LESSON 1: THE RICH DON'T WORK FOR MONEY

“I don’t understand,” I said with a frown.

“Don’t worry about that for now. Just know that it’s fear that keeps

most people working at a job: the fear of not paying their bills, the fear

of being fired, the fear of not having enough money, and the fear of

starting over. That’s the price of studying to learn a profession or trade,

and then working for money. Most people become a slave to money—

and then get angry at their boss.”

“Learning to have money work for you is a completely different

course of study?” I asked.

“Absolutely,” rich dad answered. “Absolutely.”

We sat in silence on that beautiful Hawaiian Saturday morning. My

friends had just started their Little League baseball game, but for some

reason I was now thankful I had decided to work for 10 cents an hour.

I sensed that I was about to learn something my friends wouldn’t learn

in school.

“Ready to learn?” asked rich dad.

“Absolutely,” I said with a grin.

“I have kept my promise. I’ve been teaching you from afar,” my rich

dad said. “At nine years old, you’ve gotten a taste of what it feels like to

work for money. Just multiply your last month by fifty years and you

will have an idea of what most people spend their life doing.”

“I don’t understand,” I said.

“How did you feel waiting in line to see me, once to get hired and

once to ask for more money?”

“Terrible,” I said.

“If you choose to work for money, that is what life will be like,” said

rich dad.

“And how did you feel when Mrs. Martin dropped three dimes in

your hand for three hours of work?”

“I felt like it wasn’t enough. It seemed like nothing. I was

disappointed,” I said.

“And that is how most employees feel when they look at their

paychecks—especially after all the tax and other deductions are taken

out. At least you got 100 percent.”

“You mean most workers don’t get paid everything?” I asked

with amazement.

“Heavens no!” said rich dad. “The government always takes its

share first.”

“How do they do that?” I asked.

“Taxes,” said rich dad. “You’re taxed when you earn. You’re

taxed when you spend. You’re taxed when you save. You’re taxed

when you die.”

“Why do people let the government do that to them?”

“The rich don’t,” said rich dad with a smile. “The poor and the

middle class do. I’ll bet you that I earn more than your dad, yet he

pays more in taxes.”

“How can that be?” I asked. At my age, that made no sense to me.

“Why would someone let the government do that to them?”

Rich dad rocked slowly and silently in his chair, just looking at me.

“Ready to learn?” he asked.

I nodded my head slowly.

“As I said, there is a lot to learn. Learning how to have money work

for you is a lifetime study. Most people go to college for four years,

and their education ends. I already know that my study of money will

continue over my lifetime, simply because the more I find out, the

more I find out I need to know. Most people never study the subject.

They go to work, get their paycheck, balance their checkbooks, and

that’s it. Then they wonder why they have money problems. They think

that more money will solve the problem and don’t realize that it’s their

lack of financial education that is the problem.”

“So my dad has tax problems because he doesn’t understand

money?” I asked, confused.

“Look,” said rich dad, “taxes are just one small section on learning

how to have money work for you. Today, I just wanted to find out if

you still have the passion to learn about money. Most people don’t.

They want to go to school, learn a profession, have fun at their work,

and earn lots of money. One day they wake up with big money

problems, and then they can’t stop working. That’s the price of only

knowing how to work for money instead of studying how to have

money work for you. So do you still have the passion to learn?” asked

rich dad.

I nodded my head.

“Good,” said rich dad. “Now get back to work. This time, I will

pay you nothing.”

“What?” I asked in amazement.

“You heard me. Nothing. You will work the same three hours

every Saturday, but this time you will not be paid 10 cents per hour.

You said you wanted to learn to not work for money, so I’m not going

to pay you anything.”

I couldn’t believe what I was hearing.

“I’ve already had this conversation with Mike and he’s already

working, dusting and stacking canned goods for free. You’d better

hurry and get back there.”

“That’s not fair,” I shouted. “You’ve got to pay something!”

