You Can Choose to Be Rich by Robert T. Kiyosaki
Are you tired of running the “rat race,” stuck working paycheck to paycheck despite your best efforts? Robert Kiyosaki, drawing on the opposing financial philosophies of his highly educated “Poor Dad” and his non-traditional, wealthy “Rich Dad,” presents a practical three-step program to redefine your relationship with money and secure financial independence. This text is essential today because traditional industrial-age thinking—prioritizing a safe job and savings—is increasingly obsolete in our fast-paced information age.
Who May Benefit
- Employees seeking to transition from job security to financial freedom.
- Self-employed individuals (S Quadrant) aiming to build scalable business systems.
- Aspiring entrepreneurs looking to launch or buy effective businesses.
- Average investors ready to move beyond mutual funds and acquire controlled assets.
- Individuals struggling to manage debt and control cash flow.
Top 3 Key Insights
- Financial freedom is a daily choice requiring you to adopt the mindset of the rich, conquering fear and cynicism.
- Acquire financial literacy in accounting, investing, and taxes to stop working hard for money.
- Build assets (businesses/real estate) that generate passive or portfolio income to cover all expenses.
4 More Takeaways
- Successful investing is a mechanical, long-term plan based on knowledge, not risky gambling or emotional panic.
- Shift from the Employee’s “Earn-Tax-Spend” model to the corporation’s tax-advantaged “Earn-Spend-Tax” approach.
- Pay yourself first daily to build financial discipline and create the pressure needed to find new income streams.
- Utilize a corporation’s protection: “Own nothing, but control everything” to limit personal liability and maximize deductions.
Book in 1 Sentence
Achieve financial freedom by changing your mindset, acquiring financial literacy, and building income-generating assets that work for you.
Book in 1 Minute
This program is your roadmap to financial freedom, contrasting the struggling “Poor Dad” who sought job security with the wealthy “Rich Dad” who prioritized financial literacy. Kiyosaki stresses that becoming rich is a daily choice, not a matter of luck. The core strategy involves executing a rigorous three-step plan: Think It, Learn It, Do It. Readers must overcome internal obstacles like fear and cynicism to develop a rich mindset, gain crucial knowledge in accounting, taxes, and investing, and finally, take action by moving from the Employee (E) or Self-Employed (S) quadrants to the Business Owner (B) and Investor (I) quadrants. The ultimate goal is to have your money work hard for you, providing the time and freedom to pursue your passions and give back to society.
1 Unique Aspect
The book’s most enduring concept is the CASHFLOW Quadrant (E, S, B, I), which categorizes people not by what they earn, but how they generate income, providing a clear visual framework for the necessary shift from seeking security to achieving financial freedom.
Chapter-wise Summary
Section 1: THINK LIKE THE RICH
Chapter 1: Change Your Mind, Change Your Life
“All of us have the power of choice. I choose to be rich, and I make that choice every day.”
To truly change your financial life, you must first confront and transform your ingrained ways of thinking, moving away from negative thoughts and excuses that keep you from choosing wealth. The outdated mentality of the industrial age, which encouraged seeking a “safe, secure job,” must be replaced by the mindset required for the information age: pursuing financial literacy and creating your own assets. Financial success demands cultivating positive traits like courage, vision, and self-control. Critically, stop fearing failure; learning from mistakes turns them into opportunities for wisdom, and understanding that inaction (not investing) is riskier than taking calculated risks. Overcome the six primary personal obstacles: fear, cynicism, laziness, bad habits (like paying others first), arrogance, and disappointment.
Chapter Key Points
- Discard industrial age thinking.
- Overcome six personal obstacles.
- Turn mistakes into learning.
Chapter 2: Rich Dad’s Get Rich Strategies
“The poor and the middle class work for money. The rich have their money work for them.”
Rich Dad emphasized six strategies to break free from the “rat race”. First, commit to financial literacy, the necessary foundation to build lasting wealth. Second, always work to learn essential business skills like leadership, management, and sales, rather than focusing solely on short-term income. Third, recognize that business is a team sport; proactively find mentors and build a team of competent, loyal advisors. Fourth, work for yourself by owning a B-quadrant business system or income-generating assets. Fifth, learn to create money by identifying overlooked opportunities and raising capital, proving that money is ultimately “just an idea”. Finally, practice generosity and give back, which enhances your cash flow control and brings rewards in return.
Chapter Key Points
- Focus on financial literacy.
- Work to learn skills.
- Build systems, create money.
Chapter 3: Where Are You?
“Changing quadrants means transforming who you are, how you think, and how you look at the world.”
