Rich Dad Poor Dad Review: Is it still relevant in 2021?

Rich Dad Poor Dad was written by Robert Kiyosaki almost 25 years ago. But do the lessons still ring true in 2021? Financial adviser Ben Nash reviews the iconic book.

The personal finance book, Rich Dad Poor Dad, is estimated to have sold more than 40 million copies across the globe since it was first self-published by US entrepreneur Robert Kiyosaki in 1997.

I first read Rich Dad Poor Dad in 2001, after being given a copy by my Nan. I was immediately captivated by the way Kiyosaki talked about money, the simplicity with which he explained concepts I had no idea about, and the different thinking he applied for how to ‘get rich’. His message was: ‘It is possible for anyone to create significant wealth if they take the right approach.’ This became the trigger for me to pursue a career in personal finance.

Is it worth reading Rich Dad Poor Dad?

Since reading this book, I’ve spent 20 years studying personal finance and investing, and over a decade helping people with their money, and in that time I’ve seen a lot of do’s and don’ts. I’ve also become an author myself, publishing similarly about finance.

From this experience, I can say that many of the wealth creation principles Kiyosaki writes about are, in my opinion, rock solid. There are some gaps which I discuss below, but on balance this book may be a huge help to people who want to get ahead with their money.

Author of Rich Dad Poor Dad with book
Robert Kiyosaki with his book Rich Dad Poor Dad. Image: Robert Kiyosaki/richdad.com

Summary of Rich Dad Poor Dad concepts

The main concepts that I think ring true almost a quarter of a century after being published are the importance of financial education, why you need to nail your savings and the difference between assets and liabilities.

The importance of financial education

Throughout Rich Dad Poor Dad, Kiyosaki talks about one of the keys to true wealth being building your financial knowledge. I wholeheartedly agree with him on this.

And even more than just with wealth building, I’ve found that building your financial IQ is also a key to the elimination of stress that can be caused by money – something I think is possible for anyone who is prepared to put in the work to prioritise their financial wellbeing.

Why you need to ‘nail’ your savings

Kiyosaki also stresses the importance of being on top of your cashflow and savings strategy. And while budgeting can seem ‘boring’ or only a small element of your money, having had insights into how many people manage their money, I agree that your savings strategy may be ‘mission critical’ to your level of monetary success.

The difference between assets and liabilities

In the book, Kiyosaki challenges some conventional views around what defines an asset vs a liability. He says that basically everything we own that isn’t an investment (including your home, if you own one) is really a liability or a ‘toy’. In my view, this is spot on.

It’s easy to fall into the trap of thinking possessions like cars, furniture, jewellery, etc, are assets. And while they do have value, he says these items are never really going to make you any money, so it doesn’t make a lot of sense to include them under what we think of as our ‘wealth’.

Kiyosaki’s view that your home is not an asset – while not technically true – is, in my view, a good way to think about your money. With staggering house prices in most Australian major cities, I’ve found balancing the amount of your wealth tied up in your home vs how much you have in actual investments is a key driver of how ‘rich’ you actually are.

What’s wrong with Rich Dad Poor Dad?

There has been criticism from some commentators about aspects of Rich Dad Poor Dad. For example, some commentators have pointed out that Kiyosaki’s ‘Rich Dad’ example may be fictionalised, although it could be said to be presented as being non-fiction. Other commentators have suggested that some of the figures in the book may be overstated.

With the above being said, on a second read of this bestselling finance book, I found a few things that didn’t sit quite right with me in 2021, including that it is too focused on entrepreneurs, not specific to Australia and downplays investment risk.

Too focused on entrepreneurs

A view of Kiyosaki’s that I don’t agree with is that you need to be an entrepreneur to get rich. I personally don’t think everyone is cut out to be a business owner, and I know many people who have created serious wealth without running a business.

Not specific to Australia

It’s worth noting for Australian readers that because he is based out of the US, the strategies and tactics Kiyosaki covers on real estate are less applicable to Aussie property buyers. Our real estate markets are fundamentally different.

Downplays investment risk

The main criticism I have of Rich Dad Poor Dad is that Kiyosaki downplays investment risk throughout the book. He talks about the fact that once you understand your risk, you should be prepared to accept it. My view is that you absolutely need to understand risk first so you can manage it. But just understanding risk when you invest doesn’t eliminate the risk.

When you invest, once you understand where your risk is coming from you can then apply risk management strategies and techniques. But there is always some risk left over. Risk is what makes you money when you invest, and all of your options have some level of risk attached to them. Buying shares has risks, buying property has risks, and doing nothing has a level of risk attached to it too.

My view is that the key to investing the smartest way for you is to understand the difference between good investment risk and bad investment risk, and choose the right level of risk to achieve what you want. This is a decision that will be personal for you, and you may like to seek the support and guidance of a professional financial adviser.

Does Rich Dad Poor Dad really work?

Even with the flaws of Rich Dad Poor Dad, I think that on balance the principles Kiyosaki covers could help most people get ahead financially. Specifically, these are all sound messages:

  • the focus on consistently investing
  • ‘nailing’ your savings strategy
  • focusing on growing investment income
  • treating your wealth creation like a business

Why is Rich Dad Poor Dad a bestseller?

With estimates of over 40 million copies being sold, Rich Dad Poor Dad is one of the most popular personal finance books ever written. I think one of the keys to the success of Rich Dad Poor Dad is how Kiyosaki uses simple, easy-to-read language that someone without a background in financial concepts could easily understand.

The fact Kiyosaki also talks about how anyone can create real wealth, even if you’re starting with no money, is something many people could find appealing. Most people fall into the conventional wisdom that you need a lot of money to get started investing, but this just isn’t true. The way Kiyosaki explains how anyone can get rich if they apply themselves may give you some motivation to take your next steps, which is often half the battle when it comes to money.

My rating is: 8 out of 10.

Book details:

  • Title: Rich Dad Poor Dad: What the Rich Teach Their Kids About Money – That the Poor and Middle Class Do Not!
  • Author: Robert T Kiyosaki
  • Stockists: richdad.com

 

Cover image source: Hadrian/Shutterstock.com


Thanks for visiting Canstar, Australia’s biggest financial comparison site*

About Ben Nash

Headshot of Ben NashBen Nash is a finance expert commentator, podcaster, financial adviser and founder of Pivot Wealth. He is the author of the Amazon bestselling guide Get Unstuck: Create a Life not Limited by Money. You can connect with him on LinkedIn.

This article was reviewed by our Digital Editor Amanda Horswill and Sub Editor Jacqueline Belesky before it was updated, as part of our fact-checking process.

Share this article