(upbeat music) - Okay, so we're going
with Robert Kiyosaki where into the next
Millennial Money lesson or Money and Millennial lesson. Here with Alexandra Gonzalez
and Robert Kiyosaki, and I think this is what our
schools should teach you, instead of go to school, get
a job, and get out of debt. Are you nuts? And save money. Are you nuts? It's crazy. And pay your taxes, are you nuts? It's crazy 'cause the
rich don't pay taxes. Well, they pay less taxes. So this is part of what you
need to decide now 'cause if you keep doing what you're
doing, you'll keep paying more taxes. - [Alexandra] Exactly. - You'll make more money
and pay more taxes. Not smart. So anyway, this is an continuation of why the rich don't work
for money, but what do they work for? And this is not according to me. This is according to the
government and the tax department. So the tax department which,
every country has taxes, determines, they wanna
know what type of income do you work for. So when you say to someone
your age, or a child to the parent, parent to
the child, they say it's go to school, get a job,
they're working for this type of income. Earned income, as you can
see from this diagram here, as you see from the diagram
here, this is earned income here and the first thing you
pay is the highest taxes 'cause you worked for money. - Yes. - The government doesn't
want you working for money. They punish you for that. They want you to hire employees or invest. Okay, so earned income
is what they work for. The second is portfolio income. It's also called capital gains. So if I buy I house for
let's say $100,000, I sell it for $200,000, the
$100,000 is capital gains. If I buy a stock for $10 and
sell it for $20, the $10 is capital gains. This is the second highest taxed. So the tax breaks that
President Trump is working on today is primarily for these guys here. So they're doctors, lawyers,
highly educated people, and they have stocks. Most of these guys don't have
stocks, of the working class, they have a 401(k), but
they don't get the break. But these guys, if you're
active in stocks and that kind of stuff, or flipping
houses, you get a break. But what the really rich
work for is passive income, and passive income for
me, I have a business. Whether I work or not, money comes in. And you've seen me, I'm not here, am I? - No, never.
- Never (laughs). I've earned my right not to be here. Real estate, I get every year,
my wife and I Kim, we add more real estate. Also we have commodity income
from oil wells and things like this. Even the stock price of oil's
gonna go up and all this. We still get this. But this is another type of income. This here, what I'll get into,
is called phantom income. It's taxes I don't pay,
so it's a little bit beyond most people's minds, but let's say my tax bill is $100,000. By doing what the government wants here, the government may give
me a $50,000 tax break. That means $50,000 in
taxes I don't have to pay. - [Alexandra] Wow. - So the $50,000 didn't go
to the government, it went back up here. So that's what financial
education does, is it teaches you about the financial
statement which is not taught in school. Again, they teach you
FICO scores, which is really fido scores. Ruff, ruff, ruff, where's
your tail little doggie? Okay, and then for you, at
your age now, you wanna know this, this is what they're
teaching you to work for now. Ironically, when you save
money and you have a 401(k), this is the kind of income. So it's savings and 401(k)s
are taxed the highest types of income. To me, it's stupid, but if
you don't know any better, saving money and what do you
call that 401(k)s is good. In CAD, that's called RRSP,
and Australia it's called the superannuation. But this is what most
people have 'cause they went to school, they got a job. And then this is what
the rich really have. It's passive and it's because
I'm an active investor. I don't buy this 'cause
this is passive investors. I am active, I am professional
in all of these areas. So I work for passive income,
which means I'm not here. The check comes in, the checks come in. Every year, now you've seen
Kim and I, and your mother now, she's working on here. And so your mother's
income keeps going up, your father's income keeps going up, and they don't have a job. That's what they did, right? - Yes, yeah. - So any comments on this? - So like you said, our
entire life we're taught to work for earned income
as opposed to passive income and portfolio income,
and we're never offered those classes in the
university, but thanks to the financial education
that I received with you and going to seminars and
working at this company, I was able to learn about
those types of income and what I wanna do with
my career and my life. - Correct. - [Alexandra] Investing in
real estate, things like that, you have to take outside
of school classes for that. - Yes. - [Alexandra] And so I
think it's incredible because that is where you make
the majority of your money. - Well, if you didn't go to school. - Exactly. - I do recommend taking
these classes first, 'cause you can get hammered really easily. - Oh no, of course. It's incredible that we have
to go to outside sources instead of inside sources
in the university to learn about these things, to learn
about portfolio income, passive income. - And be a non-professional investor. - [Alexandra] Exactly. And then all I have to do is
worry about going to school, going to work, getting their paycheck, but at the same time it's
very risky 'cause you have no control over your life. - None.
- [Alexandra] None. - None. And the worst thing about
it, too, is that most people who are A students, they
think they can just go out and do this one. It's possible, but it's like
trying to be a pro golfer. You don't take one class
and one lesson and say oh okay, I'm gonna take
on the professionals. It's years of work to get here. And financial education is
practiced, study, lessons, being a student, so I
spent a lot of time here. Lot of time, that was rich dad. If you read Rich Dad, Poor
Dad, in there it talks about Ray Kroc, the founder of
McDonald's, and people asked Ray Kroc, they said what
business is McDonald's, he asked the class, this is
the University of Texas class, MBA program, he said what
business is McDonald's in, and everybody said hamburgers. And he says no. McDonald's is a real estate company. - [Alexandra] Exactly. - And the reason for
that is because they get passive income, they use
debt, they pay no taxes. That's why McDonald's is a big company whereas what most people do is they start Mom and Pop hamburger stand
and they work really hard and pay earned income. - So I think it's a lot
of years of hard work and many, many mistakes, and
you also have to learn to lose the fear of making mistakes
and of losing money. - Well, it's part of the process. It's only the academic types
like my poor dad, they think if they memorized a right
answer, that's all the need. It's like the right
answer for a golfer is hit the ball straight, keep it
in the fairway, putt in one. Okay, that's the right answer. Trouble is, they can't do it. - [Alexandra] Exactly. - And in the real world,
it's what can you do? Deeds, not words. And academic types who are
running our government are just talk. They have no real world experience, and that is what's
costing us the most money. We have A students running our government and our Federal Reserve Bank. That's the problem. So you understand now the
rich don't work for money, but they work for
different types of income. - Yes. - And do you understand the
government wants us to do this? - [Alexandra] Yeah. - That's why they give us tax breaks. Before we go on to the next
lesson for Millennial Money, my job was just to shake
your head and stir it, not give you answers. What's going through your head now? What are you thinking? - I know I'm not gonna get
there tomorrow, but I know I have to make baby steps
in order to be able to get financially educated and
become where I want to be where I don't rely on a paycheck anymore. - It depends if your parents
gave you a working class DNA. You gotta work hard for money, and that's one of the
biggest traps there is. You wanna work for the
right type of income, but not for money.
