Rich dad poor dad Robert Kiyosaki Audiobook

Time Warner audiobooks presents Rich Dad Poor Dad written by Robert Kiyosaki with Sharon L Lecter CPA and read by Steven Loy featuring an introduction by Robert Kiyosaki [Music] I had two fathers a rich one and a poor one one was highly educated and intelligent he had a PhD and completed four years of undergraduate work in less than two years the other father never finished the eighth grade both men were successful in their careers working hard all their lives both earned substantial income yet one struggled financially all his life the other would become on the richest men in Hawaii one died leaving tens of millions of dollars to his family charities and his church the other left bills to be paid both men were strong her is mattock and influential both men offered me advice but they did not advise the same things both men believed strongly in education but did not recommend the same course of study if I had had only one dad I would have had to accept or reject his advice having two dads advising me offered me the choice of contrasting points of view one over rich man and one of a poor man instead of simply accepting or rejecting one or the other I found myself thinking more comparing and then choosing for myself the problem was the rich man was not rich yet and the poor man not yet poor both were just starting out on their careers and both were struggling with money and families but they had very different points of view about the subject of money for example one day I would say the love of money there's a root of all evil the other a lack of money is the root of all evil as a young boy having two strong fathers both influencing me was difficult I wanted to be a good son and listen but the two fathers did not say the same things the contrast and their points of view particularly where money was concerned was so extreme that I grew curious and intrigued I began to start thinking for long periods of time about what each was saying much of my private time was spent reflecting asking myself questions such as why does he see that and then asking the same question of the other dad's statement it would have been much easier to simply say yeah he's right I agree with that or to simply reject the point of view by saying the old man doesn't know what he's talking about instead having two dads whom I love force me to think and ultimately choose a way of thinking for myself as a process choosing the thing for myself turned out to be much more valuable in the long run rather than simply accepting or rejecting a single point of view one of the reasons the rich get richer the poor get poorer and the middle class struggles in debt is because the subject of money is taught at home not in school most of us learn about money from our parents so what can a poor parent tell their child about money they simply say stay in school and study hard the child may graduate with excellent grades but with a poor person's financial programming and mindset it was learned while the child was young money is not taught in schools schools focus on scholastic and professional skills but not financial skills this explains how smart bankers doctors and accountants who are in excellent grades in school may still struggle financially all their lives our staggering national debt is due in large part to highly educated politicians and government officials making financial decisions with little or no training on the subject of money I often look ahead to a new millennium and wonder what will happen when we have millions of people who will need financial and medical assistance they will be dependent upon their families or the government for financial support what will happen with Medicare and Social Security run out of money how will a nation survive you're teaching children about money continues to be left to parents most of whom will be or already are poor because I had two influential fathers I learned from both of them I had to think about each dad's advice and in doing so I gained valuable insight into the power and effect of one's thoughts on one's life for example one dad had a habit of saying I can't afford it the other dad forbade those words to be used he insisted I say how can I afford it one is a statement and the other was a question one lets you off the hook and the other forces you to think might seem to be a Rich Dad would explain that by automatically saying the words I can't afford it your brain stops working by asking the question how can I afford it your brain is put to work he did not mean by everything you wanted he was fanatical about exercising your mind the most powerful computer in the world my brain gets stronger every day because I exercise it the stronger it gets the more money I can make he believed that automatically saying I can't afford it was a sign of mental laziness although both dads worked hard I noticed that one dad had a habit of putting his brain to sleep when they came to money matters and the other had a habit of exercising his brain the long-term result was that one dad grew stronger financially and the other grew weaker it is not much different from a person who goes to the gym to exercise on a regular basis versus someone who sits on the couch watching television proper physical exercise increases your chances for health and proper mental exercise increases your chances for wealth laziness decreases both health and wealth my two dads had opposing attitudes and thought one dad thought that the rich should pay more in taxes and take care of those less fortunate the other said taxes punished those who produce and reward those who don't produce one dad recommended study hard so you can find a good company to work for the other recommended study hard so you can find a good company to buy one dad said the reason I'm not rich is because I have your kids the other said the reason I must be rich is because I have you kids one day I'd encourage talking about money and business at the dinner table the other forbade the subject of money to be discussed over a meal one said when it comes to money play it safe and don't take risks the other said learn to manage risk one believed our home is our largest investment and our greatest asset the other believed my house is a liability and if your house is your largest investment you're in trouble both debts paid their bills on time if one paid his bills first while the other paid his bills last being a product of two strong dads allowed me the luxury of observing the effects different thoughts have on one's life I noticed that people really do shape their life through their thoughts for example my poor dad always said I'll never be rich and that prophecy became reality my rich dad on the other hand always refer to himself as rich he would say things like I'm a rich man and rich people don't do this even when he was flat broke after a major financial setback he continued to refer to himself as a rich man he would cover himself by saying there was a difference between being poor and being broke broke is temporary and poor is eternal my poor dad would also say I'm not interested in money or money doesn't matter my rich dad always said money is power the power of our thoughts may never be measured or appreciated but it became obvious to me as a young boy to be aware of my thoughts and how I express myself I noticed that my poor dad was poor not because of the amount of money he earned which was significant but because of his thoughts and his actions as a young boy having two fathers I became acutely aware of being careful which thoughts I chose to adopt as my own whom should I listen to my rich dad or my poor dad although both men had tremendous respect for education and learning they disagreed and what they thought was important to learn one wanted me to study hard earn a degree and get a good job to work for money he wanted me to study to become a professional an attorney or an accountant or to go to business school for my MBA the other encouraged me to study to be a rich to understand how money works and learn how to have it work for me I don't work for money whether words he would repeat over and over money works for me at the age of nine I decided to listen to and learn from my rich dad about money in doing so I chose not to listen to my poor dad even though he was the one with all the college degrees once I made up my mind whom to listen to my education about money began my rich dad taught me over a period of thirty years until I was age 39 he stopped once he realized that I knew and fully understood what he had been trying to drum into my often thick skull money is one form of power but what is more powerful is financial education money comes and goes but if you have the education about how money works you gain power over it and can begin building well the reason positive thinking alone does not work is because most people went to school and never learn how money works so they spend their lives working for money because I was only nine years old when I started the lessons my rich dad taught me were simple and was all said and done there are only six main lessons repeated over 30 years this book is about those six lessons put as simply as possible as my Rich Dad put forth those lessons to me the lessons are not meant to be answers but guideposts guideposts that will assist you and your children to grow wealthier no matter what happens in a world of increasing change and uncertainty [Music] dad can you tell me how to get rich my dad put down the evening paper why do you want to get rich son because today Jimmy's mom drove up in their new Cadillac and they were going to their beach house for the weekend he took three of his friends but Mike and I weren't invited they told us we weren't invited because we were poor kids they did my dad asked incredulously yeah they did I replied in a hurt tone my dad silently shook his head pushed his glasses up the bridge of his nose and went back to reading his paper I stood waiting for an answer the year was 1956 I was nine years old by some twist of fate I attended the same public school where the rich people sent their kids we were primarily a sugar plantation town the managers of the plantation and the other affluent people of the town switches doctors business owners and bankers sent their children to this school grades 1 to 6 after grade 6 their children were generally sent off to private schools because my family lived on one side of the street I went to this school that I lived on the other side of the street I would have gone to a different school with kids from families more like mine after grade 6 these kids and I would go on to the public intermediate and high school there was no private school for them or for me my dad finally put down the paper well son he began slowly if you want to be rich you have to learn to make money how do I make money I asked well use your head son he said smiling which really meant that's all I'm gonna tell you or I don't know the answer so don't embarrass me the next morning I told my best friend Mike what my dad had said as best I could tell Mike and I were the only poor kids in this school Mike was like me and that he was in this school by a twist of fate someone had drawn a jog in a line for the school district and we wound up in school with the rich kids so what do we do to make money Mike I don't know I said but do you want to be my partner he agreed and so on that Saturday morning Mike became my first business partner we spent all morning coming up with ideas and how to make money finally that afternoon a bolt of lightning him through our heads it was an idea that Mike had gotten from a science book he'd read excitedly we shook hands and the partnership now had a business for the next several weeks Mike and I ran around our neighborhood knocking on doors and asking our neighbors if they'd save their toothpaste tubes for us with puzzled looks most adults consented with a smile some asked us what we were doing to which we replied we can't tell you it's a business secret my mom grew distressed as the week's wore on we had selected a site next to her washing machine as the place we would stockpile our raw materials in a brown cardboard box at one time held ketchup bottles our little pile of used toothpaste tubes began to grow one day my dad drove up to see two nine-year-old boys in the driveway with a production line operating at full speed fine white powder everywhere on a long table where small milk cartons from school and our family's hibachi grill was glowing with red-hot coals at maximum heat dad walked up cautiously having to park the car at the base of the driveway since the production line blocked the carport as he got closer he saw a steel pot sitting on top of the coals with the toothpaste tubes being melted down and those days toothpaste did not come in plastic tubes the tubes were made of land so once the pain was burned off the tubes were dropped in a small steel pot melted into late-game liquid and with my mom's pot holders we were pouring the lead through a small hole in the top of the milk cartons the milk cartons were filled with plaster of Paris the white powder everywhere was the plaster before we mix it with water the milk cartons were the outer containers for plaster of Paris molds my dad watched as we carefully poured the molten lead through a small hole in the top of the plaster-of-paris cube what are you boys doing he asked with a cautious smile we're doing what you told me to do we're gonna be rich I said yep said Mike grinning and nodding his head we're partners and what is in those plaster molds dad asked watch I said this should be a good match with a small hammer I tapped at the seal that divided the cube in half cautiously I pulled up the top half of the plaster mold and a lead nickel fell out oh my god my dad said you're casting nickels out of lead that's right Mike's head we're making money my dad smiled and shook his head along with a fire and a box has spent toothpaste tubes in front of him where two little boys covered with white dust and smiling from ear to ear he asked us to put everything down and sit with him on the front step of our house with a smile he gently explained what the word counterfeiting meant our dreams were dashed you mean this is illegal asked Mike yes it is illegal my dad said gently but you boys have shown great creativity and original thought keep going I'm really proud of you disappointed Mike and I sat in silence for about 20 minutes before we began cleaning up our mess the business was over on opening day sweeping the powder up I looked at Mike and said I guess Jimmy and his friends were right we are poor my father was just leaving as I said that boys he said you're only poor if you give up the most important thing is that you did something most people only talk and dream of getting rich you've done something I'm very proud of the two of you I will say it again keep going don't quit Mike and I stood there in silence there were nice words but we still did not know what to do so how come you're not rich dad I asked because I chose to be a school teacher school teachers really don't think about being rich we just like to teach I wish I could help you but I really don't know how to make money Mike and I turned and continued our cleanup I know said my dad if you boys want to learn how to be rich don't ask me talk to your dad Mike my dad asked Mike with a scrunched up face yeah your dad repeated my dad went to smile your dad and I have the same banker and he raves about your father he told me several times that your father is brilliant when it comes to making money he seems to be building an empire and I suspect in a few years he will be a very rich man with that Mike and I got excited again with new vigor we began cleaning up the mess caused by our now-defunct first business as we were cleaning we made plans on how and when to talk to Mike's dad the problem was that Mike's dad worked long hours and often did not come home until late his father owned warehouses a construction company a chain of stores and three restaurants it was the restaurant that kept him out late Mike caught the bus home after we had finished cleaning up he was gonna talk to his dad when he got home that night and asked him if he would teach us how to become rich Mike promised to call as soon as he talked to his dad even if it was late the phone rang at 8:30 p.m. Mike's dad had agreed to meet with Mike and me at 7:30 Saturday morning I caught the bus to the poor side of town Michael and I met with his dad that morning at 8 o'clock he was already busy and had been at work for more than an hour his construction supervisor was just leaving in his pickup truck as I walked up to his simple small and tidy home Mike met me at the door dad's on the phone and he said to wait on the back porch Mike said as he opened the door the old wooden floor creaked as I stepped across the threshold of this aging house there was a cheap mat just inside the door that mat was there to hide the years of wear from countless footsteps that the floor had supported although clean it needed to be replaced I felt claustrophobic as I entered the narrow living room which was filled with old musty overstuffed furniture that today would be collectors items sitting on the couch were two a little older than my mom across from the women said a man and workman's clothes they smiled as Mike and I walked past him heading for the kitchen which led to the porch that overlooked the backyard I smiled back shyly who are those people I asked oh they work for my dad the older man runs his warehouses and the women are the managers of the restaurant and you saw the construction supervisor who's working on a road project about 50 miles from here his other supervisor who's building a tract of houses had already left before you got here does this go on all the time I asked not always but quite often said Mike smiling as he pulled up a chair to sit down next to me I asked him if he teaches to make money Mike said oh and What did he say to that I asked with cautious curiosity only had a funny look on his face at first and then he said he would make us an offer oh I said rocking my chair back against the wall i sat there perched on two rear legs of the chair Mike did the same thing suddenly Mike's dad burst through the rickety screen door and onto the porch Mike and I jumped to our feet not out of respect but because we were startled ready boys Mike's dad asked has he pull up a chair to sit down with us we nodded our heads as we pulled our chairs away from the wall to sit in front of them he was a big man about six feet tall and 200 pounds Mike says that you want to learn how to make money is that correct Robert I nodded my head quickly but with a little intimidation he had a lot of power behind his words and smile okay here's my offer I'll teach you but I won't do it classroom style you work for me and I'll teach you you don't work for me I don't teach you I can teach you faster if you work and I'm wasting my time if you just want to sit and listen like you do in school that's my offer take it or leave it um may I ask a question first I asked don't take it or leave it I've got too much work to do to waste my time if you can't make up your mind decisively and you'll never learn to make money anyway take it I said take it said Mike good said Mike's dad mrs. Martin will be by in ten minutes after I'm through with her you ride with her to my super rent and you can begin working I'll pay you ten cents an hour and you will work for three hours every Saturday but I have a softball game today I said Mike's dad lowered his voice to a stern tone take it or leave it he said I'll take it I replied choosing to work and learn instead of playing softball by 9:00 a.m. on a beautiful Saturday morning Mike and I were working for mrs. Martin she was a kind and patient woman she always said that Mike and I reminded her of her two sons who were grown and gone although kind she believed in hard work and she kept us working she was a taskmaster we spent three hours taking canned goods off the shelves and with a feather