I finished reading the book Rich Dad Poor Dad by Robert Kiyosaki on December 2019. If I could reverse time, I would have read this book much earlier instead of procrastinating till this year. That book has given me valuable life lessons and insightful personal finance practices. This is a personal book summary, where I will highlight the key lessons I have learnt from reading this book and what actions I took to change my future.
LESSON 1: Recognize what are assets and what are liabilities
Prior to reading this book, I have taken some accounting courses and so I thought I knew what assets and liabilities are pretty well. In accounting, I learnt that assets are properties, equipment, intellectual property — basically something that you own. Liabilities are on the other hand, things that you owe to people like loans, etc. Well, from reading this book, it turns out that this definition was half true.
Robert Kiyosaki defined assets as things that generate income. So by his definition, cars or houses on mortgages are not assets even though they seem to be in accounting. Liabilities are things that reduce income such as that Netflix subscription, car loan payments, etc. I realized that managing my personal finance required me to change my definition of what is an asset and liability. Kiyosaki’s definitions were mind-blowing to me because it was so simple to understand and yet many struggled to collect more assets than liabilities.
We all desire that luxurious life. We all love to spend our money on things that we perceive has value. But we never thought of them as assets or liabilities. What I now practice after reading this book is understand what I am actually spending on and identify if it is an asset or a liability. This simple mindfulness helped me realize that having Amazon Prime, Netflix and Spotify subscriptions were not helping me financially and that it is better to just let go of them before my liabilities column fills up faster than my assets column. That was also when I realized that I made the same mistake many people do — I am…