The Rich Dad Philosophy
The main goal of Kiyosaki's anecdotal lessons in the Rich Dad series of books is to create financially literate and aware persons who can support themselves on their investments alone, rather than running the "rat race" and living paycheck to paycheck. To do this they advocate investments such as real estate and small businesses. They clearly define the difference between an asset and a liability. Kiyosaki defines "assets" as things that generate money, such as rental properties or businesses and "liabilities" as things that cost money, such as house payments, cars and so on. Financial leverage is also a key component towards becoming rich. Lechter advocates learning to take existing infrastructures and systems and applying them to your project.
Lechter stresses what she calls "financial literacy" as the means to obtaining wealth. She says that life skills are often best learned through experience and that there are important lessons not taught in school. According to Lechter, in order to obtain financial freedom, one must be either be a business owner or an investor, generating passive income.
Lechter and Kiyosaki speak often of what they call "The Cashflow Quadrant," a conceptual tool that aims to describe how all the money in the world is earned. Depicted in a diagram, this concept entails four groupings, split with two lines (one vertical and one horizontal). In each of the four groups there is a letter representing a way in which an individual may earn income. The letters are as follows.
- E: Employee — Working for someone else
- S: Self-employed or Small business owner — Where a person owns his own job and is his own boss.
- B: Business owner — Where a person owns a "system" of making money, rather than a job to make money.
- I: Investor — Spending money in order to receive a larger payout in return.
For those on the left side of the divide ("E" and "S"), Lechter and Kiyosaki say that they may never obtain true wealth. Conversely, those on the right side of the divide ("B" and "I") are supposedly following the only road to true wealth.
Read more about this topic: Sharon Lechter
Famous quotes containing the words the rich, rich, dad and/or philosophy:
“Ah! on Thanksgiving day, when from East and from West,
From North and from South, come the pilgrim and guest,
When the gray-haired New Englander sees round his board
The old broken links of affection restored,
When the care-wearied man seeks his mother once more,
And the worn matron smiles where the girl smiled before.
What moistens the lip and what brightens the eye?
What calls back the past, like the rich Pumpkin pie?”
—John Greenleaf Whittier (1807–1892)
“The movies today are too rich to have any room for genuine artists. They produce a few passable craftsmen, but no artists. Can you imagine a Beethoven making $100,000 a year?”
—H.L. (Henry Lewis)
“Now folks, I hereby declare the first church of Tombstone, which ain’t got no name yet or no preacher either, officially dedicated. Now I don’t pretend to be no preacher, but I’ve read the Good Book from cover to cover and back again, and I nary found one word agin dancin’. So we’ll commence by havin’ a dad blasted good dance.”
—Samuel G. Engel (1904–1984)
“Frankly, I do not like the idea of conversations to define the term “unconditional surrender.” ... The German people can have dinned into their ears what I said in my Christmas Eve speech—in effect, that we have no thought of destroying the German people and that we want them to live through the generations like other European peoples on condition, of course, that they get rid of their present philosophy of conquest.”
—Franklin D. Roosevelt (1882–1945)