“You said you wanted to learn. If you don’t learn this now, you’ll

grow up to be like the two women and the older man sitting in my

living room, working for money and hoping I don’t fire them. Or like

your dad, earning lots of money only to be in debt up to his eyeballs,

hoping more money will solve the problem. If that’s what you want,

I’ll go back to our original deal of 10 cents an hour. Or you can do

what most adults do: Complain that there is not enough pay, quit,

and go looking for another job.”

“But what do I do?” I asked.

Rich dad tapped me on the head. “Use this,” he said. “If you use

it well, you will soon thank me for giving you an opportunity and

you will grow into a rich man.”

I stood there, still not believing what a raw deal I was handed. I came

to ask for a raise, and somehow I was instead working for nothing.

Rich dad tapped me on the head again and said, “Use this. Now

get out of here and get back to work.”

Lesson #1: The Rich Don’t Work for Money

I didn’t tell my poor dad I wasn’t being paid. He wouldn’t have

understood, and I didn’t want to try to explain something I didn’t

understand myself.

For three more weeks, Mike and I worked three hours every

Saturday for nothing. The work didn’t bother me, and the routine

got easier, but it was the missed baseball games and not being able

to afford to buy a few comic books that got to me.

Rich dad stopped by at noon on the third week. We heard his

truck pull up in the parking lot and sputter when the engine was

turned off. He entered the store and greeted Mrs. Martin with a hug.

After finding out how things were going in the store, he reached into

the ice-cream freezer, pulled out two bars, paid for them, and signaled

to Mike and me.

“Let’s go for a walk, boys.”

We crossed the street, dodging a few cars, and walked across a

large grassy field where a few adults were playing softball. Sitting

down at a lone picnic table, he handed Mike and me the treats.

“How’s it going, boys?”

“Okay,” Mike said.

I nodded in agreement.

“Learn anything yet?” rich dad asked.

Mike and I looked at each other, shrugged our shoulders, and

shook our heads in unison.

Avoiding One of Life’s Biggest Traps

“Well, you boys had better start thinking. You’re staring at one of

life’s biggest lessons. If you learn it, you’ll enjoy a life of great freedom

and security. If you don’t, you’ll wind up like Mrs. Martin and most of

the people playing softball in this park. They work very hard for little

money, clinging to the illusion of job security and looking forward to a

three-week vacation each year and maybe a skimpy pension after fortyfive

years of service. If that excites you, I’ll give you a raise to 25 cents

an hour.”

“But these are good hardworking people. Are you making fun of

them?” I demanded.

A smile came over rich dad’s face.

“Mrs. Martin is like a mother to me. I would never be that cruel.

I may sound unkind because I’m doing my best to point something out

to the two of you. I want to expand your point of view so you can see

something most people never have the benefit of seeing because their

vision is too narrow. Most people never see the trap they are in.”

Mike and I sat there, uncertain of his message. He sounded cruel,

yet we could sense he was trying to drive home a point.

With a smile, rich dad said, “Doesn’t that 25 cents an hour sound

good? Doesn’t it make your heart beat a little faster?”

I shook my head no, but it really did. Twenty-five cents an hour

would be big bucks to me.

“Okay, I’ll pay you a dollar an hour,” rich dad said, with a sly grin.

Now my heart started to race. My brain was screaming, “Take it.

Take it.” I could not believe what I was hearing. Still, I said nothing.

“Okay, two dollars an hour.”

My little brain and heart nearly exploded. After all, it was 1956

and being paid $2 an hour would have made me the richest kid in

the world. I couldn’t imagine earning that kind of money. I wanted to

say yes. I wanted the deal. I could picture a new bicycle, new baseball

glove, and the adoration of my friends when I flashed some cash.

On top of that, Jimmy and his rich friends could never call me poor

again. But somehow my mouth stayed shut.

The ice cream had melted and was running down my hand. Rich

dad was looking at two boys staring back at him, eyes wide open and

brains empty. He was testing us, and he knew there was a part of our

emotions that wanted to take the deal. He understood that every

person has a weak and needy part of their soul that can be bought,

and he knew that every individual also had a part of their soul that

was resilient and could never be bought. It was only a question of

which one was stronger.