duster brushing each can to get the dust off and then restocking them neatly it was excruciating ly boring work for three weeks Mike and I reported to mrs. Martin that worked our three hours by noon our work was over and she dropped three little dimes in each of our hands now even at the age of nine in the mid 50's 30 cents was not too exciting comic books cost 10 cents back then so I usually spend my money on comic books and went home by Wednesday of the 4th week I was ready to quit I had agreed to work only because I wanted to learn to make money from Mike's dad and now I was a slave for 10 cents an hour on top of that I had not seen Mike's dad since that first Saturday I'm quitting I told Mike at lunchtime a school lunch was miserable school was boring and no I didn't even have my Saturdays to look forward to but it was the 30 cents that really got to me Mike smiled dad said this would happen he said to meet with him when you were ready to quit what I said indignantly he's been waiting for me to get fed up sort of Mike said that's kind of different he teaches differently from your dad your mom and dad lecture a lot my dad is quiet and a man of few words you just wait till lists Saturday I'll tell him you're ready you mean I've been set up no not really but maybe dad will explain on Saturday I was ready to face him and I was prepared even my real dad was angry with him my real dad the one I call the poor one thought that my rich dad was violating child labor laws and should be investigated my educated dad told me to demand what I deserve at least 25 cents an hour my poor dad told me that if I didn't get a raise I was to quit immediately at 8 o'clock Saturday morning I was going through the same rickety door of Mike's house take a seat and wait in line Mike's dad said as I entered he turned and disappeared into his little office next to a bedroom I looked around the room and didn't see Mike anywhere feeling awkward I cautiously sat down next to the same two women who were there four weeks earlier they smiled and slid across the couch to make room for me 45 minutes went by and I was steaming the two women had met with him and left 30 minutes earlier an older gentleman was in there for 20 minutes and was also gone the house was empty and I sat out in his musty dark living room on a beautiful sunny Hawaiian day waiting to talk to a cheapskate who exploited children I can hear him rustling around in the office talking on the phone and ignoring me I was now ready to walk out but for some reason I stayed finally 15 minutes later at exactly 9:00 o'clock rich dad walked out of his office said nothing and signaled with his hand for me to enter his dingy office I understand you want a raise you're gonna quit rich dad said is he swiveled in his office chair well you're not keeping your end of the bargain I blurted out nearly in tears it was really frightening for a nine-year-old boy to confront a grown-up you said did you teach me if I work for you well I've worked for you I've worked hard I've given up my baseball games to work for you and you don't keep your word you haven't taught me anything you you're a crook like everyone in town thinks you are you're greedy you want all the money and don't take care of your employees you make me wait and don't show me respect I'm only a little boy and I deserve to be treated better rich dad rocked back in the swivel chair hands up to his chin somewhat staring at me not bad he said in less than a month you sound like most of my employees what I asked not understanding what he was saying I continued with my grievance I thought you were gonna keep up your end of the bargain and teach me instead you want to torture me that's cruel that it's really cruel I am teaching you rich dad said quietly what have you taught me nothing I said angrily you haven't even talked to me once since I agreed to work for peanuts 10 cents an hour huh I should notify the government about you we have child labor laws you know my dad works for the government you know Wow Sid rich dad now you sound like most of the people who used to work for me people I've either fired or they've quit so what do you have to say I demanded feeling pretty brave for a little kid how do you know that I've not taught you anything asked rich dad calmly well you've never talked to me I've worked for three weeks and you've not taught me anything I said with a pout this teaching mean talking or a lecture rich dad asked well yes I replied that's how they teach you in school he said smiling but that is not how life teaches you and I would say that a life is the best teacher of all most of the time life does not talk to you just sort of pushes you around each push is life saying wake up there's something I want you to learn I had no idea what he was talking about life pushes all of us around some give up others fight if you learn the lesson and move on they welcome life pushing them around to these few people it means they need and want to learn something they learn and move on most quit and a few like you fight Rich Dad stood and shut the creaky old wooden window that needed repair if you learn this lesson you will grow into a wise wealthy and happy young man if you don't you will spend your life blaming a job low pay or your boss for your problems you'll live life hoping for that big break that'll solve all your money problems Rich Dad looked over to me to see if I was still listening his eyes met mine we stared at each other streams of communication going between us through our eyes finally I pulled away once I had absorbed his last message I know he was right I was blaming him and I did ask to learn I was fighting Rich Dad continued or if you're the kind of person who has no guts you just give up every time life pushes you if you're that kind of person you'll live all your life playing it safe doing the right things saving yourself for some event that never happens then you die a boring old man you'll have lots of friends who'll really liked you because you were such a nice hard-working guy you spent a life playing it safe doing the right things but the truth is you let a life push you into submission deep down you were terrified of taking risks you really wanted a win but the fear of losing was greater than the excitement of winning deep inside you and only you will know that you didn't go for it you chose to play it safe our eyes met again for ten seconds we looked at each other only pulling away once the message was received you've been pushing me around I asked some people might say that smiled Rich Dad I would say that I just gave you a taste of life what taste of life I asked still angry but not curious you boys are the first people that have ever asked me to teach them how to make money I have more than a hundred and fifty employees and not one of them has asked me what I know about money they asked me for a job and a paycheck but never to teach them about money so most will spend the best years of their lives working for money not really understanding what it is they're working for i sat there listening intently so when Mike told me about you wanting to learn how to make money I decided to design a course that was close to real life I could talk I was blue in the face but you wouldn't hear a thing so I decided to let life push you around a bit so you could hear me that's why I only paid you ten cents so what is the lesson I learned from working for only ten cents an hour I asked that your keep and exploit your workers Rich Dad laughed heartily you best change your point of view stop blaming me thinking I'm the problem if you think I'm the problem then you have to change me if you realize that you're the problem then you can change yourself learn something then grow wiser but you only pay me ten cents so what are you learning rich dad asked smiling that your Jeep I said with a sly grin see you think I'm the problem said rich dad but you are well keep that attitude and you'll learn nothing keep the attitude that I'm the problem and what choices do you have well if you don't pay me more or show me more respect and teach me I'll quit well put rich dad said and that's exactly what most people do they quit and go looking for another job better opportunity and higher pay actually thinking that a new job or more pay will solve the problem in most cases it won't so what will solve the problem I asked just take this measly ten cents an hour and smile rich dad smiled that's what the other people do just accept a paycheck knowing that they and their family will struggle financially but that's all they do waiting for a raise thinking that more money will solve the problem most just accepted and some take a second job working harder but again accepting a small paycheck I sat staring at the floor beginning to understand the lesson rich dad was presenting I could sense it was a taste of life finally I looked up and repeated the question so what will solve the problem this he said tapping me gently on the head this stuff between your ears it was at that moment that rich dad shares the pivotal point of view that separated him from his employees and my poor dad and led him to eventually become one of the richest men in Hawaii while my highly educated but poor dad struggled financially all his life it was a singular point of view that made all the difference over a lifetime rich dad said over and over this point of view which I call lesson number one the rich don't work for money on that bright Saturday morning I was learning a completely different point of view from what I'd been taught by my poor dad at the age of nine I grew aware that both dads wanted me to learn both dads encouraged me to study but not the same things my highly educated dad recommended that I do what he did son I want you to study hard get good grades so you can find a safe secure job with a big company and make sure it has excellent benefits my Rich Dad wanted me to learn how money works so I could make it work for me these lessons I would learn through life with his guidance not because of a classroom my Rich Dad continued my first lesson I'm glad you could angry about working for 10 cents an hour if you'd not gotten angry and had gladly accepted it I would have to tell you that I could not teach you you see true learning takes energy passion a burning desire anger is a big part of that formula for passion is anger and love combined when it comes to money most people want to play it safe and feel secure so passion does not direct them fear does so is that why they'll take a job with low pay I asked yes said Rich Dad some people say I exploit people because they don't pay as much as the sugar plantation or the government I say people exploit themselves it's their fear not mine but don't you feel you should pay them more I asked I don't have to and besides more money will not solve the problem just look at your dad he makes a lot of money and he still can't pay his bills most people given more money two more dead so that's why the ten cents an hour I said smiling it's a part of a lesson that's right smiled Rich Dad you see your dad went to school and got an excellent education so he could get a high paying job which he did but he still has money problems because he never learned anything about money at school on top of that he believes in working for money and you don't I asked no not really he said rich dad if you want to learn to work for money and stay in school that's a great place to learn to do that but if you want to learn how to have money work for you then I will teach you that but only if you want to learn wouldn't everyone want to learn that I asked no Sid Rich Dad simply because it's easier to learn to work for money especially if fear is your primary emotion when the subject of money is discussed I don't understand I said with a frown oh 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 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 my friends would have been just starting their little league baseball game but for some reason I was now thankful I decided to work for 10 cents an hour I sensed that I was about to learn something my friends would not learn in school ready to learn ass bridge dad absolutely I said with a grin I've kept my promise I've been teaching you from afar my Rich Dad said at 9 years old you've gotten a taste of what it feels like to work for money just multiply your last month by 50 years and you'll 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 wants to ask for more money terrible I said if you choose to work for money that is what life is like for many people said rich dad and how did you feel when mrs. Martin dropped three dimes in your hand for three hours 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 a hundred percent you mean most workers don't get paid everything I asked with amazement heavens no said rich dad the government always takes its chair first how do they do that I asked taxes said rich dad you're taxed when you earn you're taxed when you spend your tax 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 in 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 as a nine year old boy that made no sense to me why would someone let the government do that to them rich dad sat there in silence I guess he wanted me to listen instead of jabber away at the mouth finally I calmed down I did not like what I had heard I knew my dad complained constantly about paying so much in taxes but really did nothing about it was that life pushing him around rich dad rocked slowly and silently in his chair just looking at me ready to learn yes I nodded my head slowly learning how to have money work for you it's 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 a 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 on top of that they wonder why they have money problems then they think that more money will solve the problem if you 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 of 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 fast Rich Dad I'm out of 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'll work the same three hours every Saturday but this time you will not be paid ten cents an hour you said you wanted to learn to not work for money so I'm not gonna pay you anything I couldn't believe what I was hearing I've already had this conversation with Mike he's already working dusting and stacking canned goods for free you better hurry up and get back there I stood there still not believing what a raw deal I've been handed here I came to ask for a raise and now I was being told to keep working for nothing rich dad tapped me on the head and said use this now get out of here I didn't tell my poor dad I wasn't being paid he would not have understood and I did not want to try to explain something that I did not even understand myself for three more weeks Mike and I worked for three hours every Saturday for nothing the work didn't bother me and the routine got easier it was the mist 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 we cross the street dodging a few cars and walked across a large grassy field where a few adults were playing softball sitting down at a remote picnic table he handed Mike and me the ice cream bars 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 shrug our shoulders and shook our heads in unison well you boys had better start thinking you're staring at one of life's biggest lessons if you learn the lesson you'll enjoy a life of great freedom and security if you don't learn the lesson you'll wind up like mrs. Martin and most of the people playing softball in this park they worked very hard for a little money clinging to the illusion of job security looking forward to a three-week vacation each year in a skimpy pension after 45 years of work now that excites you I'll give you a raise to 25 cents an hour but these are good hard-working people are you making fun of them I demand it a smile came over rich dad's face mrs. Martin's like a mother to me and I would never be that cruel I may sound cruel 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 something most people never have the benefit of seeing because their vision is too narrow most people never see the tractor in Mike and I sat there uncertain of his message he sounded cruel yet we could sense he was desperately wanting us to know something with a smile Rich Dad said doesn't that 25 cents an hour sound good doesn't that make your heart beat a little faster I shook my head no but it really did 25 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 was beginning to race my brain was screaming take it take it I could not believe what I was hearing still I said nothing okay $2.00 an hour my little nine-year-old brain and heart nearly exploded after all it was 1950 being paid two dollars 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 but somehow my mouth stayed silent maybe my brain had over he didn't blown a fuse but deep down I badly wanted that two dollars an hour 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 knew that he was testing us and he knew there was part of our emotions that wanted to take the deal okay he said five dollars an hour suddenly there was a silence from inside me something had changed the offer was too big and I've gotten ridiculous not too many grown-ups in 1956 made more than $5 an hour the temptation disappeared and a 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 there was a calm and a certainty about money that entered my brain of my soul I knew Mike had gotten to that point also good rich dad's head 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 their lives are then run forever by two emotions fear and greed offer them more money and they continue to cycle by also increasing their spending this is what I call the rat race there is another way my caste yes said rich dad slowly but only a few people find it and what is that way my caste that's what I hope you boys will find out as you work and study with me that is why I took away all forms of pay any hints my caste we're kind of tired of working hard especially for nothing well the first step is telling the truth said a rich dad we haven't been lying I said I did not say you were lying I said to tell the truth rich dad came back the truth about what I asked how you're feeling rich dad said you're not to say it to anyone else just yourself you mean the people in this park that people who work for you mrs. Martin they don't do that I asked I doubted rich dad said instead they feel the fear of not having money instead of confronting the fear they react instead of think they react emotionally instead of using their heads Rich Dad said tapping us on our heads then they get a few bucks in their hands and again the emotion of joy and desire and greed take over and again they react instead of think so their emotions do their thinking Mike said that's correct said rich dad money is running their lives and they refuse to tell the truth about that money is in control of their emotions and hence their souls rich dad sat quietly planning his words sink in 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 finish with the other emotion which is 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 more security so they keep working thinking money will soothe their souls that are troubled by fear and desire but money cannot do that even for rich people my caste rich people included said Rich Dad in fact the reason many rich people are rich is not because of desire but because of fear they actually think that money can eliminate that fear of not having money of being poor so they amassed tons of it only to find out that the fear gets worse they now fear losing it I have friends who keep on 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 all their money I want to teach you to master the power of money not be afraid of it and they don't teach that in the school if you don't learn it you can become a slave to money it was finally making sense he did want us to widen our views to see what mrs. Martin could not see his employees could not see or my dad for that matter he used examples that sounded cruel at the time but