There are a million ways to make a million dollars and get rich, and this is how Robert Kiyosaki does it.
Robert Kiyosaki is a financial educator, entrepreneur, and the author of “Rich Dad Poor Dad.” It’s one of the bestselling personal finance books of all time.
He has challenged and changed how millions of people worldwide think about money and investing.
In this article, we’ll dive into some of Robert Kiyosaki’s key principles for success and getting rich.
Don’t worry if you don’t feel like reading, you can enjoy the video below or watch it on YouTube:
1
Assets Over Liabilities
The principle of prioritizing “Assets Over Liabilities” is perhaps the cornerstone of Robert Kiyosaki’s financial philosophy. He popularized it through his best-selling book “Rich Dad Poor Dad.”
At its core, the concept is strikingly simple but profoundly impactful.
Kiyosaki defines an asset as something that puts money in your pocket. Whereas a liability is something that takes money out of your pocket.
This redefinition changes the conventional understanding of assets and liabilities.
Usually, they’re associated with accounting and bookkeeping, where even your home could be considered an asset.
In Kiyosaki’s paradigm, your home, unless it’s generating rental income, is not really an asset; it’s a liability. Why?
Because it takes money out of your pocket every month in the form of maintenance.
On the other hand, an investment property that you rent out for more than your monthly expenses would be an asset.
The fundamental shift here is to view assets and liabilities in terms of cash flow, not just value.
This approach forces you to think in terms of financial efficiency: what brings you income, and what drains it?
If you want to get rich, use Robert Kiyosaki’s approach to assets and liabilities as a practical roadmap.
The goal isn’t merely to ‘save money’ but to acquire assets that will generate ongoing income.
It steers you toward investments that pay dividends, rental properties that generate positive cash flow, or businesses that can run without your day-to-day involvement.
By doing this, you’re not just storing value; you’re actively increasing your income streams. Over time, these assets can compound to create substantial wealth and financial security.
But perhaps the most transformative aspect of this principle is its mindset shift.
Instead of pursuing the traditional markers of financial success—luxury cars, bigger homes, extravagant vacations—you focus on building a robust portfolio of income-generating assets.
This transition from a consumption mindset to an investment mindset is often the defining factor that sets financially free individuals apart from those who are trapped in the rat race.
2
Don’t work for money; work to learn
For most people, the ultimate objective of finding a job or sticking with a career is the financial security that comes from a stable income.
But Kiyosaki argues that this narrow focus often leads to a lack of financial literacy and, ultimately, a life confined to the “rat race.”
After all, it’s been said that one of the most dangerous addictions is a monthly paycheck.
By contrast, working to learn changes the equation completely. It turns each job and experience into an educational platform that equips you with skills, insights, and knowledge that can later be leveraged to make money independently.
The first thing to realize is that formal education is limited, especially in teaching practical skills that can be applied to real-world financial problems.
While a regular job teaches you how to do that specific job, it rarely teaches you how to manage, invest, or grow your money.
The situation is even bleaker when it comes to learning how to leverage money to create assets or how taxes work.
By working to learn, you pick jobs, roles, or projects that allow you to acquire these very skills.
The income is a secondary benefit; the primary goal is the acquisition of a skill set that can be used for future entrepreneurial or investment ventures.
According to Robert Kiyosaki, you get rich by investing in yourself, your most important asset.
Consider the example of taking a lower-paying job in a start-up versus a well-paying corporate job.
A start-up job may offer you the chance to wear multiple hats—sales, marketing, product development, and even a bit of financial planning.
These skills are the tools that can equip you to start your own venture down the line or make far more insightful investment choices.
A well-paying corporate job may offer immediate financial gratification but could pigeonhole you into a specialized role that doesn’t offer broad learning opportunities.
In the long term, the concept of working to learn enriches you far beyond immediate financial compensation.
It nurtures a mindset of continuous learning and adaptability, skills increasingly essential in a rapidly changing economic landscape.
It also better positions you for financial freedom because you’re accumulating not just money but also the know-how to make that money work for you.
Money can be lost, stolen, or spent, but knowledge—once gained—can be applied repeatedly in various contexts.
The investment in learning becomes a lifelong asset, providing returns well into the future.
3
The importance of cash flow
The concept is simple but profound: It’s not about how much money you have; it’s about how much money you have coming in regularly.
Lottery winners, for example, are not wealthy. They just so happen to have a lot of disposable cash at the moment.
This cash flow can be the difference between financial freedom and financial struggle.
Accumulating assets that don’t generate income can actually be a liability.
They may require ongoing costs for maintenance, not to mention their potential to depreciate over time.
However, assets that create a regular income stream offer both long-term security and the freedom to invest in new opportunities as they arise.
This is why Kiyosaki advocates for investments like real estate properties or owning businesses. Because they can provide a consistent cash flow.
Even in the stock market, he leans towards dividend-yielding stocks over those that only offer the possibility of capital gains.
The advantage of this approach is that it provides both a safety net and a means of growth. Your expenses are covered, and any extra can be reinvested to create additional income streams.
