Robert Kiyosaki Answers: Is It Smarter to Save More Money or Earn More Income?

When it comes to money, what’s your financial focus? My poor dad — my natural father who spent his life working in the public school system — spent much of his energy working for others and saving as much money as he could. He was addicted to “safe” decisions with his money.

“If you want to be rich,” my poor dad said, “Go to school, get a good job, and save your money.” The only problem is that my poor dad never became rich. He worked long hours, struggled financially and was never happy. If he wanted something nice, he denied himself. If we wanted to go on a trip, he’d say, “We can’t afford it.” At the end of his life, my poor dad was penniless. The costs of old age eroded his savings and he had no investments to fall back on. If it weren’t for his pension and Social Security, he’d have been in real trouble.

His financial decisions weren’t “safe” after all.

A different mindset

At a young age, my rich dad, my best friend’s dad, taught me a different mindset about money. He said, “Savers are losers. If you want to be rich, don’t save your money, make it work for you.”

Unlike my poor dad, rich dad was not highly educated. From a young age, he had to help support his family by running the family business. But what he lacked in traditional education, Rich Dad made up for in financial education. He understood money and how it worked. As a result, my rich dad owned many businesses and investments that produced cash flow for him every month.

He didn’t work for others, enjoyed the fine things in life, and was very happy. Rather than save money, he invested it in assets that made more money for him. At the end of his life, Rich Dad was wealthy in many ways. He’d lived a full life with friends and family — because of his financial freedom.

The difference between my poor dad and my rich dad can be found in their financial focus.

Working for money

My poor dad focused on saving more money rather than earning more money. The problem with his mindset is that it required working for money and for others. Because my poor dad was overly concerned with putting money in the bank, he missed many opportunities to use his money to make him richer.

When it came to his financial focus, my poor dad spent his energy working to make money, pay his expenses and save what was left — and very little was left.

Making money work for you

Rather than focusing on saving, my rich dad’s financial focus was on earning more money. The advantage of his mindset is that it required making money work for him. Because my rich dad was focused on making more money, he found many opportunities to expand his riches.

When it came to his financial focus, my rich dad spent his energy building his cash-flowing assets, building his income through those investments and then paying his expenses.

Planning to be rich

The difference between my poor dad and my rich dad essentially came down to how they managed their money. Poor dad said, “Live below your means.” My poor dad’s budget or money management focused on cutting expenses to meet his income. It was important for him to pay everyone else and then enjoy what — if anything — was left.

Rich dad said, “Expand your means.” My rich dad’s plan focused on increasing income. It was important for him to pay himself first and then take care of his expenses. He said, “Most people use their budget as a plan to become poor or middle class rather than to become rich. My budget is a plan to become rich. You have to make a surplus an expense.”

What he meant is that most people view a surplus as an asset. They save their extra cash in the bank or they spend it on liabilities. Rather than view extra money as an asset, Rich Dad viewed it as an expense to be invested. By making investments an expense in his budget, my rich dad ensured that he would make them a priority. He called it paying himself first.

So the question today is: Who are you paying first, yourself or everyone else? Your mindset is everything. If you want to be rich, I encourage you to change your mindset about money — and start focusing on earning.

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  • I make paying myself easy: I know when I get paid and so I set up an automatic transfer from my checking account for the year based on my paychecks. The money is gone from my checking account right away. I have no urge to spend it because I never “see” it. Some people confuse paying yourself first with saving whatever is left over at the end of the month, which is wrong. You save before doing anything else and then finding a way to survive the month on the smaller paycheck.

  • I agree Mr. Kiyosaki. It’s smarter to make your money work for you then to work for your money & save it.

    • Dan Cohen

      I agree too.. but have to take his word for a grain of salt. It’s important to do both which i do. I have an acquaintance who only use money to buy properties and not much savings..and when he needed money he borrowed… all cash flow in and he reinvest just like how rich dad said. During good times he was making big money…until kaboom- one year he went bankrupt because has no savings and some properties stop cash flowing due to economy and he can’t find any money cash. All those work over the year equal to nothing now.

      It’s good to be rich rich, but it’s more important to make yourself financial secure by just aiming for passive income over expense first. He was aiming first for rich rich, which is NOT a necessity.. take care of yourself first and then aim for rich rich ‘with calculated risk’ and not overleverage. (richard branson said that)

      • Dan Catron

        Sounds like the adage Don’t put your eggs in one basket. To invest in real estate alone is dangerous as it is a market like stocks are, and a volatile one. He should have diversified his investments. That way when one market goes down, he can lean on others investments. Sometimes when one goes down other go up. It’s not investing in general, it’s smart investing that is the key.

