Rich Dad’s Increase Your Financial IQ: Get Smarter with Your Money by Robert T. Kiyosaki
The traditional path to financial security—working hard, saving money, and diversifying—is dangerously obsolete in today’s economy. Robert Kiyosaki, drawing on lessons from his Rich Dad, argues that wealth is determined not by your income, but by your financial intelligence, or Financial IQ. This book provides a practical framework for mastering the five core financial skills required to thrive, ensuring you play by the new rules of money and stop being prey for financial predators.
Who May Benefit
- Entrepreneurs and business leaders (B Quadrant).
- Serious investors seeking greater returns (I Quadrant).
- Individuals seeking protection from high taxes and fees.
- Those ready to discard outdated financial advice.
- Anyone dedicated to developing their cognitive “financial genius”.
Top 3 Key Insights
- Financial intelligence, not money or effort, solves financial problems and drives ultimate wealth accumulation.
- Mastering five core Financial IQs (Making, Protecting, Budgeting, Leveraging, Improving Information) is essential for success.
- Due to rules changing in 1971 and 1974, traditional advice like saving currency and massive diversification is now obsolete and risky.
4 More Takeaways
- Safe financial leverage (IQ #4) depends entirely on the investor’s control over the asset, minimizing market risk.
- Budgeting for a surplus (IQ #3) must be treated as a prioritized expense, forcing the search for increased income.
- Protecting money (IQ #2) requires defense against seven primary predators, including taxes, bankers, and brokers.
- True financial genius requires courage to align the logical, creative, and powerful subconscious brains against the fear of failure.
Book in 1 Sentence Increase your financial IQ by mastering five core intelligences to solve problems and thrive in the new economy.
Book in 1 Minute The path to prosperity is paved by increasing your Financial IQ—the combination of five core intelligences—in response to the accelerating challenges of the Information Age. Kiyosaki argues that traditional wisdom like saving currency and heavy diversification is flawed because the rules of money fundamentally changed in 1971 and 1974, making savers losers. True wealth is achieved by using knowledge (IQ #5) to build and acquire assets, protect money from predators (IQ #2), force a budget surplus (IQ #3), and apply conscious leverage (IQ #4). The rich view financial problems as opportunities to learn and grow smarter, a perspective essential for financial integrity.
1 Unique Aspect The book redefines financial management as a holistic quest for “financial integrity,” emphasizing that mastery isn’t just about technical skill (IQ #1) but the sound, incorruptible functioning of all five financial intelligences working as a unified system.
Chapter Summaries
Introduction: Does Money Make You Rich?
“It is information, knowledge, wisdom, and know-how, a.k.a. financial intelligence, that makes one wealthy.”
The introduction challenges the notion that money solves problems, pointing out that lottery winners and successful professionals often end up broke (like MC Hammer). Kiyosaki asserts that neither hard work, education, nor a job solves money problems. Instead, financial intelligence—the ability to process information and solve financial problems—is the key. The rules of money changed significantly in 1971 (when currency left the gold standard) and 1974 (when pensions shifted risk to employees), making outdated advice dangerous. The poor and middle class avoid financial challenges, while the rich actively solve them to increase their Financial IQ and get richer.
Chapter Key Points
- Money does not make you rich.
- Financial intelligence solves problems.
- Rich seek problems to solve.
Chapter 1: What Is Financial Intelligence?
“The rich get richer because they learn to solve financial problems.”
Kiyosaki shares experiences showing that both the poor and the rich face real money problems, just different types. He explains that financial problems are like a toothache: if ignored, they compound into massive life problems. The root cause of poverty is having more problems than solutions. The rules of money changed significantly in 1971, turning savers into losers and debtors into winners, fundamentally altering capitalism. The middle class attempts to “outsmart” their problems through academic security, often becoming financial prisoners of their jobs. Financial intelligence is the solution, and the rich use their acumen (financial integrity) to solve problems, including working to solve other people’s financial problems, which makes them rich.
Chapter Key Points
- All classes have money problems.
- Problem-solving raises Financial IQ.
- Rich solve problems for opportunities.
Chapter 2: The Five Financial IQs
“Financial intelligence is that part of our mental intelligence we use to solve our financial problems. Financial IQ is the measurement of that intelligence.”
Financial IQ measures the results of one’s financial intelligence. The five core financial intelligences required for success are introduced: 1) Making more money (gross dollars earned); 2) Protecting your money (percentage kept, e.g., low taxes); 3) Budgeting your money (creating a surplus); 4) Leveraging your money (high return on investment); and 5) Improving your financial information (knowledge foundation). Kiyosaki argues that high financial IQ is essential for success in the B (big business) and I (investor) quadrants, unlike the E or S quadrants where academic or professional IQs are prioritized. Turning money over to “experts” (IQ #5 mistake) prevents personal learning and growth.
