Chapter One
Rich Dad, Poor DadAs narrated by Robert Kiyosaki
I had two fathers, a rich one and a poor one. One was highlyeducated and intelligent; he had a Ph.D. and completed four years ofundergraduate work in less than two years. He then went on toStanford University, the University of Chicago, and NorthwesternUniversity to do his advanced studies, all on full financialscholarships. The other father never finished the eighth grade.
Both men were successful in their careers, working hard all theirlives. Both earned substantial incomes. Yet one struggledfinancially all his life. The other would become one of the richestmen in Hawaii. One died leaving tens of millions of dollars to hisfamily, charities and his church. The other left bills to be paid.
Both men were strong, charismatic and influential. Both men offeredme advice, but they did not advise the same things. Both menbelieved strongly in education but did not recommend the same courseof study.
If I had had only one dad, I would have had to accept or reject hisadvice. Having two dads advising me offered me the choice ofcontrasting points of view; one of a rich man and one of a poor man.
Instead of simply accepting or rejecting one or the other, I foundmyself thinking more, comparing and then choosing for myself.
The problem was, the rich man was not rich yet and the poor man notyet poor. Both were just starting out on their careers, and bothwere struggling with money and families. But they had very differentpoints of view about the subject of money.
For example, one dad would say, "The love of money is the root ofall evil." The other, "The lack of money is the root of all evil."
As a young boy, having two strong fathers both influencing me wasdifficult. I wanted to be a good son and listen, but the two fathersdid not say the same things. The contrast in their points of view,particularly where money was concerned, was so extreme that I grewcurious and intrigued. I began to start thinking for long periods oftime about what each was saying.
Much of my private time was spent reflecting, asking myselfquestions such as, "Why does he say that?" and then asking the samequestion of the other dad's statement. It would have been mucheasier to simply say, "Yeah, he's right. I agree with that." Or tosimply reject the point of view by saying, "The old man doesn't knowwhat he's talking about." Instead, having two dads whom I lovedforced me to think and ultimately choose a way of thinking formyself. As a process, choosing for myself turned out to be much morevaluable in the long run, rather than simply accepting or rejectinga single point of view.
One of the reasons the rich get richer, the poor get poorer, and themiddle class struggles in debt is because the subject of money istaught at home, not in school. Most of us learn about money from ourparents. So what can a poor parent tell their child about money?They simply say "Stay in school and study hard." The child maygraduate with excellent grades but with a poor person's financialprogramming and mind-set. It was learned while the child was young.
Money is not taught in schools. Schools focus on scholastic andprofessional skills, but not on financial skills. This explains howsmart bankers, doctors and accountants who earned excellent gradesin school may still struggle financially all of their lives. Ourstaggering national debt is due in large part to highly educatedpoliticians and government officials making financial decisions withlittle or no training on the subject of money.
I often look ahead to the new millennium and wonder what will happenwhen we have millions of people who will need financial and medicalassistance. They will be dependent on their families or thegovernment for financial support. What will happen when Medicare andSocial Security run out of money? How will a nation survive ifteaching children about money continues to be left to parents-mostof whom will be, or already are, poor?
Because I had two influential fathers, I learned from both of them.I had to think about each dad's advice, and in doing so, I gainedvaluable insight into the power and effect of one's thoughts onone's life. For example, one dad had a habit of saying, "I can'tafford it." The other dad forbade those words to be used. Heinsisted I say, "How can I afford it?" One is a statement, and theother is a question. One lets you off the hook, and the other forcesyou to think. My soon-to-be-rich dad would explain that byautomatically saying the words "I can't afford it," your brain stopsworking. By asking the question "How can I afford it?" your brain isput to work. He did not mean buy everything you wanted. He wasfanatical about exercising your mind, the most powerful computer inthe world. "My brain gets stronger every day because I exercise it.The stronger it gets, the more money I can make." He believed thatautomatically saying "I can't afford it" was a sign of mentallaziness.
Although both dads worked hard, I noticed that one dad had a habitof putting his brain to sleep when it came to money matters, and theother had a habit of exercising his brain. The long-term result wasthat one dad grew stronger financially and the other grew weaker. Itis not much different from a person who goes to the gym to exerciseon a regular basis versus someone who sits on the couch watchingtelevision. Proper physical exercise increases your chances forhealth, and proper mental exercise increases your chances forwealth. Laziness decreases both health and wealth.
My two dads had opposing attitudes in thought. One dad thought thatthe rich should pay more in taxes to take care of those lessfortunate. The other said, "Taxes punish those who produce andreward those who don't produce."
One dad recommended, "Study hard so you can find a good company towork for." The other recommended, "Study hard so you can find a goodcompany to buy."
One dad said, "The reason I'm not rich is because I have you kids."The other said, "The reason I must be rich is because I have youkids."
One encouraged talking about money and business at the dinner table.The other forbade the subject of money to be discussed over a meal.
One said, "When it comes to money, play it safe, don't take risks."The other said, "Learn to manage risk."
One believed, "Our home is our largest investment and our greatestasset." The other believed, "My house is a liability, and if yourhouse is your largest investment, you're in trouble."