“Okay, five dollars an hour.”

Suddenly I was silent. Something had changed. The offer was too

big and ridiculous. Not many grown-ups in 1956 made more than

that, but quickly my temptation disappeared, and calm set in. Slowly,

I turned to my left to look at Mike. He looked back at me. The part

of my soul that was weak and needy was silenced. The part of me that

had no price took over. I knew Mike

had gotten to that point too.

“Good,” rich dad said softly. “Most

people have a price. And they have a

price because of human emotions named

fear and greed. First, the fear of being

without money motivates us to work hard, and then once we get that

paycheck, greed or desire starts us thinking about all the wonderful

things money can buy. The pattern is then set.”

“What pattern?” I asked.

“The pattern of get up, go to work, pay bills; get up, go to work,

pay bills. People’s lives are forever controlled by two emotions: fear

and greed. Offer them more money and they continue the cycle by

increasing their spending. This is what I call the Rat Race.”

“There is another way?” Mike asked.

“Yes,” said rich dad slowly. “But only a few people find it.”

“And what is that way?” Mike asked.

“That’s what I hope you boys will learn as you work and study

with me. That is why I took away all forms of pay.”

“Any hints?” Mike asked. “We’re kind of tired of working hard,

especially for nothing.”

“Well, the first step is telling the truth,” said rich dad.

“We haven’t been lying,” I said.

“I did not say you were lying. I said to tell the truth,” rich

dad retorted.

“The truth about what?” I asked.

“How you’re feeling,” rich dad said. “You don’t have to say it

to anyone else. Just admit it to yourself.”

“You mean the people in this park, the people who work for you,

Mrs. Martin, they don’t do that?” I asked.

“I doubt it,” said rich dad. “Instead, they feel the fear of not

having money. They don’t confront it logically. They react emotionally

instead of using their heads,” rich dad said. “Then, they get a few

bucks in their hands and again, the emotions of joy, desire, and greed

take over. And again they react, instead of think.”

“So their emotions control their brain,” Mike said.

“That’s correct,” said rich dad. “Instead of admitting the truth

about how they feel, they react to their feelings and fail to think.

They feel the fear so they go to work, hoping that money will soothe

the fear, but it doesn’t. It continues to haunt them and they return

to work, hoping again that money will calm their fears, and again it

doesn’t. Fear keeps them in this trap of working, earning money,

working, earning money, hoping the fear will go away. But every day

they get up, and that old fear wakes up with them. For millions of

people that old fear keeps them awake all night, causing a night of

turmoil and worry. So they get up and go to work, hoping that a

paycheck will kill that fear gnawing at their soul. Money is running

their lives, and they refuse to tell the truth about that. Money is in

control of their emotions and their souls.”

Rich dad sat quietly, letting his words sink in. Mike and I heard

what he said but didn’t understand fully what he was talking about.

I just knew that I often wondered why grown-ups hurried off to

work. It did not seem like much fun, and they never looked that

happy, but something kept them going.

Realizing we had absorbed as much as possible of what he was

talking about, rich dad said, “I want you boys to avoid that trap.

That is really what I want to teach you. Not just to be rich, because

being rich does not solve the problem.”

“It doesn’t?” I asked, surprised.

“No, it doesn’t. Let me explain the other emotion: desire. Some

call it greed, but I prefer desire. It’s perfectly normal to desire something

better, prettier, more fun, or exciting. So people also work for money

because of desire. They desire money for the joy they think it can buy.

But the joy that money brings is often short-lived, and they soon need

more money for more joy, more pleasure, more comfort, and more

security. So they keep working, thinking money will soothe their souls

that are troubled by fear and desire. But money can’t do that.”

“Even rich people do this?” Mike asked.