I've never forgotten him my vision widened that day and I could begin to see the trap that lay ahead for most people you see we're all employees ultimately we just work at different levels that Rich Dad I just want you boys to have a chance to avoid the trap 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 high 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 of the rich it's self-inflicted fear and ignorance that keeps people trapped see you boys go to school and get your college degrees I'll teach you how to stay out of the trap the pieces of the puzzle were appear my highly educated dad had a great education in a great career but school never told him how to handle money or his fears it became clear that I could learn different and important things from to father's so you've been talking about the fear of not having money how does the desire of money affect our thinking my guest 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's most important we will always have emotions of fear and greed from here on in it's most important for you to use those emotions to your advantage and for the long-term and not simply let your emotions run you by controlling 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 in motion 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 the donkey's nose the donkey's owner may be going where he wants to go but the donkey is chasing an illusion tomorrow there will only be another carrot for the donkey you mean the moment I began to picture a new baseball glove candy or toys that's like a carrot to a donkey my cast yeah and as you get older your toys get more expensive new car 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 enticing you toward the rocks that's the trap so what's the answer my cast what intensifies fear and desire is ignorance that's why rich people with lots of money often have more fear the richer they get money is the carrot the illusion 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 knowledge of oneself ignorant sets in that struggle is a moment-to-moment decision to learn to open or close one's mind look school is very very important to go to school to learn a skill or a profession so as to be a contributing member of society every culture needs teachers doctors mechanics artists cooks businesspeople police officers firefighters soldiers schools trained them so our culture can thrive and flourish said Rich Dad unfortunately for many people school at the end not the beginning what does ignorant have to do with greed and fear I asked because it's ignorant about money that causes so much greed and so much 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 now it hurts the poor people the most so poor people have worse health than those with money because the doctors raised their rates the attorneys raised their rates because the attorneys rates have gone up school teachers want to 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 great civilizations collapsed when the gap between the haves and the have-nots was too great America is on the same course proving once again that history repeats itself because we do not learn from history we only memorize historical dates and names not a lesson our price is supposed to go up I asked not an educated society with a well-run government prices should actually come down of course that's 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 only focus on teaching people to work for money not how to harness money's power but don't we have business schools my caste aren't you encouraging me to go to business school for my master's degree yes rich dad but all too often business schools train employees who are sophisticated bean counters heaven forbid a bean counter takes over a business all they do is look at the numbers fire people and kill the business I know because I hire bean counters all they think about is cutting costs and raising prices which causes 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 Pastor Mike yes said Rich Dad learn to use your emotions to think not think with your emotions when you boys mastered your emotions first by agreeing to work for free how do other words 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 can you tell the difference between emotions thinking and the head thinking my caste oh yes I heard all the time said Rich Dad I hear things like well everyone has to work or no richer 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 instead of is there something I'm missing here which breaks the emotional thought and gives you time to think clearly I must admit it was a great lesson to be getting to know when someone was speaking out of emotions or out of clear thought it was a lesson that served me well for life especially when I was the one speaking out of reaction and not from clear thought as we headed back to the store Rich Dad explained that the rich really did make money they did not work for it he went on to explain that when Mike and I were casting 5 cent pieces out of lead thinking we were making money we were very close to thinking the way rich people think the problem was that it was illegal for us to do it rich dad went on to explain that the rich know that money is an illusion truly like the carrot for the donkey it's only out of fear and greed that the illusion of money is held together by billions of people think that money is real money is really made up it was only because of the illusion of confidence and the ignorance of the masses that the house of cards stood standing in fact he said in many ways that donkeys carrot was more valuable than money as he climbed into his pickup truck outside of his little convenience store he said keep working boys but the sooner you forget about needing a paycheck the easier your adult life will be keep using your brain work for free and soon your mind will show you ways of making money far beyond what I could ever pay you you'll begin to see opportunities right in front of you that in the past would have gone unnoticed Mike and I picked up our things from the store and waved goodbye to mrs. Martin we went back to the park to the same picnic bench and spent several more hours thinking and talking we spent the next week at school thinking and talking for two more weeks we kept thinking and talking and working for free at the end of the second Saturday I was again saying goodbye to mrs. Martin and looking at the comic book stand with a longing gaze the hard thing about not even getting 30 cents every Saturday was that I didn't have any money to buy comic books suddenly as mrs. Martin was saying goodbye to Mike and me I saw something she was doing that I'd never seen her do before I mean I'd seen her do it but I never took notice of it mrs. Martin was cutting the front page of the comic book in half she was keeping the top half of the comic book cover and throwing the rest of the comic book into a large brown cardboard box well I asked her what she did with the comic book she said I throw them away I give the top half of the cover back to the comic book distributor for credit when he brings in the new comics he's coming in an hour I can I waited for an hour soon the distributor arrived and I asked him if we could have the comic books to which he replied you can have them if you work for this store and do not resell them our partnership was revived Mike's mom had a spare room in the basement that no one used we cleaned it out and began piling hundreds of comic books in that room soon our comic book library was open to the public we hired Mike's younger sister who loved to study to be head librarian she charged each child ten cents admission to the library which was open from 2:30 to 4:30 p.m. every day after school the customers the children of the neighborhood could read as many comics as they could in two hours it was a bargain for them since a comic cost 10 cents each and they could read five or six in two hours Mike's sister would check the kids as they left to make sure they weren't borrowing in a comic books she also kept the books logging in how many kids showed up each day who they were and any comments they might have Mike and I averaged $9.50 per week over a three month period we paid his sister a dollar a week and allowed her to read the comics for free which she rarely did since she was always studying Mike and I kept our agreement by working in the store every Saturday and collecting all the comic books from the different stores we kept our agreement to the distributor by not selling any comic books we burned them once they got to tatters we tried opening a branch office but we could never quite find someone as dedicated as Mike's sister we could trust at an early age we found out how hard it was to find good staff three months after the library first opened a fight broke out in the room some bullies from another neighborhood pushed their way in and started it Mike's dad suggested we shut down the business so our comic book business was shut down and we stopped working on Saturdays at the convenience store anyway Rich Dad was excited because he had new things he wanted to teach us he was happy because we'd learned our first lesson so well we'd learned to have money work for us by not getting paid for our work at the store we were forced to use our imaginations to identify an opportunity to make money by starting our own business the comic book library we were in control of our own finances not dependent on an employer the best part was that our business generated money for us even when we weren't physically there our money worked for us instead of paying us money rich dad had given us so much more lesson - why teach financial literacy in 1990 my best friend Mike took over his father's Empire and is in fact doing a better job than his dad did we see each other once or twice a year on the golf course he and his wife are wealthier than you could imagine rich dad's Empire is in great hands and Mike is now grooming his son to take his place as his dad groomed us in 1994 I retired at the age of 47 and my wife Kim was 37 retirement does not mean not working - my wife and me it means that barring unforeseen cataclysmic changes we can work or not work and our wealth grows automatically staying way ahead of inflation I guess it means freedom the assets are large enough to grow by themselves it's like planting a tree you water it for years and then one day it doesn't need you anymore its roots have gone down deep enough then the tree provides shade for your enjoyment Mike chose to run the Empire and I chose to retire whenever I speak to groups of people they often ask what I would recommend or what could they do how do they get started is there a good book I'd recommend what is the secret to success I simply say to them what my Rich Dad said back to me when I was a little kid if you want to be rich you need to be financially literate that idea was drummed into my head every time we were together as I said my educated dad stressed the importance of reading books while my rich dad stressed the need to master financial literacy if you're going to build the Empire State Building the first thing you need to do is dig a deep hole and pour a strong foundation if you're going to build a home in the suburbs all you need to do is pour a 6-inch slab of concrete most people in their drive to get rich are trying to build an empire state building on a 6-inch slab our school system then created in the agrarian age believes in homes with no foundation dirt floors are still the rage so kids graduate from school with virtually no financial foundation one day sleepless and deep in debt in suburbia living the American dream they decide that the answer to their financial problems is to find a way to get rich quick construction on the skyscraper begins it goes up quickly and soon instead of the Empire State Building we have the Leaning Tower of Suburbia the sleepless nights return as for Mike and me in our adult years both of our choices were possible because we were taught to pour a strong financial foundation when we were just kids now accounting is possibly the most boring subject in the world it also could be the most confusing but if you want to be rich long-term it could be the most important subject the question is how do you take a boring and confusing subject and teach it to kids the answer is make it simple my rich dad poor distraught financial foundation for Mike and me since we were just kids he created a simple way to teach us for years he only drew pictures and used words Mike and I understood the simple drawings the jargon the movement of money and then in later years Rich Dad began adding numbers most importantly you must know the difference between an asset and a liability and buy assets if you want to be rich this is all you need to know it is rule number one it is the only rule this may sound absurdly simple but most people have no idea how profound this rule is most people struggle financially because they do not know the difference between an asset and a liability rich people acquire assets the poor and middle class acquire liabilities but they think they are assets when rich dad explained this to Mike and me we thought it was kidding here we were nearly teenagers and waiting for the secret to get rich and this was his answer it was so simple that had to stop for a long time to think about it if it's that simple how come everyone's not rich I asked rich dad smiled because people do not know the difference between an asset and a liability I remember asking how can adults be so silly if it's that simple if it's that important why would everyone not want to find out it took our rich dad only a few minutes to explain what assets and liabilities were to teach preteen boys which dad kept everything simple using as many pictures as possible as few words as possible and no numbers for years my Rich Dad simply drew a vertical box with a line through the middle the top half was for income and the bottom half was for expenses then beneath that box he drew another box horizontally which he divided into a left half for assets and a right half for liabilities the income statement often called a profit loss statement measures income and expenses money in or money out the second set of boxes is the balance sheet it's called that because it's supposed to balance assets against liabilities that relationship is vital to understand the primary cause of financial struggle is simply not knowing the difference between an asset and a liability the cause of the confusion is found in the definition of the two words if you want a lesson in confusion simply look up the words asset and liability in the dictionary so my Rich Dad simply told two young boys the following an asset is something that puts money in my pocket a liability is something that takes money out of my pocket this is really all you need to know if you want to be rich simply spend your life buying assets if you want to be poor or middle-class spend your life buying liabilities it's not knowing the difference that causes most of the financial struggle in the real world my Rich Dad then three arrows on his diagram he explained the arrow represents the flow of cash or cash flow an eighty percent of most families the financial story is a story of working hard in an effort to get ahead it's not because it'll make money but because they spend their lives buying liabilities instead of assets the first arrow showed the cash flow pattern of a poor person or a young person still at home the arrow goes into the income box from a job or salary it then continues into the expense box expenses include taxes rent and everyday living expenses it flows out the expense box and is gone the second arrow Rich Dad drew representative a cash flow pattern of a middle-class person the arrow flows from a job into the income box it then flows into the liabilities box most middle-class people acquire many liabilities such as a mortgage a car loan and credit card debt from the liabilities box it flows to the expense box where the monthly payments are made for the liabilities as well as taxes and living expenses from there it flows out the expense box and is gone the third arrow is a pattern of a wealthy person this arrow simply flows from the asset box into the income box the cash flow is not generated by a job or salary but by assets remember assets are things that put money in your pocket additionally the rich have few expenses and liabilities or if they do those liabilities are more than covered by their assets examples such as these are oversimplified everyone has living expenses the need for food shelter and clothing the diagrams Rich Dad Drew showed the flow of cash through a poor middle-class or wealthy person's life it's the cash flow that tells the story it's the story of how a person handles their money what they do after they get the money in their I cringe whenever I heard people ask me how to get rich quicker or how do they start I often hear I'm in debt so I need to make more money but more money will often not solve the problem in fact it may actually accelerate the problem money often makes obvious our tragic human flaws money often puts a spotlight on what we do not know that's why all too often a person who comes into a sudden windfall of cash let's say in inheritance pay raise or lottery winnings soon returns to the same financial mess if not worse than the mess they were in before they receive the money money only accentuates a cash flow pattern running in your head if your pattern is to spend everything you get most likely an increase in cash or just result in an increase in spending thus the saying a fool in his money is one big party [Music] you you [Music] because students leave school without financial skills millions of educated people pursue their profession successfully but later find themselves struggling financially they work harder but don't get ahead what's missing from their education is not how to make money but how to spend money what to do after you make it it's called financial aptitude what to do with the money once you make it how to keep people from taking it from you how long you keep it and how hard that money works for you most people cannot tell why they struggle financially because they don't understand cash flow a person can be highly educated professionally successful and financially illiterate these people often work harder than they need to because they learn how to work hard but not how to have their money work for them the moving picture show of hard-working people has a set pattern recently married the happy highly educated young couple move in together and one of their cramped rented apartments immediately they realize that they're saving money because two can live as cheaply as one the problem is the apartment is cramped they decide to save money to buy their dream homes so they can have kids they now have two incomes and they begin to focus on their careers their incomes begin to increase as their incomes go up their expenses go up as well so there is little or no money to flow into the asset box this means the only income they get comes from their jobs the number one expense for most people is taxes many people think it's income tax but for most Americans their highest tax is Social Security as an employee it appears as if the Social Security tax combined with the Medicare tax rate is roughly 7.5% but it's really 15% since the employer must the social security amount in essence it is money the employer cannot pay you on top of that you still have to pay income tax on the amount deducted from your wages for Social Security tax income you never receive because it went directly to social security through withholding then their liabilities go up this is best demonstrated by going back to the young couple as a result of their incomes going up they decide to go out and buy the house of their dreams once in their house they have a new tax called property tax then they buy a new car new furniture and new appliances to match their new house all of a sudden they wake up and their liabilities column is full of mortgage debt and credit card debt they're