It’s Time to Discuss ‘Rich Dad Poor Dad’

Are you ready to become a Rich Dad?

Welcome to the Billfold Book Club’s discussion of Robert Kiyosaki’s Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That The Poor And Middle Class Do Not!

You don’t need to have read the book to chime in on the discussion. I am also going to spoil the book’s ending.

Here we go.

At its core, the financial advice given in Rich Dad Poor Dad is nearly identical to the financial advice given in Your Money or Your Life, and in who knows how many other personal finance texts:

1. Earn money.
2. Use your earned money to create sources of passive income.
3. When your passive income nets you a monthly sum greater than your living expenses, congratulations. You are now rich.

The trouble is that this whole system depends on #1. You gotta earn money to spend money on real estate, small businesses, large-scale stock investments, and anything else that is going to get you that sweet, sweet passive income.

You literally cannot become rich without capital.

I mention these two books because I read both RDPD and YMOYL during my formative years. I found myself much more strongly drawn to the “hippie next door” sentiment of Your Money or Your Life, with its examples of hardworking hotel housekeepers who saved their pennies until they could buy Treasury Bonds (at interest levels that no longer exist).

Kiyosaki, on the other hand, comes across as the jerk you don’t want to get stuck talking to at a party.

When I realized about halfway through my RDPD re-reading that both of these books, the one that I loved and the one that repelled me, were offering the exact same advice, I realized something fundamentally important. These books weren’t actually teaching financial literacy, not really. Instead, they were rewriting the American Dream.

We’re going to come back to you cannot become rich without capital in a minute. First, a quick summary of Rich Dad Poor Dad:

Chapter 1 Lesson 1: The Rich Don’t Work for Money

Arguably the most interesting chapter in the book, Kiyosaki begins his story by comparing his Poor Dad, who seems like a kind, thoughtful man, to his friend Mike’s Rich Dad, who is a gigantic tool.

The bulk of the chapter is this hilarious story about how Rich Dad gives 9-year-old Kiyosaki a taste of how awful it is to be a low-wage employee, first by hiring Kiyosaki to work at his convenience store for 10 cents an hour and then by treating Kiyosaki like garbage. When Kiyosaki complains, Rich Dad makes him an offer: Do you want to be a wage slave for the rest of your life, or do you want to be rich?

Kiyosaki chooses rich, and Rich Dad says (paraphrased) “Okay, from here on out, you and Mike are going to work for me for free. Find me again once you’ve figured out how to be rich.”

So these two 9-year-old boys work at Rich Dad’s convenience store for free until they figure out that they can take the old comic books that the convenience store can’t sell and use them to build a comic book lending library in Mike’s basement. They hire Mike’s sister to run the library, pay her 10 cents an hour, and then charge all their little friends to hang out in Mike’s basement and read last week’s comic books.

BOOM! Passive income. Also, the pull quote for the entire book:

The poor and the middle class work for money. The rich have money work for them.

At nine years old, Kiyosaki figures out how to have money work for him. He tells Rich Dad, who is summarily pleased. (Poor Dad, meanwhile, makes the kids shut the lending library down. Killjoy.)

Sadly, Rich Dad does not appear as a character in the book beyond the first chapter. Also, Rich Dad probably isn’t real. In 2003, Kiyosaki reportedly gave a SmartMoney interview in which he said “Is Harry Potter real? Why don’t you let Rich Dad be a myth, like Harry Potter?”

SO WAIT. Rich Dad isn’t real? Is Mike real? Is the comic book lending library real? Are comic books real? What about the stories that Kiyosaki tells later in the book, the ones where he becomes rich by finding houses no one else wants, buying them for “only $5,000 down,” and then selling them at a huge profit? ARE THOSE HOUSES REAL?

Is anything in this book real?

Before we discuss capital and the American Dream, let’s speed read through the rest of these chapters:

Chapter 2 Lesson 2: Why Teach Financial Literacy?