“Rich people included,” said rich dad. “In fact, the reason many rich

people are rich isn’t because of desire, but because of fear. They believe

that money can eliminate the fear of being poor, so they amass tons of it,

only to find the fear gets worse. Now they fear losing the money. I have

friends who keep working even though they have plenty. I know people

who have millions who are more afraid now than when they were poor.

They’re terrified of losing it all. The fears that drove them to get rich

got worse. That weak and needy part of their soul is actually screaming

louder. They don’t want to lose the big houses, the cars and the high life

money has bought them. They worry about what their friends would say

if they lost all their money. Many are emotionally desperate and neurotic,

although they look rich and have more money.”

“So is a poor man happier?” I asked.

“No, I don’t think so,” replied rich dad. “The avoidance of money

is just as psychotic as being attached to money.”

As if on cue, the town derelict went past our table, stopping by

the large rubbish can and rummaging around in it. The three of us

watched him with great interest, when before we probably would

have just ignored him.

Rich dad pulled a dollar out of his wallet and gestured to the

older man. Seeing the money, the derelict came over immediately,

took the bill, thanked rich dad profusely, and hurried off, ecstatic

with his good fortune.

“He’s not much different from most of my employees,” said rich

dad. “I’ve met so many people who say, ‘Oh, I’m not interested in

money.’ Yet they’ll work at a job for eight hours a day. That’s a denial of

truth. If they weren’t interested in money, then why are they working?

That kind of thinking is probably more psychotic than a person who

hoards money.”

As I sat there listening to my rich dad, my mind flashed back to

the countless times my own dad said, “I’m not interested in money.”

He said those words often. He also

covered himself by always saying,

“I work because I love my job.”

“So what do we do?” I asked. “Not

work for money until all traces of fear

and greed are gone?”

“No, that would be a waste of time,”

said rich dad. “Emotions are what make

us human. The word ‘emotion’ stands for ‘energy in motion.’ Be

truthful about your emotions and use your mind and emotions in

your favor, not against yourself.”

“Whoa!” said Mike.

“Don’t worry about what I just said. It will make more sense in

years to come. Just be an observer, not a reactor, to your emotions.

Most people do not know that it’s their emotions that are doing the

thinking. Your emotions are your emotions, but you have got to learn

to do your own thinking.”

“Can you give me an example?” I asked.

“Sure,” replied rich dad. “When a person says, ‘I need to find

a job,’ it’s most likely an emotion doing the thinking. Fear of not

having money generates that thought.”

“But people do need money if they have bills to pay,” I said.

“Sure they do,” smiled rich dad. “All I’m saying is that it’s fear that

is all too often doing the thinking.”

“I don’t understand,” said Mike.

“For example,” said rich dad. “If the fear of not having enough

money arises, instead of immediately running out to get a job, they

instead might ask themselves this question: ‘Will a job be the best

olution to this fear over the long run?’ In my opinion, the answer is

no. A job is really a short-term solution to a long-term problem.”

“But my dad is always saying, ‘Stay in school and get good grades,

so you can find a safe, secure job,’” I interjected, somewhat confused.

“Yes, I understand he says that,” said rich dad, smiling. “Most people

recommend that, and it’s a good path for most people. But people make

that recommendation primarily out of fear.”

“You mean my dad says that because he’s afraid?”

“Yes,” said rich dad. “He’s terrified that you won’t earn enough

money and won’t fit into society. Don’t get me wrong. He loves you

and wants the best for you. I too believe an education and a job are

important, but it won’t handle the fear. You see, that same fear that

makes him get up in the morning to earn a few bucks is the fear that

is causing him to be so fanatical about your going to school.”

“So what do you recommend?” I asked.

“I want to teach you to master the power of money, instead of

being afraid of it. They don’t teach that in school and, if you don’t

learn it, you become a slave to money.”

It was finally making sense. He wanted us to widen our views

and to see what the Mrs. Martins of this world couldn’t see. He used

examples that sounded cruel at the time, but I’ve never forgotten

them. My vision widened that day, and I began to see the trap that

lay ahead for most people.

