5 Ways to Manage Your MONEY Like the RICH

In this video we're gonna talk about how to manage your money like the rich. So I believe that there's five things that the rich and the wealthy do differently than the poor. So Ken what's the biggest difference between the rich and the poor? The biggest difference is their - mindset So I can see this from experience because I grew up with a poor mindset my my parents had poor mindsets they always said we can't afford something and only later in life did I realize you know how can we afford something and so that's the biggest differentiation in my opinion that I think what happens is the the poor they spend whatever they make and then they invest afterwards where the rich they actually invest first and then they look for the cash flow from those investments to spend so the rich they invest and then spend and the poor they spend and then they invest that's probably one of the bigger things that I see as the difference how do the rich view assets and liabilities versus how do the poor view assets and liabilities really what the what the rich do is they focus on building their asset column and that's probably the biggest thing in other words you know a lot of people think their equity in their home as an asset or what's maybe what's in their bank account or their 401k and those are real assets but the rich actually take it to a whole new level they're trying to build their asset column on income producing real estate income producing businesses and things like that and they're really growing that asset column the other thing is I found that the poor often look at liabilities as bad and and I think that in a lot of cases they can be you know they can be like there's what I call good debt and there's bad debt you know good debt is debt that's used to buy assets bad debt would be let's say a car loan you know and I have I have a car loan so I'm not just saying that you need to just know the difference credit card debt is and so those are liabilities and so what happens at a lot of times is people they the poor grow the liability column so that they can barely make it and so right now we're seeing that in student loan debt for example and I'm not saying that education is a good investment what I'm saying is that it's a tough liability to get out from you know as you're barely making money so so knowing the difference between asset growth and and liabilities is a huge huge factor I think in your overall game plan Ken what are some of the tax and legal strategies that the rich do that the poor don't do the first thing that I learned on the legal side is that if you put your things into an LLC or a limited liability company or a C Corp or an S corp those are different kinds of legal entities those are considered businesses or entities you have a great deal of asset protection inside of there so for example let's say like Ken Mack or calm that's an entity well if somebody Sue's me on something on Ken Mack or calm they actually sue a corporation or a company and so they have to what to call pierce the corporate veil so so things that you're doing inside of a company can be very very important even if it's a small business so let's say you have a small consulting business and you're running across town and you run a red light and you hit somebody and they sue you well and you're out on business so if your assets are inside of a corporation they're gonna it's gonna be a lot harder to penetrate that corporation to get at your personal assets that's number one people use entities for protecting their homes and protecting their businesses and protecting all kinds of things very very very common and legal and so that's the first thing the other thing that I found is when I started my own businesses there are certain things like my car that I use like I probably use my car seventy to eighty percent for business driving around looking at properties you know I'm all over the state driving around going to the meeting with all kinds of people well you can take a lot of expenses even a home office and you know it all has to be legit you have to be actually doing things from your home to you know which I do I work from home a lot and so those are things that you can actually write off so they're real expenses and so you take what would normally be just normal day-to-day living and you can start running things through like like let's say if I have a business lunch then I can actually write that business lunch off and there's there are things that you can do for entertaining okay now the laws have changed a lot so you have to be really crystal clear on what what you know what you can and can't do and I'm certainly not the expert for that but there's a lot of things that you can do inside of an entity for asset protection and for be able to write things off to lower your personal expenses on things that you're doing to grow on the tax side this is probably the part that's blown me away the most and if you haven't had a chance to see Tom wheelwrights videos you know he's a master at this stuff he understands tax like nobody and the tax laws are really set up for people to use they say you know these are the things that you can legally do in order to reduce your taxes and so those are the things that I've learned over time is there are certain things that the government gives you like a lot of people remember when the alternative fuel cars for example right that was a tax incentive people went out and bought all those cars you know they all alternative fuel license plate that's what I'm talking about and so that's those are things like that are available in business too you know like we provide housing and so the government gives us tax benefits to provide housing and they do it in mining you know they want oil and gas and so they label there's tax incentives if you invest in oil and gas I'm not saying that those are all great investments what I'm saying is that there are tax there are tax pieces inside of there that can reduce your overall income so there's a lot of people invest looking for tax strata as well and so those are the kinds of things that I've learned that the difference between the rich and the poor do because the poor kept typically the poor mindset they usually put their money in savings so around managing money what's the difference between the way the rich manage their money in the way the poor manage their money well I think this has a lot to do with being passive or active and so I fell into this category as a young man when I first got out of college I remember putting two grand with somebody and then opening the statement every quarter and seeing if it grew or not and generally it didn't grow at all you know I didn't understand all the fees and all the financial planning and all the stuff behind all that at the time