Lessons from Rich Dad Poor Dad
The big lesson to be learned from Rich Dad Poor Dad:
Don’t work hard for money; instead, have money work hard for you.
I have read several bad reviews about Rich Dad Poor Dad... I myself wasn't too much of a fan at first. However, I came to realize that Kiyosaki is a seller, not your personal broker. He gives the concepts, and you take what you like, discard what you don't. You have to be a little bit critical of what you read, and see the feasibility in your situation.
According to Rich Dad (and Poor Dad), there are two main types of income: Earned income, Residual income (including passive income and portfolio income).
Your earned income is what you earn by working. Your job, for example, is an earned income. If you stop working (quit, are let go, etc), you will stop earning that income.
Residual income is what your earn with not direct involvement from you. Of course, you need an initial effort, but once it's going good, it's going, and doesn't stop (usually). A good example of a passive income is income derived from real estate or from your paper assets (bonds, mutual funds,etc). Residual income can be difficult to create, and the key is to be alert for residual income opportunities.
The other main discrepancy between Rich Dad and Poor Dad is that Rich Dad will spend his money on assets while Poor Dad will spend his money on liabilities, without understanding the difference. For example, while a new car is an asset to Poor Dad, that same new car is a liability to Rich Dad. This is the reasoning behind it:
An Asset is something that will pay you back, by producing income.
A Liability is something that will cost you money, by causing expenditures.
So when you buy a new car, what happens? You spend money. Similarly, when you purchase a new house in the suburbs or a new TV, you spend money, by creating a monthly mortgage payment or monthly credit card payments. And as people make more money, they tend to buy more goods and services on credit, increasing the amount of debts.
This is where investing in other types of assets become interesting - the residual income. You need to purchase assets that will create a streaming income. Over time that residual income will become greater than you earned income (job), allowing you to become independently wealthy.
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