When Kiyosaki talks about the importance of cash flow, he’s essentially talking about creating a self-sustaining financial ecosystem.
Once set in motion, it has the potential not only to maintain itself but also to grow exponentially. By growing, it makes way for more investments and, therefore, more cash flow.
In a volatile economy, the ability to generate consistent cash flow can make or break you.
4
Understand taxes and corporations
When it comes to getting rich, Robert Kiyosaki often discusses the vital role of taxes and corporations.
Contrary to the mainstream approach of paying taxes first and then spending what’s left, Kiyosaki suggests using the legal framework of corporations to minimize tax burdens, thus maximizing income and investment opportunities.
This is a strategic shift from what he calls the “Employee mindset” to an “Investor/Entrepreneur mindset.”
Changing how you earn your money, spend it, and, critically, shield it from unnecessary taxes.
By the way, this is exceptionally valuable to freelancers that get incorporated.
Corporations, according to Kiyosaki, are like “secret money boxes” that the rich have mastered using.
One reason the rich get richer is not just because they make more money, but because they keep more of it.
A corporation allows you to do things like deduct expenses before paying taxes, which can significantly reduce your tax liabilities.
This is in contrast to individuals, who have to pay taxes first and then manage their lives with what remains.
A corporation’s ability to write off expenses, use pre-tax dollars for investment, and take advantage of various tax breaks can be the difference between a modest nest egg and substantial wealth.
Kiyosaki points out that the tax laws are essentially a series of incentives for investors and business owners.
By understanding how to navigate these incentives, you can not only reduce your tax liability but also encourage yourself to engage in the kinds of economic activities that the government wants to promote, such as investing in real estate or starting a business.
Thus, the savvy use of corporations and understanding tax law are not about evading taxes, but about being smart and strategic in how you generate and retain wealth.
The takeaway here is crystal clear: learning how to leverage the advantages of corporations and tax laws is not just for the wealthy elite but for anyone who seeks to attain financial freedom.
The rules of money are not taught in standard education. That’s why acquiring this knowledge is both revolutionary and necessary.
5
How to use debt
Robert Kiyosaki’s perspective on debt diverges significantly from traditional financial wisdom.
While most people see debt as something to be avoided, Kiyosaki advocates for using “good debt” as a tool to accelerate wealth accumulation.
The key, according to him, is understanding the difference between “good debt” and “bad debt.”
- “Bad debt” is what most people are familiar with.
It’s the credit card debt incurred from buying things that lose value over time—liabilities like luxury items, vacations, or cars.
This kind of debt saps your financial resources and leaves you poorer in the long run. - On the other hand, “good debt” is used to acquire assets that generate income or appreciate in value over time.
These can be rental properties, businesses, or investments.
The income or appreciation from these assets can not only cover the cost of the debt (like interest payments) but can also generate additional income, creating a positive cash flow.
This is leveraging debt in a way that allows you to grow your wealth.
Kiyosaki asserts that knowing how to leverage good debt smartly can amplify your returns. Thus allowing you to benefit from capital growth, income, and tax advantages.
However, this strategy comes with its own set of risks and requires a sound understanding of market conditions, interest rates, and your own financial situation.
Tread carefully, education and financial literacy are critical before employing such advanced strategies.
The takeaway here is that not all debt is created equal.
By understanding and using “good debt” wisely, you can take advantage of leverage to multiply your investment returns. Moreover, acquire extra assets and accelerate your journey toward financial freedom.
6
Income streams
In Robert Kiyosaki’s world, having only one source of income, like a 9-to-5 job, is not only limited but also dangerous.
His theory tells people to have more than one source of income, not just the money they earn, but also passive income and income from investments.
Kiyosaki says that depending on just one source of income, especially one that you don’t have much control over, like a job, leaves you open to financial instability.
Having multiple sources of income is like not putting all your eggs in one box.
When you have more than one way to make money, you are less affected by changes in the business. The job market doesn’t affect you or your investments.
If one source of income stops or slows down, you have other options.
When it comes to getting rich, Kiyosaki suggests investing in real estate, starting or acquiring businesses, and investing in the stock market.
- Rental income from real estate can be a steady source and its value usually goes up over time.
- Businesses can bring in money right away and add worth over time.
- Investing in stocks or bonds can give you income or interest payments, and you may also be able to make a profit on the value of your investment.
It’s not enough to have more than one source of income. You should also have different kinds of income.
Earned income (what you get from your job) is charged the most and takes the most time. Passive income, like from real estate, is usually taxed at a much lower rate and doesn’t take as much work over time.
Portfolio income, such as from stocks and bonds, can also be less taxing and often takes the least time to handle.
Diversifying your income is important because it not only makes good financial sense but also gives you a safety net.
It’s a plan that can give you both short-term benefits and long-term security, as well as a number of tax benefits.
7
Don’t keep money idle in the bank
There’s nothing fundamentally wrong with saving. However, Kiyosaki says that it’s an old model that doesn’t take into account inflation.
Basically, the money you save today is likely to be worth less in the future because prices go up over time.