now trapped in the rat race a child comes along they work harder the process repeats itself more money and higher taxes also called bracket creep our credit card comes in the mail they use it it maxes out a loan company calls and says their greatest asset their home has appreciated in value the company offers a bill consolidation loan because their credit is so good and tells them the intelligent thing to do is clear off the high interest consumer debt by paying off their credit card and besides interest on their home is a tax deduction they go for it and pay off those high interest credit cards they breathe a sigh of relief their credit cards are paid off they've now folded their consumer debt into their home mortgage their payments go down because they extend their debt over 30 years it is the smart thing to do their neighbor calls to invite them to go shopping the Memorial Day Sale is on a chance to save some money they say to themselves I won't buy anything I'll just go look but just in case they find something they tucked that clean credit card inside their wallet I run into this young couple all the time their names change but their financial dilemma is the same they come to one of my talks to hear what I have to say they ask me can you tell us how to make more money their spending habits have caused them to seek more income they don't even know that the trouble is really how they choose to spend the money they do have and that is the real cause of their financial struggle it's caused by financial illiteracy and not understanding the difference between an asset and a liability more money seldom solve someone's money problems intelligence solves problems there's a saying a friend of mine says over and over to people in debt if you find yourself in a hole stop digging the poor and middle-class all too often allow the power of money to control them by simply getting up and working harder failing to ask themselves if what they do make sense they shoot themselves in the foot as they leave for work every morning by not fully understanding money the vast majority of people allow the awesome power of money to control them the power of money is used against them by the time Mike and I were 16 years old we began to have problems in school we were not bad kids we just began to separate from the crowd we work for Mike's dad after school and on the weekends Mike and I often spend hours after work just sitting at a table with his dad while he held meetings with his bankers attorneys accountants brokers investors managers and employees we learned more sitting at his meetings than we did in all our years of school college included Mike's dad was not school educated but he was financially educated and successful as a result he used to tell us over and over again an intelligent person hires people who are more intelligent than they are so Mike and I had the benefit of spending hours listening to and in the process learning from intelligent people but because of this both Mike and I just could not along with the standard Dogma that our teachers preached occasionally miker I would ask our teachers how what we studied was applicable or we asked why we never studied money and how it worked to the latter question we often got the answer that money was not important that if we excelled in our education the money would follow the more we knew about the power of money the more distant we grew from the teachers in our classmates my highly educated dad never pressured me about my grades I often wondered why but we did begin to argue about money by the time I was 16 I've probably had a far better foundation with money than both my mom and dad I could keep books I listen to tax accountants corporate attorneys bankers real estate brokers investors and so forth my dad talked to teachers one day my dad was telling me why our home was his greatest investment a not too pleasant argument took place when I showed him why I thought a house was not a good investment the argument illustrated the difference in perception between my rich dad and my poor dad when it came to their homes poor dad thought his house was an asset and listed it in the asset box and the rich dad thought it was a liability and put his home in the liability box I remember when I drew a diagram for my dad showing him the direction of cash flow I also showed him the ancillary expenses that went along with owning the home a bigger home meant bigger expenses and the cash flow kept going out through the expense column today I am still challenged on the idea of a house not being an asset and I know that for many people it's their dream as well as their largest investment and owning your own home is better than nothing I simply offer an alternate way of looking at this popular Dogma my wife and I would love a bigger more flashy house to impress the Joneses but we know it is not an asset it's a liability since it takes money out of our pocket so here's the argument I've put forth I really do not expect most people to agree with it because a nice home is an emotional thing and when it comes to money high emotions tend to lower financial intelligence when it comes to houses I point out that most people work all their lives paying for a home they never own in other words most people buy a new house every so many years each time incurring a new 30-year loan to pay off the previous one even though people receive a tax deduction for interest on mortgage payments they pay for all their other expenses with after-tax dollars even after they pay off their mortgage then there are property taxes my wife's parents were shocked when the property taxes on their home went to $1,000 a month this was after they'd retired so the increase put a strain on their retirement budget and they felt forced to move also houses do not always go up in value I still had friends who owe a million dollars for a home that will today sell for only seven hundred thousand finally the greatest losses of all are those from missed opportunities if all your money is tied up in your house you may be forced to work harder because your money continues blowing out of the expense column instead of adding to the asset column the classic middle-class cash flow pattern if a young couple would put more money into their asset column early on their later years would get easier especially as they prepare to send their children to college their assets would have grown and would be available to help cover expenses all too often a house only serves as a vehicle for incurring a home equity loan to pay for mounting expenses in summary the end result in making a decision to own a house that is too expensive in lieu of starting an investment portfolio early on impacts an individual in at least the following three ways number one loss of time during which other assets could have grown in value number two loss of additional capital which could have been invested instead of paying for high maintenance expenses were related directly to the home number three loss of education too often people count their house savings and retirement plan as all they have in their asset column because they have no money to invest they simply do not invest this cost them investment experience most never become what the investment world calls a sophisticated investor and the best investments are usually first sold to sophisticated investors who then turn around and sell them to the people playing it safe my educated dad's personal financial statement best demonstrates the life of someone in the rat race his expenses seem to always keep up with his income never allowing him to invest in assets as a result his liabilities such as his mortgage and credit card debts are larger than his assets my rich dad's personal financial statement on the other hand reflects the results of a life dedicated to investing and minimizing liabilities his assets greatly exceed his liabilities a review of my rich dad's financial statement is why the rich get richer the asset column generates more than enough income to cover expenses with the balance reinvested into the asset column the asset column continues to grow and therefore the income it produces grows with it the result being the rich get richer the middle-class finds itself in a constant state of financial struggle their primary income is through wages and as their wages increase so do their taxes their expenses tend to increase and equal increments as their wages increase hence the phrase the rat-race they treat their home as their primary asset instead of investing in income producing assets remember the most important rule is to know the difference between an asset and a liability once you understand the difference concentrate your efforts on only buying income-generating assets that's the best way to get started on a path to becoming rich keep doing that and your asset column will grow focus on keeping liabilities and expenses down this will make more money available to continue pouring into the asset column this pattern of treating your home is an investment and the philosophy that a pay raise means you can buy a larger home or spend more is the foundation of today's debt-ridden society this process of increased spending throws families into greater debt and into more financial uncertainty even though they may be advancing in their jobs and receiving pay raises on a regular basis this is high risk living caused by weak financial education as an employee who's also a homeowner you're working efforts are generally as follows you work for someone else most people working for a paycheck are making the owner or the shareholders richer your efforts and success will help provide for the owners success and retirement next you work for the government the government takes its share from your paycheck before you even see it by working harder you simply increase the amount of taxes taken by the government most people work from January to May just for the government and finally you work for the bank after taxes your next largest expense is usually your mortgage and credit card debt the problem with simply working harder is that each of these three levels takes a greater share of your increased efforts you need to learn how to have your increased efforts benefit you and your family directly once you've decided to concentrate on minding your own business how do you set your goals for most people they must keep their profession and rely on their wages to fund their acquisition of assets as their assets grow how do they measure the extent of their success when does someone real that they are rich that they have wealth as well as having my own definitions for assets and liabilities I also have my own definition for wealth actually I borrowed it from a man named Buckminster Fuller some people call him a quack and others call him a living genius years ago he got all the architects buzzing because he applied for a patent in 1961 for something called a geodesic dome but in the application Fuller also said something about wealth it was pretty confusing at first but after reading it for a while it began to make some sense wealth is a person's ability to survive so many number of days forward or if I stopped working today how long can I survive unlike net worth the difference between your assets and liabilities which is often filled with the person's expensive junk and opinions of what things are worth this definition creates the possibility for developing a truly accurate measurement I could now measure and really know where I was in terms of my goal to become financially independent although net worth often includes these non-cash producing assets like stuff you bought that now sits in your garage wealth measures how much money your money is making and therefore your financial survivability wealth is the measure of the cash flow from the asset column compared with the expense column let's use an example let's say I have a cash flow from my asset column of $1000 a month and I have monthly expenses of $2000 what's my wealth let's go back to buckminster fuller's definition using his definition how many days forward can I survive and let's assume a 30-day month by that definition I have enough cash flow for half a month when I have achieved $2,000 a month cash flow from my assets then I will be wealthy I now have income generated from assets each month that fully covers my monthly expenses if I want to increase my expenses I first must increase my cash flow from assets to maintain this level of wealth take notice that it's at this point that I am no longer dependent on my wages I have focused on and been successful in building an asset column that's made me financially independent if I quit my job today I would be able to cover my monthly expenses with the cash flow from my assets my next goal would be to have the excess cash flow from my assets reinvested into the asset column the more money that goes into my asset column the more my asset column grows the more my assets grow the more my cash flow grows and as long as I keep my expenses less than the cash flow from these assets I will grow richer with more and more income from sources other than my physical labor as this reinvestment continues I am well on my way to being rich the actual definition of rich is in the eye of the beholder you can never be too rich just remember this simple observation the rich buy assets the poor only have expenses the middle-class buys liabilities they think are assets so how do I start minding my own business what's the answer listen to the founder of McDonald's lesson three mind your own business in 1974 Ray Kroc the founder of McDonald's was asked to speak at the MBA class at the University of Texas at Austin a dear friend of mine Keith Cunningham was a student in that MBA class after a powerful and inspiring talk the class adjourned and the students asked ray if he would join them at their favorite hangout to have a few beers ray graciously accepted what business am I in ray asked once the group had all their beers in hand everyone laughed said Keith most of the MBA students thought Ray was just fooling around no one answered so ray asked the question again what business do you think I'm in my students laughed again and finally one brave soul yelled out ray who in the world does not know that you're in the hamburger business hooray chuckled that's what I thought you'd say he paused and then quickly said ladies and gentlemen I'm not in the hamburger business my business is real estate McDonald's today is the largest single owner of real estate in the world owning even more than the Catholic Church today McDonald's owned some of the most valuable intersections and street corners in America as well as in other parts of the world Keith said it was one of the most important lessons in his life today Keith owns car washes but his business is the real estate under those car washes the previous chapter ended with a statement illustrating that most people work for everyone but themselves they work first for the owners of the company then for the government through taxes and finally for the bank that owns their mortgage as a young boy we did not have a McDonald's nearby yeah my Rich Dad was responsible for teaching Mike and me the same lesson that Ray Kroc talked about of the University of Texas it is secret number three of the rich the secret is mind your own business financial struggle is often directly the result of people working all their life for someone else many people will have nothing at the end of their working days our current educational system focuses on preparing today's youth to get good jobs by developing scholastic skills their lives will revolve around their wages or as described earlier their income column and after developing scholastic skills they go on to higher levels of schooling to enhance their professional abilities they studied to become engineers scientists cooks police officers artists writers and so on these professional skills allow them to enter the workforce and work for money there's a big difference between your profession and your business often I ask people what's your business and they will say oh I'm a banker then I asked them if they own the bank and they usually respond no I worked there in that instance they've confused their profession with their business their profession may be a banker but they still need their own business Ray Kroc was clear on the difference between his profession and his business his profession was always the same he was a Salesman at one time he sold mixers for milkshakes and soon thereafter he was selling hamburger franchises but while his profession was selling hamburger franchises his business was the accumulation of income producing real estate to become financially secure a person needs to mind their own business your business revolves around your asset column as opposed to your income column I stated earlier the number one rule is to know the difference between an asset and a liability and to buy assets the rich focus on their asset columns while everyone else focuses on their income statements that's why we hear so often I need a raise if only I had a promotion I'm going back to school to get more training so I can get a better job I'm gonna work overtime maybe I can get a second job I'm quitting in two weeks I found a job that pays more in some circles these are sensible ideas yet if you listen to Ray Kroc you're still not minding your own business these ideas all still focus on the income column and will only help a person become more financially secure if the additional money is used to purchase income generating assets the primary reason the majority of the poor and middle class are fiscally conservative which means I can't afford to take risks is that they have no financial foundation they have to cling to their jobs they have to play it safe when downsizing became the in thing to do millions of workers found out that their largest so-called asset their home was eating them alive their asset called a house still cost them money every month their car another asset was eating them alive the golf clubs in the garage that cost a thousand dollars were not worth a thousand dollars anymore without job security they have nothing to fall back on what they thought were assets could not help them survive in a time of financial crisis so many people have put themselves in deep financial trouble when they run short of income to raise cash they sell their assets first their personal assets can generally be sold for only a fraction of the value that's listed in their personal balance sheet or if there's a gain on the sale of the assets they're taxed on the game so again the government takes its share of the gain thus reducing the amount available to help them out of debt that's why I say someone's net worth is often worth less than they think start minding your own business keep your daytime job but start buying real assets not liabilities or personal effects that have no real value once you get them home a new car loses nearly 25 percent of the price you pay for it the moment you drive it off a lot it's not a true asset even if your banker lets you listed as one my $400 new titanium driver was worth a hundred and fifty dollars the moment I teed off for adults keep your expenses low reduce your liabilities and diligently build a base of solid assets for young people who've not yet left home it's important for parents to teach them the difference between an asset and a liability get them to start building a solid asset column before they leave home get married buy a house have kids and get stuck in a risky financial position clinging to a job and buying everything on credit I see so many young couples who get married and trapped themselves into a lifestyle that will not let them get out of debt for most of their working years for most people just as the last child leaves home the parents realized they've not adequately prepared for retirement and they begin to scramble to put some money away then their own parents become ill and they find themselves with new responsibilities so what kind of assets am I suggesting that