Good Example Of Essay On Finance - ?Rich Dad, Poor Dad? Book Report

Type of paper: Essay

Topic: People, Finance, Wellness, Money, Life, Literature, Family, Workplace

Pages: 10

Words: 2750

Published: 2020/11/15

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“Rich Dad, Poor Dad” book report

This paper is aimed at reviewing the famous personal finance book “Rich Dad, Poor Dad” by Robert Kiyosaki, summarizing its key messages and at reflecting on the practical implications of the author’s recommendations. Being on the bestseller lists for a long time, this book gives a practical advice on money philosophy and personal finance management in an easy-to-read and funny form of a parable.

Introduction and Chapters 1-3.

Everyone thinks that she or he wants to be rich and is ready to wealth. Is this true? In this boot the author shows how underlying attitudes, stereotypes and other psychological mechanisms regarding money and wealth, acquired in early childhood from family members, are transformed lifelong and how these attitudes affect people’s financial and material well-being. Author also gives advice how to re-think one’s attitude to work, money and wealth and how to re-design one’s life in order to reach financial freedom.
There’s a paradox – many smart people, successfully graduated from various educational institutions and developed successful career, are not rich. People do their best to receive a good education and to find a good employer to succeed, but the richest people don’t get their wealth because of their education. So, high educational grades don’t correlate with success and financial well-being. But, being involved in what the author called “A Rat Race”, people encourage their children to be good at studying and hardworking, paying a little or almost no attention to understanding the child’s vocation and forming the right attitudes to work and money. So, the loop closes and the “Rat Race” begins again. Good students graduate, make good career with their safe and respectable job, their income increase gradually, but spending and taxes increase even faster.
So, the worst advice the parents can give to their children is, according to Robert Kiyosaki, “Go to school, get good grades and look for a safe secure job.” Instead, it’s necessary to teach a child the specific rules of money and develop his or her financial intelligence. And this is true not only for kids. People of any age can understand these rules and, if they have enough courage and willingness to change their lives with greater freedom and financial success, they can do it.
Kiyosaki builds the plot of his book as a parable about two fathers – a rich one and a poor one. With this metaphor he introduces a message that with equal starting conditions, the attitude to money determines the future financial success. This make a reader ask themselves a question whether they think of money as of the “root of all evil” or as of power or the necessary resource. The difficulty is that the attitude to money is formed at home, in family, and the parents teach their kids by the example of their own life. The children unconsciously adopt the pattern of behavior of their parents, and, as a result, “the rich get richer, the poor get poorer, and the middle class struggles in debt” (Kiyosaki, 11.)
The human brain is plastic to some extent. If a person repeats as a mantra that the money is evil, that she will never be rich and cannot afford this or that, that the best strategy in life is to find a safe and stable job, the actions became aligned with this philosophy, so, the life reflects the above mentioned attitudes as a mirror. People, who believe that money is evil, that love to money is a sin, often avoid money, and, of course, money and success avoid them. People, being risk-averse, who rely on the government, on employer, on the insurance system, need protection lifelong and cannot decide to take control of their lives. Instead, they can re-think their attitudes towards self-reliance and learn how to manage risk wisely. The difference is dramatic – if the people with psychology of “poor” work for money, the other people with an attitude of “rich” make money work for them.
Except an interest to some area, the would-be rich should have a close relationship with reality. Hopes, beliefs and talks have a good motivating effect, but only those win who dare to act and to learn life lessons. This approach is life-transforming, but when changing the life, a person should start from themselves, because it’s much easy and much more effective than trying to change the other people or the environment (25.) Self-transformation and self-motivation is not easy, because people quickly get used to the better, and the joy caused by higher incomes and more money goes away very quickly. So, it’s necessary to find other types of inner fuel in mind and emotion to drive success and to refrain from unnecessary spending. The behavioral economics studies this eternal contradiction between the pursuit of long-term benefits and the numerous short-term oriented desires. Those who can defer impulsive consumption in favor of long-term benefits, often manage to become wealthier. Kiyosaki named it “choosing the thoughts” over emotions (39), but, actually, it’s not a control and suppression; it’s the correct alignment of priorities in life. Personal or family history may pre-define these attitudes, but it’s always possible to set goals and priorities independently.
It’s vital to keep the goal in mind. Sometimes, even work for free should not be neglected, if it opens the ways for earning money in the future. So, people should act as strategists of their own live. Not their life should live them, but they should live their own life. But to become to be a conductor of one’s own life, a person should learn the instruments of financial flows management. This is financial literacy. Financial literacy along with financial intelligence opens the door for financial freedom and independence from economic conjuncture, from the job market, and even from inevitable economic crises.