  • Justin Gonzales

    Thank You Mr. Kiyosaki for writing all those books. I bought almost all of them and I am inspired. I’m really interested in increasing my financial IQ. I was born with both parents in the E quadrant and it really made me realize that you really are correct. both my “poor” parents taught me to get high grades, get a good job and save for my future. now, I’m doing my best to learn and i’m still focusing on financial IQ #1.

    “It’s not our fault we are born poor but it is our fault if we die poor”


  • Ezy Cosme

    All I can say To Mr. Robert Is THANK YOU VERY MUCH for changing my life! (^_^)

  • clindseysmith

    Funny how the article claims posted April 19th, 2014 and the comments are listed as 1-2 years ago.

    • GBR Casey

      We frequently republish articles that have performed well and continue to be relevant so new readers can enjoy.

  • anon

    Fine advice…but quit throwing your “Poor Dad” under the bus for being willing to serve our country’s children. He may have been penniless but perhaps some people find value in things other than money. Not saying we don’t want a healthy retirement but it always annoys me when this author describes his dad in such a derogatory way. Thanks, “poor dad” for spending a life serving, not scrounging for more money for himself. There is more to life. Good financial planning is important, yes. I agree. But so is serving.

    • Dan Cohen

      ouch… but your right.. makes him look like a self pompous and greedy azz who cares only about money and nothing else.

    • Blackjack

      It doesn’t sound like you read the books or listened to the tapes. He holds his father in great regard. He was a career educator and even ran for the office of Lt. Governor. His dad defined himself in the way and it left an impact on the author that was far reaching and influenced his career.

    • P.K.

      What this author is trying to do is to make quick bucks by selling his SEMINARs to stupid public who has no idea as to becoming financially independent. Believe me. There are abundant sneaky folks like R.K. who is trying to make money by talking his nonsense to naïve others.

    • Managing your finances poorly and only saving has nothing to do with being a teacher.

    • Sanjosemike

      Sorry anon. We have enough children in the World. Children are incredibly demanding and selfish. They make it almost impossible to save for retirement, by limiting your ability to move to advance your work or career. They require enormous amounts of time and energy that subtracts from your energy and resolve to advance your career.
      You end up living in a more expensive place than you can afford, for their “advantage and security.” Child-care is unbelievably expensive.
      Less than 10% of the population can actually afford to have and take care of children. If you must, have only one.
      I expect a lot of down-votes to this post. But underneath all of the anger, you KNOW I’m right.

  • Jeff Yeager

    Can’t say I agree with much that Robert K. has to say. As I explain in this rebuttal, there’s a big difference between making a good living and making a good life:

  • tom

    These “rich dad” types usually recommend profligate spending on things like cars, clothes and houses and get-rich quick schemes because you deserve to be rich. Meanwhile they get to cherry pick the people who were successful doing things like selling on eBay or whatever and neglect the wannabees as losers.

    Which is not to say that people are not going to be successful if they try new ventures and other ideas in their spare time. But some magical “rich dad” mindset is just asking for trouble if the venture fails with great economic damage.

    • Oklahoma Wayne

      If you work hard you get paid, the amount you have in excess you should reinvest in your self. it like don’t play with money you cant afford to loose

  • AG

    Too basic. This post is really for not very sophisticated. As investor, the real challenge is what to invest and analysis of future enconomical change.

  • magnus

    easier said than done

  • Paul

    If this column is recommending something other than a balanced financial portfolio, it makes some sense for someone with more money than he
    needs in order to make ends meet. That person can risk the excess on aggressive growth. For others, it’s a recipe for bankruptcy.

  • AG

    A lot of sounds like ghetto drug dealer dad advice from this post. Statistics have confirmed relationship between wealth and higher education/ IQ .

    `poor’ dad advice works for me. Getting good grade – good school- high pay job (six digit) – extra money for investment – more money – investment only big money can do (over million dollar type investment) – even more money – so on and on.