Both dads paid their bills on time, yet one paid his bills firstwhile the other paid his bills last.
One dad believed in a company or the government taking care of youand your needs. He was always concerned about pay raises, retirementplans, medical benefits, sick leave, vacation days and other perks.He was impressed with two of his uncles who joined the military andearned a retirement and entitlement package for life after twentyyears of active service. He loved the idea of medical benefits andPX privileges the military provided its retirees. He also loved thetenure system available through the university. The idea of jobprotection for life and job benefits seemed more important, attimes, than the job. He would often say, "I've worked hard for thegovernment, and I'm entitled to these benefits."
The other believed in total financial self-reliance. He spoke outagainst the "entitlement" mentality and how it was creating weak andfinancially needy people. He was emphatic about being financiallycompetent.
One dad struggled to save a few dollars. The other simply createdinvestments.
One dad taught me how to write an impressive resume so I could finda good job. The other taught me how to write strong business andfinancial plans so I could create jobs.
Being a product of two strong dads allowed me the luxury ofobserving the effects different thoughts have on one's life. Inoticed that people really do shape their life through theirthoughts.
For example, my poor dad always said, "I'll never be rich." And thatprophesy became reality. My rich dad, on the other hand, alwaysreferred to himself as rich. He would say things like, "I'm a richman, and rich people don't do this." Even when he was flat brokeafter a major financial setback, he continued to refer to himself asa rich man. He would cover himself by saying, "There is a differencebetween being poor and being broke. Broke is temporary, and poor iseternal."
My poor dad would also say, "I'm not interested in money," or "Moneydoesn't matter." My rich dad always said, "Money is power."
The power of our thoughts may never be measured or appreciated, butit became obvious to me as a young boy to be aware of my thoughtsand how I expressed myself. I noticed that my poor dad was poor notbecause of the amount of money he earned, which was significant, butbecause of his thoughts and actions. As a young boy, having twofathers, I became acutely aware of being careful which thoughts Ichose to adopt as my own. Whom should I listen to-my rich dad or mypoor dad?
Although both men had tremendous respect for education and learning,they disagreed in what they thought was important to learn. Onewanted me to study hard, earn a degree and get a good job to workfor money. He wanted me to study to become a professional, anattorney or an accountant or to go to business school for my MBA.The other encouraged me to study to be rich, to understand how moneyworks and to learn how to have it work for me. "I don't work formoney!" were words he would repeat over and over, "Money works forme!"
At the age of 9, I decided to listen to and learn from my rich dadabout money. In doing so, I chose not to listen to my poor dad, eventhough he was the one with all the college degrees.
A Lesson From Robert Frost
Robert Frost is my favorite poet. Although I love many of his poems,my favorite is The Road Not Taken. I use its lesson almost daily:
The Road Not Taken
Two roads diverged in a yellow wood, And sorry I could not travel both And be one traveler, long I stood And looked down one as far as I could To where it bent in the undergrowth;
Then took the other, as just as fair, And having perhaps the better claim, Because it was grassy and wanted wear Though as for that the passing there Had worn them really about the same,
And both that morning equally lay In leaves no step had trodden black. Oh, I kept the first for another day! Yet knowing how way leads onto way, I doubted if I should ever come back.
I shall be telling this with a sigh Somewhere ages and ages hence; Two roads diverged in a wood, and I- I took the one less traveled by, And that has made all the difference.
Robert Frost [1916]
And that made all the difference.
Over the years, I have often reflected upon Robert Frost's poem.Choosing not to listen to my highly educated dad's advice andattitude about money was a painful decision, but it was a decisionthat shaped the rest of my life.
Once I made up my mind whom to listen to, my education about moneybegan. My rich dad taught me over a period of 30 years, until I wasage 39. He stopped once he realized that I knew and fully understoodwhat he had been trying to drum into my often thick skull.
Money is one form of power. But what is more powerful is financialeducation. Money comes and goes, but if you have the education abouthow money works, you gain power over it and can begin buildingwealth. The reason positive thinking alone does not work is becausemost people went to school and never learned how money works, sothey spend their lives working for money.
Because I was only 9 years old when I started, the lessons my richdad taught me were simple. And when it was all said and done, therewere only six main lessons, repeated over 30 years. This book isabout those six lessons, put as simply as possible as my rich dadput forth those lessons to me. The lessons are not meant to beanswers but guideposts. Guideposts that will assist you and yourchildren to grow wealthier no matter what happens in a world ofincreasing change and uncertainty.
Lesson #1 The Rich Don't Work for Money
Lesson #2 Why Teach Financial Literacy?
Lesson #3 Mind Your Own Business
Lesson #4 The History of Taxes and the Power of Corporations
Lesson #5 The Rich Invent Money
Lesson #6 Work to Learn- Don't Work for Money
Continues...
Excerpted from Rich Dad Poor Dad Classics - 3 Copy Boxed Setby Robert T. Kiyosaki Copyright © 2001 by Robert T. Kiyosaki. Excerpted by permission.
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