Rich Dad vs. Poor Dad

Rich Dad vs. Poor Dad

The contrasting philosophies of Rich Dad vs. Poor Dad to teach financial literacy have sparked countless discussions and debates. This article draws on Robert Kiyosaki’s seminal work Rich Dad Poor Dad and delves into the core differences between these two figures. As we navigate the intricate maze of money management, understanding the lessons from Rich Dad and Poor Dad can offer invaluable insights. Whether you’re a seasoned entrepreneur or investor or just starting on your financial journey, the perspectives of these two dads serve as a compass, guiding readers toward informed decisions and a deeper understanding of wealth and success. Keep reading as I unpack the lessons and takeaways from this iconic narrative.

Mindset about Money and Education

Poor Dad believed in traditional education; Rich Dad believed in financial education.

The contrasting mindsets about money between Poor Dads and Rich Dads, as presented in Robert Kiyosaki’s “Rich Dad Poor Dad,” revolve heavily around their beliefs in education. Let’s delve into their differing perspectives:

  1. Poor Dad’s Mindset: Traditional Education:
    • Value of Formal Education: Poor Dad greatly valued formal education. He believed in the conventional path: go to school, get good grades, attend college, and then find a stable job. This pathway, he thought, would lead to financial security and success.
    • Job Security Over Financial Literacy: With his emphasis on traditional education, Poor Dad prioritized job security. He believed a good education would lead to a good job and provide a steady paycheck and benefits. The focus was more on earning and saving than understanding and growing wealth.
    • Outcome: This mindset often leads to a cycle where individuals work for money, living paycheck to paycheck, without a deeper understanding of how to make their money work for them. It’s a more reactive approach to finances, responding to financial needs rather than proactively planning and investing for the future.
  2. Rich Dad’s Mindset: Financial Education:
    • Value of Financial Literacy: Rich Dad believed that understanding money, investments, assets, and liabilities was crucial. While he didn’t dismiss the importance of formal education, he emphasized that traditional schooling often lacks lessons on financial literacy, which are essential for true financial independence.
    • Money Working for You: Rich Dad’s philosophy was centered on the idea that one should learn how to make money work for them rather than working for money. This means understanding investments, creating assets, and generating passive income streams.
    • Proactive Approach: With financial education, individuals can proactively approach their finances. They can make informed investment decisions, understand the difference between assets and liabilities, and seek opportunities to grow their wealth rather than earn it.
    • Outcome: The financially literate mindset fosters continuous learning and growth. Individuals are not just earning and spending but actively seeking ways to grow their wealth, reduce liabilities, and achieve financial freedom.

The core difference between Poor Dad’s and Rich Dad’s mindset about money is their belief in the type of education that leads to financial success. While Poor Dad believed in the security offered by formal education and a stable job, Rich Dad believed in the power and freedom of financial education. Kiyosaki’s book emphasizes the importance of financial literacy and encourages readers to seek knowledge that empowers them to understand and effectively manage their finances.

Lesson: Poor Dad believed in traditional education; Rich Dad believed in financial education.

Financial Philosophy

Poor Dad thought, “Money is the root of all evil”; Rich Dad thought, “The lack of money is the root of all evil.”

This contrast between the two statements is one of the central themes in Robert Kiyosaki’s “Rich Dad Poor Dad” and reflects two fundamentally different perspectives on money.

  1. “Money is the root of all evil” (Poor Dad’s Perspective):
    • This is a common misquote from the Bible, which says, “For the love of money is a root of all kinds of evil.” (1 Timothy 6:10). The sentiment behind this statement is that an unhealthy obsession or desire for money can lead to unethical behavior, greed, and other negative consequences.
    • Poor Dad’s perspective, as portrayed in the book, aligns with a more traditional view held by many: that pursuing wealth can lead to moral corruption and that there’s virtue in living a modest life without an excessive focus on financial gain.
    • This mindset can sometimes result in a fear or distrust of wealth, leading individuals to avoid opportunities to grow their wealth or to feel guilty about pursuing financial success.
  2. “The lack of money is the root of all evil” (Rich Dad’s Perspective):
    • Rich Dad’s perspective flips the traditional view on its head. He suggests that financial struggles and the lack of money can lead to many problems in life, including stress, crime, dependency, and limitations on one’s freedom and opportunities.
    • From this viewpoint, understanding money and striving for financial independence and literacy is not just about personal gain but about avoiding the pitfalls and challenges of economic insecurity.
    • Rich Dad believes that by being financially educated and independent, one can lead a more fulfilling life, provide for their family, contribute to their community, and avoid the negative consequences that can arise from financial struggles.

