Rich Kid Smart Kid: Giving Your Child a Financial Head Start by Robert T. Kiyosaki
The world is shifting from the Industrial Age to the Information Age, rendering old advice like “get a safe, secure job” largely obsolete. While education is more important than ever, traditional schooling often fails to prepare children for the complex financial challenges of modern life, leading millions toward economic difficulties in retirement. Rich Kid Smart Kid offers a critical blueprint for parents, explaining how to provide the essential financial education schools omit and protect their child’s natural genius, ensuring they are prepared not just to survive, but to truly thrive, in the brave new world.
Who May Benefit
- Parents seeking to give their children a financial head start in life.
- Those interested in teaching children about money through engaging games and real-life experiences.
- Parents of children who are struggling or bored in the traditional academic system.
- Adults seeking to change their financial self-perceptions and outdated “winning formulas”.
- Individuals aiming to understand the link between multiple intelligences and long-term professional success.
Top 3 Key Insights
- Protect your child’s self-perception and genius, as this foundation is key to lifelong success.
- Financial education—learning assets versus liabilities—is more vital than high academic grades.
- Get rich at home by building assets that work for you, rather than working for money.
4 More Takeaways
- Savers are often losers due to taxation and inflation; money must move fast to create wealth.
- Success is defined as the freedom to be authentically yourself, regardless of societal expectations.
- Avoid the financial trap of only having earned income, which is the highest taxed type of income.
- Use games and “financial field trips” to teach crucial money concepts through experience.
Book in 1 Sentence
Parents must actively cultivate their child’s natural genius and financial intelligence for thriving in the rapidly changing Information Age.
Book in 1 Minute
The world has changed. Relying on good grades and a safe job is Industrial Age thinking, leaving millions unprepared for retirement. Kiyosaki argues that true success demands financial intelligence, measured by a healthy financial statement, not a report card. Drawing on lessons from his academically successful “Poor Dad” and his financially brilliant “Rich Dad,” the book stresses the importance of fostering a child’s natural learning genius and protecting their self-perception. By teaching children to understand assets, liabilities, and debt management through play and real-world experience, parents empower them to achieve financial security and the freedom to pursue their unique path in life.
1 Unique Aspect
The book uses the game Monopoly as a direct, real-world formula for building massive wealth—buy four green houses and trade them for one red hotel—compressing decades of financial strategy into an easily digestible and actionable concept.
Chapter-Wise Summary
Introduction: Why Your Banker Does Not Ask You for Your Report Card
“The rules have changed”.
As the world shifts from the Industrial Age to the Information Age, the value of a traditional education continually decreases, requiring constant retraining merely to keep up. While education is vital, the existing system is failing to prepare students for financial challenges, demonstrated by statistics showing that 56 out of 100 people aged 65 require government or family support. The core issue is that your banker does not ask for your school report card; they ask for your financial statement, which serves as your adult measure of financial intelligence. Parents are encouraged to take an active role in education to ensure their children gain the financial security needed for this new age.
Chapter Key Points
- Old rules are obsolete.
- Financial statement is adult report card.
- New age demands lifelong learning.
Part I: “Money Is an Idea”
“Money is an idea”.
Part I contrasts the author’s two influential fathers: the academic “poor dad” and the financially astute “rich dad”. Both believed that all children are born with the potential to be smart and rich, and that money begins as an idea. By observing both men, the author learned that limiting concepts like “I can’t afford it” become self-fulfilling prophecies, limiting one’s financial and academic future. This section focuses on protecting a child’s natural possibilities and laying the philosophical groundwork for financial genius by drawing out (educare) the intelligence already within them.
Chapter Key Points
- Money starts as an idea.
- Protect child’s potential.
- Academics vs. financial genius.
Chapter 1: All Kids Are Born Rich Kids and Smart Kids
“The word education comes from the Latin word educare, which means ‘to draw out'”.
Both father figures believed genius must be “drawn out,” not crammed in. The author recounts the “mud puddle incident” where he was bullied and realized that life rarely offers simple right or wrong answers; instead, it demands complex choices, each with consequences. His father taught him that intelligence is knowing what is appropriate in a situation, requiring a balance between gentleness (feminine side) and strength (masculine side). Allowing children to navigate conflict and teaching them the intelligence of making fine distinctions is crucial to their development.
Chapter Key Points
- All kids are born geniuses.
- Intelligence is making distinctions.
- Balance kindness with strength.
Chapter 2: Is Your Child a Genius?
“Intelligence is the ability to make finer distinctions”.
