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

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

“The First Generation makes the fortune. The Second Generation enjoys the fortune. The Third Generation loses the family fortune.”

What does the quote mean?

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

Growing up in relative comfort, the second generation often lacks their parents’ appetite for urgency, hunger and risk. Although they try to preserve wealth, they rarely multiply it. Family wealth often disappears in the third generation.

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

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

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

3. Car: Parents buy their children a car and pay for fuel, insurance and other repairs.

4. Flat: They also buy their children’s first house.

5. Cash (Trust Fund): Parents create trust funds for their children, eliminating the need to learn how to budget, make sacrifices, or invest in the future.

His main argument is not necessarily against helping children financially; It is against them removing their struggle, responsibility and financial education from their lives.

According to Kiyosaki, wealth preservation needs are: financial literacy, entrepreneurial thinking, risk assessment skills, financial discipline, and a mindset that focuses on building wealth rather than consuming income. Without these skills, once-inherited wealth may slowly disappear due to lifestyle inflation, poor decision-making, or lack of financial awareness.

At its core, Kiyosaki’s message is that without financial education, money can become a burden rather than an inheritance.