This best selling title published in 1997 and we didn’t get around to it till 2016. Not because we didn’t appreciate the urgency of building wealth, we simply fell out of touch with reading. An easy feat in this age of streaming video.
It’s been a while now since we read it, so our hazy memories don’t contain much detail. Racking our brains, we recall two worthwhile lessons. The first being asset accumulation, it’s a basic principle yet poorly understood by the populace. To our surprise, the second lesson leaned on psychology and wasn’t even a direct wealth strategy.
Spoiler Alert. We’re going to discuss details about this book. It’s a good read, but let’s just say it didn’t make us rich. Essentially it’s an introduction to financial literacy for people living paycheck to paycheck.
By the time we picked up this book, we’d accumulated enough life experience to appreciate the value of building asset pools. So no surprises there, but we did find amusement when the book described people mistaking expenses for assets. Largely since it reminded us of several figures in our lives who feel rich because they own expensive items, but toil away in the daily grind.
The lessons in psychology made the read worthwhile for us. These made the strongest impressions:
- pay yourself first
- ask yourself “how can I afford it?”
“Pay yourself first” as a wealth building mantra corrects a common problem. When people receive their paycheck, they preferentially allocate the bulk of the value to living expenses and what remains goes towards investment. With this arrangement, investment is an afterthought. On the other hand, “pay yourself first” forces the lion’s share of the paycheck into investment, ensuring the investment grows.
“How can I afford it?” is what rich people ask themselves when contemplating investment opportunities. It’s a proactive mindset compared to what poor people think, that being “I can’t afford it.” The former puts the brain to work, the latter shuts it down.
Both of these simple lessons served as useful devices for tweaking our thought processes. They give us a leg up on the motivation front, otherwise investment truly feels like an insurmountable afterthought.
We recall that Rich Dad Poor Dad favours property investment. Somehow, we can’t help suspecting that this bestseller and a suite of similar investment texts started an investment fad that led to today’s absurd property prices, but we’ll reserve that gripe for another post.
Peculiar
Naturally, the title’s significance piqued our curiosity and we wondered what the explanation would reveal. Our best guess? That the author concocted a fable of two fathers in order to illustrate his wealth building principles.
We discover that Poor Dad is his father. An academic who lived paycheck to paycheck relying on the basic principle of savings. Rich Dad happened to be his friend’s father. Nothing strange about that. However, the author referred to the friend’s father as his own “Rich Dad”, in contrast to his Poor (actual) Dad. As a narrative device, okay perhaps. In reality, though, a little peculiar.