Kiyosaki illustrates this thesis with a story of “the richest businessmen” (43.) The deeper meaning of the story is that money without financial intelligence money goes like sand through the fingers. Understanding the diversity of financial management tools is the fundamentals of financial success, but “diverse” doesn’t mean complexity. As Kiyosaki said “Keep It Simple Stupid” (46) – all the brightest solutions are simple and understandable even to a child, like, for example, the concept of assets, liabilities and cash flows presented in the book. The source of learning can be different; but it’s necessary to mention that rich people learn even from their subordinates. They learn from life and from all people surrounding them. This open-mindedness and continuous learning allows these people to be flexible, creative, and aware and also to take the best possible decisions. It is what the author called “the intelligence”. Financial intelligence goes in line with emotional intelligence – a capability to understand one’s desires and emotions, to understand human nature and motives of people; it’s a capability to act independently, under the influence of common sense, not emotional impulse.
Many misconceptions underlie today's debt-ridden society, such as, for example, belief that the house is an investment and increase in earnings should always be followed by increase in spending (57.) People don’t generate the sources of income sufficient enough to guarantee their financial freedom and depend on their employers. The roots of such a behavior are in the following: nobody explained those people a core difference between assets with income-generating capabilities and liabilities. That’s why many people rely on their employer as the only source of income and work for the state budget and for the banks their whole life. The core difference between the behaviors of rich and poor is that the first generate incomes and buy assets while the second have only expenses and liabilities.
The next big ontological difference between rich and poor is that rich people mind their business while others rely only on their profession they acquired through education and implemented through employment. Kiyosaki said: “To become financially secure, a person needs to mind their own business” (62.) It’s not a barrier if one has a profession, but at the same time it’s necessary to think of an idea to be implemented as an own business. Ownership and income-generating potential are crucial here. Good assets, to Kiyosaki’s opinion, are operating businesses, bonds, stocks, mutual funds, real estate, royalties and other forms of assets that can assure regular passive income to their owner. Today, with rapidly changing technologies, it can be interesting and profitable to invest in a young tech startup, to make it public or to sell to strategic investor; it can multiply the initial investments. But at initial stage, it may require personal involvement.
It’s necessary to concentrate on income-growth strategies, like those described by the author (for example, fast exit from small startups). It’s necessary to say that growing one’s assets may not require quitting one’s job – these things can be done in parallel; there’s a freedom to do what one likes and to be independent from economy and job market fluctuations. To reward themselves for success and patience, wealthy people buy some luxury goods and enhance their quality of living; on the contrary, poor people tend to buy expensive clothes, cars and houses as early as possible to “look rich”.
Except wider opportunities to investment and consumption, rich people enjoy the power of money and also tax preferences through involvement such a mighty instrument as corporations. Corporations being supported and protected by governments as a major source of jobs for middle class and poor, have a variety of tools how to optimize their expenses and to manage assets to their benefit. On the contrary, employees do not own resources and means of production; they rely on their companies and have to bear their tax burden, earning enough money just to maintain their existence as labor force. So, employment makes rich only the employer.
Not everyone have enough courage to break the pattern, to start their own business and, finally, to quit hired labor force. The way of running own business can bring wins and losses, and people, risk-averse by their nature, prefer apparent stability of employment. But there’re a lot of entrepreneurs, who learn from their wins and losses and are not afraid to move forward. Financial literacy, in particular, the ability to read and understand financial statements, ability to form investment strategies, understanding of markets and legislation, supports them (73.) The people with attitudes of “rich” gain numerous benefits such as tax advantages, instruments of assets protection, for example, corporations, trusts; and, of course, extended opportunities to better life style through spending and access to resources.
In his sixth chapter, Kiyosaki states that “the rich invent money” (75.) What does it mean? It means that the people, who have enough courage and motivation, shape the economic world and, being rewarded for their knowledge and boldness by success and power, have all the possibilities to define the rules of the game. The rich people are often creative and consider lots of various options; at the same time, financial intelligence and cold calculation of short-term and long-term risks and benefits allows them to refrain from rash acts. So, the psychology of rich is a perfect combination of openness, creativity and rationality.
