Rich Dad Poor Dad for Teens

1. Embrace Contrasting Financial Wisdom

If I had had only one dad, I would have had to accept or reject his advice. Having two dads advising me offered me the choice of contrasting points of view; one of a rich man and one of a poor man.

Diverse perspectives are crucial. The author, Robert Kiyosaki, was shaped by two fathers: his highly educated "poor dad" (his biological father) who advocated for a secure job and good grades, and his uneducated but financially savvy "rich dad" (his best friend's father) who taught him how money truly works. This duality forced Robert to think critically, compare, and ultimately choose his own path, rather than blindly accepting a single viewpoint. This foundational lesson highlights the importance of seeking out varied advice to build personal financial intelligence.

Traditional advice is often flawed. Robert's poor dad, despite being intelligent and well-meaning, struggled financially because he followed conventional wisdom: "Study hard and get good grades and you will find a high-paying job with great benefits." This advice, while once effective, is outdated in a rapidly changing world where job security is fleeting and financial education is absent from schools. The world has changed, but the advice hasn't, leaving many educated individuals unprepared for real-world financial challenges.

Financial education starts at home. Most people learn about money from their parents, perpetuating either a "poor person's financial programming" or a "rich person's financial programming." Schools focus on scholastic and professional skills, neglecting financial literacy. This gap explains why many smart professionals still struggle financially. Robert's rich dad emphasized that true financial success comes from understanding how money works and making it work for you, a lesson rarely taught in formal education.

2. Master Financial Literacy: Assets vs. Liabilities

If you want to be rich, this is all you need to know. It is Rule No. 1. It is the only rule.

The core distinction. The fundamental rule of wealth is to know the difference between an asset and a liability, and to buy assets. Rich dad simplified this: "An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket." This seemingly simple definition is profound, yet most people struggle financially because they acquire liabilities, mistakenly believing them to be assets.

Cash flow tells the story. Financial literacy isn't just about numbers; it's about understanding the "story" the numbers tell through cash flow.

• Poor person's cash flow: Income (job) -> Expenses (food, rent, clothes, fun). No assets or liabilities.
• Middle class cash flow: Income (job) -> Expenses (taxes, mortgage, consumer loans) -> Liabilities (mortgage, credit cards). They often treat their home as an asset, but it's a liability if it takes money out of their pocket.
• Wealthy person's cash flow: Assets (stocks, real estate, businesses) -> Income (dividends, rent, royalties) -> Liabilities (none, or paid by assets).

Avoid the "Empire State Building on a 6-inch slab" trap. Many people, in their drive to get rich, try to build wealth without a strong financial foundation. They focus on making more money, but not on how to spend it wisely or keep it. Money without financial intelligence is quickly lost. The key is to diligently build an asset column that generates income, keeping liabilities and expenses low to free up more capital for investment.

3. Escape the Rat Race: Make Money Work for You

The poor and the middle class work for money. The rich have money work for them.

The cycle of fear and greed. Most people are trapped in the "Rat Race," a cycle driven by fear (of not having money, of being fired) and greed (desire for luxuries). They work hard for a paycheck, and as their income rises, their expenses and liabilities often increase proportionally, keeping them perpetually dependent on their jobs. This emotional reaction prevents them from thinking strategically about their financial future.

Money is an illusion. Rich dad taught that money itself is an illusion, a "carrot for the donkey." The real power lies in financial education and understanding how to make money work for you. By focusing on acquiring assets that generate income, individuals can break free from the need to constantly work for a paycheck. This shift in mindset is crucial for achieving true financial freedom.

The price of ignorance. People who only know how to work for money often become "slaves to money." They spend their lives chasing paychecks and job security, never questioning where these emotion-driven thoughts are leading them. This lack of financial education is the root cause of financial struggle, not the amount of money earned. Learning to have money work for you is a different course of study, requiring passion and a burning desire to learn.

