RichDad,PoorDad

RichDad,PoorDad

RichDad,PoorDad
ByRobertT.Kiyosaki
INTRODUCTION
ThereisaNeed
Doesschoolpreparechildrenfortherealworld?“Studyhardandget

goodgradesandyouwillfindahigh-payingjobwithgreatbenefits,”my
parentsusedtosay.Theirgoalinlifewastoprovideacollegeeducation
formyoldersisterandme,sothatwewouldhavethegreatestchancefor
success in life. When T finally earned my diploma in1976-graduating
with honors, and near the top of my class, in accounting from Florida
StateUniversity-myparentshadrealizedtheirgoal.Itwasthecrowning
achievement oftheir lives. In accordance with the “Master Plan,” I was
hiredbya“Big8”accountingfirm,andIlookedforwardtoalongcareer
andretirementatanearlyage.

My husband, Michael, followed a similar path. We both came from

hard?working families, ofmodest means but with strong work ethics.
Michael also graduated with honors, but he didit twice: first as an
engineer and then from law school. He was quickly recruited by a
prestigiousWashington,D.C.,lawfirmthatspecializedinpatentlaw,and
his futureseemed bright, career path well-defined and early retirement
guaranteed.

Althoughwehavebeensuccessfulinourcareers,theyhavenotturned

outquiteasweexpected.Webothhavechangedpositionsseveraltimes-
for all the right reasons-but thereare no pension plans vesting on our
behalf. Our retirement funds are growing only throughour individual
contributions.

Michael and I have a wonderful marriage with three great children.

AsIwritethis,twoareincollegeandoneisjustbeginninghighschool.
Wehavespentafortunemakingsure ourchildrenhavereceivedthebest
educationavailable.

One day in 1996, one of my children came home disillusioned with

school.Hewasboredandtiredofstudying.“WhyshouldIputtimeinto
studyingsubjectsIwillneveruseinreallife?”heprotested.

Withoutthinking,Iresponded,“Becauseifyoudon'tgetgoodgrades,

you won't get intocollege.” “Regardless of whether I go to college,” he
replied,“I'mgoingtoberich.”

“If you don't graduate from college, you won't get a good job,” I

respondedwithatingeofpanicandmotherlyconcern.“Andifyoudon't
haveagoodjob,howdoyouplantogetrich?”

My son smirked and slowly shook his head with mild boredom. We

havehadthistalkmanytimesbefore.Heloweredhisheadandrolledhis
eyes.Mywordsofmotherlywisdomwerefallingondeafearsonceagain.

Though smart and strong-willed, he has always been a polite and

respectfulyoungman.

“Mom,”hebegan.Itwasmyturntobelectured.“Getwiththetimes!

Look around; therichest people didn't get rich because of their
educations.LookatMichaelJordanandMadonna.EvenBillGates,who
droppedoutofHarvard,foundedMicrosoft;heisnowtherichestmanin
America,andhe'sstillinhis30s.Thereisabaseballpitcherwhomakes
more than $4 million a year even though he has been labeled `mentally
challenged.'”

Therewasalongsilencebetweenus.ItwasdawningonmethatIwas

giving my son thesame advice my parents had given me. The world
aroundushaschanged,buttheadvicehasn't.

Gettingagoodeducationandmakinggoodgradesnolongerensures

success,andnobodyseemstohavenoticed,exceptourchildren.

“Mom,” he continued, “I don't want to work as hard as you and dad

do.You make a lot of money, and we live in a huge house with lots of
toys. If I follow your advice, I'll windup like you, working harder and
harder only to pay more taxes and wind up in debt. Thereis no job
security anymore; I know all about downsizing and rightsizing. I also
know thatcollege graduates today earn less than you did when you
graduated. Look at doctors. Theydon't make nearly as much money as
theyusedto.IknowIcan'trelyonSocialSecurityorcompany pensions

forretirement.Ineednewanswers.”

