Rich Dad Poor Dad Lessons: Avoiding House Poverty and Building Real Wealth

This past week, I started reading Rich Dad Poor Dad by Robert T. Kiyosaki. The book explores the contrasting financial philosophies of Robert’s two father figures and the advice they offered him throughout his life. Even in the introduction, several points resonated with me deeply, especially in light of my current financial journey.

Considering Buying a House

Lately, I’ve been contemplating purchasing a house. Many people, including prominent real estate investors, advocate buying a home as a smart and strategic first investment. A house is often considered an asset because it appreciates over time. Initially, I believed this was my next logical step: figure out how to buy a house. However, after crunching the numbers and examining housing prices in Arizona, I realized, “I can’t afford to buy a house anytime soon.”

In Robert’s book, his “poor dad” would say, “I can’t afford this,” while his “rich dad” would ask, “How can I afford this?” This distinction struck a chord with me. It’s a mindset shift—approaching financial challenges with creativity rather than resignation. Asking “how” exercises the brain to find solutions. It aligns with the law of attraction: what you focus on and talk about often manifests in your life. For instance, if you constantly declare that you’re poor, you’re likely to remain so. On the other hand, focusing on earning more can help you attract opportunities to increase your income.

Avoiding the Trap of Being House Poor

At one point, I believed that buying a house was a natural step forward in my financial and personal life. However, a podcast I listened to highlighted the danger of becoming “house poor.” This happens when a significant portion of your income is consumed by housing expenses, leaving little room for anything else.

Rich Dad Poor Dad also emphasizes that relying solely on a home as your primary investment can be risky. This perspective challenged my thinking. Instead of rushing to buy a house, I began focusing on acquiring assets.

Assets come in two forms: appreciating and depreciating. Depreciating assets, like cars or clothing, lose value over time. Appreciating assets, such as real estate or businesses, gain value. My new approach involves prioritizing investments in appreciating assets—for example, purchasing properties that generate cash flow or investing in the stock market. For me, owning a business means investing in sound companies with long-term potential.

The Importance of Financial Education

Research is essential when building financial literacy. Books, podcasts, and YouTube videos are excellent starting points. The best investment you can make is in yourself. Becoming financially educated is achievable for anyone willing to put in the time and effort. Patience and discipline are key.

Personally, I’ve found podcasts to be incredibly helpful. During my long commute, I listen to finance-related podcasts instead of music. One of my current favorites is the Investing for Beginners Podcast, which focuses on value investing—buying stocks at a low price or below their intrinsic value.

The book I’m reading, Rich Dad Poor Dad by Robert T. Kiyosaki, is an excellent resource for understanding how money works. It’s an easy read and perfect for those just starting their personal finance journey.

Final Thoughts

Improving financial literacy takes effort, but the rewards are worth it. Whether it’s reading books, listening to podcasts, or exploring other resources, there’s always something new to learn. For me, the journey involves being consistent with reading and staying open to new ideas. If you’re looking for a place to start, I highly recommend Rich Dad Poor Dad. It’s an eye-opening book that can help reshape how you think about money and investments.