Don’t buy a house, because it is a liability that sucks away your income and prevents you from becoming rich. (Once you have capital, on the other hand, buy 10 houses. Buy 100 houses!)

This chapter actually provides some solid Basic Financial Literacy advice. It does not, however, solve the problem of where you should live while you are trying to become rich. Houses won’t work because mortgages suck away income that could go into developing a small business. So … rentals? But I thought the rent was too damn high! WHERE AM I SUPPOSED TO LIVE, ROBERT KIYOSAKI?

Chapter 3 Lesson 3: Mind Your Own Business

You cannot become rich without starting a business. Period.

Oh, but he doesn’t mean any old rinky-dink small business like, say, my freelance writing business. He means the type of business that requires serious starting capital.

It also has to be a business where other people do all the work. After all: “If I have to work there, it’s not a business. It becomes my job.”

Chapter 4 Lesson 4: The History of Taxes and the Power of Corporations

Once you are rich, there are a lot of ways that you can get out of paying taxes. One of them is starting a corporation that serves as a tax shelter.

Chapter 5 Lesson 5: The Rich Invent Money

Be the Uber, not the person who drives for Uber.

(I mean, Uber wasn’t around when Kiyosaki was writing. But this chapter is essentially about startups, and how you can invent money by identifying a need and then creating a company that fulfills that need.)

Chapter 6 Lesson 6: Work to Learn—Don’t Work for Money

Kiyosaki is “shocked” to learn how little his talented mechanic, doctor, teacher, writer and other professional friends earn. He attempts to convince us all that we could earn more if we learned one simple skill: how to sell ourselves. He reminds us that he is a “best-selling author,” not a “best-writing author.”

Chapter 7: Overcoming Obstacles

Why aren’t you rich? Could it be because there are OBSTACLES in your MIND preventing you from SEEING ALL THE OPPORTUNITIES OUT THERE?

Chapter 8: Getting Started

This chapter is mostly pablum like “there is gold everywhere” and “find a reason greater than reality.” (Um… okay.)

It also contains one piece of actionable advice: if you have to choose between investing in an asset and paying your bills, always choose the asset. To quote Kiyosaki directly: “I let the creditors and even the government scream.”

In related news, Kiyosaki’s company Rich Global LLC filed for bankruptcy protection in August 2012.

Chapter 9: Still Want More?

This chapter is about how to flip houses, if you are interested in doing that.

Okay, back to the idea that you can’t become rich without capital and the American Dream.

Arguably, the “old” American Dream, which still sounds pretty nice to me, is to have a good job and a good place to live. (And positive human relationships, which may or may not present themselves in the form of family, children, and community.)

There’s also the other American Dream of becoming rich, which is often presented as “not having to work a day in your life” even though the types of people who flip houses, start Ubers, or become “best-selling authors” work a lot.

The only real way to become rich without working is to get your hands on a passive income stream that outpaces your monthly expenses, which is also the only way to become permanently financially independent.

You need some pretty intense starting capital to do that. Where do you get that capital? Usually at a traditional high-paying job. Kiyosaki earned his starting capital by being one of the top five salespeople at Xerox.

What if you can’t reach that level of capital at your current job? I was the top salesperson at the telemarketing agency but that was never going to get me enough money to buy and flip a house. In Chapter 6, Kiyosaki even implies that his professional mechanic and doctor friends don’t earn enough capital to do what he has done.

Your Money or Your Life advocates playing it safe and saving pennies. Rich Dad Poor Dad advocates going for broke—literally. But they both leave out the part about how it just isn’t going to happen for most of us. The economic system isn’t set up for all of us to earn enough capital that we can develop our own passive income streams.

Kiyosaki would probably consider me a cynic. (In Chapter 7, cynicism is one of the obstacles that prevents people from becoming rich.) But I’m curious what you think. So I’m turning the Billfold Book Club over to you. Let’s hash out what we think about Rich Dad Poor Dad in the comments.



Nicole Dieker is a freelance writer and ghostwriter, and is the only member of the band Hello, The Future!