Every child is born capable of quantum learning and possesses multiple intelligences, yet traditional school focuses narrowly on the verbal-linguistic genius (reading and writing). Rich dad defined Financial IQ not by net worth, but by how much money you keep and how much freedom, happiness, and choices that money affords. The ability to make finer distinctions—for example, between good debt and bad debt—is the foundation of all intelligence and allows individuals to learn faster in ways that suit their natural abilities, like the author learning best by doing (physical genius).
Chapter Key Points
- Financial IQ measures freedom.
- Multiple geniuses exist.
- Learn by doing, not just reading.
Chapter 3: Give Your Children Power—Before You Give Them Money
“The more you need money, the less power you have”.
Money is merely an idea, and true financial power lies in your internal ideas and perceptions. Rich dad deliberately had the author work for free to teach him that he could create money without needing to work for money. This shifts the mindset from neediness (which robs power) to creativity. The crucial goal for parents is protecting a child’s self-perception—the belief they can be rich and smart—a foundation so vital that changing a negative “ounce of perception” later often requires a “ton of education”. Parents should encourage inquiry by asking, “How can I afford it?” rather than shutting down possibilities with “I can’t afford it”.
Chapter Key Points
- Power comes from ideas, not money.
- Protect self-perceptions.
- Never say, “I can’t afford it”.
Chapter 4: If You Want to Be Rich, You Must Do Your Homework
“The primary difference between the rich, the poor, and the middle class is what they do in their spare time”.
Wealth is not generated primarily through hard work at a job, but through financial homework—what you do with your money outside of work. Rich dad taught the wealth formula using Monopoly: buy four green houses (small assets) and convert them into one red hotel (large asset). This formula focuses on building an asset column that increases in value and generates passive income, rather than working for a paycheck. For the author, playing Monopoly provided the winning formula and incentive needed to endure boring academics, because he could see his future self as financially free.
Chapter Key Points
- Get rich doing homework.
- Monopoly teaches wealth formula.
- Build assets, not just jobs.
Chapter 5: How Many Winning Formulas Will Your Child Need?
“The school system is not really a system of education as much as a system of elimination”.
In the rapidly changing world, a child needs a minimum of three winning formulas: for learning, professional life, and financial life. Traditional school is often a “system of elimination,” measuring success via bell curves and favoring only one genius (verbal-linguistic), which damages the self-esteem of children who learn differently. Parents must observe and support a child’s unique learning style, especially around the “nine-year change” (when children seek independent identity and survival skills). Crucially, the system itself—rooted in old Prussian models—is designed for survival, not change, often choosing to drug hyperactive kids rather than speed up its curriculum.
Chapter Key Points
- Need three winning formulas.
- Support unique learning styles.
- System designed for survival.
Chapter 6: Will Your Child Be Obsolete by Thirty?
“The older you get, the less valuable you become”.
The Industrial Age belief in increasing value with age is dangerously inverted in the Information Age; without continuous learning, professionals can become obsolete by age thirty or forty. The future favors individuals who possess strong learning formulas that enable them to change and adapt quickly, rather than those who simply secured good grades. Following the old advice to “get a safe, secure job” often traps people on a career path that stops working. Parents must overcome their own Depression-era fears of unemployment and teach their children that they will likely have multiple professions, necessitating constant self-reinvention.
Chapter Key Points
- Job skills rapidly depreciate.
- Adaptation is critical skill.
- Obsolete ideas, not people.
Chapter 7: Will Your Child Be Able to Retire Before Thirty?
“If you don’t have to go to work, you have a lot of time to become rich”.
Rich dad’s vision was to teach the author to achieve financial freedom early, enabling him to retire before thirty. Playing Monopoly became a “looking glass,” revealing a new financial world where his perception shifted from “poor kid” to “rich kid” simply by understanding the tangible relationship between assets and cash flow. Schools are structured to teach students to look for jobs (to sit on the employee side of the table), but rich dad taught the author to look for business opportunities and investments (to sit on the owner/investor side). The goal is not to find a job, but to gain the financial skills that enable early retirement and lifelong choice.
Chapter Key Points
- Retire early to get rich.
- Training mind to look for assets.
- Education continues after school.
Part II: Money Does Not Make You Rich
“If money made you rich, why do so many lottery winners go broke?”.
The section challenges the notion that academic success or simply making a lot of money guarantees real-world success; money alone does not make one rich. Financial problems are often compounded when people acquire debt, such as school loans or credit card debt, immediately upon leaving school. True financial success requires financial literacy—the ability to control and manage the flow of money, a skill often missing from formal education.
Chapter Key Points
- Money alone fails to enrich.