He was right. He needed new answers, and so did I. My parents'

advice may have worked forpeople born before 1945, but it may be
disastrous for those of us born into a rapidlychangingworld.Nolonger
canIsimplysaytomychildren,

“Gotoschool,getgoodgrades,andlookforasafe,securejob.”
IknewIhadtolookfornewwaystoguidemychildren'seducation.
As a mother as well as an accountant, I have been concerned by the

lack of financialeducation our children receive in school. Many of
today's youth have credit cards beforethey leave high school, yet they
haveneverhadacourseinmoneyorhowtoinvestit,letaloneunderstand
how compound interest works on credit cards. Simply put, without
financial literacy and the knowledge of how money works, they are not
preparedtofacetheworldthatawaitsthem,aworldinwhichspendingis
emphasizedoversavings.

Whenmyoldestsonbecamehopelesslyindebtwithhiscreditcards

as a freshman incollege,Inotonlyhelpedhimdestroythecreditcards,
but I also went in search of aprogram that would help me educate my
childrenonfinancialmatters.

One day last year, my husband called me from his office. “I have

someone I think youshould meet,” he said. “His name is Robert
Kiyosaki.He'sabusinessmanandinvestor,andheishereapplyingfora
patentonaneducationalproduct.Ithinkit'swhatyouhavebeenlooking
for.”

JustWhatIWasLookingFor
My husband, Mike, was so impressed with CASHFLOW, the new

educational product that RobertKiyosaki was developing, that he
arrangedforbothofustoparticipateinatestoftheprototype.Becauseit
wasaneducationalgame,Ialsoaskedmy19-year-olddaughter,who was
a freshman at a local university, if she would like to take part, and she
agreed.

About fifteen people, broken into three groups, participated in the

test.

Mikewasright.ItwastheeducationalproductIhadbeenlookingfor.

Butithadatwist:ItlookedlikeacolorfulMonopolyboardwithagiant
well-dressed rat in the middle.Unlike Monopoly, however, there were
twotracks:oneinsideandoneoutside.Theobjectofthegamewastoget
out of the inside track-what Robert called the “Rat Race” and reachthe
outer track, or the “Fast Track.” As Robert put it, the Fast Track
simulateshowrichpeopleplayinreallife.

Robertthendefinedthe“RatRace”forus.
"Ifyoulookatthelifeoftheaverage-educated,hard-workingperson,

there is a similarpath. The child is born and goes to school. The proud
parentsareexcitedbecausethechildexcels,getsfairtogoodgrades,and
isacceptedintoacollege.Thechildgraduates,maybegoesontograduate
schoolandthendoesexactlyasprogrammed:looksforasafe,securejob
orcareer.Thechildfindsthatjob,maybeasadoctororalawyer,or joins
the Army or works for the government. Generally, the child begins to
makemoney,creditcardsstarttoarriveinmass,andtheshoppingbegins,
ifitalreadyhasn't.

"Having money to burn, the child goes to places where other young

people just like themhang out, and they meet people, they date, and
sometimestheygetmarried.Lifeiswonderfulnow,becausetoday,both
menandwomenwork.Twoincomesarebliss.Theyfeelsuccessful,their
future is bright, and they decide to buy a house, a car, a television,take
vacations and have children. The happy bundle arrives. The demand for
cash isenormous.Thehappycoupledecidesthattheircareersarevitally
important and begin towork harder, seeking promotions and raises. The
raises come, and so does another child andthe need for a bigger house.
Theyworkharder,becomebetteremployees,evenmorededicated. They
go back to school to get more specialized skills so they can earn more
money.Maybetheytakeasecondjob.Theirincomesgoup,butsodoes
the tax bracketthey're in and the real estate taxes on their new large
home, and their Social Securitytaxes, and all the other taxes. They get
their large paycheck and wonder where all themoney went. They buy
somemutualfundsandbuygrocerieswiththeircreditcard.Thechildren
reach 5 or 6 years of age, and the need to save for college increases as
wellastheneedtosavefortheirretirement..

"Thathappycouple,born35yearsago,isnowtrappedintheRatRace

for the rest oftheir working days. They work for the owners of their
company,forthegovernmentpayingtaxes,andforthebankpayingoffa
mortgageandcreditcards.

“Then,theyadvisetheirownchildrento`studyhard,getgoodgrades,

and find a safe jobor career.' They learn nothing about money, except
from those who profit from theirnaïveté, and work hard all their lives.
The process repeats into another hard-workinggeneration. This is the
`RatRace'.”