According to Kiyosaki, saving your money doesn’t give it a chance to grow and work for you.
In fact, because of low-interest rates and the impact of inflation, the real value of the money you save could go down.
Because of this, he wants people to invest instead. With the right investments, you can make a lot more money than you would get from a savings account.
It doesn’t matter if you’re investing in the stock market, real estate, or something else. The key is to invest in things that could give you a much higher rate of return.
But it’s important to keep in mind that investing comes with risks. Moreover, it requires a good grasp of the financial world.
Kiyosaki promotes the idea of financial education to make informed decisions.
You should know the basics of any asset class you buy in. Learn how risky it is and be aware of market trends that could affect it.
By making smart choices about how to invest your money, you’re not just putting it away; you’re also contributing to your own financial growth.
So, the main thing to take away from this is that saving is good. But in Kiy buying is often better if you want to get rich.
Just make sure you have the right information and tools to make smart investments.
8
Don’t follow the herd
The “herd mentality” in investment or financial decisions often involves going along with what everyone else is doing, usually under the influence of fear or greed.
For instance, during a stock market boom, people may rush to buy stocks because they see others making easy money.
On the other hand, when the market is down, the herd may panic and sell, fearing further loss.
Following the herd can be incredibly risky because it usually means you’re getting in too late or getting out too early. Both of which could lead to significant financial loss.
When it comes to getting rich, Robert Kiyosaki advises against this instinctual behavior because of its often reactionary nature.
Instead, he recommends doing your own research, understanding the market, and making financial choices that align with your personal goals and risk tolerance.
Not following the herd means that you’re not investing in something just because everyone else is; you’re investing because it makes sense for your financial future.
Moreover, not following the herd often opens up opportunities that many might overlook.
These could be in the form of unpopular stocks, neglected real estate markets, or investments in skills and industries that are yet to boom.
By steering clear of the herd, you can often buy assets at a lower price and sell them at a higher value, as you’re not competing with a rush of buyers or sellers.
In other words, if your aunt is investing in it, it’s probably too late.
9
Surround yourself with smart people
Robert Kiyosaki often says that if you want to get rich and financially independent, you should hang out with smart, knowledgeable people.
Your group of friends isn’t just a reflection of your personal life. It’s also a key factor in your financial future.
Smart individuals, especially those with the experience you want, can provide insights, guidance, and opportunities you might not have had otherwise.
Consider it an investment in social wealth.
The idea is that if you have a network of smart, financially savvy people, you can learn about ideas and views you wouldn’t have thought of on your own.
It’s not just about making connections to get business. It’s also about learning from other people.
People you hang out with can help or hinder your learning, be it real estate investing, the stock market, or tax models.
In Kiyosaki’s words, you’re the average of the five people you spend the most time with.
If these people don’t know much about money, you may end up with their limits and maybe even their bad habits.
On the other hand, if you hang out with people who know more about money and are more successful than you, you’re more likely to catch up to them.
You can learn from their wins and failures, which will help you make better financial decisions and avoid common mistakes.
In the end, if all your friends are broke, it’s likely that you are too.
10
Know the market
This is something Robert Kiyosaki and Warren Buffett both agree on.
They don’t go into things they don’t fully understand, even if it seems like a great opportunity.
Kiyosaki frequently emphasizes the need to “Know the Market” when it comes to investing and accumulating wealth.
He posits that one of the primary reasons people fail in their investments is a lack of understanding of market conditions, trends, and rules.
To him, investing isn’t about throwing your money into stocks, real estate, or other assets and hoping for the best.
It’s a calculated process that requires understanding market dynamics, consumer behavior, and economic indicators.
Researching the market involves understanding the past, present, and projected future of the asset you’re interested in.
If you want to get rich, Robert Kiyosaki suggests that you do your due diligence before jumping into any investment:
- Are you investing in a growing industry?
- What are the historical trends in the asset’s price?
- What are the experts saying?
- How many similar investment options are available in the market?
These are some of the things that Kiyosaki says you should think about.
Market trends are an important part of understanding the market.
Prices go up and down in both real estate and the stock market. That’s because of things like supply and demand, the economy, and even politics.
If you know about these cycles, you can make better choices about when to buy, hold, or sell an object.
Investing at the right time can mean the difference between a good return and a financial disaster.
If you “know the market,” you can also find treasures for less than market value and make a lot of money.
Kiyosaki talks a lot about how important financial schooling is for finding these kinds of opportunities.
He says that the most profitable trades are the ones that most people miss or don’t understand. Why? Because they don’t know enough about the market.
So, there you go.
Robert Kiyosaki is more of an old-school guy. His book “Rich Dad, Poor Dad” was one of the first books we read about money. In fact, it’s the one we usually suggest to people who are just starting to learn about money.
If you need a solid foundation and evergreen principles, this is it. If you’ve enjoyed this article, we recommend you also read the Warren Buffet one. It’s the one we started this whole series with and it’s a value bomb.
When it comes to getting rich, Robert Kiyosaki has valuable lessons to teach. So take out your notes and start applying this to your situation. See you next time!