The contrast between these two statements highlights the difference between viewing money as a potential source of problems versus viewing financial ignorance and lack as real issues. Kiyosaki uses these contrasting views to emphasize the importance of financial education and the potential benefits of understanding and effectively managing money.

Views on Jobs

Poor Dad worked for money; Rich Dad made money work for him.

Poor Dad believed in job security and said, “Get a safe, secure job with benefits.”; Rich Dad thought about entrepreneurship and said, “Jobs are a short-term solution to a long-term problem.”

Poor Dad believed in traditional education. He emphasized getting a good job, working hard, and saving money. He often said, “I can’t afford it.”

Rich Dad believed in financial education. He emphasized learning about money, investing, and creating assets. He encouraged asking, “How can I afford it?”

Views on Work:

Poor Dad worked for money.

Rich Dad made money working for him.

The lesson from Robert Kiyosaki’s view on jobs provides a deep insight into two contrasting philosophies about earning income, job security, and financial independence. Let’s break down this lesson:

  1. Poor Dad’s Views on Jobs:
    • Working for Money: Poor Dad’s philosophy was about trading time for money. He believed in the traditional employment model, where you work a set number of hours and receive a paycheck in return. This approach often results in individuals relying on their next paycheck to meet their financial needs.
    • Job Security: Poor Dad’s ultimate goal was to find a stable job with benefits, which he equated with financial security. He believed that if you had a steady job, you’d be protected from financial hardships. This perspective is rooted in the idea that external factors, like a reliable employer, are the primary sources of financial stability.
  2. Rich Dad’s Views on Jobs:
    • Making Money Work for Him: Instead of trading time for money, Rich Dad believed in creating systems, investments, or businesses that generate income, even when he wasn’t actively working. This philosophy is about building assets that can provide passive income, leading to true financial freedom.
    • Entrepreneurship Over Job Security: Rich Dad viewed traditional jobs as a temporary fix to a more significant issue. While a job might provide immediate financial relief, it doesn’t necessarily lead to long-term financial independence. By saying, “Jobs are a short-term solution to a long-term problem,” Rich Dad emphasizes the importance of thinking beyond immediate needs and focusing on long-term financial strategies. Entrepreneurship, for him, was a way to create value, innovate, and ultimately build wealth that wasn’t directly tied to the hours worked.

The lesson from Kiyosaki’s views on jobs challenges conventional wisdom about employment and financial security. While traditional jobs can provide stability, they might not offer the path to financial peace and independence that many seek. On the other hand, understanding money, seeking passive income sources, and considering entrepreneurship can lead to a financial situation where one isn’t just working for money but has money working for them. This shift in perspective encourages individuals to think more broadly about their financial strategies and seek avenues that offer immediate rewards and long-term economic growth.

Views on Assets and Liabilities

Poor Dad didn’t have a clear understanding of assets and liabilities and often mistook liabilities for assets; Rich Dad emphasized acquiring assets that generate income and said, “Rich people acquire assets. The poor and middle class acquire liabilities but think they are assets.”

Lesson: Poor Dad didn’t understand assets and liabilities clearly and often mistook liabilities for assets. Rich Dad emphasized acquiring income-generating assets and said, “Rich people acquire assets. The poor and middle class acquire liabilities but think they are assets.”

Robert Kiyosaki’s teachings in “Rich Dad Poor Dad” provide a straightforward and impactful distinction between assets and liabilities, central to his financial philosophy. Here’s how he differentiates the two:

  1. Asset:
    • Kiyosaki’s Definition: An asset puts money into your pocket.
    • Examples: Rental properties (where you receive rent), stocks that pay dividends, businesses that you own but don’t require your daily involvement, royalties from intellectual properties, or any other investments that generate income.
    • Significance: Kiyosaki emphasizes the importance of accumulating assets. The more support you have, the more passive income you generate. His goal, as outlined in the book, is to have enough income from assets to cover all expenses, leading to financial independence.
  2. Liability:
    • Kiyosaki’s Definition: A liability takes money out of your pocket.
    • Examples: This includes things like mortgages, car loans, credit card debts, or any other financial obligations that require an outflow of money.
    • Common Misconception: One of Kiyosaki’s notable points is that many people consider their homes assets. However, by his definition, if you’re paying a mortgage, property taxes, maintenance, and other expenses, and the house isn’t generating income (like rental income), it’s taking money out of your pocket and is considered a liability.
    • Significance: Kiyosaki advises that to achieve financial independence, one should work on reducing liabilities and increasing assets.

