Quote of the Day: Robert Kiyosaki on how family wealth is destroyed — ‘First Generation builds the fortune...’

Investor and financial education advocate Robert Kiyosaki, best known for his personal finance book Rich Dad Poor Dad, often shares advice on social media. In LiveMint's Quote of the Day, we highlight his warning about how family fortunes are often destroyed by the third generation.

“First Gen builds the fortune. Second Gen enjoys the fortune. Third Gen loses the family fortune.”

What the quote implies

The quote means that the first generation typically builds wealth from scratch through hard work, sacrifice, and financial discipline. They understand the scarcity and value of money because they have experienced struggle.

The second generation, raised in relative comfort, often lacks the urgency and hunger, and risk appetite of their parents. While they may try to preserve wealth, they rarely multiply it. By the third generation, the family fortune is usually lost.

According to Kiyosaki, there are “Five Cs” that can undermine financial responsibility. The five Cs are cash, college, car, condo, and cash (Trust fund). He explains:

1. Cash: Parents give children money and never expect them to return it.

2. College: Parents pay for their children's college education.

3. Car: The parents buy cars for their children, pay for their gas, insurance, and other repair expenses.

4. Condo: They also buy their children's first home.

5. Cash (Trust Fund): Parents set up trust funds for their children, removing the need to learn to budget, sacrifice or invest in the future.

His core argument is not necessarily against helping children financially, but is against removing their struggle, responsibility, and financial education from their lives.

According to Kiyosaki, wealth preservation needs- financial literacy, entrepreneurial thinking, risk assessment skills, financial discipline, and a mindset focused on building assets rather than consuming income. Without these skills, the wealth once inherited can gradually disappear due to lifestyle inflation, poor decision-making, or a lack of financial awareness.

In essence, Kiyosaki’s message is that money without financial education can become a liability rather than a legacy.