you or your children acquire in my world real assets fall into several different categories first businesses that do not require my presence I own them but they're managed or run by other people if I have to work there it's not a business it becomes my job then come categories such as stocks bonds mutual funds income generating real estate notes or IOUs royalties from intellectual property such as music scripts patents and finally anything else that has value produces income or appreciates and has a ready market as a young boy my educated dad encouraged me to find a safe job my rich dad on the other hand encouraged me to begin acquiring assets that I loved if you don't love it you won't take care of it I collect real estate simply because I love buildings and land I love shopping for them I could look at them all day long when problems arise the problems are not so bad that it changes my love for real estate for people who hate real estate they shouldn't buy it I love stocks of small companies especially startups the reason is that I have an entrepreneur not a corporate person in my early years I worked in large organizations such as Standard Oil of California the US Marine Corps and Xerox Corporation I enjoyed my time with those organizations and have fond memories but I know deep down I'm not a company man I like starting companies not running them so my stock buyers are usually of small companies and sometimes I even start the company and take a public fortunes are made in new stock issues and I love the game many people are afraid of small cap companies and call them risky and they are but risk is always diminished if you love what the investment is understand it and know the game for years even while I was with the Marine Corps in Xerox I did what my rich dad recommended I kept my daytime job but I still minded my own business I was active in my asset column I traded real estate in small stocks rich dad always stressed the importance of financial literacy the better I was at understanding the accounting and cash management the better I would be at analyzing investments and eventually starting and building my own company I would not encourage anyone to start a company unless they really want to knowing what I know about running a company I would not wish that task on anyone there are times when people cannot find employment we're starting a company as a solution for them the odds are against success 9 out of 10 companies fail in five years all those that survived the first 5 years 9 out of every 10 of those eventually fail as well so only if you really have the desire to own your own company do I recommend it otherwise keep your daytime job and mind your own business when I say mind your own business I mean to build and keep your asset column strong once the dollar goes into it never let it come out think of it this way once a dollar goes into your asset column it becomes your employee the best thing about money is that it works 24 hours a day and can work for generations keep your daytime job be a great hard-working employee but keep building that asset column as your cash flow grows you can buy some luxuries an important distinction is that rich people buy luxuries last while the poor and middle class tend to buy luxuries first the poor and middle class often buy luxury items such as big houses diamonds furs jewelry or boats because they want to look rich they look rich but in reality they just get deeper in debt on credit the old money people the long-term rich built their asset column first then the income generated from the column bought their luxuries the poor and middle class buy luxuries with their own sweat blood and children's inheritance a true luxury is a reward for investing in and developing a real asset for example when my wife and I had extra money coming from our apartment houses she went out and bought her Mercedes it didn't take any extra work or risk on her part because the apartment house bought the car she did however have to wait for it for four years while the real estate investment portfolio grew and finally began throwing off enough extra cash flow to pay for the car but the luxury the Mercedes was a true reward because she had proved she knew how to grow her asset column that car now means a lot more to her than simply another pretty car it means she used her financial intelligence to afford it what most people do is they impulsively go out and buy a new car or some other luxury on credit they may feel bored and just want a new toy buying a luxury on credit often causes a person to sooner or later actually resent that luxury because the dead on the luxury becomes a financial burden after you've taken the time and invested in and built your own business you're now ready to add the magic touch the biggest secret of the rich the secret that puts the rich way ahead of the pack the reward at the end of the road for diligently taking the time to mind your own business lesson for the history of taxes and the power of corporations I remember in school being told the story of Robin Hood and his Merry Men my school teacher thought it was a wonderful story of a romantic hero like Kevin Costner type who robbed from the rich and gave to the poor my Rich Dad did not see Robin Hood as a hero he called Robin Hood a crook Robin Hood may be long gone but his followers live on how often I still hear people say what on the rich pay for it or the rich should pay more in taxes and give it to the poor it's this idea of Robin Hood or taking from the rich to give to the poor that has caused the most pain for the poor in the middle class the reason the middle class is so heavily taxed is because of the Robin Hood ideal the real reality is that the rich are not taxed it's the middle class who pays for the poor especially the educated upper income middle class again to understand fully how things happen we need to look at the historical perspective we need to look at the history of taxes although my highly educated dad was an expert on the history of education my Rich Dad fashioned himself as an expert on the history of taxes Rich Dad explained to Mike and me that in England in America there were no taxes occasionally there were temporary taxes levied in order to pay for Wars the king or the president would put the word out and ask everyone to chip in taxes were levied in Britain for the fight against Napoleon from 1799 to 1816 in America taxes were levied to pay for the Civil War from 1861 to 1865 in 1874 England made income tax a permanent levy on its citizens in 1913 an income tax became permanent in the United States with the adoption of the sixteenth amendment to the Constitution what these historical dates failed to reveal is that both of these taxes were initially levied against only the rich it was this point that rich dad wanted Mike and me to understand he explained that the idea of taxes was made popular and accepted by the majority by telling the poor and the middle class that taxes were created only to punish the rich this is how the masses voted for the law and it became constitutionally legal although it was intended to punish the rich in reality and wound up punishing the very people who voted for it the poor in the middle class once government got a taste of money the appetite grew said Rich Dad your dad and I are exactly opposite he's a government bureaucrat and I'm a capitalist we get paid and our success is measured on opposite behaviors he gets paid to spend money and hire people the more he spends and the more people he hires the larger his organization becomes in the government the larger his organization the more he's respected on the other hand within my organization the fewer people I hire and the less money I spend the more I'm respected by my investors that's why I don't like government people they have different objectives for most business people as the government grows more and more tax dollars will be needed to support it as I said the passage taxes was only possible because the masses believed in the Robin Hood theory of economics which was to take from the rich and give to everyone else the problem was that the government's appetite for money was so great that taxes who needed to be levied on the middle class and from there it kept trickling down the rich on the other hand saw an opportunity they do not play by the same set of rules as I've stated the rich already knew about corporations which became popular in the days of sailing ships the rich created the corporation as a vehicle to limit their risk to the assets of each voyage the rich put their money into a corporation to finance the voyage the corporation would then hire a crew to sail to the New World to look for treasures if the ship was lost the crew lost their lives but the loss to the rich would be limited only to the money they invested for that particular voyage it's the knowledge of the power of the legal structure of the corporation that really gives the rich a vast advantage over the poor in the middle class having two fathers teaching me one a socialist and the other a capitalist I quickly began to realize that the philosophy of the capitalist made more financial sense to me it seemed to me that the Socialists ultimately penalized themselves due to their lack of financial education no matter what the take from the rich crowd came up with the rich always found a way to outsmart them that is how taxes were eventually levied on the middle class the rich outsmarted the intellectuals solely because they understood the power of money a subject not taught in schools how did the rich outsmart the intellectuals once the take from the rich tax was passed cash started flowing into government coffers initially people were happy money was handed out to government workers and the rich it went to government workers in the form of jobs and pensions he went to the rich fire their factories receiving government contracts the government became a large pool of money but the problem was the fiscal management of that money there really is no recirculation in other words the government policy if you were a government bureaucrat was to avoid having excess money if you fail to spend your allotted funding you risk losing it in the next budget you certainly not be recognized for being efficient business people on the other hand are rewarded for having excess money and are recognized for their efficiency as this cycle of growing government spending continued the demand for money increased and the tax the rich idea was now being adjusted to include lower income levels down to the very people who voted it in the poor in the middle class true capitalists used their financial knowledge to simply find a way to escape they headed back to the protection of a corporation a corporation protects the rich but what many people who've never formed a corporation do not know is that a corporation is not really a thing a corporation is merely a file folder with some legal documents in it sitting in some attorney's office registered with a state government agency it's not a big building with the name of the corporation on it it's not a factory or a group of people a corporation is merely a legal document that creates a legal body without a soul the wealth of the rich was once again protected once again the use of corporations became popular once the permanent income laws were passed because the income tax rate of the corporation was less than the individual income tax rates in addition as I said earlier certain expenses could be paid with pre-tax dollars within the corporation this war between the haves and the have-nots has been going on for hundreds of years it's the take from the rich crowd versus the rich the battle is waged whenever and wherever laws are made the battle will go on forever the problem is the people who lose are the uninformed the ones who get up every day and diligently go to work and pay taxes if they only understood the way the rich play the game make a plan - then they would be on their way to their own financial independence this is why I cringe every time I hear a parent advise their children to go to school so they can find a safe secure job an employee with a safe secure job without financial aptitude has no escape average Americans today work 5 to 6 months for the government before they make enough to cover their taxes in my opinion that is a long time the harder you work the more you pay the government that's why I believe that the idea of take from the rich backfired on the very people who voted it in every time people try to punish the rich the rich don't simply comply they react they have the money power and intent to change things they do not just sit there and voluntarily pay more taxes they search for ways to minimize their tax burden they hire smart attorneys and accountants and persuade politicians to change laws or create legal loopholes they have the resources to affect change the poor in the middle class do not have the same resources they sit there and let the government's needles enter their arm and allow the blood donation to begin today I'm constantly shocked at the number of people who pay more taxes or take fewer deductions simply because they are afraid of the government and I do know how frightening and intimidating a government tax agent can be I have had friends who have had their businesses shut down and destroyed only to find out it was a mistake on the part of the government I realize all that but the price of working from January to mid-may is a high price to pay for that intimidation my poor dad never fought back my Rich Dad didn't either he just played the game smarter and he did it through corporations the biggest secret of the rich my highly educated dad always encouraged me to seek a good job with a strong corporation he spoke of the virtues of working your way up the corporate ladder he didn't understand that by relying solely on a paycheck from a corporate employer I would be a docile cow ready for milking when I told my rich dad of my father's advice he only chuckled why not on the ladder was all he said as a young boy I didn't understand what rich dad meant by owning my own corporation it was an idea that seemed impossible and intimidating although I was excited by the idea my youth would not let me envision the possibility that grown-ups would someday work for a company I would own the point is if not for my rich dad I would have probably followed my educated dad's advice it was merely the occasional reminder of my rich dad that kept the idea of owning my own corporation alive and kept me on a different path by the time I was 15 or 16 I knew I was not going to continue down the path my educated dad was recommending I did not know how I was going to do it but I was determined not to head in the direction most of my classmates were heading that decision changed my life it was not until I was in my mid-20s that my rich dad's advice began to make more sense I was just out of the Marine Corps and working for Xerox I was making a lot of money but every time I looked at my paycheck I was always disappointed the deductions were so large and the more I worked the greater the deductions as it became more successful my boss has talked about promotions and raises it was flattering but I could hear my rich dad asking me in my ear who are you working for who are you making rich in 1974 while still an employee for Xerox I formed my first corporation and began minding my own business there were already a few assets in my asset column but now I was determined to focus on making it bigger those paychecks with all the deductions made all the years of my rich dad's advice make total sense I could see the future if I followed my educated dad's advice many employers feel that advising their workers to mind their own business is bad for business I'm sure it can be for certain individuals but for me focusing on my own business developing assets made me a better employee I now had a purpose I came in early and worked diligently amassing as much money as possible so I could begin investing in real estate Hawaii was just set to boom and there were fortunes to be made the more I realized we were in the beginning stages of a boom the more Xerox machines I sold the more I sold the more money I made and of course the more deductions there were from my paycheck it was inspiring I wanted out of the trap of being an employee so badly that I worked harder not less by 1978 I was consistently one of the top 5 sales people in sales often number one I badly wanted out of a rat race in less than three years I was making more in my own little corporation which was a real estate holding company then I was making it Xerox and the money I was making in my asset column in my own corporation was money working for me not me pounding on doors selling copiers my rich dad's advice made much more sense soon the cash flow from my properties was so strong that my company bought me my first Porsche my fellow Xerox salespeople thought I was spending my commissions I wasn't I was investing my commissions in assets my money was working hard to make more money each dollar in my asset column was a great employee working hard to make more employees and by the boss a new Porsche with before tax dollars I began to work harder for Xerox the plan was working and my Porsche was the proof by using the lessons I learned from my Rich Dad I was able to get out of the proverbial rat race of being an employee at an early age it was made possible because of the strong financial knowledge acquired through these lessons without this financial knowledge which I call my financial IQ my road to financial independence would have been much more difficult I now teach others through financial seminars in the hope that I may share my knowledge with them whenever I do my talks I remind people that financial IQ is made up of knowledge from four broad areas of expertise the first area is accounting what I call financial literacy a vital skill if you want to build an empire the more money you're responsible for the more accuracy is required or the house comes tumbling down this is the left brain side or the details financial literacy is the ability to read and understand financial statements this ability allows you to identify the strengths and weaknesses of any business the second is investing what I call the science of money making money this involves strategies and formulas this is the right brain side or the creative side next you must obtain expertise in understanding markets the science of supply and demand there's a need to know the technical aspects of the market which is a motion driven the Tickle Me Elmo doll during Christmas 1996 is a case of technical or emotion driven market the other market factor is the fundamental or the economic sense of an investment does an investment make sense or does it not make sense based on the current market conditions finally you must understand the law for instance utilizing a corporation wrapped around the technical skills of accounting investing in markets can aid explosive growth an individual with the knowledge of the tax advantages and protection provided by a corporation can get rich so much faster than someone who's an employee or a small business sole proprietor it's like the difference between someone walking and someone flying the difference is profound when it comes to long term wealth a corporation can do so many things that an individual cannot like pay for expenses before it pays taxes that is the whole area of expertise that is so exciting but not necessary to get into unless you have sizeable assets or a business employees earn and get taxed and they try to live on what's left a corporation earns spends everything it can and is taxed on anything that's left it's one of the biggest legal tax loopholes that the rich use they're easier to set up and are not expensive if you own investments that are producing good cash flow for example by owning your own corporation car payments insurance repairs our company expenses most restaurant meals are partial expenses and on and on all are paid for legally with pre-tax dollars