The CASHFLOW Quadrant (E, S, B, I) identifies your income source. E types (employees) seek job security and benefits. S types (self-employed/small business owners) are perfectionists who own a job and prefer doing everything themselves. B types (business owners) delegate using “other people’s money and time” (O-P-M/O-P-T) and build effective systems. I types (investors) have their money work for them, achieving wealth measured in time. Financial freedom requires shifting to the right side (B or I). Kiyosaki suggests mastering the B quadrant first because running a successful system creates the cash flow and free time necessary to become a powerful Investor. The right side of the quadrant grants the ultimate goal: time and freedom.
Chapter Key Points
- Understand the four quadrants.
- B/I quadrants lead to freedom.
- Wealth is measured in time.
Chapter 4: Getting Started
“There is gold everywhere. Most people aren’t trained to see it.”
The journey begins by deciding your long-term financial goal: Do you want to be secure, comfortable, or rich?. Most people limit themselves by prioritizing security, seeing wealth as an unlikely stroke of luck. Drafting aggressive financial plans for all three goals—especially the rich plan—is critical to expanding your mindset and identifying hidden possibilities. To truly adopt the rich mindset, find deep-seated personal reasons that compel you forward, and choose daily to be rich. Select friends who talk about opportunity, and emulate financial heroes. Always pay your advisors well because their expertise should generate profits. The essential discipline is to pay yourself first before creditors, using that financial pressure to seek new income streams and build assets.
Chapter Key Points
- Define secure, comfortable, and rich.
- Pay advisors well.
- Pay yourself first, then invest.
Section 2: LEARN WHAT THE RICH KNOW: The Five Pillars of Financial Literacy
Pillar 1: A Primer on Economics
“Those who work the hardest and are paid the least suffer the most from the constant erosion of money’s value.”
Financial literacy starts with understanding macroeconomics and the fundamental concepts like “Time Is Money” and inflation, which causes the purchasing power of your funds to decline. Understanding economic cycles—tracked by the GDP and CPI—strengthens your resolve and ability to spot opportunities in any market condition. The financially intelligent investor remains emotionally neutral during market turbulence. While the majority panics and flees during a bust, sophisticated investors enter the market, buying undervalued assets when others are selling. In the information age, access to knowledge is power, and it is easier than ever to gain access to the world of wealth.
Chapter Key Points
- Time is constantly eroding money’s value.
- Sophisticated investors profit during busts.
- Information is power.
Pillar 2: The Basics of Accounting
“Assets put money in your pocket. Liabilities take money from your pocket.”
Every household operates as a business, and managing its cash flow requires proficiency in accounting. The critical skill is correctly identifying assets (items that generate income, like a rental property) versus liabilities (items that cause expenses, like a mortgage or bad debt). Kiyosaki defines personal property, including your primary residence, as a liability or a “doodad” if it does not produce passive income. Understanding the relationship between the balance sheet and the income statement reveals one’s cash flow pattern. The goal is the rich person’s pattern: assets generate income which covers expenses and consistently buys more assets.
Chapter Key Points
- Learn to read financial statements.
- A home is often a liability.
- Rich cash flow: assets buy more assets.
Pillar 3: The Fundamentals of Taxes
“In this world nothing can be said to be certain, except death and taxes.”
The rich understand that while taxes are certain, the U.S. tax system is progressive and contains legal advantages written for business owners. The secret is to operate under the “Earn-Spend-Tax” model of a corporation, which allows legitimate business expenses to be deducted before income is taxed. Different business entities—Sole Proprietorship, Partnership, Corporation (C/S), and Limited-Liability Company (LLC)—offer varying legal protection and tax treatment. Utilizing a corporation is the key strategy, enabling the owner to separate personal liability from business debt: “Own nothing, but control everything”. Financial literacy allows the owner to legally convert many personal costs into tax-deductible business expenses.
Chapter Key Points
- Taxes are inevitable, but manageable.
- Use business entities for tax advantage.
- Own nothing, control everything.
Pillar 4: The B-I Triangle
“There are many people with great ideas but few people with great fortunes. The B-I triangle has the power to turn ordinary ideas into great fortunes.”
The stability of any thriving business or investment relies on the B-I Triangle, defined by three elements: Mission, Teamwork, and Leadership. The Mission must be strong and customer-focused, not merely motivated by profit. Teamwork demands assembling a collection of highly skilled specialists (lawyers, CPAs, bankers) who work in unison, recognizing that business is a collective effort. Effective Leadership requires vision, communication, decisiveness, and the humility to listen to experts, knowing that a leader’s job is to bring out the best in people, not to be the best person. Inside the triangle are five essential management tiers (Cash Flow, Communications, Systems, Legal, Product). Mastering Systems Management is paramount; the business must be formalized and designed to operate efficiently without the owner’s constant presence.