    • AG

      Cautious about any getting rich fast scheme. I have plenty of friends and relatives ending up in bankruptcy or scammed to lose their shirts because of their “discover” of “unique” investment opportunity. Yes, you can borrow loan(million dollars type) to start a profitable bussiness. But in an efficient market, such unique opportunity is really rare. If your judgement is wrong, you will be in deep debt and lose all of your fortune. To be competitive, you need to be sure you can outsmart your competitors. The irony is that people with higher education (often with higher IQ) almost always win in free market competioin. My Ivy league educated grandparents were the type who always win in anywhere and any time. They started from scratch twice in their life.

      • James

        They always win… Hmm so why did they start from scratch twice in their life..? Sounds like they lost at least once.

  • Nutchaser

    Totally disagree. Poor dad has a better chance of becoming rich dad by acting like poor dad. When poor dad acts like rich dad he usually stays poor dad. Rich dad has a better chance of staying rich dad by acting like poor dad.

  • Siouxlouie

    It’s actually possible to do both! I practiced law for 44 years, serving my clients (after a stint in the U.S. Government serving an unappreciative and undeserving public), and then invested aggressively in the stock market, including with an aggressive hedge fund. I just retired, wealthier than I ever imagined, thanks to a healthy increase in the S&P.

    • Bully Pulpit

      Thank that “unappreciative, undeserving public” for you gains as they carry the burden of the QE’s and printing that gave you such wealth.

    • RichDadPoorDadFan

      Better convert all that wealth to gold because we (the US) are about to lose our global currency reference. China and others are looking for another currency to use as a reference. When other countries stop using the US dollar as a reference our currency becomes devalued where we’ll have to pay for foreign imports in another currency. Our economy will crash, the Walmart business model will fail, etc. it will be like Germany during WWII. a loaf of bread will be $250.

  • Harry

    Seems like a lot of words to say don’t put your money in the bank, invest it in something with bigger returns.

  • nagaina

    Bad advice. live below your means and find happiness through things other than consumption. This guy advice will lead you to tears. No amount of money will ever be enough if you can’t control you impulses.

  • Odin

    anon ..needs to get over it!!

  • Shaped

    Can this guy go away? I was given his books when I was young and they are completely full of terrible advice. They should have never been popular to begin with.

  • Catherine Jorgenson

    My friend Jared Mohler introduced me to “Rich Dad, Poor Dad” and I loved it.

  • RichDadPoorDadFan

    You can do both—save and invest using the same money. Bank of America offered me 0.14%APR on a 6 month CD. WOW! I told the teller that I make 18%APR on the county Tax Certificates I bought and still buy. The teller said, “What’s a tax certificate?” Anything is better than putting your money in a bank. Even doing Covered Calls makes more money than a bank savings account or CD.

  • dave

    Your real father should have got a full time job instead of being a teacher.

  • poppindon

    The man is speaking from his personal experiences and observations. He is a financial expert, not a spiritual guru. If you can’t find time to give to others while you are investing and earning, then the problem is you.

  • anonymous

    I think Mr. Kiyosaki made a mistake in naming his biological father “poor dad” it is disrespectful to his deceased father. Although the facts are that his father was poor at the end of his life, he was a faithful father and was very educated in other ways. Kiyosaki felt that if one read his book, which I have, that they would understand that he was simply simplifying the characters of his book. His business mentor he dubbed rich dad, and his biological father who was a teacher and a high ranking official in Hawaii government poor dad, simply because as they aged, his father’s finances became more unstable and the business mentor more stable.

    Now, is Kiyosaki dishonest , I do not know. But I have read his book and the principle of saving money by putting your money into something that is taxed less, can’t be argued with. Moreover, Kioysaki’s main point about the two dads is that one had no formal education but lots of informal financial education while the other had the opposite.

    Kiyosaki’s other main point is that financial education in this country teaches people to become employees. Why? because it helps the government collect more of your paycheck in earned income. He’s not against being an employee but if that is all you are and you do not invest, own a business or become an independent contractor of some sort then you will always pay higher taxes. Paper assets, real estate and income earned as an independent contractor is always taxed at a lower rate, because you assume all the risks and the government doesn’t bail you out. So the risk takers are rewarded with lower tax burdens for for creating businesses and jobs. Investors get the same perks. That is Kiyosaki’s point.

  • sdj

    What is the difference between saving making money

  • sdj

    Apologies…please identify the difference between saving and making money.

  • sdj

    My family members are arguing that saving money is “making money” and my argument is that when you have what you started with, you have saved. When you have incurred an increase, you’ve made money. Please provide insight.