“You see, we’re all employees ultimately. We just work at different

levels,” said rich dad. “I just want you boys to have a chance to avoid

the trap caused by those two emotions, fear and desire. Use them in

your favor, not against you. That’s what I want to teach you. I’m not

interested in just teaching you to make a pile of money. That won’t

handle the fear or desire. If you don’t first handle fear and desire, and

you get rich, you’ll only be a highly paid slave.”

“So how do we avoid the trap?” I asked.

“The main cause of poverty or financial struggle is fear and

ignorance, not the economy or the government or the rich. It’s

self-inflicted fear and ignorance that keep people trapped. So you

oys go to school and get your college degrees, and I’ll teach you

how to stay out of the trap.”

The pieces of the puzzle were appearing. My highly educated dad

had a great education and a great career, but school never told him

how to handle money or his fear of it. It became clear that I could

learn different and important things from two fathers.

“So you’ve been talking about the fear of not having money. How

does the desire for money affect our thinking?” Mike asked.

“How did you feel when I tempted you with a pay raise? Did you

notice your desires rising?”

We nodded our heads.

“By not giving in to your emotions, you were able to delay

your reactions and think. That is important. We will always have

emotions of fear and greed. From here on in, it’s imperative for you

to use those emotions to your advantage, and for the long term to not

let your emotions control your thinking. Most people use fear and

greed against themselves. That’s the start of ignorance. Most people

live their lives chasing paychecks, pay raises and job security because

of the emotions of desire and fear, not really questioning where those

emotion-driven thoughts are leading them. It’s just like the picture of

a donkey dragging a cart with its owner dangling a carrot just in front

of its nose. The donkey’s owner may be going where he wants to, but

the donkey is chasing an illusion. Tomorrow there will only be another

carrot for the donkey.”

“You mean the moment I picture a new baseball glove, candy and

toys, that’s like a carrot to a donkey?” Mike asked.

“Yes, and as you get older, your toys get more expensive—a new

car, a boat, and a big house to impress your friends,” said rich dad

with a smile. “Fear pushes you out the door, and desire calls to you.

That’s the trap.”

“So what’s the answer,” Mike asked.

“What intensifies fear and desire is ignorance. That is why rich

people with lots of money often have more fear the richer they get.

Money is the carrot, the illusion. If the donkey could see the whole

picture, it might rethink its choice to chase the carrot.”

Rich dad went on to explain that a human’s life is a struggle

between ignorance and illumination.

He explained that once a person stops searching for information

and self-knowledge, ignorance sets in. That struggle is a moment-tomoment

decision—to learn to open or close one’s mind.

“Look, school is very important. You go to school to learn a skill

or profession to become a contributing member of society. Every

culture needs teachers, doctors, mechanics, artists, cooks, businesspeople,

police officers, firefighters, and soldiers. Schools train them so society

can thrive and flourish,” said rich dad. “Unfortunately, for many people

school is the end, not the beginning.”

There was a long silence. Rich dad was smiling. I didn’t

comprehend everything he said that day. But as with most great

teachers, his words continued to teach for years.

“I’ve been a little cruel today,” said rich dad. “But I want you

to always remember this talk. I want you to always think of Mrs.

Martin. And I want you always to remember that donkey. Never

forget that fear and desire can lead you into life’s biggest trap if you’re

not aware of them controlling your thinking. To spend your life

living in fear, never exploring your dreams, is cruel. To work hard for

money, thinking that it will buy you things that will make you happy

is also cruel. To wake up in the middle of the night terrified about

paying bills is a horrible way to live. To live a life dictated by the size

of a paycheck is not really living a life. Thinking that a job makes you

secure is lying to yourself. That’s cruel, and that’s the trap I want

you to avoid. I’ve seen how money runs people’s lives. Don’t let that

happen to you. Please don’t let money run your life.”

A softball rolled under our table. Rich dad picked it up and threw

it back.

“So what does ignorance have to do with greed and fear?” I asked.

