Introduction

Introduction - Rich Dad Poor Dad


Having two dads offered me the choice of contrasting points of view: one of a rich man and one of a poor man.
 

I had two fathers, a rich one and a poor one. One was highly educated and intelligent. Hehad a Ph.D. and completed four years of undergraduate work in less than two years. He thenwent on to Stanford University, the University of Chicago, and Northwestern University todo his advanced studies, all on full financial scholarships. The other father never finishedthe eighth grade.


Both men were successful in their careers, working hard all their lives. Both earnedsubstantial incomes. Yet one always struggled financially. The other would become one ofthe richest men in Hawaii. One died leaving tens of millions of dollars to his family,charities, and his church. The other left bills to be paid.


Both men were strong, charismatic, and influential. Both men offered me advice, but they didnot advise the same things. Both men believed strongly in education but did not recommendthe same course of study.


If I had had only one dad, I would have had to accept or reject his advice. Having two dadsoffered me the choice of contrasting 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 found myself thinking more, comparing, and then choosing for myself. The problem was that the rich man was not rich yet, and the poor man was not yet poor. Both were just starting out on their careers, and both were struggling with money and families. But they had very different points of view about money.


For example, one dad would say, “The love of money is the root of all evil.” The other said, “The lack of money is the root of all evil.”


As a young boy, having two strong fathers both influencing me was difficult. I wanted to be agood son and listen, but the two fathers did not say the same things. The contrast in theirpoints of view, particularly about money, was so extreme that I grew curious and intrigued. Ibegan to start thinking for long periods of time about what each was saying.


Much of my private time was spent reflecting, asking myself questions such as, “Why doeshe say that?” and then asking the same question of the other dad’s statement. It would havebeen much easier to simply say, “Yeah, he’s right. I agree with that.” Or to simply reject thepoint of view by saying, “The old man doesn’t know what he’s talking about.” Instead,having two dads whom I loved forced me to think and ultimately choose a way of thinkingfor myself. As a process, choosing for myself turned out to be much more valuable in thelong run than simply accepting or rejecting a single point of view.


One of the reasons the rich get richer, the poor get poorer, and the middle class struggles indebt is that the subject of money is taught at home, not in school. Most of us learn about money from our parents. So what can poor parents tell their child about money? They simply say, “Stay in school and study hard.” The child may graduate with excellent grades, but with a poor person’s financial programming and mind-set.


Sadly, money is not taught in schools. Schools focus on scholastic and professional skills,but not on financial skills. This explains how smart bankers, doctors, and accountants whoearned excellent grades may struggle financially all of their lives. Our staggering nationaldebt is due in large part to highly educated politicians and government officials makingfinancial decisions with little or no training in the subject of money.


Today I often wonder what will soon happen when we have millions of people who needfinancial and medical assistance. They will be dependent upon their families or thegovernment for financial support. What will happen when Medicare and Social Security runout of money? How will a nation survive if teaching children about money continues to beleft to parents—most of whom will be, or already are, poor?


Because I had two influential fathers, I learned from both of them. I had to think about eachdad’s advice, and in doing so, I gained valuable insight into the power and effect of one’sthoughts on one’s life. For example, one dad had a habit of saying, “I can’t afford it.” Theother dad forbade those words to be used. He insisted I ask, “How can I afford it?” One is astatement, and the other is a question. One lets you off the hook, and the other forces you tothink. My soon-to-be-rich dad would explain that by automatically saying the words “I can’tafford it,” your brain stops working. By asking the question “How can I afford it?” your  brain is put to work. He did not mean that you should buy everything you want. He was fanatical about exercising your mind, the most powerful computer in the world. He’d say, “My brain gets stronger every day because I exercise it. The stronger it gets, the more money I can make.” He believed that automatically saying “I can’t afford it” was a sign of mental laziness.


Although both dads worked hard, I noticed that one dad had a habit of putting his brain tosleep when it came to finances, and the other had a habit of exercising his brain. The long-term result was that one dad grew stronger financially, and the other grew weaker. It is notmuch different from a person who goes to the gym to exercise on a regular basis versussomeone who sits on the couch watching television. Proper physical exercise increases yourchances for health, and proper mental exercise increases your chances for wealth.


My two dads had opposing attitudes and that affected the way they thought. One dad thoughtthat the rich should pay more in taxes to take care of those less fortunate. The other said, “Taxes punish those who produce and reward those who don’t produce.”


