• Alex Vikner

5 Lessons From Rich Dad Poor Dad

Rich Dad Poor Dad by Robert Kiyosaki lays out the fundamental mindset needed to build wealth. Here are the 5 key lessons I learned from this book.

1. Don't Work for Money

The poor and middle class work for money while the rich have money work for them by finding ways of generating passive income. Trading your time for money is what keeps you poor.

Most people went to school and never learned how money works, so they spend their lives working for money.

Don't let fear and greed control your life because that will set you in the rat race and make you a slave to money. Learn to use your emotions to think, not think with your emotions.

For most people, a job is a short-term solution to a long-term problem. Those who escape the rat race derive their income through assets and investments.

95% of the income gains in the US between 2009 and 2012 went to the wealthiest 1%? It went to entrepreneurs and investors, not employees.

Savers are losers. Nowadays, you are losing money with saving accounts due to the low interest rates and high inflation. So learn how to invest your money intelligently.

2. Become Financially Literate

Rich people acquire assets while the poor and middle class acquire liabilities that they think are assets. To be clear, assets put money in your pocket while liabilities take money out of your pocket.

Cash flow tells the story of how a person handles money. If you want to buy something, you must first generate enough cash flow from your assets to cover the expenses.

Rich people are not born different from poor people. However, if you are brought up in a wealthy family you are more likely to be wealthy and vice versa. That is because during the formative years of childhood, you mostly learn from your parents and their habits rub onto you.

To fight this. fate, you need to become financially literate! Remember: you become what you study, so choose what your study carefully. Financial IQ is composed of accounting, investment strategy, markets, and law. Know a little about all those topics while continuously expanding your knowledge in unrelated domains.

Every rich person has lost money at some point, but many poor people have never lost a cent... Failure inspires winners and defeats losers. Do not be afraid of losing and be bold enough to admit and learn from your mistakes.

3. Mind Your Own Business

Financial struggle is often the result of people working all their lives for someone else. Keep your job, but work on side projects and strategically buy assets (stocks, bonds, real estate etc.).

Always pay yourself first. Set aside a portion of your income and invest it in assets. What's left in the end can be used expenditures. The poor and middle class tend to spend first and save what's left.

Keep building a diversified portfolio of assets and your wealth will accumulate exponentially with the compound effect. Diversification is important because it reduces risk and thereby creates stability.

4. Understand Tax Law

Taxes are the single largest expense for the average person. However, the rich pay very little in income tax because they don't earn their money as employees do. They know that the best way to legally avoid taxes is by generating passive income.

Passive income is superior to earned income as it's taxed less and a result of cash-flowing assets, not selling your time as an employee.

Tax law is written to reduce your taxes. In the US, there are over 5,800 pages of tax law. About 30 pages are devoted to raising taxes and a few other pages describe tax rates. The remaining 5,770 pages are devoted to reducing your taxes!

5. Work to Learn

Strive to broaden your knowledge in order to know a little about a lot. Young people should seek work for what they will learn rather than for what they will earn. This will help you avoid getting stuck in the rat race (endlessly chasing a higher salary, a nicer house, a better car etc.).

The world is filled with talented poor people. All too often, they're poor not because of what they know, but because of what they don't know.

Being technically specialised has its strengths and weaknesses. Some people are geniuses but don't know how to communicate effectively, and therefore have pitiful earnings. If they would spend a year learning how to communicate better, their situation would improve a lot.


Information without action is meaningless. Try to implement some of these lessons in your life to improve your financial situation.