- Need real-world financial skills.
- Focus on financial management.
Chapter 8: My Banker Has Never Asked Me for My Report Card
“My banker has never asked me for my report card”.
The author realized that a bad grade in high school was merely a short-term failure, while his financial statement would be his adult “report card” for life. Financial literacy provides the “three Cs”: confidence, control, and correction. Lacking these, many people list liabilities (like their personal home mortgage or consumer goods) as assets on their balance sheet. A liability takes money out of your pocket (it “eats you”), while an asset puts money in (“it feeds you”). Understanding this cash flow distinction is the foundational step in financial education, allowing corrections before it is too late.
Chapter Key Points
- Financial statement is life report card.
- Literacy brings confidence, control, correction.
- Assets feed you, liabilities eat you.
Chapter 9: Kids Learn by Playing
“The current system of education does not allow teachers to teach in this way or allow teachers the time to give each child the attention needed”.
Children learn financial survival skills best through play and fun, just like animals. Since the traditional educational system is a “factory” focused on mass production schedules rather than individual learning curves, parents must provide experiential learning at home. Games, such as Kiyosaki’s CASHFLOW for Kids, serve as an ideal bridge, allowing children to learn abstract concepts like financial statements (Step 1: drawings, Step 2: play, Step 3: real life) with minimal emotional pain from mistakes. The process of teaching also helps the parent learn and reinforce better financial habits, emphasizing the value of accountability.
Chapter Key Points
- Play teaches survival skills.
- Games bridge theory and reality.
- Financial discipline is key.
Chapter 10: Why Savers Are Losers
“Savers are losers”.
Rich dad’s contentious statement “Savers are losers” was meant to provoke students into realizing that mere saving is an outdated, low-return Industrial Age formula. Savers are punished because interest earned is often negated by inflation and taxed by the government, resulting in a net loss. Furthermore, the tax system incentivizes being in debt (e.g., mortgages receive deductions) rather than saving. Financial intelligence requires focusing on the velocity of money—converting money quickly into assets that return the initial capital, allowing for reinvestment. The “three piggy bank system” (Tithing, Savings, Investing) is recommended to teach the discipline of “pay yourself first”.
Chapter Key Points
- Savings net losses after taxes.
- Velocity of money matters.
- Use three piggy banks system.
Chapter 11: The Difference Between Good and Bad Debt
“If you want to be rich, you must know the difference between good debt and bad debt”.
The rich focus on debt management, aiming to acquire and manage increasing amounts of good debt—debt that is borrowed to purchase an asset that generates income. Poor and middle-class individuals, conversely, focus on paying off all debt, especially debt acquired for liabilities (like houses and cars). Rich dad taught the alchemy of money by instructing the author to “think like a banker”: borrowing money (the bank’s liability) and finding a way to make that money generate income. This ability to differentiate between wealth-creating and wealth-destroying debt drastically increases financial sophistication. Debt is a loaded gun; handled properly, it can build wealth rapidly.
Chapter Key Points
- Good debt buys assets.
- Think like a banker.
- Debt is a powerful tool.
Chapter 12: Learning with Real Money
“The greatest risk of all is to wait too long to begin making those mistakes”.
Using real money allows children to gain the priceless experience necessary to develop financial confidence and entrepreneurial spirit. Practical application reinforces concepts like delayed gratification; for example, teaching a child to acquire an asset (vending machines) that subsequently pays for a desired liability (golf clubs). This experiential learning protects a child’s creativity and self-perception, empowering them to become who they want to be. The greatest risk is not taking risks when young, as mistakes made early (when the consequences are small) accelerate learning and prevent larger failures later in life when time runs out.
Chapter Key Points
- Money is a teaching tool.
- Encourage entrepreneurial spirit.
- Start small, learn from mistakes.
Chapter 13: Other Ways to Increase Your Child’s Financial IQ
“Nothing is complicated if you use simple words”.
Financial intelligence starts with language. By enriching their financial vocabulary, children gain the ability to make finer distinctions and see opportunities invisible to others. Definitions should be communicated to the child mentally, emotionally, and physically (such as using games to make them tangible). It is crucial to distinguish between earned income (highest taxed, lowest control), portfolio income (paper assets), and passive income (real estate, lowest taxed), and understand that conversion from earned to passive/portfolio income is the path of the rich. Combining words with numbers (math) dramatically increases communication power and financial insight.
Chapter Key Points
- Vocabulary expands financial sight.
- Distinguish three income types.
- Words and numbers form community.
Chapter 14: What Is an Allowance For?