53 Comments / Post A Comment

Allison (#4,509)

I did not read the book but I know my dad had a copy of it for years. He….never brought up the stuff that is apparently within it, so I assume he just thought it was BS.

ThatJenn (#916)

He also presents his outlook about money as a sort of zen thing, about how you can’t get focused on making a paycheck, even though… your paychecks at the beginning of your life are what will fund this great capitalist adventure? And it’s literally a book about getting rich so it feels a little weird in context?

(Note – I read a version of this book that I think came out in 1997 – no updates. I also didn’t finish it yet.)

There were a few major takeaways I found at least worthy of consideration. One was that thinking of your home as “your biggest asset” is problematic. This is a view I’ve come around to sort of on my own after ~10 years of home ownership. Sure, I was a homeowner through the end of the bubble and the crash, and I’m in an area that hasn’t recovered basically at all, so I’m a bit biased, but generally – having a house as an asset is nice in the same way owning a car or an ice cream maker or your own lawnmower is, just on a bigger scale and with slower depreciation. Once you own it you don’t have to pay someone else to provide that thing for you, and you could theoretically also sell it and recoup a bit of your money. If you’re lucky it might appreciate and gain some value, but that’s only really useful if you want to take out a loan against it or sell it. Otherwise, it’s just a thing you own that is convenient and cost-saving for you, and in exchange you take on all the liabilities involved in owning it.

Relatedly, I also appreciated that he mentioned that nobody should get into the real estate business unless they REALLY want to buy and sell houses. That’s good, at least.

Anyway, his general weird outlook is terrible, he goes on this long thing about how income inequality is going to ruin our culture but his entire strategy literally depends upon most people NOT taking his advice and thus being willing to work/pay most of the taxes to make you rich, and I found nearly everything about the way he interacted with the probably-fictitious Rich Dad deeply offensive. (Yes, insult this kid’s dad right to said kid! That is a great and neighborly thing to do!)

I have more thoughts but I will save them until I’m not at work. I hope others read this and I’m looking forward to both discussion of this terribly offensive book and whatever book we read next.

HelloTheFuture (#5,275)

@ThatJenn But if Rich Dad isn’t real, then those insults never happened. So… that makes it better?

ThatJenn (#916)

@HelloTheFuture It was pretty clear that even if Rich Dad wasn’t real, those insults against Poor Dad were really the author’s own thoughts. I guess I just thought it was unfortunate writing to make it sound like Rich Dad said them. (There were other situations where the author takes ownership of these kinds of thoughts about his Poor Dad, saying he “realized” these things later in life, and I just think he should have stuck with that.)

ThatJenn (#916)

@HelloTheFuture Oh oh oh also! It took him a LONG time to explain the whole “I had two dads” thing, as he talks about how hard it was having two fathers he looked up to, etc. – since I assumed his dad wasn’t gay (mine is so I went there immediately but discounted it) I then moved on to assuming one would at least be, like, a stepfather or something. But no? Just a friend’s fictitious dad he liked a lot? I spent what felt like an inordinate amount of time at the beginning of the book waiting to figure that one out.

HelloTheFuture (#5,275)

@ThatJenn Yeah. I think it takes 30 pages before he writes “Rich Dad wasn’t my dad. He was my friend Mike’s dad. My unnamed friend Mike, who went on to run a business that is extremely successful but I can’t name for some strange reason.”

Pitts (#5,529)

@ThatJenn I did not realize how prevalent the “house as greatest asset” line of thinking was before I read this book and started running it by a few people. Maybe it was because we bought after the bubble burst that the leading advice we got was buy a house to live in, not to make money off of. But after 18 months of nothing but home improvement projects, and several major appliances at the end of their useful life, I find it hard to believe that anyone thinks of their home as an investment first …

HelloTheFuture (#5,275)

@Michelle Pittman@facebook I know there is a lot of advice re: “buy a home, pay it off, sell it before retirement and use the cash to fund your golden years.”