Theonlywaytogetoutofthe“RatRace”istoproveyourproficiency

at both accountingand investing, arguably two of the most difficult
subjects to master. As a trained CPA who once worked for a Big 8
accounting firm, I was surprised that Robert had made the learningof
these two subjects both fun and exciting. The process was so well
disguised that whilewe were diligently working to get out of the “Rat
Race,”wequicklyforgotwewerelearning.

Soon a product test turned into a fun afternoon with my daughter,

talking about things wehad never discussed before. As an accountant,
playingagamethatrequiredanIncomeStatementandBalanceSheetwas
easy.SoIhadthetimetohelpmydaughterandtheotherplayers at my
tablewithconceptstheydidnotunderstand.Iwasthefirstperson-andthe
onlypersonintheentiretestgroup-togetoutofthe“RatRace”thatday.
Iwasoutwithin50minutes,althoughthegamewentonfornearlythree
hours.

At my table was a banker, a business owner and a computer

programmer.Whatgreatlydisturbedmewashowlittlethesepeopleknew
abouteitheraccountingorinvesting,subjectssoimportantintheirlives.I
wondered how they managed their own financialaffairs in real life. I
couldunderstandwhymy19-year-olddaughterwouldnotunderstand,but
theseweregrownadults,atleasttwiceherage.

After I was out of the “Rat Race,” for the next two hours I watched

my daughter and theseeducated, affluent adults roll the dice and move
theirmarkers.AlthoughIwasgladtheywerealllearningsomuch,Iwas
disturbedbyhowmuchtheadultsdidnotknowaboutthebasicsofsimple

accounting and investing. They had difficulty grasping the relationship
betweentheirIncomeStatementandtheirBalanceSheet.Astheybought
andsoldassets,theyhadtroublerememberingthateachtransactioncould
impacttheirmonthlycashflow.Ithought,howmanymillionsofpeople
are out there in the real world strugglingfinancially, only because they
haveneverbeentaughtthesesubjects?

Thankgoodnessthey'rehavingfunandaredistractedbythedesireto

win the game, I saidto myself. After Robert ended the contest, he
allowed us fifteen minutes to discuss andcritique CASHFLOW among
ourselves.

The business owner at my table was not happy. He did not like the

game. “I don't need toknowthis,”hesaidoutloud.“Ihireaccountants,
bankersandattorneystotellmeaboutthisstuff.”

TowhichRobertreplied,“Haveyouevernoticedthattherearealot

of accountants whoaren't rich? And bankers, and attorneys, and
stockbrokers and real estate brokers. Theyknow a lot, and for the most
partaresmartpeople,butmostofthemarenotrich.Sinceourschoolsdo
not teach people what the rich know, we take advice from these people.
Butoneday,you'redrivingdownthehighway,stuckintraffic,struggling
to get to work, andyou look over to your right and you see your
accountant stuck in the same traffic jam.You look to your left and you
seeyourbanker.Thatshouldtellyousomething.”

Thecomputerprogrammerwasalsounimpressedbythegame:“Ican

buysoftwaretoteachmethis.”

The banker, however, was moved. “I studied this in school-the

accountingpart,thatis-butIneverknewhowtoapplyittoreallife.Now
Iknow.Ineedtogetmyselfoutofthe`RatRace.'”

Butitwasmydaughter'scommentsthatmosttouchedme.“Ihadfun

learning,” she said. “Ilearned a lot about how money really works and
howtoinvest.”

Thensheadded:“NowIknowIcanchooseaprofessionfortheworkI

want to perform andnotbecauseofjobsecurity,benefitsorhowmuchI
getpaid.IfIlearnwhatthisgameteaches,I'mfreetodoandstudywhat
my heart wants to study. . .rather than studysomething because

businessesarelookingforcertainjobskills.IfIlearnthis,Iwon'thaveto
worry about job security and Social Security the way most of my
classmatesalreadydo.”

I was not able to stay and talk with Robert after we had played the

game,butweagreedtomeetlatertofurtherdiscusshisproject.Iknewhe
wanted to use the game to help othersbecome more financially savvy,
andIwaseagertohearmoreabouthisplans.