lesson 5 the rich invent money I've been teaching professionally since 1984 it's been a great experience and rewarding it's also a disturbing profession for I've taught thousands of individuals and I see one thing in common in all of us myself included we all have tremendous potential and we are all blessed with gifts yet the one thing that holds all of us back is some degree of self doubt it's not so much the lack of technical information that holds us back but more the lack of self confidence some are more effective than others once we leave school most of us know that it's not as much a matter of college degrees or good grades that count in the real world outside of academics something more than just grades is required I've heard it called guts hutzpah balls audacity bravado cunning daring tenacity and brilliance this factor whatever it's labeled ultimately decides one's future much more than school grades inside each of us is one of these brave brilliant and daring characters there's also the flip side that character people who could get down on their knees and beg if necessary after a year in Vietnam is a Marine Corps pilot I intimately got to know both of those characters inside of me one is not better than the other yet as a teacher I recognized that it was excessive fear and self-doubt there were the greatest detractors of personal genius it broke my heart to see students know the answers yet lacked the courage to act on the answer often in the real world it's not the smart to get a head but the bold in my personal experience your financial genius requires both technical knowledge as well as courage if fear is too strong the genius is suppressed in my classes I strongly urge students to learn to take risks to be bold to let their genius convert that fear into power and brilliance it works for some and just terrifies others I've come to realize that for most people when it comes to the subject of money they would rather play it safe I've had to field questions such as why take risks why should I bother developing my financial IQ why should I become financially literate and I answer just to have more options there are huge changes up ahead there will be a hundred people like Bill Gates and hugely successful companies like Microsoft created every year all over the world and there also will be many more bankruptcies layoffs and downsizing so why bother developing your financial IQ because if you do you will prosper greatly and if you don't this period of time will be a frightening one land was wealth 300 years ago so the person who owned the land owned the wealth then it was factories in production and America rose to dominance the industrialist owned the wealth today it's information and the person who has the most timely information owns the wealth the problem is information flies all around the world of the speed of light the new wealth cannot be contained by boundaries and borders as lands and factories were the changes will be faster and more dramatic there will be a dramatic increase in the number of new multimillionaires there also will be those who are left behind today I find so many people struggling often working harder simply because they cling to old ideas they want things to be the way they were they resist change I know people who are losing their jobs or their houses and they blame technology or the economy or their boss sadly they fail to realize that they might be the problem old ideas are their biggest liability it's a liability simply because they fail to realize that while that idea or way of doing something was an asset yesterday yesterday is gone one afternoon I was teaching investing using a game I'd invented cash flow as a teaching tool a friend had brought someone along to attend the class this friend of a friend was recently divorced had been badly burned in the divorce settlement and was now searching for some answers her friend thought the class might help the game was designed to help people learn how money works in playing the game they learn about the interaction of the income statement with the balance sheet they learn how cash flows between the two and how the road to wealth is through striving to increase your monthly cash flow from the acid column to the point that it exceeds your monthly expenses once you accomplish this you're able to get out of the rat race and onto the fast track as I've said some people hate the game some love it and others missed the point this woman missed a valuable opportunity to learn something in the opening round she drew a doodad card with the boat on it at first she was happy oh I've got the boat then as her friend tried to explain how the numbers worked on her income statement and balance sheet she got frustrated because she had never liked math the rest of her table waited while her friend continued explaining the relationship between the income statement balance sheet and monthly cash flow suddenly when she realized how the numbers worked had dawned on her that her boat was eating her alive later on in the game she was also downsized and had a child it was a horrible game for her after the class her friend came by and told me that she was upset she'd come to the class to learn about investing and did not like the idea that it took so long to play a silly game her friend attempted to tell her to look within herself to see if him reflected on herself in any way with that suggestion the woman demanded her money back she said that the very idea that a game could be a reflection of her was ridiculous her money was promptly refunded and she left since 1984 I have made millions simply by doing what the school system does not in school most teachers lecture I hated lectures as a student I was soon bored and my mind would drift in 1984 I began teaching via games and simulations I always encouraged adult students to look at games as reflecting back to what they know and what they needed to learn most importantly a game reflects back on one's behavior it's an instant feedback system instead of the teacher lecturing you the game is feeding back a personalized lectured custom-made just for you the friend of the woman who left later called to give me an update she said her friend was fine and had calmed down in her cooling-off period she could see some relationships between the game and her life just like a board game the world is always providing us with instant feedback we could learn a lot if we tuned in more one day not long ago I complain to my wife that the cleaners must have shrunk my pants my wife gently smiled and poked me in the stomach to inform me that the pants have not shrunk something else had expanded me the game cashflow was designed to give every player personal feedback the purpose is to give you options if you draw the boat card and it puts you into debt the question is now what can you do how many different financial options can you come up with that's the purpose of the game to teach players to think and create new and various financial options I've watched this game played by more than a thousand people the people who get out of the rat race in the game the quickest are the people who understand numbers and have creative financial Minds they recognized different financial options people who take the longest are people who aren't familiar with numbers and often do not understand the power of investing which people are often creative and take calculated risks there have been people playing cash flow who gained lots of money in the game but they don't know what to do with it most of them have not been financially successful in real life either everyone else seems to be getting ahead of them even though they have money and that's true in real life there are a lot of people who have a lot of money and do not get ahead financially limiting your options is the same as hanging on to old ideas I have a friend from high school who now works at three jobs 20 years ago he was the richest of all my classmates when the local sugar plantation closed the company he worked for went down with the plantation in his mind he had the one option and that was the old option work hard the problem was he couldn't find an equivalent job that recognized his seniority in the old company as a result he's overqualified for the jobs he currently has so his salary is lower he now works three jobs to earn enough to survive I've watched people playing cash flow complaining that the right opportunity cards are not coming their way so they sit there I know people who do that in real life they wait for the right opportunity I've watched people get the right opportunity card and then not have enough money then they complain they would have gotten out of the rat race if it had more money so they sit there I know people in real life who do that also they see all the great deals but they have no money and I have people pull a great opportunity card read it out loud and have no idea that it's a great opportunity they have the money the time is right they have the card but they can't see the opportunity staring at them they fail to see how it fits into their financial plan for escaping the rat race and I know more people like that than all the others combined most people have an opportunity of a lifetime flash right in front of them and they fail to see it a year later they find out about it after everyone else got rich financial intelligence is simply having more options if the opportunities aren't coming your way what else can you do to improve your financial position if an opportunity lands in your lap and you have no money and the bank won't talk to you what else can you do to get the opportunity to work in your favor if your hunch is wrong and what you've been counting on doesn't happen how can you turn a lemon into millions that is financial intelligence it's not so much what happens but how many different financial solutions you can think of to turn a lemon into Millions that's how creative you are in solving financial problems most people only know one solution work hard save and borrow so why would you want to increase your financial intelligence because you want to be the kind of person who creates your own luck you can take whatever happens and make it better few people realize that luck is created just as money is and if you want to be luckier and create money instead of working hard then your financial intelligence is important if you're the kind of person who's waiting for the right thing to happen you might wait for a long time it's like waiting for all the traffic lights to be green for five miles before starting the trip as young boys Mike and I were constantly told by my rich dad that money is not real rich dad occasionally reminded us of how close we came to the secret of money on that first day we got together and began making money out of plaster of Paris the poor and middle-class worked for money he would say the rich make money the more real you think money is the harder you will work for it if you can grasp the idea that money is not real you will grow richer faster what is it was the question Mike and I often came back with what is money if it's not real what we agree it is was all rich dad would say the single most powerful asset we all have is our mind if it's trained well it can create enormous wealth in what seems to be an instant I'll give you a simple example of creating money in the early 1990s the economy of Phoenix was horrible I was watching the TV show Good Morning America when a financial planner came on and began forecasting doom and gloom his advice was to save money put $100 away every month he said and in 40 years you will be a multimillionaire well putting money away every month is a sound idea it is one option the option most people subscribe to the problem is this it blinds the person from what's really going on they miss major opportunities for much more significant growth of their money the world is passing them by as I said the economy was terrible that time for investors this is the perfect market condition a chunk of my money was in the stock market and in apartment houses I was short of cash because everyone was giving stuff away I was buying I was not saving money I was investing my wife and I had more than a million dollars in cash working in a market that was rising fast it was the best opportunity to invest the economy was terrible I just could not pass up these small deals houses that were once $100,000 were now 75,000 but instead of shopping at the local real estate office I began shopping at the bankruptcy attorneys office or the courthouse steps in these shopping places a seventy-five thousand dollar house could sometimes be bought for twenty thousand or less for 2000 which was loaned to me from a friend for 90 days for $200 I gave an attorney a cashier's check as a down payment while the acquisition was being processed I ran an ad in the paper advertising a seventy-five thousand dollar house for only 60,000 and no money down the phone rang hard and heavy prospective buyers were screened and once the property was legally mine all the prospective buyers were allowed to look at the house it was a feeding frenzy the house sold in a few minutes I asked for a twenty five hundred dollar processing fee which they gladly handed over and the escrow entitled company took over from there I returned the two thousand to my friend with an additional two hundred he was happy the home buyer was happy the attorney was happy and I was happy I'd sold a house for 60 thousand that cost me twenty thousand the forty thousand was created from money in my asset column in the form of a promissory note from the buyer total working time five hours during this depressed market my wife and I were able to do six of these simple transactions in our spare time while the bulk of our money was in larger properties in the stock market we were able to create more than a hundred and ninety thousand dollars in assets notes at ten percent interest in those six by create and sell transactions that comes to approximately nineteen thousand dollars a year income much of it sheltered through our private corporation much of that nineteen thousand a year goes to pay for our company cars gas trips insurance dinners with clients and other things by the time the government gets a chance to tax that income it's been spent on legally allowed to pre-tax expenses this was a simple example of how money is invented created and protected using financial intelligence ask yourself how long it would take to save a hundred and ninety thousand dollars with the bank pay you ten percent interest on your money and the note is good for thirty years I hope they never pay me the one hundred and ninety thousand I have to pay a tax if they pay me the principle and besides nineteen thousand paid over thirty years is a little over five hundred thousand and income the math is simple you don't need algebra or calculus I don't write much because the escrow company handles the legal transaction and the servicing of the payments I have no roofs to fix or toilets to unplug because the owners do that it's their house occasionally someone does not pay and that's wonderful because there are late fees or they move out and the property is sold again the court system handles that and it may not work in your area the market conditions may be different but the example illustrates how a simple financial process can create hundreds of thousands of dollars with little money have low risk it's an example of money being only an agreement anyone with a high school education can do it yet most people won't most people listen to the standard advice of work hard and save money for about thirty hours of work approximately a hundred and ninety thousand dollars was created in the asset column and no taxes were now you may understand why I silently shake my head when I hear parents say my child is doing well in school and receiving a good education it may be good but is it adequate I know the above investment strategy is a small one it's used to illustrate how small can grow into big my success reflects the importance of a strong financial foundation which starts with strong financial education financial intelligence is made up of these four main technical skills number one financial literacy the ability to read numbers number two investment strategies the science of money making money number three the market supply and demand Alexander Graham Bell gave the market what he wanted and AT&T was born so did Bill Gates a seventy-five thousand dollar house offered for sixty thousand that cost twenty thousand was also the result of seizing an opportunity created by the market somebody was buying and someone was selling number four the law the awareness of accounting corporate state and national rules and regulations I recommend playing within the rules it's this basic foundation or the combination of these skills that's needed to be successful in the pursuit of wealth whether it be through the buying of small homes large apartments companies stocks bonds mutual funds precious metals baseball cards or the like personally I use two main vehicles to achieve financial growth real estate and small stocks I use real estate as my foundation day in and day out my properties provide cash flow and occasional spurts of growth in value a small cap stocks are used for fast I do not recommend anything that I do the examples are just that examples if the opportunity is too complex and I do not understand the investment I don't do it simple math and common sense is all that's needed to do well financially [Music] you [Music] less than six work to learn don't work for money in 1995 I granted an interview with a newspaper in Singapore the young female reporter was on time and the interview got underway immediately we sat in the lobby of a luxurious hotel sipping coffee and discussing the purpose of my visit to Singapore I was to share the platform with Zig Ziglar he was speaking on motivation and I was speaking on the secrets of the rich someday I'd like to be a best-selling author like you she said I've seen some of the articles she'd written for the paper and I was impressed she had a tough clear style of writing her articles held a reader's interest you have a great style I said in reply what holds you back from achieving your dream my work doesn't seem to go anywhere she said quietly everyone says that my novels are excellent but nothing happens so I keep my job with the paper at least it pays the bills do you have any suggestions yes I do I said brightly a friend of mine here in Singapore runs a school that trains people to sell he runs sales training courses for many of the top corporations here in Singapore and I think attending one of his courses would greatly enhance your career she stiffened are you saying that I should go to school to learn to sell I nodded I have a master's degree in English literature why would I go to school to learn to be a salesperson I'm a professional she was now packing her briefcase forcibly the interview was over on the coffee tables had a copy of my first book I picked it up as well as the notes that she jotted down in her legal pad do you see this I said pointing to her notes she looked down at her notes what she said used again I pointed deliberately to her nodes on her pad she'd written Robert Kiyosaki best-selling author it says best-selling author not best writing water her eyes widened immediately I'm a terrible writer you're a great writer I went to sales school you have a master's degree put them together and you get a best-selling author and a best writing author anger flared from her eyes I'll never stoop so low as to learn how to sell people like you have no business writing I'm a professionally trained writer and you're a Salesman it's not fair the rest of her notes were put away and she hurried out through the large glass doors into the humid singapore morning at least she gave me a fair and a favorable right up the next morning the world is filled with smart talented educated and gifted people we meet them every day they're all around us I'm constantly shocked at how little talented people earn