but I was doing what everybody did has taken some money and sticking it with somebody and then working hard and I think a lot of times people never ever sway from that so they work their butts off and then they put all our money into whatever it is usually it's some kind of a vehicle with some company I'm not saying those are bad things to do it is a way to invest but I think that that's a very very passive way to invest that I think it's horrible that people can go 20 30 years and not really understand how their portfolio is doing without actively managing it and I think it happens a lot and I certainly fell into this category and only after a while that I realized that the rich actually don't do that you know most of the people I know do not invest in 401ks most of them are not in the stock market because it's those are very very hard things to invest in and do very very well now I'm not saying you can't make money in those things but what I'm saying is that the what I found is that the rich are much more active so I'll just give you an example this weekend I was meeting with a friend of mine and we're actually going to set up a little board it's called rogue capital and we're all going to invest in tech deals and businesses and real estate all through a collective group people that you know that are all smart in a lot of different ways and so we're all learning together because the deal flows as deal flows come we can all discuss them openly and actively we can look at different things and everybody has different expertise and different skill sets and so that I think is the difference is that I'm actually I'm actively yes I'm the real estate guy but I also invest in a lot of businesses and gold and silver ore and you know I've done plenty of stock trading and things like that as well and I've invested in gold mines and silver mines and things like that and so but I'm actively doing it and I'm I'm actually investing directly where I think a lot of times people hand their money over to somebody and they just don't know or they meet with them once a year or once a quarter and I just think that's horrible I think you should be really really really understand with so much on the line I think you should really understand who is managing your money what kind of fees they're there they're taking and why you know that's the biggest question is why when it comes to money and what it actually is the rich think about it a certain way and the poor think about it a certain way what is money to the rich money changed in the early 70s when Nixon took the united states off of the gold standard and I think a lot of people certainly I was a young man or young boy actually I don't recall that I don't remember what it was like before that but my parents did and so what that meant before the early 70s was that a dollar was tied to the gold standard so I remember as a kid Fort Knox and thinking about that how cool that is and all the money and all the gold in Fort Knox all that that's actually what it was it was it was tied to the dollar well when the dollar became what's called free floating or a guy like mike maloney would call it fiat currency what a fiat currency means is that it's now not tied to anything and so the u.s. or the Federal Reserve can can actually they can actually grow the money supply they can actually grow it to pay for dads and things like that they can actually add a dad out at and so all that does is it takes what would be considered you know something that was a little more stable to something that was less stable it can be devalued so if you really want to take a look just take a look at how much the dollars to valued in the last 15 years just google it and you'll see you'll freak you out so now here's the interesting thing as a dollars of dollars a dollar so if I had a dollar let's say you know back in early 2000s it's still the same dollar it just buys less that's the only difference and so if your bank account was 10 grand in night in 2000 it's and it's still 10 grand today all it means is that it buys a lot less and so I think what happens is the poor they save save save save save this is why Robert Kiyosaki says saver they're losers you know because they don't understand that inflation czar roading their purchasing power of their own money and so let's just say inflation has been you know 2% over the last 10 years well that means that there's been a 20 percent devaluation in your currency now you know it actually buys a lot less right and and so that's all it means and so as a kid I don't know about you but I never saw a hundred dollar bill now I see so many of them they're like 20s used to be and that's a result of that and and so what the rich do is they look for investments that hedge currency so they look for things like real estate that goes up as the dollar to values because this is why this is the interesting discussion around debt so people say get out of debt get out of debt get out of that get out of that and there's lots of gurus as they get out of debt and for some people they probably should but for me if I have a just look at like your parents house for example if your parents bought a house 20 years ago and it's a $200,000 house and they have $150,000 in debt the chances that house being worth a lot more is pretty high and the debt has now gone down because the dollars to value so it's the valuing debt at the same time it's the valuing your equity that might be in your bank and so you know money is just interesting because that as it becomes devalued over time through this fiat currency and and through the growing of the money supply then you can just hedge it you know you just want to invest in things that go up along along the same of the same lines and I think a lot of times people invest in things that go down so that's one of the primary differences in the way that people look at currency versus wealth is it you know some some people try to put all their money in cash and some people try to invest as much as they can and ride along and let the economy and let you know the inflation everything not erode your hard-earned money so if you're ready to start manage your money like the rich and be the first to learn from my latest videos by subscribing to my youtube channel and visiting ken Makarov to become a free member and access 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Channel: Ken McElroy

Views: 68,246

Keywords: Rich Dad, Entrepreneurship, Investing, Personal Development, Get Wealthy, Earn Wealth, Ken McElroy, Entrepreneur, Rich Dad Advisor, Success, Business, Self-Help, Coaching, Real Estate, Real Estate Entrepreneur, Real Estate Investing, Freedom, Lifestyle Business, Hustle, Manage Money, Financially Successful People, Rich vs Poor

Id: WeXP96Jmmlw

Length: 14min 43sec (883 seconds)

Published: Mon Oct 01 2018