4. Mind Your Own Business: Build Your Asset Column

To become financially secure, a person needs to mind their own business. Your business revolves around your asset column, as opposed to your income column.

Profession vs. Business. Many people confuse their profession (what they do for work) with their business (what generates income for them independently). Ray Kroc, founder of McDonald's, famously stated his business was real estate, not hamburgers. While his profession was selling franchises, his true business was accumulating valuable land. This distinction is vital: keep your day job, but actively build your asset column.

Focus on income-generating assets. Real assets put money in your pocket without requiring your direct labor. Examples include:

• Businesses that don't require your presence (managed by others)
• Stocks, bonds, mutual funds
• Income-generating real estate
• Notes (IOUs)
• Royalties from intellectual property

Avoid "doodads" and liabilities. Many people buy luxuries (big houses, new cars, expensive gadgets) on credit, mistaking them for assets or believing they "deserve" them. These items are liabilities that take money out of your pocket, trapping you in debt. True luxuries should be purchased after your asset column generates enough income to pay for them, making them a reward for financial intelligence, not a burden.

5. Leverage the Power of Corporations

It is the knowledge of the power of the legal structure of the corporation that really gives the rich a vast advantage over the poor and the middle class.

The rich play by different rules. Historically, taxes were introduced to "punish the rich," but the rich, understanding the system, found ways to minimize their tax burden through legal structures like corporations. This led to the middle class bearing the brunt of taxation. A corporation is not just a big building; it's a legal entity that offers significant financial advantages.

Corporate advantages:

• Tax benefits: Corporations can pay for expenses before paying taxes, unlike individuals who earn, get taxed, and then spend. This allows for legal deductions on things like vacations (as board meetings), car expenses, and health club memberships.
• Asset protection: Corporations and trusts can shield assets from lawsuits. The rich often control everything but own nothing personally, creating layers of legal protection. The poor and middle class, owning everything directly, are more vulnerable.

Financial IQ includes legal knowledge. Understanding the law, especially tax codes and corporate structures, is a crucial component of financial intelligence. Ignorance makes one susceptible to being "pushed around" by the tax man. By knowing the rules, the rich can play the game smarter, minimizing their tax burden and protecting their wealth, rather than simply complying and paying more.

6. Cultivate Financial Genius: Invent Money & Opportunities

In the real world outside of academics, something more than just grades is required. I have heard it called “guts,” “chutzpah,” “balls,” “audacity,” “bravado,” “cunning,” “daring,” “tenacity” and “brilliance.”

Beyond technical knowledge. Financial genius requires both technical knowledge (financial literacy) and courage. Fear and self-doubt are major detractors of personal genius, often preventing people from acting on opportunities. The world is full of smart people who struggle financially because they lack the boldness to take calculated risks and convert fear into power.

Information is the new wealth. In today's Information Age, timely information is wealth. The ability to learn quickly and adapt to change is priceless. Old ideas become liabilities if one clings to them. Instead of blaming external factors for financial struggles, individuals should look inward and recognize that their own outdated ideas or resistance to change might be the problem.

Create new options. The game of wealth involves constantly creating new financial options. When faced with a challenge, instead of reacting emotionally (e.g., "I need a job"), ask "How can I afford it?" or "What are my options?" This forces the brain to think creatively and find solutions. Rich people are often creative and take calculated risks, seeing opportunities where others see only problems or "noise."

7. Work to Learn, Not Just to Earn

Instead I recommend to young people to seek work for what they will learn, more than what they will earn.

Prioritize skill acquisition. Instead of specializing narrowly for higher pay, seek diverse learning experiences. Robert left a high-paying job at Standard Oil to join the Marine Corps to learn leadership, and then joined Xerox to overcome shyness and master sales. These experiences, though not immediately high-paying, built a broad skill set that proved invaluable for his entrepreneurial journey.

The synergy of skills. Financial intelligence is a synergy of accounting, investing, marketing, and law. Mastering these technical skills makes it easier to make money work for you. Many talented people earn less than they're capable of because they focus solely on perfecting their primary skill (e.g., cooking a better hamburger) rather than learning business systems, sales, and marketing.