“Because it is ignorance about money that causes so much greed

and fear,” said rich dad. “Let me give you some examples. A doctor,

wanting more money to better provide for his family, raises his fees.

By raising his fees, it makes health care more expensive for everyone.

It hurts the poor people the most, so they have worse health than

those with money. Because the doctors raise their fees, the attorneys

raise their fees. Because the attorneys’ fees have gone up, schoolteachers

want a raise, which raises our taxes, and on and on and on. Soon there

will be such a horrifying gap between the rich and the poor that chaos

will break out and another great civilization will collapse. History

proves that great civilizations collapse when the gap between the haves

and have-nots is too great. Sadly, America is on that same course

because we haven’t learned from history. We only memorize historical

dates and names, not the lesson.”

“Aren’t prices supposed to go up?” I asked.

“In an educated society with a well-run government, prices should

actually come down. Of course, that is often only true in theory.

Prices go up because of greed and fear caused by ignorance. If schools

taught people about money, there would be more money and lower

prices. But schools focus only on teaching people to work for money,

not how to harness money’s power.”

“But don’t we have business schools?” Mike asked. “And haven’t

you encouraged me to go for my MBA?”

“Yes,” said rich dad. “But all too often business schools train

employees to become sophisticated bean-counters. Heaven forbid a beancounter

takes over a business. All they do is look at the numbers, fire

people, and kill the business. I know this because I hire bean-counters.

All they think about is cutting costs and raising prices, which cause more

problems. Bean-counting is important. I wish more people knew it, but

it, too, is not the whole picture,” added rich dad angrily.

“So is there an answer?” asked Mike.

“Yes,” said rich dad. “Learn to use your emotions to think, not

think with your emotions. When you boys mastered your emotions

by agreeing to work for free, I knew there was hope. When you again

resisted your emotions when I tempted you with more money, you

were again learning to think in spite of being emotionally charged.

That’s the first step.”

“Why is that step so important?” I asked.

“Well, that’s up to you to find out. If you want to learn, I’ll take

you boys into the briar patch, a place almost everyone else avoids. If

you go with me, you’ll let go of the idea of working for money and

instead learn to have money work for you.”

“And what will we get if we go with you. What if we agree to

learn from you? What will we get?” I asked.

“The same thing Brer Rabbit got,” said rich dad, referring to the

classic children’s story.

“Is there a briar patch?” I asked.

“Yes,” said rich dad. “The briar patch is our fear and greed.

Confronting fear, weaknesses, and neediness by choosing our own

thoughts is the way out.”

“Choosing our thoughts?” Mike asked, puzzled.

“Yes. Choosing what we think rather than reacting to our emotions.

Instead of just getting up and going to work because not having the

money to pay your bills is scaring you, ask yourself, ‘Is working harder

at this the best solution to this problem?’ Most people are too afraid to

rationally think things through and instead run out the door to a job

they hate. The Tar Baby is in control. That’s what I mean by choosing

your thoughts.”

“And how do we do that?” Mike asked.

“That’s what I will teach you. I’ll teach you to have a choice of

thoughts rather than a knee-jerk reaction, like gulping down your

morning coffee and running out the door.

“Remember what I said before: A job is only a short-term

solution to a long-term problem. Most people have only one problem

in mind, and it’s short-term. It’s the bills at the end of the month,

the Tar Baby. Money controls their lives, or should I say the fear and

ignorance about money controls it. So they do as their parents did.

They get up every day and go work for money, not taking the time to

ask the question, ‘Is there another way?’ Their emotions now control

their thinking, not their heads.”

“Can you tell the difference between emotions thinking and the

head thinking?” Mike asked.

“Oh, yes. I hear it all the time,” said rich dad. “I hear things like,

‘Well, everyone has to work.’ Or ‘The rich are crooks.’ Or ‘I’ll get

another job. I deserve this raise. You can’t push me around.’ Or ‘I like

this job because it’s secure.’ No one asks, ‘Is there something I’m

missing here?’ which would break through the emotional thought

and give you time to think clearly.”