UNIVERSITY OF SAN CARLOS

SCHOOL OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTANCY

RICH DAD, POOR DAD

BA102A: Ethics Paper

Submitted by:
Vianca Pearl Amores

Submitted to:
Fr. Jose Rivas Suson, SVD

September 20, 2016

I.

Summary

Rich Dad, Poor Dad is the story of author Robert Kiyosaki's life in Hawaii and
his two fathers one rich father (not biological) and one poor father
(biological). The said author was given the option between following his poor
father a highly educated government worker or his rich father an
entrepreneur who never graduated high school.

Ultimately, Kiyosaki decides to learn from his rich dad. The book focuses
mostly on the education and financial advice Kiyosaki learned from his rich
dad. His rich father was able to create a multi-million dollar empire from
virtually nothing, using his financial acumen and the power of his
imagination.

The book is organized into six main lessons that Kiyosaki presents to
becoming successful:
(1) The rich don't work for money;
(2) Financial literacy is key;
(3) Own businesses, rather than work at them;
(4) Understand taxes and the power of corporations;
(5) The rich invent money;
(6) Work to learn rather than work for money.

These lessons combine the teachings of Kiyosaki's rich dad with experiences
from his own life. They contain recurring themes, such as the importance of
improving your financial IQ and financial literacy, a set of skills that Kiyosaki
believes is absent from the current education system.

The book also shows how the rich don't work for money, they force money to
work for them. The rich acquire assets rather than liabilities. Kiyosaki stresses
the importance of being able to differentiate between an asset and a liability.
He states that in order to be truly wealthy, your asset column must be robust
and able to offset your living expenses. He explains that most people believe a
higher income will make them rich, but in reality, a strong asset column will.
Higher incomes often lead to higher expenses, higher taxes, and more debt.

Rich Dad, Poor Dad explores the power of corporations and demonstrates how
the rich use corporations to house their money. Corporations allow for
expenses to be paid pre-tax, saving the business owner lots of money.
Kiyosaki dispels the myth that taxes hurt the rich the most instead he shows
how many rich people avoid taxes and outsmart the system. Taxes actually hit
the poor and middle class much harder.

Kiyosaki also explores the character traits and beliefs that hold people back
from becoming rich. He claims these obstacles can be grouped into five
different categories: fear, criticism, laziness, bad habits, and arrogance. The

book explores how each one of these factors acts as an impasse to financial
success and gives real-life examples.

Much of the book is devoted to self-reflection. He discusses at length the ways

in which his rich dad and poor dad have influenced him. Although he
ultimately chose to emulate his rich dad, he still retains some of the beliefs
that his poor father held, such as the importance of social responsibility and
empathy for what he terms as the "have-nots."

II.

Analysis from the point of view of Ethics

One of the very important principles of business ethics is that the main goal of
a business is not to earn profit but to be an instrument to the improvement of
each member of the organization. Earning profit is merely a benefit but not the
main goal.

The following are the principles that the author shared in his book that relate
to business ethics:

SECRET 1: RICH DONT WORK FOR MONEY

People quit jobs because jobs dont pay well. Rich work (in jobs) to learn and
not for money. Rich dad got his own son and the author to work for a very
small pay in a retail store. At one time, due to small pay, both boys were ready

to quit the job and Rich father told them that this is exactly why people quite
job and a prospective businessman dont. Rich Dads lesson: Learn the
business where you do your job so that you can start your own business later.
As a result of this thinking, both boys took thought about business and
reviewed the available resource base. They started a comic book library,
renting books and earning more money than their job of retail store.
SECRET 2: LEARN FINANCIAL LITERACY
Most people buy a house at mortgage and consider it to be an asset. However,
in businessmans vocabulary, its actually a liability because the house is not
earning anything. The house is eating up resources of the person who has
bought it on mortgage.
In school, people are taught to earn good grades, get good jobs and be good
employees. Generally, financial literacy component is not taught. Therefore,
people with job generally struggle to meet their day to day expenses, middle
class purchase liabilities considering it to be an asset (e.g. a house bought on
mortgage or a car on lease!) while rich people construct a sound asset base
which generates income for purchase of other assets.
Rich dad taught author to buy house once there is another asset which
generates enough cash flow to enable the person buy a house. What are the
assets of rich people? Those include: Real Estate, apartments generating rents
and businesses being managed by managers and generating cash. A person
can start with stocks, bond and mutual funds but these are not at all a
substitute of a business which generates cash flows. Rich Dad lesson: Learn

the difference between an asset and a liability and think how to create income
generating assets.

SECRET 3: MIND YOUR OWN BUSINESS

Rich Dads lesson: Along with your day job, start some business side by side.
Dont spend all your salary. Save some amount on a monthly basis and think
about an idea which can be turned to profitable business later. Business of Mc
Donalds owner is not selling ham burgers but to have real estate. If ham
burgers dont sell, there is enough property to be sold, if required.
SECRET 4: THE HISTORY OF TAXES AND CORPORATIONS
Salaried people earn their salary, pay taxes and then spend from whatever
amount is left. Rich people earn, their companies pay all their expenses
including taxes and then they have enough amounts to spend, as all their
expenses are paid before paying any tax.
Author advises to talk to businessmen and investment bankers to learn
businesses. Reading and understanding of financial statements is a must to
understand how a business operates. Rich dads lesson: how rich people
protect themselves from heavy taxes? Their secret: Corporations!
SECRET 5: THE RICH INVEST MONEY
A person can invest money either through experts i.e. investment bankers,
stock brokers etc or can go for self created investment by identifying an
opportunity, raising capital and finding expert people to manage the business.

Rich Dads lesson: Learn how to manage risk. An Investment is not risky. Not
knowing how to manage an investment is risky
SECRET 6: WORK TO LEARN AND NOT FOR MONEY
One should learn to manage cash flows, systems and people. Continuous
learning is the key. Learn how to sell.
III.

Synthesis
One theme thats apparent in this book is that for an individual to be wealthy,
he must aim to own the system or means of production, rather than work for
another individual. The author stresses that there is obviously something
confining about being an employee; it shuts the mind to other possibilities and
it stunts initiative.

Financial intelligence is THE most powerful asset. By studying the precepts of

accounting and investing, the author believes that individuals will be able to
see the difference between an asset and a liability; in fact it is the more
concrete application of learning whats right and whats wrong. Generating a
string of expenses is wrong, building assets is right.

Unlike individuals who earn and then pay taxes on what they earn,
corporations earn, spend what they want to spend, and pay taxes on whats
left. Corporations, therefore, hold a certain degree of power. The rich know
how to use this power, the poor dont.

The author also believes that true luxuries are experienced when they are the
outward manifestations of intelligent investing and asset building. He cites the
example of his wife purchasing a Mercedes Benz because it was the car she
liked and worked hard to be able to purchase it. The author cautions however
about keeping up with the Joneses and getting into debt because of this human
frailty.

Fear, laziness, cynicism and arrogance are to be blamed for most of human
inaction.

IV.

Conclusion
The books theme reduces to two fundamental concepts: a can-do attitude and
fearless entrepreneurship. The author highlights these two concepts by
providing multiple examples for each and focusing on the need for financial
literacy, how the power of corporations contribute to making the wealthy even
wealthier, minding your own business, overcoming obstacles by not fostering
laziness, fear, cynicism and other negative attitudes, and recognizing the
characteristics of humans and how their preconceived notions and upbringing
hamper their financial freedom goals.