Rich Dad Poor Dad (Kiyosaki)
Short summary
Hawaii, 1950s. A young boy grows up under the influence of two fathers who hold opposing views on money, work, and life. He navigates his childhood and early adulthood trying to decide whose advice to follow.
Robert observes that his biological father, despite holding a high position in the government, struggles with debt and financial insecurity. This father advises Robert to study hard and find a secure job.
Conversely, the father of his friend Mike, a man with less formal education, builds a business empire. He teaches the boys that the rich do not work for money; they make money work for them.
Robert chooses to learn from Mike's father. Through lessons involving working for free and analyzing real estate, he learns to distinguish assets from liabilities. He discovers that fear and greed trap people in the "Rat Race." He learns that building an asset column—through investments, stocks, and intellectual property—is superior to relying on a salary. He also realizes that mindset determines success.
Failure inspires winners. And failure defeats losers. It is the biggest secret of winners. ... The greatest secret of winners is that failure inspires winning; thus, they’re not afraid of losing.
By overcoming obstacles like cynicism and laziness, and by focusing on financial literacy rather than job security, Robert achieves financial freedom and retires early.
Detailed summary by chapters
Introduction. Rich Dad Poor Dad
Robert Kiyosaki had two fathers who offered him conflicting viewpoints on money. One was his biological father, a highly educated man who held a Ph.D. and worked for the government, yet struggled financially. The other was the father of his best friend, a man who never finished the eighth grade but became one of the richest men in Hawaii.
Chapter 1. Lesson 1: The rich dont work for money
At the age of nine, Robert attended a public school where many rich families sent their children. His perspective on wealth shifted when a classmate named Jimmy excluded him and his friend Mike from a weekend beach house trip because they were considered "poor kids."
Hurt by the exclusion, Robert asked his father how to make money. His dad told him to use his head, which led the boys to collect toothpaste tubes made of lead. They melted the lead to cast homemade nickels, believing they were simply doing what they were told: making money. Roberts father explained that this was counterfeiting and illegal, but he encouraged their creativity. He suggested they speak to Mike's father, who was building a business empire. The boys met with Mike's dad, who agreed to teach them under a specific condition: they had to work for him.
The offer was to work three hours every Saturday at his convenience store for 10 cents an hour. Robert took the job and worked under the supervision of Mrs. Martin, dusting cans.
The work was boring, and the pay was insufficient to buy the comic books Robert loved. After three weeks, he was ready to quit. When he confronted Mike's dad about the low pay and lack of teaching, the man explained that life teaches by pushing you around. He had designed the low wage to provoke anger and reflection. He explained that most people accepted low pay due to fear of not having money, which trapped them in a cycle of working to pay bills.
The pattern of get up, go to work, pay bills... People’s lives are forever controlled by two emotions: fear and greed. Offer them more money and they continue the cycle... This is what I call the Rat Race.
To test whether the boys had learned the lesson, Mike's dad offered them raises—first 25 cents, then a dollar, then two dollars, and finally five dollars an hour. Robert felt his soul tempted by the money, but he stayed silent. He realized that accepting the money would only bind him to the cycle of fear and desire. Satisfied that they had resisted the trap, Mike's dad told them the next step was to work for free. They went back to the store, dusting cans without pay. This forced them to look for opportunities their minds missed when focused on a paycheck. They noticed Mrs. Martin cutting the tops off comic books to return for credit, throwing the rest away. The boys asked the distributor for the discarded comics and opened a library in Mike's basement, hiring Mike's sister to manage it.
Chapter 2. Lesson 2: Why teach financial literacy?
By 1990, Mike had taken over his father's empire, while Robert retired at age 47 with his wife Kim. Robert reflected on the importance of financial education over mere earnings.
Most people fail to realize that in life, it’s not how much money you make. It’s how much money you keep. We’ve all heard stories of lottery winners who are poor, then suddenly rich, and then poor again.
Mike's dad taught the boys that if they wanted to build an empire, they needed a solid foundation.
If you want to be rich, you need to be financially literate. If you are going to build the Empire State Building, the first thing you need to do is dig a deep hole and pour a strong foundation.
The only rule Robert emphasized was knowing the difference between an asset and a liability. He defined an asset as something that puts money in your pocket, while a liability is something that takes money out of your pocket. Mike's dad used simple drawings to illustrate cash flow patterns. He showed that the poor have expenses, the middle class buy liabilities they think are assets, and the rich buy assets.
Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets. ... The rich focus on their asset columns while everyone else focuses on their income statements.
Robert argued that for most people, their house is a liability, not an asset, because it takes money out of their pockets through mortgages, taxes, and upkeep. He observed that financial struggle often stemmed from professional success without financial understanding, leading people to increase their expenses as their income rose.
Chapter 3. Lesson 3: Mind your own business
Robert recounted a story about Ray Kroc, who told a group of MBA students that his business was not hamburgers, but real estate. Kroc understood that the location of the franchise was the key to success. This illustrated the difference between a profession and a business. Robert observed that most people spend their lives minding someone else's business and making them rich. He advised keeping a day job while building an asset column filled with stocks, bonds, or income-generating real estate.