I heard the other day that less than 5% of Americans earn more than $100,000 a year I've met brilliant highly educated people who earn less than $20,000 a year a business consultant who specializes in the medical trade was telling me how many doctors dentists and chiropractors struggle financially all this time I thought that when they graduated the dollars would pour in it was this business consultant who gave me the phrase they are one skill away from great wealth what this phrase means is that most people need only to learn and master one more skill and their income would jump exponentially I have mentioned before that financial intelligence is a synergy of accounting investing marketing and law combine these four technical skills and making money with money is easier when it comes to money the only skill most people know is to work hard the classic example of a synergy of skills was that young writer for the newspaper if she diligently learned the skills of sales and marketing her income would jump dramatically if I were her I would take some courses in advertising copywriting as well as sales then instead of working at the newspaper I would seek a job at an advertising agency even if it were a cut in pay she'd learn how to communicate in short cuts that are used in successful advertising she also would spend time learning public relations an important skill she would learn how to get millions in free publicity than at night non weekends she could be writing a great novel when it was finished she'd be better able to sell her book than in a short while she could be a best-selling author when I graduated from the u.s. Merchant Marine Academy in 1969 my educated dad was happy Standard Oil of California had hired me for its oil tanker fleet I was a third mate and the pay was low compared with my classmates but it was okay for a first real job after college my starting pay was about $42,000 a year including overtime and I only had to work for seven months I had five months of vacation if I'd wanted to I could have taken the run to Vietnam with a subsidiary shipping company and easily doubled my pay instead of taking the five months vacation I had a great career ahead of me yet I resigned after six months with the company and joined the Marine Corps to learn how to fly my educated dad was devastated rich dad congratulated me in school and in the workplace the popular opinion is the idea of specialization that is in order to make more money or get promoted you need to specialize that is why medical doctors immediately begin to seek a specialty such as orthopedics or pediatrics the same is true for accountants architects lawyers pilots and others my educated dad believed in the same dogma that's why he was thrilled when he eventually achieved his doctorate he often admitted that schools reward people who study more and more about less and less rich dad encouraged me to do exactly the opposite you want to know a little about a lot was his suggestion that's why for years I worked in different areas of his companies for a while I worked in his accounting department although I would probably never have been an accountant he wanted me to learn via osmosis Rich Dad knew I would pick up jargon and a sense of what's important and what's not I also worked as a busboy and construction worker as well as in sales reservations and marketing he was grooming Mike and me that's why he insisted we sit in on the meetings with his bankers lawyers accountants and brokers he wanted us to know a little about every aspect of his empire educated dad thought I went to school to learn to be a ship's officer rich dad knew that I went to school to study international trade so as a student I made cargo runs navigating large freighters oil tankers and passenger ships to the Far East and the South Pacific Rich Dad emphasized that I stay in the Pacific instead of taking ships to Europe because he knew that the emerging nations were in Asia not Europe while most of my classmates including Mike were partying at their fraternity houses I was studying trade people business styles and cultures in Japan Taiwan Thailand Singapore Hong Kong Vietnam Korea Tahiti Samoa and the Philippines I also was partying but it was not in any frat house I grew up rapidly educated dad could not understand why I decided to quit and join the Marine Corps I told him I wanted to learn to fly but really I wanted to learn to lead troops rich dad explained to me that the hardest part of running a company is managing people he'd spent three years in the Army my educated dad was draft exempt Rich Dad told me of the value of learning to lead men into dangerous situations leadership is what you need to learn next he said if you're not a good leader you'll get shot in the back just like they do in business returning from Vietnam in 1973 I resigned my commission even though I loved flying I found a job with Xerox Corporation I joined it for one reason and it was not for the benefits I was a shy person and the thought of selling was the most frightening subject in the world Xerox is one of the best sales training programs in America Rich Dad was proud of me my educated dad was ashamed being an intellectual he thought that salespeople were below him I worked with Xerox for four years until I overcame my fear of knocking on doors and being rejected once I could consistently be in the top five in sales I again resigned and moved on leaving behind another great career with an excellent company in 1977 I formed my first company rich data groom Mike and me to take over companies so I now had to learn to form them and put them together my first product the nylon and velcro wallet was manufactured in the Far East and shipped to a warehouse in New York near where I had gone to school my formal education was complete and it was time to test my wings if I failed I went broke which dad thought it best to go broke before 30 you still have time to recover was his advice on the eve of my 30th birthday my first shipment left Korea for New York today I still do business internationally and as my Rich Dad encouraged me to do I keep seeking the emerging nations today my investment company invests in south America Asia Norway and Russia as an old cliche that goes job is an acronym for just over broke and unfortunately I would say that the saying applies to millions of people because school does not think financial intelligence is an intelligence most workers live within their means they work and they pay bills there's another horrible management theory that goes workers work hard enough to not be fired and owners paid just enough so that workers won't quit and if you look at the pay scales of most companies again I would say there is a degree of truth in that statement the net result is that most workers never get ahead they do what they've been taught to do get a secure job most workers focus on working for pay and benefits that reward them in the short term but is often disastrous in the long run instead I recommend the young people to seek work for what they will learn more than what they will earn look down the road at what skills they want to acquire before choosing a specific profession and before getting trapped in the rat race when I speak to adults who want to earn more money I always recommend the same thing I suggest taking a long view of their life instead of simply working for the money and security which I admit are important I suggest they take a second job that will teach them a second skill often I recommend joining a network marketing company also called multi-level marketing if they want to learn sales skills some of these companies have excellent training programs that help people get over their fear of failure and rejection which are the main reasons people are unsuccessful education is more valuable than money in the long run when I ask the classes I teach how many of you can cook a better hamburger in the McDonald's almost all of the students raise their hands I then ask so if most of you can cook a better hamburger how come McDonald's makes more money than you the answer is obvious McDonald's is excellent at business systems the reason so many talented people are poor is because they focus on building a better hamburger and no little to nothing about business systems a friend of mine in Hawaii is a great artist he makes a sizable amount of money one day his mother's attorney called to tell him that she had left him $35,000 that is what was left of her estate after the attorney and the government took their shares immediately he saw an opportunity to increase his business by using some of this money to advertise two months later his first four-color full-page ad appeared in an expensive magazine that targeted the very rich the ad ran for three months he received no replies from the ad and all of his inheritance is now gone he now wants to sue the magazine for misrepresentation this is a common case of someone who can build a beautiful hamburger but knows little about business when I asked him what he'd learned his only reply was that advertising sales people are crooks I then asked him if he'd be willing to take a course in sales and a course in direct marketing his reply I don't have the time and I don't want to waste my money the world is filled with talented poor people all too often they're poor or struggle financially or earn less than they're capable of not because of what they know but because of what they do not know they focus on perfecting their skills at building a better hamburger rather than the skills of selling and delivering the hamburger maybe McDonald's does not make the best hamburger but they are the best at selling and delivering a basic average Burger poor dad wanted me to specialize that was his view on how to be paid more rich dad advised that Mike and I groom ourselves many corporations do the same thing they find a young bright student out of Business School and begin grooming that person to someday take over the company so these bright young employees do not specialize in one department they're moved from department to department to learn all the aspects of business systems the rich often groomed their children or the children of others by doing so their children gain an overall knowledge of the operations of the business and how the various departments interrelate for the World War two generation it was considered bad to skip from company to company today it's considered smart since people will skip from company to company rather than seek greater specialization why not seek to learn more than earn in a short term it may earn you less in the long term it will pay off in large dividends the main management skills needed for success are the management of cash flow the management of systems including yourself and time with family and the management of people the most important specialized skills are sales and understanding marketing it's the ability to sell therefore to communicate to another human being being a customer employee boss spouse or child that is the base skill of personal success it is communication skills such as writing speaking and negotiating that are crucial to a life of success it's a skill that I work on constantly attending courses or buying educational tapes to expand my knowledge rich dad encouraged Mike and me to know a little about a lot he encouraged us to work with people smarter than we were and to bring smart people together to work as a team today would be called a synergy of professional specialties today I meet ex school teachers earning hundreds of thousands of dollars a year they earn that much because they have specialized skills in their field as well as other skills they can teach as well as sell and market I know of no other skills to be more important than selling as well as marketing the skills of selling and marketing are difficult for most people primarily due to their fear of rejection the better you are communicating negotiating and handling your fear of rejection the easier life is just as I advise that newspaper writer who wanted to become a best-selling author I advise anyone else today being technically specialised as its strengths as well as its weaknesses I have friends who are geniuses but they cannot communicate effectively with other human beings and as a result their earnings are pitiful I advise them to just spend a year learning to sell and even if they earn nothing their communication skills will improve and that is priceless getting started I wish I could say acquiring wealth was easy for me but it wasn't so in response to the question how do I start I offer the thought process I go through on a day-by-day basis it really is easy to find great deals I promise you that it's just like riding a bike after a little wobbling it's a piece of cake but when it comes to money it's the determination to get through the wobbling that's a personal thing to find million-dollar deals of a lifetime requires us to call on our financial genius I believe that each of us has a financial genius within us the problem is our financial genius lies asleep waiting to be called upon it lies asleep because our culture has educated us into believing that the love of money is the root of all evil it's encouraged us to learn a profession so we can work for money but fail to teach us how to have money work for us it taught us not to worry about our financial future our company or the government would take care of us when our working days are over however it's our children educated in the same school system who will end up paying for it the is still to work hard earn money and spend it and when we run short we can always borrow more unfortunately 90% of the Western world subscribes to the above Dogma simply because it's easier to find a job and work for money if you're not one of the masses I offer you the following ten steps to awaken your financial genius I simply offer you the steps I have personally followed if you want to follow some of them great if you don't make up your own your financial genius is smart enough to develop its own list step number one I need a reason greater than reality if you ask most people if they would like to be rich or financially free they would say yes but then reality sets in the road seems too long with too many hills to climb it's easier just to work for money and hand the excess over to your broker a reason or a purpose is a combination of watts and don't want when people ask me what my reason for wanting to be rich is it's a combination of deep emotional wants and don't want I will list a few first I don't want for they create the wands I don't want to work all my life I don't want what my parents aspired for which was job security in the house in the suburbs I don't like being an employee now the ones I want to be free to travel the world and live in a lifestyle I love I want to be young when I do this I want to simply be free I want control over my time in my life I want money to work for me those are deep-seated emotional reasons what are yours as I said I wish I could say it was easy it wasn't but it wasn't hard either but without a strong reason or purpose anything in life is hard step number 2 I choose daily the power of choice that is the main reason people want to live in a free country we want the power to choose financially with every dollar we get in our hands we hold the power to choose our future to be rich poor or middle-class our spending habits reflect who we are poor people simply have poor spending habits most people choose not to be rich for 90% of the population being rich is too much of a hassle so they invent sayings that go I'm not interested in money or I'll never be rich or I don't have to worry I'm still young or when I make some money then I'll think about my future or my husband wife handles the finances the problem with those statements is they rob the person who chooses to think such thoughts of two things one is time which is your most precious asset and two is learning just because you have no money it shouldn't be an excuse to not learn but that is a choice we all make daily the choice of what we do with our time our money and what we put in our heads that is the power of choice all of us have choice I just choose to be rich and I make that choice every day step number three choose friends carefully first of all I do not choose my friends by their financial statements I have friends who have actually taken the vow of poverty as well as friends who earn millions every year the point is I learned from all of them and I consciously make the effort to learn from them but there's one distinction that I'd like to point out I've noticed that my friends with money talk about money and I do not mean brag they're interested in the subject so I learned from them and they learn from me my friends whom I know are in dire straits financially do not like talking about money business or investing they often think it rude so I also learned from my friends who struggle financially I find out what not to do step number four master a formula and then learn a new one in order to make bread every baker follows a recipe even if it's only held in their head the same is true for making money that's why money is often called dough when it comes to money the masses generally have one basic formula they learned in school and that is work for money the formula I see that is predominant in the world is that every day millions of people get up and go to work earn money pay bills balance checkbooks buy some mutual funds and go back to work that is the basic formula or recipe if you're tired of what you're doing or you're not making enough it's simply a case of changing the formula via which you make money years ago when I was 26 I took a weekend class called how to buy real estate foreclosures I learned a formula the next trick was to have the discipline to actually put into action what I had learned that is where most people stop for three years while working for Xerox I spent my spare time learning to master the art of buying foreclosures I've made several million dollars using that formula but today it's too slow and too many other people are doing it so after I mastered that formula I went in search of other formulas for many of the classes I did not use the information I learned directly but I always learned something new step number five pay yourself first the power of self discipline if you cannot get control of yourself do not try to get rich you might first want to do in the Marine Corps or some religious order so you can get control of yourself it makes no sense to invest make money and blow it it's the lack of self-discipline that causes most lottery winners to go broke soon after winning millions it's the lack of self-discipline that causes people who get a raise to immediately go out and buy a new car or take a cruise it's difficult to say which of the 10 steps is the most important but of all the steps this step is probably the most difficult to master if it's not already a part of your makeup I would venture to say that it's a lack of personal self-discipline that is the number one delineating factor between the rich poor and middle-class I do not take the saying pay yourself first lightly the richest man in Babylon by George Classen is where the statement pay yourself first comes from millions of copies have been sold but while millions of people freely repeat that powerful statement if you follow the advice for those who do follow it their financial statement income statement and balance sheet shows income flowing into assets and assets supplying income each month these people allocate money to their asset column before they pay their monthly expenses although millions of people have read Klassen's book and understand the words pay yourself first in reality they pay themselves last now I can hear the howls from those of you who sincerely believed in paying your bills first and I can hear all the responsible people who pay their bills on time I'm not saying be irresponsible and not pay your bills all I'm saying is do what the program says which is pay yourself first the reason I