One dad recommended, “Study hard so you can find a good company to work for.” The otherrecommended, “Study hard so you can find a good company to buy.”


One dad said, “The reason I’m not rich is because I have you kids.” The other said, “Thereason I must be rich is because I have you kids.”


One encouraged talking about money and business at the dinner table, while the otherforbade 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 tomanage risk.”


One believed, “Our home is our largest investment and our greatest asset.” The otherbelieved, “My house is a liability, and if your house is your largest investment, you’re introuble.”



Both dads paid their bills on time, yet one paid his bills first while the other paid his billslast.



One dad believed in a company or the government taking care of you and your needs. Hewas always concerned about pay raises, retirement plans, medical benefits, sick leave,vacation days, and other perks. He was impressed with two of his uncles who joined themilitary and earned a retirement-and-entitlement package for life after twenty years of activeservice. He loved the idea of medical benefits and PX privileges the military provided itsretirees. He also loved the tenure system available through the university. The idea of jobprotection for life and job benefits seemed more important, at times, than the job. He wouldoften say, “I’ve worked hard for the government, and I’m entitled to these benefits.”


The other believed in total financial self-reliance. He spoke out against the entitlement mentality and how it created weak and financially needy people. He was emphatic about being financially competent.


One dad struggled to save a few dollars. The other created investments. One dad taught mehow to write an impressive resumé so I could find a good job. The other taught me how towrite strong business and financial plans so I could create jobs.


Being a product of two strong dads allowed me the luxury of observing the effects differentthoughts have on one’s life. I noticed that people really do shape their lives through theirthoughts.


For example, my poor dad always said, “I’ll never be rich.” And that prophecy becamereality. My rich dad, on the other hand, always referred to himself as rich. He would saythings like, “I’m a rich man, and rich people don’t do this.” Even when he was flat brokeafter a major financial setback, he continued to refer to himself as a rich man. He wouldcover himself by saying, “There is a difference between being poor and being broke. Brokeis temporary. Poor is eternal.”


My poor dad would say, “I’m not interested in money,” or “Money doesn’t matter.” My richdad always said, “Money is power.”


The power of our thoughts may never be measured or appreciated, but it became obvious tome as a young boy that it was important to be aware of my thoughts and how I expressed myself. I noticed that my poor dad was poor, not because of the amount of money he earned, which was significant, but because of his thoughts and actions. As a young boy having two fathers, I became acutely aware of being careful about which thoughts I chose to adopt as my own. Should I listen to my rich dad or to my poor dad?


Although both men had tremendous respect for education and learning, they disagreed aboutwhat they thought was important to learn. One wanted me to study hard, earn a degree, andget a good job to earn money. He wanted me to study to become a professional, an attorneyor an accountant, and to go to business school for my MBA. The other encouraged me tostudy to be rich, to understand how money works, and to learn how to have it work for me. “I don’t work for money!” were words he would repeat over and over. “Money works forme!”


At the age of nine, I decided to listen to and learn from my rich dad about money. In doingso, I chose not to listen to my poor dad, even though he was the one with all the collegedegrees.


There is a difference between being poor and being broke. Broke is temporary. Poor iseternal.


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.


And that has made all the difference.


Over the years, I have often reflected upon Robert Frost’s poem. Choosing not to listen tomy highly educated dad’s advice and attitude about money was a painful decision, but it wasa decision that shaped the rest of my life.


Once I made up my mind about whom to listen to, my education about money began. My richdad taught me over a period of 30 years until I was 39 years old. He stopped once herealized that I knew and fully understood what he had been trying to drum into my often-thickskull.


Money is one form of power. But what is more powerful is financial education. Moneycomes and goes, but if you have the education about how money works, you gain power overit and can begin building wealth. The reason positive thinking alone does not work isbecause most people went to school and never learned how money works, so they spendtheir lives working for money.


Because I was only nine years old when I started, the lessons my rich dad taught me weresimple. And when it was all said and done, there were only six main lessons, repeated over 30 years. This book is about those six lessons, put as simply as possible, just as simply asmy rich dad put forth those lessons to me. The lessons are meant not to be answers, butguideposts that will assist you and your children to grow wealthier no matter what happensin a world of increasing change and uncertainty.



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