Chapter Key Points
- Financial IQ measures results.
- Five distinct financial intelligences.
- B and I quadrants require high FIQ.
Chapter 3: Financial IQ #1: Making More Money
“One of the reasons people lack financial IQ #1: making more money, is because they want the money but not the process.”
Kiyosaki illustrates IQ #1 by detailing his choice to take a low-paying job at Xerox to master sales skills—a crucial part of his entrepreneurial process—instead of returning to high-paying positions as a ship’s officer or pilot. The journey toward wealth is defined by the process of solving increasingly complex problems, not by the resulting money. Emotional intelligence is vital here; avoiding quitting when depressed or frustrated is key. B and I quadrant players focus on building or acquiring assets that generate passive income, effectively having assets work for them. Earned income (E and S quadrants) is the hardest income to protect from predators, highlighting the value of passive income.
Chapter Key Points
- The process of learning makes you rich.
- B/I build income-producing assets.
- Overcome fear and stick with failure.
Chapter 4: Financial IQ #2: Protecting Your Money
“A bureaucrat’s job is to get their hands deeper in your pockets—legally—and your job is to have them take as little as possible—legally.”
Financial IQ #2 measures the percentage of income you retain against the portion taken by financial predators. Kiyosaki identifies seven “Bs” that steal wealth: Bureaucrats (taxes), Bankers (fees, fractional reserve), Brokers (sales commissions), Businesses (credit card interest), Brides/Beaus (divorce), Brothers-in-Law (estate vultures), and Barristers (lawsuits). Earned income, typically generated by E’s and S’s, provides the least protection against taxes. Kiyosaki stresses the importance of gaining financial education to identify and secure good brokers and to hold valuable assets within protective legal entities (like C-corporations or LLCs). He concludes that since the system is rigged to legally take money, it is easier to change oneself and play by the new rules than to fight the system.
Chapter Key Points
- Taxes are major financial predators.
- Good brokers educate, bad brokers sell.
- Hold assets in legal entities.
Chapter 5: Financial IQ #3: Budgeting Your Money
“Most people use their budget as a plan to become poor or middle class rather than a plan to become rich.”
Kiyosaki rejects the advice to “live below your means,” favoring the strategy of expanding your means and budgeting for a surplus. The radical budgeting tip is to make saving, tithing, and investing (creating a surplus) an expense—a top priority, not the last. By paying yourself first, even if it leaves a shortage, you are compelled to increase your income (IQ #1) to resolve the deficit, thus growing richer and more resourceful. Furthermore, rich budgeting dictates that assets must pay for liabilities or luxuries (e.g., generating passive income to afford a Bentley). The expense column serves as a crystal ball, revealing a person’s true financial future based on their discretionary spending habits.
Chapter Key Points
- Expand your means, don’t limit them.
- Pay yourself first as an expense.
- Bad debt can be a resource for growth.
Chapter 6: Financial IQ #4: Leveraging Your Money
“Leverage is risky only when people invest in assets that they have no control over.”
Leverage, defined as doing more with less (often OPM—Other People’s Money), is key to achieving high returns. Kiyosaki contends that the widespread belief that “higher returns mean higher risk” is false, specifically when investors maintain control. Paper assets (stocks, mutual funds) offer no control, requiring investors to rely on obsolete advice like diversification. Real estate, conversely, allows control over rents (income), expenses, and financing (liability). Controlling these elements allows for achieving infinite returns (IRR) by leveraging improvements to refinance, pulling out the original cash investment tax-free while retaining the income-generating asset.
Chapter Key Points
- Leverage is doing more with less.
- Control minimizes investment risk.
- Highest returns achieved using OPM.
Chapter 7: Financial IQ #5: Improving Your Financial Information
“Ultimately, it is not the asset that makes you rich . . . it is information and intelligence that makes you rich.”
In the Information Age, information is the single greatest asset; lacking knowledge about money causes people to “perish” financially. Kiyosaki, recalling his time as an information officer in Vietnam, stresses the need to classify information by time, credibility, and classification (insider information). Amateurs lose money because they trade on ancient history (late information) or deceptive tactics like the “pump and dump”. Smart investors distinguish between opinions (like capital gains projections) and facts (like cash flow). Ignorance of key information, such as the 20-year cycle between stocks and commodities, ensures failure. True intelligence takes information and makes it meaningful, recognizing that the value of an asset is more important than its price.
Chapter Key Points
- Information is the greatest asset.
- Distinguish facts from opinions.
- Follow long-term global trends.