My husband and I set up a dinner meeting with Robert and his wife

withinthenextweek.Althoughitwasourfirstsocialget-together,wefelt
asifwehadknowneachotherforyears.

Wefoundoutwehadalotincommon.Wecoveredthegamut,from

sports and plays torestaurants and socio-economic issues. We talked
about the changing world. We spent a lot of time discussing how most
Americans have little or nothing saved for retirement, as wellas the
almost bankrupt state of Social Security and Medicare. Would my
children berequired to pay for the retirement of 75 million baby
boomers?Wewonderedifpeoplerealizehowriskyitistodependona

pensionplan.
Robert'sprimaryconcernwasthegrowinggapbetweenthehavesand

have nots, in Americaand around the world. A self-taught, self-made
entrepreneurwhotraveledtheworldputtinginvestmentstogether,Robert
wasabletoretireattheageof47.Hecameoutofretirementbecausehe
shares the same concern I have for my own children. He knows thatthe
world has changed, but education has not changed with it.According to
Robert,children spend years in an antiquated educational system,
studyingsubjectstheywillneveruse,preparingforaworldthatnolonger
exists.

“Today, the most dangerous advice you can give a child is `Go to

school,getgoodgradesandlookforasafesecurejob,'”helikestosay.
“That is old advice, and it's badadvice. If you could see what is
happeninginAsia,Europe,SouthAmerica,youwouldbeas concernedas
Iam.”

It'sbadadvice,hebelieves,“becauseifyouwantyourchildtohavea

financially securefuture, they can't play by the old set of rules. It's just

toorisky.”

Iaskedhimwhathemeantby“oldrules?”.
“People like me play by a different set of rules from what you play

by,” he said. “Whathappens when a corporation announces a
downsizing?”

“Peoplegetlaidoff,”Isaid."Familiesarehurt.Unemploymentgoes
up."
“Yes, but what happens to the company, in particular a public

companyonthestockexchange?”

“The price of the stock usually goes up when the downsizing is

announced,” I said. “Themarket likes it when a company reduces its
labor costs, either through automation or justconsolidating the labor
forceingeneral.”

“That'sright,”hesaid.“Andwhenstockpricesgoup,peoplelikeme,

the shareholders,get richer. That is what I mean by a different set of
rules.Employeeslose;ownersandinvestorswin.”

Robert was describing not only the difference between an employee

and employer, but alsothe difference between controlling your own
destinyandgivingupthatcontroltosomeoneelse.

“Butit'shardformostpeopletounderstandwhythathappens,”Isaid.

“Theyjustthinkit'snotfair.”

“That's why it is foolish to simply say to a child, `Get a good

education,'”hesaid.“Itisfoolishtoassumethattheeducationtheschool
system provides will prepare yourchildren for the world they will face
upon graduation. Each child needs more education.Different education.
Andtheyneedtoknowtherules.Thedifferentsetsofrules.”

“Therearerulesofmoneythattherichplayby,andtherearetherules

thattheother95percentofthepopulationplaysby,”hesaid.“Andthe95
percent learns those rules athome and in school. That is why it's risky
today to simply say to a child, `Study hard andlook for a job.'A child
todayneedsamoresophisticatededucation,andthecurrentsystemisnot
delivering the goods. I don't care how many computers they put in the
classroom or how much money schools spend. How can the education
systemteachasubjectthatitdoesnotknow?”

Sohowdoesaparentteachtheirchildren,whattheschooldoesnot?

Howdoyouteachaccountingtoachild?Won'ttheygetbored?Andhow
do you teach investing when as aparent you yourself are risk averse?
Instead of teaching my children to simply play itsafe, I decided it was
besttoteachthemtoplayitsmart.

“So how would you teach a child about money and all the things

we've talked about?” Iasked Robert. “How can we make it easy for
parentsespeciallywhentheydon'tunderstanditthemselves?”

“Iwroteabookonthesubject,”hesaid.
“Whereisit?”
“Inmycomputer.It'sbeenthereforyearsinrandompieces.Iaddto

itoccasionallybutI'venevergottenaroundtoputitalltogether.Ibegan
writing it after my other bookbecameabestseller,butIneverfinished
thenewone.It'sinpieces.”