Communication is key. The ability to sell and market is paramount for personal success. This includes skills like writing, speaking, and negotiating. These are difficult for many due to fear of rejection, but improving them can dramatically increase income and opportunities. Robert advises taking sales and marketing courses, even if it means a temporary pay cut, because the long-term benefits are immense.

8. Conquer Internal Obstacles: Fear, Cynicism, Laziness, Habits, Arrogance

The primary difference between a rich person and a poor person is how they handle that fear.

Fear of losing money. Everyone fears losing money, but the rich handle it differently. They understand that winning often follows losing, and failure can be a powerful motivator. "People are so afraid of losing that they lose." Instead of avoiding risk, they learn to manage it, turning losses into lessons that make them stronger and smarter.

Cynicism and doubt. "The sky is falling" mentality, or cynicism, is expensive. Cynics criticize without analyzing, letting doubts and fears close their minds to opportunities. Winners analyze, seeing opportunities others miss. For example, instead of saying "I don't want to fix toilets" (a common cynical response to real estate investing), a smart investor finds a property manager who does fix toilets, allowing them to acquire more assets.

Laziness by staying busy. Many people are "too busy" to take care of their wealth or health, using constant activity as a way to avoid confronting important issues. The cure for this laziness is a "little greed"—a strong desire for something better that motivates action. Rich dad encouraged asking "How can I afford it?" instead of "I can't afford it," which opens the mind to possibilities.

Bad habits and arrogance. Our lives are a reflection of our habits. Poor habits, like paying yourself last, lead to financial struggle. Arrogance (ego + ignorance) prevents learning and leads to losses. A truly intelligent person welcomes new ideas and is humble enough to learn from others, even those with differing views.

9. Practice Self-Discipline: Pay Yourself First

I firmly believe in paying my bills on time. I just pay myself first. Before I pay even the government.

The power of self-discipline. This is arguably the most difficult step to master. People with low self-esteem and low tolerance for financial pressure often become victims of those with self-discipline. The principle of "pay yourself first" means allocating money to your asset column before paying monthly expenses or creditors.

Motivation through pressure. When you pay yourself first, especially if cash flow is tight, the pressure to pay bills becomes a powerful motivator. This forces you to seek new forms of income, work harder, and think more creatively about money. This mental "workout" strengthens your financial muscles, making you smarter and more active. If you pay yourself last, there's no pressure to innovate, and you remain financially weak.

Avoid consumer debt. The rule "pay yourself first" doesn't mean being irresponsible. It means avoiding large consumer debts in the first place. Build assets first, then buy luxuries. If you occasionally come up short, let the pressure inspire you to create more income, rather than dipping into savings or liquidating investments. This habit builds financial fortitude and intelligence.

10. Seek Good Advice & Give Generously

If you want something, you first need to give.

Value good advice. Rich dad believed in paying professionals well (attorneys, accountants, brokers) because their expertise and timely information can make you more money than their fees. A good broker acts as your eyes and ears to the market, saving you time and identifying opportunities. People who try to save a few dollars by cutting commissions often miss out on invaluable insights and opportunities.

The power of reciprocity. Both of Robert's dads were teachers, but rich dad emphasized giving money as well as knowledge. He believed in tithing and that "if you want something, you first need to give." This principle applies to money, love, friendship, and opportunities. When you give what you want, it comes back in multiples. This generosity, coupled with a willingness to teach others, creates a torrent of new ideas and bounty.

Learn from heroes. Emulating heroes is a powerful way to learn. Robert studied the stats and strategies of investors like Warren Buffett and Donald Trump, subconsciously adopting their bravado and analytical approaches. Heroes make complex things seem easy, inspiring us to believe "If they can do it, so can I." This taps into a tremendous source of raw genius and makes the journey to wealth more accessible.

Last updated: February 9, 2026