Chapter Key Points
- Mission, Teamwork, and Leadership are foundation.
- Effective leaders are listeners.
- A system should function without the owner.
Pillar 5: The ABCs of Investing
“Investing is a plan, not a product or procedure.”
True investing requires a comprehensive plan tailored to your financial goals (secure, comfortable, or rich). Investors range from average (buying mutual funds) to professional, with the highest level being the ultimate investor. Sophisticated investors excel because they leverage tax and corporate laws, create deals, and are not afraid to lose. They understand the distinction between good debt (money borrowed for assets someone else pays off) and bad debt (consumer debt paid with after-tax dollars). Real estate is a crucial vehicle for moving to the I Quadrant because it allows investors to use leverage (other people’s money, like the bank’s) to finance large assets that appreciate and provide significant tax shelters. Alternatively, ownership of a successful business system (B quadrant) also grants necessary tax advantages and positive cash flow.
Chapter Key Points
- Investing requires a real plan.
- Real estate provides leverage and tax benefits.
- Avoid bad debt, acquire good debt.
Section 3: DO WHAT THE RICH DO: A Step-by-Step Guide to the Financial Fast Track
Step 1: Determine Where You Are
“If people knew how a financial statement worked, they would be more in control of their money.”
The first action is to conduct an honest financial inventory by creating your own personal financial statement—your “report card for life”. This requires meticulously calculating your monthly income (earned, passive, portfolio) and expenses, along with assets and liabilities. Rich Dad’s analysis strips away items like your personal residence or car, considering them doodads rather than true assets, forcing a realistic view of your holdings. The statement determines your cash flow pattern: poor (income pays expenses), middle class (income pays expenses and growing liabilities disguised as assets), or rich (assets generate income that buys more assets). Accurate recordkeeping is essential for sound financial management and tax compliance.
Chapter Key Points
- Fill out a personal financial statement.
- Identify your current cash flow pattern.
- Accurate recordkeeping is essential.
Step 2: Set Your New Goals
“It isn’t how much money you make that counts, it’s how much money you keep.”
With a clear financial picture, the next step is setting written, aggressive goals for security, comfort, and wealth. The rich measure wealth in time—the duration you can survive without physically working. Analyzing your statement involves maximizing passive/portfolio income as a percentage of your total income and decreasing the percentage paid in taxes. The ultimate objective is to grow your assets until the passive income they generate exceeds your total monthly expenses, thus making you infinitely wealthy. When transitioning quadrants, avoid letting ego interfere; financial intelligence, caution, and knowledge must always precede action.
Chapter Key Points
- Wealth is measured in time.
- Maximize passive/portfolio income.
- Assets must exceed expenses.
Step 3: Take Control of Your Cash Flow
“Making more money will not solve your problems if cash flow management is your problem.”
Since many financial struggles stem from poor cash flow management, the solution starts with discipline and a debt-reduction plan. The core habit is the commitment to pay yourself first every day (into savings, charity, and investing “piggy banks”). This pressure forces you to find new ways to earn money, making you mentally and financially stronger. First, eliminate all unsecured bad debt, especially high-interest credit card loans, by liquidating balances from the highest APR down. Secondly, control spending on doodads, postponing luxuries until your assets generate the income to pay for them. Once debt is paid, every dollar directed to investing should remain in the asset column forever—it is your “employee” working hard for you.
Chapter Key Points
- Pay yourself first daily.
- Eliminate unsecured bad debt.
- Invested money must stay invested.
Step 4: Become an Investor
“Investing is a plan, not a product or procedure.”
To begin investing, memorize the Seven Rules of Investing, which stress converting earned income to passive income and being prepared rather than trying to predict the market. For average investors seeking security, options like stocks, bonds, and mutual funds are available, but they require extensive due diligence (reviewing prospectuses, financial statements, etc.) due to the lack of control over management. The next level involves professional real estate investing, which is inherently superior to paper assets because it grants the investor leverage (using the bank’s and tenants’ money) for appreciation and immediate tax benefits. The formula for success is to “start small,” “look for a problem to solve” (a property undervalued due to fixable issues), and ensure the property generates a strong, positive cash flow (10% or more cash-on-cash return).
Chapter Key Points
- Follow the seven rules of investing.
- Real estate provides financial leverage.
- Acquire properties that provide positive cash flow.