And in pieces it was.After reading the scattered sections, I decided

thebookhadmeritandneededtobeshared,especiallyinthesechanging
times.Weagreedtoco-authorRobert'sbook.

I asked him how much financial information he thought a child

needed. He said it woulddepend on the child. He knew at a young age
thathewantedtoberichandwasfortunateenoughtohaveafatherfigure
who was rich and willing to guide him. Education is thefoundation of
success,Robertsaid.Justasscholasticskillsarevitallyimportant,soare
financialskillsandcommunicationskills.

WhatfollowsisthestoryofRobert'stwodads,arichoneandapoor
one, that expounds on the skills he's developed over a lifetime. The

contrastbetweentwodadsprovidesanimportantperspective.Thebookis
supported, edited and assembled by me.For any accountants who read
thisbook,suspendyouracademicbookknowledgeandopenyourmindto
thetheoriesRobertpresents.Althoughmanyofthemchallengethevery
fundamentalsofgenerallyacceptedaccountingprinciples,theyprovidea
valuable insightinto the way true investors analyze their investment
decisions.

Whenweasparentsadviseourchildrento“gotoschool,studyhard

andgetagoodjob,”weoftendothatoutofculturalhabit.Ithasalways

beentherightthingtodo.WhenImetRobert,hisideasinitiallystartled
me. Having been raised by two fathers, he hadbeen taught to strive for
two different goals. His educated dad advised him to work for a
corporation. His rich dad advised him to own the corporation. Both life
paths requirededucation, but the subjects of study were completely
different. His educated dadencouragedRoberttobeasmartperson.His
richdadencouragedRoberttoknowhowtohiresmartpeople.

Having two dads caused many problems. Robert's real dad was the

superintendent ofeducation for the state of Hawaii. By the time Robert
was16,thethreatof“Ifyoudon'tgetgoodgrades,youwon'tgetagood
job” had little effect. He already knew his careerpath was to own
corporations,nottoworkforthem.Infact,ifithadnotbeenforawise
and persistent high school guidance counselor, Robert might not have
gone on to college.He admits that. He was eager to start building his
assets, but finally agreed that thecollege education would also be a
benefittohim.

Truthfully, the ideas in this book are probably too far fetched and

radical for mostparents today. Some parents are having a hard enough
timesimplykeepingtheirchildreninschool.Butinlightofourchanging
times,asparentsweneedtobeopentonewandboldideas.Toencourage
childrentobeemployeesistoadviseyourchildrentopaymorethantheir
fairshareoftaxesoveralifetime,withlittleornopromiseofapension.
And itis true that taxes are a person's greatest expense. In fact, most
familiesworkfromJanuarytomid-Mayforthegovernmentjusttocover
theirtaxes.Newideasareneededandthisbookprovidesthem.

Robertclaimsthattherichteachtheirchildrendifferently.Theyteach

their children athome, around the dinner table. These ideas may notbe
the ideas you choose to discuss withyour children, but thank you for
lookingatthem.AndIadviseyoutokeepsearching.Inmyopinion,asa
momandaCPA,theconceptofsimplygettinggoodgradesandfindinga
good job is an old idea. We need to advise our children with a greater
degree ofsophistication. We need new ideas and different education.
Maybe telling our children tostrive to be good employees while also
strivingtoowntheirowninvestmentcorporationisnotsuchabadidea.

It is my hope as a mother that this book helps other parents. It is

Robert'shopetoinformpeoplethatanyonecanachieveprosperityifthey
so choose. If today you are agardener or a janitor or even unemployed,
youhavetheabilitytoeducateyourselfandteachthoseyoulovetotake
care of themselves financially. Remember that financialintelligence is
thementalprocessviawhichwesolveourfinancialproblems.

Today we are facing global and technological changes as great or

even greater than thoseeverfacedbefore.Noonehasacrystalball,but
one thing is for certain: Changes lieahead that are beyond our reality.
Whoknowswhatthefuturebrings?Butwhateverhappens,we have two
fundamental choices: play it safe or play it smart by preparing, getting
educatedandawakeningyourownandyourchildren'sfinancialgenius.-
SbaronLecbter

ForaFREEAUDIOREPORT“WhatMyRichDadTaughtMeAbout

Money” all you have to do isvisit our special website at
www.richdadbooki.comandthereportisyoursfree.

