Rich Dad Poor Dad is a starting point for anyone looking to gain control of their financial future

An asset puts money
in my pocket.
A liability takes money 
out of my pocket.
and “liability” in the dictionary. I know 
the definition may sound good to a 
trained accountant, but for the average 
person, it makes no sense. But we adults 
are often too proud to admit that 
something does not make sense.
To us young boys, rich dad said, “What defines an asset are not 
words, but numbers. And if you can’t read the numbers, you can’t tell 
an asset from a hole in the ground.” “In accounting,” rich dad would 
say, “it’s not the numbers, but what the numbers are telling you. It’s just 
like words. It’s not the words, but the story the words are telling you.”
“If you want to be rich, you’ve got to read and understand 
numbers.” If I heard that once, I heard it a thousand times from my 
rich dad. And I also heard, “The rich acquire assets, and the poor and 
middle class acquire liabilities.”
Here is how to tell the difference between an asset and a liability. 
Most accountants and financial professionals do not agree with 
the definitions, but these simple drawings were the start of strong 
financial foundations for two young boys.

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Rich Dad Poor Dad
47
This is the cash-flow pattern of an asset:
Assets
BALANCE SHEET
Liabilities
Income
Expenses
INCOME STATEMENT
The top part of the diagram is an Income Statement, often called 
a Profit-and-Loss Statement. It measures income and expenses: money 
in and money out. The lower part of the diagram is a Balance Sheet. 
It’s called that because it’s supposed to balance assets against liabilities. 
Many financial novices do not know the relationship between the 
Income Statement and the Balance Sheet, and it is vital to understand 
that relationship.
So as I said earlier, my rich dad simply told two young boys that 
“assets put money in your pocket.” Nice, simple, and usable.

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Chapter Two: Lesson 2
48