Chapter 8: The Integrity of Money
“The integrity of all five intelligences is required if a person wants to grow rich, stay rich, and pass his or her wealth on for generations.”
Integrity, meaning soundness or completeness, applies to finance; financial integrity means all five Financial IQs are functioning soundly. Lacking one IQ, such as budgeting or protection, compromises the entire financial structure. Warren Buffett seeks companies with intrinsic value, meaning they exhibit the five financial intelligences through traits like a protected niche, leverage, expandability, and predictability. Kiyosaki asserts that governments, like the U.S., operate without financial integrity by leveraging debt rather than money and failing to solve problems. As the world heads toward a “perfect storm,” individuals must increase their own financial integrity (intrinsic value) by focusing on improving their weakest financial IQ.
Chapter Key Points
- Financial integrity is wholeness.
- Intrinsic value reflects financial integrity.
- Prepare your finances for future chaos.
Chapter 9: Developing Your Financial Genius
“If you cannot control your emotions, you cannot control your money.”
Kiyosaki explains that success is achieved not by getting high academic grades, but by developing one’s unique genius through specialized focus—not diversification—and consciously choosing a high standard of living. Financial genius requires aligning the logical left brain, the creative right brain, and the powerful subconscious brain. The subconscious is the most powerful part, often controlled by fear (e.g., fear of losing a secure job), which leads to people imitating safe, average behavior. Kiyosaki’s experience showed that to change your life, you must change your environment to stimulate your “mirror neurons” and learn the dialect of rich people. True entrepreneurial success requires “ignorance and courage” to act despite the risks.
Chapter Key Points
- Reject “live below your means” advice.
- Subconscious fear limits wealth.
- Environment dictates learning and genius.
Chapter 10: Developing Your Financial IQ
“If you can train your left brain to understand the subject, engage your right brain to come up with creative solutions, keep your subconscious brain excited rather than fearful, and then take action… You can develop your genius.”
Developing your Financial IQ is a continuous, long-term process, requiring dedication to finding transitional learning environments that strengthen all three brains. These environments include the military, hands-on seminars, coaching, and networking marketing—spaces designed to conquer the fear of failure and develop interpersonal/intrapersonal skills. Kiyosaki advises aspiring entrepreneurs that their primary job is raising capital from customers, investors, and employees. He highlights the importance of feedback in life (from paychecks to standard of living) as a free source of crucial information. Only by having the courage to listen to this feedback and continually learn can one improve their life and grow richer.
Chapter Key Points
- Seek hands-on transitional environments.
- Courage and ignorance drive action.
- Feedback is priceless, constant information.
10 Notable Quotes
- “Money is not the most important thing in life, but money does affect everything that is important.”
- “It’s financial education that enables people to process financial information and turn it into knowledge…”
- “Your house is not an asset . . . your house is a liability.”
- “Poverty is simply having more problems than solutions.”
- “Under the old rules of capitalism, it was financially smart to save money. But in the new capitalism, it’s financial insanity to save a currency.”
- “The rich get richer because they learn to solve financial problems.”
- “A budget surplus is an expense.”
- “The key to leverage is control, and the key to control is financial intelligence.”
- “Diversification is a protection against ignorance. Diversification is not required if a person knows what they are doing.”
- “A risky investor invests based on opinions.”
About the Author Robert T. Kiyosaki is a fourth-generation Japanese-American, born and raised in Hawaii. After graduating from the U.S. Merchant Marine Academy, he served in Vietnam as an officer and helicopter gunship pilot. Following the war, he worked in sales at Xerox Corporation before launching his own business in 1977, bringing the first nylon and Velcro “surfer wallets” to market. He went on to found an international education company in 1985. Kiyosaki retired at age 47 in 1994 based on his investment income. His short-lived retirement led him to write Rich Dad Poor Dad (1997), which became an international phenomenon, translated into 51 languages and sold in 109 countries. He is also the creator of the educational board game CASHFLOW® 101, designed to teach the investment strategies learned from his rich dad. Kiyosaki has co-authored books like Why We Want You To Be Rich with Donald J. Trump.
How to Use This Book To apply these lessons, consciously find transitional learning environments (like CASHFLOW Clubs or seminars) to practice. Start by focusing on improving the weakest of your five Financial IQs first.
Conclusion The financial storms of the Information Age are approaching, and relying on obsolete advice will leave you financially exposed. True wealth and security stem from intellectual mastery—developing all five Financial IQs into a unified financial integrity. Embrace every financial challenge as a priceless opportunity to learn, increase your intrinsic value, and develop the courage to align your entire mind towards victory. Start mastering one of the Five Financial IQs today and command your financial future!