The core of Kiyosaki’s teaching is to focus on building and acquiring assets while minimizing liabilities. This perspective challenges conventional financial wisdom and encourages readers to think critically about where they invest their money. According to Kiyosaki, the ultimate goal is to have a portfolio of assets that generates enough income to cover your expenses, allowing for true financial freedom.

Approach to Learning

Poor Dad valued formal education and academic achievements; Rich Dad loved hands-on learning and real-world experience.

Rich Dad believed financial literacy and learning by doing were more important than formal education.

Lesson: Poor Dad valued formal education and academic achievements; Rich Dad loved hands-on learning and real-world experience.

School pays you in grades and diplomas; the markets pay you in money. This best education is in experience, not a classroom.

Views on Risk

Poor Dad was risk-averse and believed in playing it safe; Rich Dad thought taking calculated risks was essential for financial growth.

Rich Dad said, “To grow, you must take risks.”

This lesson from “Rich Dad Poor Dad” underscores two contrasting philosophies regarding risk and financial decision-making. Let’s break down the address:

  1. Poor Dad’s Perspective: Risk-Averse and Playing It Safe:
    • Risk-Averse: Being risk-averse means preferring predictable outcomes over uncertainty, even if the potential outcome of the uncertain option might be more favorable. In financial terms, risk-averse people might like to keep their money in a savings account with a guaranteed but low interest rate rather than investing it in cash-flowing assets, which have the potential for higher returns but also come with the risk of loss.
    • Playing It Safe: This mindset often aligns with traditional advice: get a stable job, save a portion of your income, avoid debt, and don’t venture into unfamiliar financial territories. The idea is to protect what you have, even if it means missing out on potential opportunities to grow wealth.
    • Outcome: While this approach can lead to a stable and predictable financial life, it might also result in missed opportunities for significant growth in wealth.
  2. Rich Dad’s Perspective: Taking Calculated Risks for Financial Growth:
    • Calculated Risks: This doesn’t mean taking reckless chances. Instead, it’s about assessing opportunities, understanding the potential upsides and downsides, and making informed decisions. It’s the idea of taking risks that are measured and thought-through.
    • Essential for Financial Growth: Rich Dad’s philosophy is that to achieve substantial financial growth, one must step out of their comfort zone and be willing to take on some risk. This could mean investing in real estate, starting a business, or exploring other investment opportunities without guarantees but with the potential for high returns.
    • Outcome: This approach can lead to greater financial rewards, but it also comes with potential losses. However, the risks can be managed and mitigated with proper education, due diligence, and continuous learning.

The lesson underscores the idea that while playing it safe might protect you from immediate losses, it can also limit your growth potential. On the other hand, taking calculated risks, when done intelligently and with proper research, can open doors to opportunities and financial gains that would otherwise remain inaccessible. Throughout the book, Kiyosaki emphasizes the importance of financial education, which equips individuals with the knowledge and tools to take calculated risks confidently and effectively.

Opinions on Financial Struggles

Poor Dad often complained about financial struggles; Rich Dad saw financial struggles as learning opportunities.

Poor Dad often complained about financial struggles but didn’t take steps to change his situation.

Rich Dad saw financial struggles as learning opportunities and always looked for solutions.

There is a financial lesson behind every struggle we face. The key is to learn those lessons and not repeat them.

Views on Taxes and Corporations

Poor Dad paid his taxes dutifully and didn’t think much about leveraging corporations; Rich Dad understood the tax benefits of owning a corporation and used it to his advantage.

Rich Dad has a nuanced discussion on taxes and the strategic use of corporations in the book. Let’s break down Rich Dad’s teachings and views on this matter:

  1. Poor Dad’s Approach to Taxes:
    • Dutiful Payment: Poor Dad followed the traditional approach to taxes. He earned his salary, and then he paid his taxes. This is the standard procedure for most salaried employees.
    • Lack of Strategic Planning: Poor Dad didn’t delve deep into tax strategies or explore ways to minimize his tax liability legally. He accepted taxes as an inevitable part of earning money.
  2. Rich Dad’s Approach to Taxes and Corporations:
    • Strategic Use of Corporations: Rich Dad recognized that corporations could be leveraged as tools to manage and, in some cases, reduce tax liability. Corporations can deduct expenses before determining their taxable income. This means they can subtract costs like salaries, travel, training, and other business-related expenses, which can significantly reduce the amount of income subject to tax.
    • Income Flow: Instead of earning money as an individual and then paying taxes, Rich Dad would make money through his corporation. After deducting business expenses and paying a smaller amount in corporate taxes, he would take money out of the corporation, often at a lower tax rate, with control over his earned income. He could also reinvest capital into the business instead of it being taxed as earnings.
    • Understanding Tax Laws: Rich Dad believed in understanding tax laws and using them to his advantage. He often emphasized that tax laws are written to favor certain types of investments and business structures. By aligning one’s financial strategies with these incentives, legally reducing tax liability is possible.