Chapter 4. Lesson 4: The history of taxes and the power of corporations
Robert's rich dad viewed the Robin Hood fantasy of taking from the rich to give to the poor as economically damaging. He explained that taxes were originally levied to fund wars and targeted only the wealthy, but eventually, the government's appetite for money caused taxes to trickle down to the middle class. The rich, however, found ways to protect their wealth through corporations.
A corporation, Robert learned, was merely a legal document that created a body without a soul, offering a lower tax rate than individual income tax. Corporations allowed the rich to earn, spend, and then be taxed on what remained, whereas employees earned, were taxed, and then spent what was left. Robert emphasized that financial IQ was comprised of accounting, investing, understanding markets, and the law. He stressed that knowledge was power, and without it, the world pushed you around.
Chapter 5. Lesson 5: The rich invent money
Robert recalled the story of Alexander Graham Bell to illustrate that in the real world, it is often the bold, not the smart, who get ahead. He lamented that many talented people suppressed their financial genius due to fear and self-doubt. He created the CASHFLOW board game to help people learn how money works, but noticed that some people, like a woman who played it, became angry when the game reflected their own financial habits.
The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth seemingly instantaneously. An untrained mind can also create extreme poverty that can crush a family...
Robert explained that financial intelligence allowed one to create more options. He shared an example from the early 1990s in Phoenix, where the economy was terrible. While others were saving money, Robert used his financial knowledge to spot opportunities in the depressed real estate market. He bought houses at bankruptcy courts for a fraction of their value and sold them for a profit, often with little of his own money tied up in the transaction. He described a specific deal where he bought a house for $20,000 using borrowed money and sold it for $60,000, creating $40,000 in assets in the form of a promissory note.
He emphasized that money was often invented through agreements and that great opportunities were seen with the mind, not the eyes. He distinguished between two types of investors: those who buy packaged investments and those who create investments. The latter required learning how to find missed opportunities, raise capital, and organize smart people.
Chapter 6. Lesson 6: Work to learn—dont work for money
In Singapore, Robert met a young female reporter who was a talented writer but frustrated with her career. He suggested she take a sales training course to help sell her books. She was offended, believing that sales were beneath her profession.
Robert pointed out that he was a "best-selling" author, not a "best-writing" author, and that combining her writing skills with sales skills would make her successful. He reflected on his own life, where his educated dad valued job security and specialization, while his rich dad encouraged him to know a little about a lot. Robert joined the Marine Corps to learn leadership and worked at Xerox to overcome his fear of rejection and learn sales. He argued that management skills—specifically cash flow, systems, and people—were crucial for success. He noted that many talented people were poor because they focused on building a better hamburger rather than building a better business system.
Chapter 7. Overcoming obstacles
Robert identified five obstacles that prevented financially literate people from becoming rich: fear, cynicism, laziness, bad habits, and arrogance. He contrasted the way different people handled the fear of losing money, using the example of Texans who remembered the Alamo—taking a major failure and turning it into a source of inspiration. He stated that for winners, losing inspired them, while for losers, it defeated them.
He discussed the obstacle of cynicism, referring to the "Chicken Little" mindset. He told the story of a friend named Richard from Boston who visited him in Phoenix.
Richard found a great real estate deal but backed out after a neighbor told him it was a bad idea, causing him to miss a massive profit when the market turned. To overcome laziness, Robert suggested using a little greed by asking, "What's in it for me?" He addressed bad habits by emphasizing the principle of paying oneself first, even when short on cash, to create pressure to generate more income. Finally, he defined arrogance as ego plus ignorance, advising that when one is ignorant on a subject, they should find an expert or a book.
Chapter 8. Getting started
Robert outlined ten steps to awaken financial genius. First, one must find a reason greater than reality—a combination of deep "wants" and "don't wants." Second, he emphasized the power of choice, making daily decisions to invest in education. Third, he advised choosing friends carefully, learning from both the rich and the poor but avoiding the "Chicken Littles." Fourth, he suggested mastering a formula and then learning a new one, emphasizing the speed of learning. Fifth, he stressed self-discipline through the rule of paying oneself first.
Sixth, he advised paying brokers well, valuing their information and time. Seventh, he introduced the concept of the "Indian Giver," where an investor seeks to get their initial capital back quickly while keeping the asset for free. Eighth, he recommended using assets to buy luxuries, rather than buying them on credit. Ninth, he spoke of the power of heroes, using them to make investing look easy and to tap into their genius. Tenth, he taught the principle of "teach and you shall receive," believing that generosity with money and knowledge brings reciprocal rewards.
If you want to be rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities. Illiteracy, both in words and numbers, is the foundation of financial struggle.
He reinforced that developing financial genius allowed one to see the gold that was everywhere, which most people were not trained to see.
Chapter 9. Still want more? Here are some to dos
For those seeking action, Robert provided a checklist. He advised stopping what wasn't working and looking for new ideas in bookstores. He suggested finding someone who had already done what one wanted to do and asking for tips. He recommended taking classes, making many offers with escape clauses, and jogging through neighborhoods to spot changes. He urged thinking big, learning from history, and taking action immediately.
Final thoughts
Robert concluded with a story about helping a friend save for his children's college education. Instead of saving cash, the friend bought a house with a small down payment. As the market improved, he sold it and rolled the profits into other investments, funding the education and his own retirement. Robert reiterated the three types of income: earned, portfolio, and passive, stating that the key to wealth was converting earned income into the other two.