don't have high credit card debt and doodad debt is because I want to pay myself first although I pay my bills last I am financially astute enough to not get into a tough financial situation to ensure paying yourself first don't get into large debt that you have to pay for keep your expenses low build up assets first then buy the big house or a nice car being stuck in the rat race is not intelligent and when you come up short let the pressure build and don't dip into your savings or investments use the pressure to inspire your financial genius to come up with new ways of making more money and then pay your bills you will have increased your ability to make more money as well as your financial intelligence step number six pay your broker's well I often see people posting a sign in front of their house that says for sale by owner or I see on TV today many people claiming to be discount brokers my rich dad taught me to take the opposite tack he believed in paying professionals well and I have adopted that policy also today I have expensive attorneys accountants real estate brokers and stockbrokers why because if and I do mean if the people are professionals their services should make you money and the more money they make the more money I make we live in an Information Age information is priceless a good broker should provide you with information as well as take the time to educate you as to its meaning step number seven be an Indian giver this is the power of getting something for nothing when the first white settlers came to America they were taken aback by a cultural practice some american indians had for example if a seller was cold the indian would give the person a blanket mistaking it for a gift the settler was often offended when the indian asked heard back the indians also got upset when they realized the settlers did not want to give it back that is where the term Indian giver came from a simple cultural misunderstanding in the world of the asset column being an Indian giver is vital to wealth the sophisticated investors first question is how fast do I get my money back they also want to know what they get for free also called a piece of the action that is why the ROI or return of and on investment is so important frequently my broker will call me and recommend I move a sizable amount of money into the stock of a company that he feels is just about to make a move that will add value to the stock like announcing a new product I will move my money in for a week to a month while the stock moves up then I pull my initial dollar amount out and stop worrying about the fluctuations of the market because my initial money is back and ready to work on another asset so my money goes in and then it comes out and I own an asset that was technically free step number eight assets buy luxuries as I said in the section pay yourself first if a person cannot master the power of self discipline it's best not to try to get rich for a while the process of developing cash flow from an asset column in theory is easy it's the mental fortitude of directing money that's hard due to external temptations it's much easier in today's consumer world to simply blow it out of the expence column because of weak mental fortitude that money flows into the paths of least resistance that is the cause of poverty and financial struggle I love my luxuries as much as anyone else the difference is some people by their luxuries on credit it's to keep up with the Joneses trap I use the income from my assets to buy my luxuries when I wanted to buy a Porsche the easy road would have been to call my banker and get alone instead of choosing to focus on the liability column I chose to focus in the asset column as a habit I used my desire to consume to inspire and motivate my financial genius to invest too often today we focus on borrowing money to get the things we want instead of focusing on creating money one is easier in the short term but harder in the long term it's a bad habit that we as individuals and as a nation have gotten into remember the easy road often becomes hard and the hard road often becomes easy the earlier you can train yourself and those you love to be masters of money the better money is a powerful force unfortunately people use the power of money against them if your financial intelligence is low money will run all over you it will be smarter than you if money is smarter than you you will work for it all your life step number 9 the need for Heroes when I was a kid I greatly admired Willie Mays Hank Aaron Yogi Berra there were my heroes as a kid playing Little League I wanted to be just like them I treasured their baseball cards I wanted to know everything about them I knew the stats the RBI the ER A's their batting averages how much they got paid and how they came up from the minors I wanted to know everything because I wanted to be just like them every time as a 9 or 10 year old kid when I stepped up to bat or played first base or catcher it wasn't me I was yogi or Hank it's one of the most powerful ways we learn that we often lose as adults we lose our heroes we lose our naivete I have new heroes as I grow older I have golf heroes such as Peter Jacobsen Fred Couples and Tiger Woods I copy their swings and do my best to read everything I can about them I also have heroes such as Donald Trump or on Buffett Peter Lynch too Saurus and Kim Rogers in my older years I know their stats just like I knew the e ra is an RBI of my baseball heroes I follow what Warren Buffett invests in and read anything I can about his point of view on the market I read Peter Lynch's book to understand how he chooses stocks and I read about Donald Trump trying to find out how he negotiates and puts deals together just as I was not me when I was up to bat when I'm in the market or I'm negotiating a deal I am subconsciously acting with a bravado of Trump or when analyzing a trend I look at it as though Peter Lynch we're doing it by having heroes we tap into a tremendous source of raw genius but heroes do more than simply inspire us heroes make things look easy it's the making it look easy that convinces us to want to be just like them if they can do it so can I step number ten teach and you shall receive both of my dads were teachers my rich dad taught me a lesson I've carried all my life and that was the necessity of being charitable or giving my educated dad gave a lot by the way of time and knowledge but almost never gave money as I said he usually said that he would give when he had some extra money of course there was really any extra my Rich Dad gave money as well as education he believed firmly in tithing if you want something you first need to give he would always say when he was short of money he simply gave money to his church or to his favorite charity if I could leave one single idea with you it's that idea whenever you feel short or in need of something give what you want first and it will come back in buckets that's true for money a smile love friendship I know it's often the last thing a purse they want to do but it's always worked for me I just trust that the principle of reciprocity is true and I give what I want my Rich Dad would often say poor people are more greedy than rich people he would explain that if a person was rich that person was providing something that other people wanted in my life over all these years whenever I felt needy or short of money or short of help I simply went out and found in my heart what I wanted and decided to give it first and when I gave had always came back it reminds me of the story of the guy sitting with firewood in his arms on a cold freezing night and he's yelling at the pot-bellied stove when you give me some heat then I'll put some wood in and when it comes to money love happiness sales and contacts all one needs to remember is first to give what you want and it will come back in droves my poor dad taught teachers and he became a master teacher my rich dad always taught young people his way of doing business in retrospect it was their generosity with what they knew that made them smarter there are powers in this world that are much smarter than we are you can get there on your own but it's easier with the help of the powers that be all you need to be is generous with what you have and the powers will be generous with you take action all of you were given two great gifts your mind and your time it is up to you to do what you please with both with each dollar bill that enters your hand you and only you have the power to determine your destiny spend it foolishly it used to be poor spend on liabilities you join the middle class invest it in your mind and learn how to acquire assets and you will be choosing wealth as your goal and your future the choice is yours and only your's with every day with every dollar you decide to be rich poor or middle class choose to share this knowledge with your children and you choose to prepare them for the world that awaits no one else will you and your children's future will be determined by choices you make today not tomorrow this has been a Time Warner audiobooks production of Rich Dad Poor Dad written by Robert Kiyosaki with Sharon L Lecter CPA and read by Stephen Moyer featuring an introduction by Robert Kiyosaki executive producer Maya Thomas produced and directed by John brunette texts abridged by John Whitman text edited by William Whittington production coordinated by Daniel Metcalfe Rich Dad Poor Dad is also available in paperback from Warner business books [Music] here's a sample from audio best-seller rich dad's cashflow quadrant a guide to financial freedom written by Robert T Kiyosaki with Sharon L Lecter CPA when people ask why Kim and I were homeless back in 1985 I tell them it was because of what my rich dad taught me about money for me money is important yet I did not want to spend my life working for it that is why I did not want a job if we were going to be responsible citizens Kim and I wanted to have our money work for us rather than spend our lives physically working for money that is why the cash flow quadrant is so important it distinguishes between the different ways in which money is generated there are ways of being responsible and creating money other than physically working for it but in order to embrace wealth it is essential to understand your relation to it my highly educated dad had a strong belief that the love of money was evil that to profit excessively meant you were greedy he often said I'll never be rich for investing as risky or money isn't everything my Rich Dad had a different point of view he thought it foolish to spend your life working for money and pretend that money was not important Rich Dad believed that life was more important than money but money was important for supporting life he often said you only have so many hours a day and you can only work so hard so why work hard for money learn to have money and people work hard for you and you can be free to do the things that are important to my Rich Dad what was important was to have lots of time to raise his kids to have money to donate to charities and projects he supported to bring jobs and financial stability to the community to have time and money to take care of his health and to be able to travel the world with his family those things take money said Rich Dad that is why money is important to me money is important but I don't want to spend my life working for it it was my rich dad who often referred to the cash flow quadrant when I was a young boy he would explain to me the difference between someone who was successful on the left side versus the right side having two dynamic and successful father figures around me gave meaning to what each was saying but it was what they were doing that allowed me to begin to notice the differences between the es side of the quadrant and the BI side one painful lesson I experienced as a young boy was simply how much time one dad had available to spend with me versus the other as the success and prominence of both dads grew it was obvious that one dad had less and less time to spend with his wife and four children my real dad was always on the road at meetings our dashing off to the airport for more meetings the more successful he got the fewer dinners we had together as a family weekend's he spent at home in his crowded little office buried under paperwork my rich dad on the other hand had more and more free time as a success grew one of the reasons I learned so much about money finance business and life was simply because my Rich Dad had more and more free time for his children and me rich dad's cash flow quadrant is also available in paperback from Warner business books here's a sample from audio bestseller rich dad's guide to investing what the rich invest in that the poor and middle-class do not written by Robert Kiyosaki with Sharon L Lecter CPA investor lesson number one the choice when it comes to money and investing people have three fundamental reasons or choices for investing Rich Dad said they are to be secure to be comfortable or to be rich which dad went on to say all three choices are important the difference in one's life occurs when the choices are prioritized he explained that most people make their money on investment choices in that exact order in other words their first choice when it comes to money decisions is security second is comfort and third is to be rich that is why most people make job security their highest priority after they have a secure job or profession then they focus on comfort the last choice for most people is to be rich rich dad said most people dream of becoming rich but it is not their first choice he went on to say only three out of a hundred people in America are rich because of this priority of choices for most people if becoming rich disturbs their comfort or makes them feel insecure they will forsake becoming rich that is why so many people want that one hot investment tip people who make security and comfort their first and second choices look for ways to get rich quick that are easy risk-free and comfortable a few people do get rich on one lucky investment but all too often they lose it all again I often hear people say I'd rather be happy than rich that comment has always sounded very strange to me since I've been both rich and poor and in both financial positions I have been both happy and unhappy I wonder why people think they have to choose between happiness and being rich when I reflect upon this lesson it occurs to me that what people are really saying is that I'd rather feel secure and comfortable than be rich that is because if they felt insecure or uncomfortable they were not happy for me I was willing to feel insecure and uncomfortable in order to be rich I have been rich and poor as well as happy and unhappy but I assure you that when I was poor and unhappy I was much unhappier than when I was rich and unhappy I have also never understood the statement money does not make you happy while there is some truth in it I've always noticed that when I have money I feel pretty good the other day I found a ten dollar bill in my jeans pocket even though it was only ten dollars it felt great finding it receiving money has always felt better than receiving a bill for money I owe at least that is my experience with money I feel happy when it comes in and sad when it leaves me that day I put my priorities in this order first to be rich then to be comfortable and finally to be secure rich dad's guide to investing is also available in paperback from Warner business books here's a sample from rich dad's rich kid smart kid giving your children of financial headstart the latest book from the New York Times best-selling authors Robert T Kiyosaki and Sharron L Lecter CPA when I was a little boy my Rich Dad often said money as an idea you would go on to say money can be anything you want it to be if you say I'll never be rich then the chances are you'll never be rich if you say I can't afford it then chances are you can't lie smart dad said much the same about education is it possible that every child is born with the potential to be rich and smart this program is about fostering and preserving that possibility both my dad's were great teachers both men were smart men but they were not smart in the same subject and they did not teach the same things yet as different as they were both dads believe the same things about all kids both dads believed all kids are born smart and all kids are born rich they both believe the child learns to be poor and learns to believe that he or she is less smart than other kids both dads were great teachers because they believed in bringing out the genius that each child is born with in other words they did not believe in putting knowledge in they believed in bringing the child's genius out both my dads were great teachers because they rarely tried to cram their ideas into my head they often sent very little waiting instead for me to ask when I wanted to know something or they asked me questions seeking to find out what I knew rather than simply telling me what they knew and not to forget the moms my mom was a great teacher and role model also she was my teacher for unconditional love kindness and the importance of caring for other people I once heard that boys marry women just like their moms and I would say that is true for me my wife Kim is also an extremely kind and loving I did not know my best friend Mike's mom very well yet the times I was over at their home Mike's mother was also very kind and attentive to what we were doing although a very private person she was always interested in what Mike and I were learning at school and in the business I could tell she was a great life partner for Mike's dad although I did not know her very well I learned from her the importance of listening to others letting others talk and being respectful of the ideas of others even if they clash with your ideas she was a great communicator in a very quiet way lessons from my mom and dad the number of single-parent families I see today concerns me having both a mom and a dad as teachers was important in my development my dad would often say true intelligence is knowing what is appropriate rather than what is simply right or wrong as a six-year-old boy I learned from my mom that I needed to be kind and gentle but when I found myself constantly confronted by bullies at school I also learned that I could at times be too kind in general I hated being called fatty Dumbo consequently after talking with my dad I learned to be strong and to stand up for myself but there had to be balance my father told me that many people live in a black and white world or right and wrong world many say don't push back and some say push back the key to being successful in life is if you must push back you need to know exactly how hard to push when I got pushed or put down I learned exactly how hard to push back knowing exactly how hard to push requires much more intelligence than simply saying don't push back or push back my dad would often say true intelligence is knowing what is appropriate rather than what is right or wrong I think today we need to be more intelligent with our strengths and our weaknesses it used to be when I was a kid and I got angry with another guy at school we would begin to wrestle get tired and then the fight would be over the worst that happened was an occasional torn shirt or bloody nose today kids get angry start thinking in the less intelligent right and wrong mode break out their guns and shoot each other we may be in the Information Age and kids maybe more worldly than their parents but we can all learn to be more intelligent with our information and our emotions we need to learn from both our mothers and fathers because with so much more information we need to be that much more intelligent rich dad's rich kid smart kid is also available in paperback from Warner business books [Music] you

Channel: Thomas Bennett

Views: 1,856,466

Rating: 4.8275595 out of 5

Keywords: Rich dad poor dad, Robert Kiyosaki

Id: gliZHyovI7c

Length: 197min 35sec (11855 seconds)

Published: Sat Apr 28 2018