As it was mentioned before, the rich people make money work for them. It means that earning money to maintain their living is not a primary goal for them anymore. There’re a lot of talented and smart people who are “a skill away” (81) from their success, but only a few people learn the skills that which separate them from the exponential growth of income. Often, entrepreneurs are product- or technology-focused, and think of customer needs as of a secondary factor. The common mistake is lack of business skills, lack of dialogue with consumers and a very long time to market. The most successful people learn lifelong, they learn from their partners, consumers, from people who work for them, they learn from life itself with all its wins and losses, highs and lows. Rich people, to Kiyosaki’s opinion, “work for what they will learn, more than what they will earn” (84), concentrating on obtaining various skills necessary to life and to success, while poor people spend their life mastering the skill they’re paid for.
The attitude of successful people to activity is also different. Unlike other people, they avoid being busy just for a reason; they avoid routine activities that prevent them from making decisions and doing something important in life. Their rhythm of activity is subordinated to their life priorities. Sometimes, it’s necessary to stop, to review the past decisions, to focus, to get insight. Rich people are afraid of missing something important, while other people are afraid of facing something important, that’s why they try to look busy all the time, filling the inner emptiness and fear with daily routine. Rich people put ambitious targets, and never set artificial barriers in their mind like statements “I’ll never be rich”, “It’s impossible” or “I cannot afford it.” Instead of “I cannot” they use “How can I..?” or even “How can we.?”, inspiring other people with bold and ambitious goals.
The difference in mindset between “rich” and “poor” is like an abyss, but this gap is possible to overcome. The first step is to challenge the common stereotypes, embedded in mind for generations, and to start tracking one’s motives, habits and common mistakes on a daily basis. Kiyosaki stated, that everyone can wake up their internal “financial genius” (103) and also find great deals, and offered ten-steps program to develop the hidden skills, including the following: to find a string reason, to direct the daily choices consciously, to choose friends carefully, to employ the power of ongoing learning, to master self-discipline, especially in financial questions, to rely on professional information intermediaries such as brokers, to start making wise investment decisions, to resist temptation to overspending, to find inspiration in people, images, stories, legends; and to learn how to harness the power of giving.
Everything that listed above looks very inspiring for many people, but it’s very difficult to start from scratch. To enact this plan, first of all, it’s necessary to stop maintaining and fueling with energy current way of living and thinking. “Stop doing what you currently doing”, Kiyosaki said (121), emphasizing the importance of re-thinking, finding new ideas, change familiar surroundings, finding like-minded people, gathering necessary information and then starting action.
The book is not only quintessential for building healthy attitude to money and wealth, it is a storehouse of useful practical mind-over-money tips to building investment strategies, to choosing deals and to make everyday choices. Of course, for parents this book is a practical guide to the education of financial literacy in children. All of people have two biggest and the most valuable assets – “mind and time” (127), with these assets it’s possible to reach the goals people set for themselves and to achieve financial freedom, shaping the future for current and future generations.
Success of Kiyosaki’s book “Rich Dad, Poor Dad” was determined by many factors. The author was among the first to give a clear picture of people’s dangerous dependence of their employers, credit cards, mortgages and consumer behavior. The ideas, described in the book, for example, that people should acquire assets and generate the flows of passive income rather than rely on their employer and waste money on spending and debts, are based on common sense and rationality. The book is rather inspirational, giving the idea that a key to financial success is inside our minds. The style of book is easy and funny, full of practical examples, real life stories, and anecdotes.
The book supports the point of view that a traditional educational system is flawed, and emphasizes an importance of family education and personal example in building financial intelligence in young generations. This book is very valuable, even “must read” for young entrepreneurs, and may be found very useful for all the people pursuing financial freedom through quality personal finance management and better decisions. Of course, the book is rather motivational than practical, and its value is in describing wide opportunities that open to people who decide to take control over their financial future into their own hands.

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WePapers. (2020, November, 15) Good Example Of Essay On Finance - ?Rich Dad, Poor Dad? Book Report. Retrieved October 15, 2021, from https://www.wepapers.com/samples/good-example-of-essay-on-finance/
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"Good Example Of Essay On Finance - ?Rich Dad, Poor Dad? Book Report." WePapers, Nov 15, 2020. Accessed October 15, 2021. https://www.wepapers.com/samples/good-example-of-essay-on-finance/
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Good Example Of Essay On Finance - ?Rich Dad, Poor Dad? Book Report. Free Essay Examples - WePapers.com. https://www.wepapers.com/samples/good-example-of-essay-on-finance/. Published Nov 15, 2020. Accessed October 15, 2021.
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