ThatJenn (#916)

@HelloTheFuture I’ve seen that advice before and it always seems odd to me. If you’re not supposed to buy a house more than, say, 3x your annual income, you can fund only a few years of retirement with that, right? Even with appreciation over 30 years or whatever and lowering one’s costs at retirement, cost of living goes up over time too. Plus then you no longer actually own your home which has its own down sides.

@fo (#839)


“If you’re not supposed to buy a house more than, say, 3x your annual income, you can fund only a few years of retirement with that, right?”

Assuming (for discussion) that your net of tax benefits cost of owning that home for 30 years is about the same as wht you would have paid in rent, then what you have is “a few years of retirement” more than you would have had renting. Which is the *real* comparison to make.

Play around with this:

to build a long-term comparison of the net costs of renting v buying. Almost always, over 30 years, buying comes out ahead, *UNLESS* you have a dramatic difference in the quality of place you would rent, v buying–eg, if you would rent only a studio/mobile home, but would buy only a 5 bedroom SFH (which, I think, is not an unreasonable think to do, depending on familial circumstance).

ThatJenn (#916)

@@fo OK, that makes a little more sense. I hadn’t really considered the tax benefits because the standard deduction is always higher for me (I live in a cheap area).

@ThatJenn Also if you have a fixed rate mortgage, it stays the same. We bought 10 years ago; according to Craigslist, similar houses in my neighborhood rent for $500-1000/mo more than our mortgage.

Of course, going for a pedestrian fixed rate mortgage is totally Poor Dad, right?

Pitts (#5,529)

I made it halfway through before I found it totally insufferable. Here’s the thing: I hypothetically DO make enough money to save up and invest wisely and have enough money to invest in assets. But can you even flip houses anymore and why would I want to start a corporation when the objective is to make my money work for me (ostensibly so I no longer have to work)? I think I need the lazy girl’s guide to doing nothing and living comfortably.

ThatJenn (#916)

@Michelle Pittman@facebook Let’s write that guide and build a personal finance empire around it. (We’ll make other people do the writing and the marketing. Otherwise it’d just be a job.)

Pitts (#5,529)

@ThatJenn But if we worked on it for free, we’d be working like the rich, which would put us closer to being rich! Am I doing this right?

ThatJenn (#916)

@Michelle Pittman@facebook I think you’re totally on to something!

HelloTheFuture (#5,275)

@ThatJenn @michellepittman@facebook Path A: “Marry rich.” Path B: “Get really happy living in tiny studio apartments.”

@HelloTheFuture Path C: “Be born into wealth. Whoops, too late.”

EA_Mann (#5,000)

@Michelle Pittman@facebook I think your lazy guide is possible and would read “put it all in the stock market until you can live off of the dividends”

HelloTheFuture (#5,275)

People of the Billfold, I just realized: Rich Dad teaches his son Mike (and Mike’s friend Robert Kiyosaki) how to be rich. But he lets Mike hire his sister to be his wage slave.

Why doesn’t Rich Dad teach Mike’s sister how to be rich too? Why does Rich Dad teach his son to be rich but not his daughter?

(I mean, Rich Dad isn’t real, so Mike and his sister probably aren’t real. But still.)

ThatJenn (#916)

@HelloTheFuture She doesn’t have the entrepreneurial spark (read: penis) required to be rich.

HelloTheFuture (#5,275)

@ThatJenn If only she knew how to lean in!

ThatJenn (#916)

@HelloTheFuture The only other book club I get invitations for just read Lean In, but I decided not to participate in that one because I thought that particular community MIGHT not be all about the hate-reading spirit in the same way this book club is.

I think one point Kiyosaki is trying to make (insufferably, I agree) is that if you’re willing to take a lot of risk and also do a crazy amount of work, you could really succeed. A lot of successful entrepreneurs I know have the following qualities:
1) They lived like poor college students for a long time
2) They worked basically every waking hour during this time
3) They had failed businesses that sucked up a year or more of their lives (at the aforementioned 80-100 hrs/week)

Most people aren’t willing to do these things. I am not willing to do these things. And there is *no guarantee* that these things will work. But it is almost certain that half-assing your journey to wealth will fail.