Step 5: Enter the B Quadrant
“In moving to the B quadrant, your goal is to own a system. Think of the system as your machine…”
Moving to the B Quadrant is essential for true freedom, as it means owning a system that produces income, not owning a job (S Quadrant). When choosing a business, assess your skills, research the competition, and find a customer need to solve. Start-ups are the riskiest, but buying a successful existing business or a franchise provides a proven system and reduces risk. Network marketing offers minimal startup costs and built-in systems, making it a viable entry point. Crucially, success requires building a team of professional advisors (financial, legal, tax) because business is a team sport; never try to go it alone. Select the proper legal entity (e.g., C Corporation) to shield personal assets and exploit tax loopholes, firmly establishing the rich’s “Earn-Spend-Tax” pattern.
Chapter Key Points
- Own systems, not jobs.
- Build a loyal team of advisors.
- Choose the right legal entity.
Step 6: Mind Your Own Business
“In the world of business capital, money follows management.”
To attract capital and ensure stability, the B-quadrant owner must rigorously manage the B-I triangle’s internal tiers: Cash Flow, Communications, Systems, Legal Affairs, and Product. Cash flow management must be monitored daily, applying tight internal controls and delaying salary until sales justify it. Leadership involves constantly communicating the mission and supporting the team, as leadership is about bringing out the best in others. Systems management is the foundation; all operations must be formalized (often in a procedures manual) so the “machine” runs smoothly without the owner’s intervention. Legal management protects the company’s core assets, specifically intellectual property (patents, trademarks, copyrights). Remember, experienced investors view the product as the least important element; systems and management are everything.
Chapter Key Points
- Management attracts capital.
- Formalize all business systems.
- Protect intellectual property.
Step 7: Become an Ultimate Investor
“The rich invent their own money. How? They build companies and sell their shares to the public.”
The ultimate stage is vertical expansion: achieving Ultimate Investor status by building a business so successful that its shares can be sold to the public via an Initial Public Offering (IPO). Ultimate investors create wealth where none existed, funding expansion and cashing in on equity. To reach this pinnacle, secure mentors from the elite investment circles, master high-level salesmanship, and deeply understand future market trends. Preserving this fortune involves counterintuitively reducing taxable earned income and maximizing legitimate expenses paid by the business entities. Money buys freedom, but the true purpose of accumulated wealth is philanthropy—giving back to the community to change society and experience the “ultimate power of money”.
Chapter Key Points
- Ultimate investors create money via IPOs.
- Reduce taxable income, increase business expenses.
- Philanthropy provides ultimate power.
10 Notable Quotes
- “The rich are not smarter than the rest of us—they just know things about money that the middle class and poor do not!”
- “Assets put money in your pocket. Liabilities take money from your pocket.”
- “Broke is temporary, poor is eternal.”
- “If you want to be rich, don’t work for a business—own a business.”
- “Investing isn’t risky; not investing is risky.”
- “The tax laws were written for the benefit of the business owner.”
- “You’ll never get rich if you don’t have the confidence to make a good sales pitch and then ask for the check.”
- “Most people fail to realize that in life, it’s not how much money you make, but how much money you keep.”
- “Utilizing the corporation is one of the secrets of the rich: Own nothing, but control everything.”
- “Wealth is measured in time, not money.”
About the Author
Robert T. Kiyosaki, born and raised in Hawaii, is a fourth-generation Japanese-American and co-founder of CASHFLOW Technologies, Inc. (CTI). After graduating from the Merchant Marine Academy, he served as a Marine Corps officer and helicopter gunship pilot in Vietnam. He later founded a company that brought the first nylon Velcro surfer wallets to market. Driven by a passion for teaching, he sold his international education business and retired financially free at age 47 in 1994. Kiyosaki dedicated his life to teaching the lessons learned from his “Rich Dad,” focusing on how people can have money work hard for them. His mission with CTI is “To elevate the financial well-being of humanity”. His influential works include Rich Dad Poor Dad, Rich Dad’s Cashflow Quadrant, and the educational board game CASHFLOW™.
How to Use This Book
Use this as a step-by-step workbook: review your financial statement worksheets, highlight key financial concepts, listen to the accompanying resources, and most importantly, take action daily on your lessons to gain critical experience.
Conclusion
Financial freedom is not a distant dream reserved for the lucky few; it is a profound choice that begins with changing your mind and committing to financial education. Stop allowing old, industrial-age ideas to constrain your future and refuse to be a slave running from paycheck to paycheck. Embrace the Rich Dad philosophy today: start building your asset column, secure your time and ultimate freedom, and choose to be rich!.