Kiyosaki’s contrast between Rich Dad and Poor Dad on this topic underscores a broader lesson about financial literacy. It’s not just about earning money but also about understanding the financial and legal systems well enough to make them work in your favor.

Rich Dad’s approach to taxes and corporations is a testament to the power of financial education. By understanding the intricacies of tax laws and the benefits of corporate structures, individuals can make informed decisions that optimize their economic outcomes. It’s a call to be proactive, to seek knowledge, and to leverage the systems in place for financial growth and preservation.

Life Outcome

Despite being well-educated and hardworking, Poor Dad struggled financially; Rich Dad built and maintained wealth through his understanding of money, investments, and business.

The lesson of the life outcomes from “Rich Dad Poor Dad” profoundly reflects on the relationship between education, work ethic, financial literacy, and ultimate financial success. Let’s delve into this lesson:

  1. Poor Dad’s Life Outcome:
    • Well-Educated and Hardworking: Poor Dad followed the traditional path that society often champions. He pursued formal education, earned degrees, and dedicated himself to his job. His hard work and commitment were undeniable.
    • Financial Struggles: Poor Dad faced economic challenges despite his education and dedication. This highlights a critical point: while valuable, traditional education and hard work don’t automatically equate to financial success. Without financial literacy and the skills to manage, grow, and invest money, even the most educated and diligent individuals can face financial difficulties.
  2. Rich Dad’s Life Outcome:
    • Understanding of Money: Rich Dad might not have had the formal education that Poor Dad had, but he deeply understood how money works. This included knowledge of assets, liabilities, investments, and the importance of creating multiple income streams.
    • Investments and Business Acumen: Rich Dad wasn’t just content with earning money; he was focused on growing it. He understood the value of investments, the power of passive income, and the importance of building and nurturing businesses.
    • Building and Maintaining Wealth: With his financial knowledge and strategic decisions, Rich Dad not only amassed wealth but also maintained and grew it. His wealth wasn’t just a result of hard work but of intelligent choices, informed risks, and continuous learning about finances.

The “Life Outcome” lesson underscores the idea that traditional education and hard work, while essential, are not the sole determinants of financial success. Financial literacy, a deep understanding of money, and the ability to make informed financial decisions are pivotal in determining one’s economic trajectory. The contrast between Poor Dad and Rich Dad serves as a reminder that to achieve financial success and stability truly; one must go beyond conventional wisdom and seek knowledge that empowers one to navigate the complex world of finances effectively.

Key Takeaways 

  • Educational Priorities:
    • Poor Dad championed formal, conventional schooling as the pathway to financial stability.
    • Rich Dad emphasized the indispensability of financial literacy for genuine financial autonomy.
  • Perspectives on Risk:
    • Poor Dad leaned towards a cautious approach, valuing safety and predictability.
    • Rich Dad advocated for informed risk-taking as a catalyst for monetary advancement.
  • Money Management Philosophies:
    • Poor Dad’s strategy was reactive, often addressing financial challenges as they surfaced.
    • Rich Dad adopted a proactive stance, leveraging knowledge to make money work in his favor.
  • End Goals:
    • Poor Dad sought job security, equating it with financial success.
    • Rich Dad pursued financial freedom, aiming to create and nurture income-generating assets.


The dichotomy between Rich Dad and Poor Dad offers profound insights into varying financial philosophies. While the former underscores the significance of financial acumen, viewing it as a tool for empowerment and growth, the latter places trust in the traditional educational trajectory, hoping it leads to monetary security. The juxtaposition serves as a compelling reminder of the power of financial education, urging individuals not just to earn but to comprehend, strategize, and optimize their financial futures.

These contrasts are the foundation for many financial lessons Kiyosaki shares in his book. The overarching message is the importance of financial education and the need to think differently about money, work, life, and what it means to be truly wealthy. This was one of the most significant life-changing books I have ever read.