HelloTheFuture (#5,275)

@Jason Schissel@facebook I agree. I think that is a good takeaway from this book but that the message is also blurred by the whole “if you have to work every day, it’s not your business, it’s your job” nonsense.

ccq (#1,175)

i bought this a few years ago for like a buck at the salvation army. it had a typed letter in it to a girl from her father, he updated her on his new job and accomplishments and recommended this book to her, he read it years before and thought it had great advice for young people. he sent his love and best wishes and signed it dad.

like 3 of my hearts were broken.

so that’s my rich dad poor dad story.

if you’re out there: BRIDGET, CALL YOUR DAD

in more relevant news: when i was getting set up with my first job my sister made me buy smart women finish rich as a general personal finance book that covered the basics. i went a bit further and bought the i will teach you to be rich book. later when i was in over my head with debt, i read dave ramsey’s total money makeover. these books all have great sound advice.

HelloTheFuture (#5,275)

@ccq Oh, wow. That letter.

I’ve also read IWTYTBR and I loved the blog right until the Earn 1K project came out (if you paid Ramit Sethi $5K, you’d get exclusive access to his course to learn how to earn $1K in extra income).

And I freely admit to using A LOT of Dave Ramsey’s advice. Also Suze Orman’s. Also a lot of it is the same advice. :)

ccq (#1,175)

@HelloTheFuture i can’t think about the letter too long, it bums me out too much.
haha that’s when i stopped reading, too. he ran out of PF advice to give- what he gave was great, don’t get me wrong- and then realized there was $$ to be made in career development courses. no hating for his business strategy, he just doesn’t blog about PF anymore, and everything he wrote seemed like a vehicle for his paid courses. his career advice is decent but i wouldn’t pay for it.
i found the suze orman young fabulous and broke book at the same salvation army, paid another dollar for it. i wasn’t wild about her advice though, she really advocated using credit cards to get your life up and going, and i read it in like 2008-9, right in the depths of the recession. i was like no thanks. but the other bread and butter advice seemed fine as i recall.

Marille (#5,933)

@HelloTheFuture I’m chiming in to recommend “The Smart Cookies’ Guide to Making More Dough”. It’s a great personal finance guide, geared largely toward young women who are still getting started professionally, and what I really love about it is that it focuses not only on doing good things with your money, but on helping you figure out what kind of life you want as well.

HelloTheFuture (#5,275)

@Marille That is one I *haven’t* read! Thanks!

ccq (#1,175)

(edit: should have been reply to hellothefuture)

honey cowl (#1,510)

I didn’t read it, but I find your analysis charming and witty. A++ would read again.

HelloTheFuture (#5,275)

@honey cowl All you have to do to read it again is SCROLL UP. ;)

honey cowl (#1,510)

@HelloTheFuture If only I had studied STEM I would have known that.

“Step one: get a million dollars…”

@fo (#839)


nonono. It is:

Step 1: Buy and read Kiyosaki’s book
Step 2: ????
Step 3: Own income producing assets! (aka: Profit!)

“Flipping” houses worked great for me! Here’s my trick:

(1) buy your house in the 1990s near Google headquarters
(2) sell your house right near the peak of the housing bubble (in, say, 2004) and move into an apartment.

Congrats! You now have a big chunk of working capital!

(Though I might have left off a step 0: Build a time machine, go back to the 1990s, and find a way to accumulate enough capital then to buy a house in Mountain View. My own method involved (a) working in tech, and (b) playing blackjack, but yours may differ. Oh, and as long as you’re in the 1990s, you should buy up some good domain names. And some stock in Apple. You’ll thank me later.)

HelloTheFuture (#5,275)

@Glen Raphael@facebook I’ve got a cardboard box and I’ve written “time machine” on the side. What happens next?