“The more people you serve, the richer you become”.
Money is a powerful teaching tool, and parents must use it carefully to avoid fostering an “entitlement” mentality. Rich dad stressed the importance of exchange: always offer something of value for what you want. The true secret to getting rich is moving beyond working for an hourly wage (which imposes a finite earning ceiling) and focusing instead on serving as many people as possible. This shifts thinking from the E/S quadrants (physical labor) to the B/I quadrants (fiscal labor/systems). Whether through volunteering (poor dad’s method) or building widespread businesses (rich dad’s method), generosity and service are key to increasing wealth.
Chapter Key Points
- Avoid entitlement mentality.
- Focus on service, not pay rate.
- Charity begins at home.
Part III: Finding Your Child’s Genius
“A genius is someone who found the magical person inside of him- or herself”.
Part III is dedicated to helping children find and express their unique gifts. Rich dad believed in building massive businesses by serving millions. Poor dad spiritualized the idea: everyone has a “geni-in-us” (genius), a gift given at birth. The goal is to find this gift and choose to give it away, unleashing personal “magic” and tremendous happiness. This path gives life reason and enables the freedom to become who one is truly meant to be.
Chapter Key Points
- Genius is internal (“geni-in-us”).
- Find your gift and give it away.
- Focus on service and happiness.
Chapter 15: How Do You Find Your Child’s Natural Genius?
“Success is the freedom to be yourself”.
People possess distinct natural learning styles (or Modus Operandi, MO) which determine how they instinctively take action. The Kolbe Index measures these instincts (Fact Finder, Follow Thru, Quick Start, Implementor), revealing an individual’s true genius, distinct from their IQ or personality. For instance, the author’s combination of Quick Start (taking risks) and Implementor (building tangibles) meant he clashed with the Fact Finder focus of traditional school, but thrived as an entrepreneur. A parent’s job is to respect these differences, recognizing that success is the freedom to be yourself, allowing the child to learn in the way that suits them best.
Chapter Key Points
- Learning styles differ significantly.
- Kolbe Index identifies instincts.
- Respect differing natural gifts.
Chapter 16: Success Is the Freedom to Be Who You Are
“Success is the freedom to be who you are”.
To avoid discord, parents should offer children more choices rather than imposing limitations. Rich dad offered the four quadrants (E, S, B, I) as career options, noting that the B and I quadrants offered the greatest financial control. By teaching children to read a financial statement, parents give them the power to understand the long-term consequences of their financial choices. The crucial lesson is that financial success is independent of academic success. By focusing on financial literacy, parents give their children the stability (like a tetrahedron’s four-sided structure) to leverage their genius and choose the freedom to live life on their own terms.
Chapter Key Points
- Offer choices (E, S, B, I).
- Every financial choice has a consequence.
- Financial success is independent of grades.
10 Notable Quotes
- “The rules have changed”.
- “Education is more important today than at any other time in history”.
- “My banker has never asked me for my report card”.
- “Intelligence is the ability to make finer distinctions”.
- “Money is an idea”.
- “Assets put money into your pocket, and liabilities take money from your pocket”.
- “The primary difference between the rich, the poor, and the middle class is what they do in their spare time”.
- “Savers are losers”.
- “The more you need money, the less power you have”.
- “Success is the freedom to be who you are”.
About the Author
Robert T. Kiyosaki, born and raised in Hawaii, is a fourth-generation Japanese-American. After graduating from college in New York, Robert joined the Marine Corps, serving as an officer and helicopter gunship pilot in Vietnam. Following his military service, he went into business, starting a company in 1977 that brought the first nylon Velcro surfer wallets to market. In 1985, he founded an international education company focusing on business and investing. He sold his business and retired at the age of 47 in 1994. During his short-lived retirement, he wrote Rich Dad Poor Dad, followed by Rich Dad’s Cashflow Quadrant and Rich Dad’s Guide to Investing, all becoming best-sellers. He also created the educational board game CASHFLOW to teach the financial strategies that allowed him to retire early.
How to Use This Book
Use the concepts immediately to evaluate and improve your own financial statement. Apply the “How can I afford it?” mantra and use play (like CASHFLOW games) to proactively teach your child financial literacy.
Conclusion
Your child is born with inherent genius, their “geni-in-us,” ready to be drawn out. Do not let fear or outdated academic dogma crush their potential or limit their choices. By providing the essential financial education missing in schools and nurturing their unique learning style, you give them the power to control their financial destiny and achieve true freedom. Your role as a parent is the most important job in the world—keep the light on and guide them toward a life of boundless security and choice.