@HelloTheFuture Next add a dial indicator on the outside. You can make the dial with a thumbtack and a long skinny triangular piece of cardboard. Make sure there are clearly labeled settings for “2014” and “1995”.

BornSecular (#2,245)

Boy am I glad I didn’t waste any time reading that. I found it insufferable just from the summary, although I also enjoyed reading the summary.

HelloTheFuture (#5,275)

@BornSecular That was the goal of this piece. :) I’m calling it a win-win.

Aconite (#6,401)

I’m a little disappointed with this discussion. Of course I recognise that a lot of the book is bollocks (not to mention execrably written), but nobody has mentioned the one message that I think IS important – that relying on paid employment is not always the “safe” option, and that it is possible to build a second income which helps to mitigate the risk. Sure, I’m not going to go around buying up distressed property and flipping it, because yes, that needs a big capital outlay (and it’s not even possible where I live). But I do have a second income from a small business I run and that gives me a level of security and autonomy I wouldn’t have if I relied entirely on my wages.

HelloTheFuture (#5,275)

@Aconite That is an excellent point. I think RDPD makes that point briefly and then loses it in the “you’ll never need to work a day in your life” hucksterism. I’m trying to remember which personal finance/career book I read articulated it really, really well. It might have been a Chris Guillebeau book.

Aconite (#6,401)

I agree that that particular point wasn’t overly well articulated in Rich Dad, although it was my main takeaway from the book. (Perhaps all the other crap was so traumatic that I blanked it out…?) I’d be very keen to read any other personal finance books which have some real discussion of the issue!

@fo (#839)

“Kiyosaki would probably consider me a cynic.”

There is another popular personal finance “never work again” person who might call you complainypants for far less. He shall remain nameless by me, to avoid the possible onslaught. But if y’all are up for crossover commenting, might be fun to Fisk that tale, too.

HelloTheFuture (#5,275)

@@fo Is this person “never work again,” or “only work for four hours every week?” Because that second guy? He’s HILARIOUS.

HelloTheFuture (#5,275)

@@fo Or wait! Does he have a moustache? Because if he does, he and I have already gone to battle. I’m called out by name on his website for complaining about his suggestions. All in good fun, of course. He’s actually a nice dude, AFAIK.

@fo (#839)

@HelloTheFuture Yes, the moustached one, who, after “retiring” ran a construction business, his wife worked (lucratively) for her parents’ business, and runs as a business a website.

Now, that is *no doubt* off the rat-race treadmill, but it ain’t “retirement”. Which, of course, is why (to his credit) he modified his language to emphasize “financial independence” and deemphasize “retired”.

And, yeah, he seems like a nice dude, except when he gets all “No more questions. You’re just a complaineypants.”, which is (a) unfirendly, (b) unhelpful, and (c) kinda weirdo-cultish that it’s just accepted as ok.

@fo (#839)


Also, the “four hours every week” guy is a hoot, too, bc the “four hours” is disproved by his schedule.

But, there is a valid point in there about having a goal of getting to a point where sub-10 hours of ‘labor’ per week will provide you with sufficient income to fund your life. And that can be by assets, or expertise, or cost reduction, or (most likely) a combination thereof. And that’s a great goal.

HelloTheFuture (#5,275)

@@fo Concur on all points! I think the “retirement” definition is “I am allowed to set my own schedule and achieve my own goals. If I make money along the way, more’s the better.”

In which case: I AM RETIRED. I am retired so hard.

Markham (#1,862)

My thoughts on Kiyosaki:

1) He encouraged people to invest heavily in real estate during the housing boom because they “the dollar was falling” and it would protect them.

How did that work out?

2) He doesn’t make money from using his advice, he makes money from selling books.

3) He filed for bankruptcy:

He sells mediocre advice to people who don’t know any better, just like all financial gurus.

Quickly this site will indisputably be famous among all blogging people, because of its fastidious articles or reviews. Ultimate Reading Order

Southhill773 (#7,489)

Thanks to Nicole Dieker and all the commenters for saving me from wasting my time with this book.

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