Thankyou
RichDad,PoorDad

RichDad,PoorDad

CHAPTERONE

RichDad,PoorDad
AsnarratedbyRobertKiyosaki
Ihadtwofathers,arichoneandapoorone.Onewashighlyeducated

andintelligent;hehadaPh.D.andcompletedfouryearsofundergraduate
workinlessthantwoyears.HethenwentontoStanfordUniversity,the
University of Chicago, and Northwestern University todo his advanced
studies,allonfullfinancialscholarships.Theotherfatherneverfinished
theeighthgrade.

Both men were successful in their careers, working hard all their

lives. Both earnedsubstantial incomes.Yet one struggled financially all
hislife.TheotherwouldbecomeoneoftherichestmeninHawaii.One
died leaving tens of millions of dollars to hisfamily, charities and his
church.Theotherleftbillstobepaid.

Bothmenwerestrong,charismaticandinfluential.Bothmenoffered

me advice, but theydid not advise the same things. Both men believed
stronglyineducationbutdidnotrecommendthesamecourseofstudy.

If I had had only one dad, I would have had to accept or reject his

advice. Having twodads advising me offered me the choice of
contrastingpointsofview;oneofarichmanandoneofapoorman.

Instead of simply accepting or rejecting one or the other, I found

myselfthinkingmore,comparingandthenchoosingformyself.

Theproblemwas,therichmanwasnotrichyetandthepoormannot

yet poor. Both werejust starting out on their careers, and both were
strugglingwithmoneyandfamilies.Buttheyhadverydifferentpointsof
viewaboutthesubjectofmoney.

Forexample,onedadwouldsay,“Theloveofmoneyistherootofall

evil.”Theother,“Thelackofmoneyistherootofallevil.”

As a young boy, having two strong fathers both influencing me was

difficult.Iwantedtobeagoodsonandlisten,butthetwofathersdidnot
say the same things. The contrast intheir points of view, particularly
where money was concerned, was so extreme that I grewcurious and

intrigued. I began to start thinking for long periods of time about what
eachwassaying.

Much of my private time was spent reflecting, asking myself

questions such as, “Why doeshe say that?” and then asking the same
questionoftheotherdad'sstatement.Itwouldhavebeenmucheasierto
simplysay,“Yeah,he'sright.Iagreewith 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 loved forced me to think and
ultimately choose a way ofthinking for myself.As a process, choosing
for myself turned out to be much more valuablein the long run, rather
thansimplyacceptingorrejectingasinglepointofview.

One of the reasons the rich get richer, the poor get poorer, and the

middleclassstrugglesindebtisbecausethesubjectofmoneyistaughtat
home,notinschool.Mostofuslearnaboutmoneyfromourparents.So
what can a poor parent tell their child aboutmoney? They simply say
“Stay in school and study hard.” The child may graduate withexcellent
grades but with a poor person's financial programming and mind-set. It
waslearnedwhilethechildwasyoung.

Money is not taught in schools. Schools focus on scholastic and

professional skills, butnot on financial skills. This explains how smart
bankers, doctors and accountants whoearned excellent grades in school
may still struggle financially all of their lives. Ourstaggering national
debt is due in large part to highly educated politicians andgovernment
officials making financial decisions with little or no training on the
subjectofmoney.

I often look ahead to the new millennium and wonder what will

happen when we have millionsof people who will need financial and
medical assistance. They will be dependent on theirfamilies or the
governmentforfinancialsupport.WhatwillhappenwhenMedicareand
SocialSecurityrunoutofmoney?Howwillanationsurviveifteaching
children aboutmoneycontinuestobelefttoparents-mostofwhomwill
be,oralreadyare,poor?

BecauseIhadtwoinfluentialfathers,Ilearnedfrombothofthem.I

hadtothinkabouteachdad'sadvice,andindoingso,Igainedvaluable

insight into the power and effect of one's thoughts on one's life. For

example,onedadhadahabitofsaying,“Ican'taffordit.”Theotherdad
forbadethosewordstobeused.HeinsistedIsay,“HowcanIaffordit?”
Oneisastatement,andtheotherisaquestion.Oneletsyouoffthehook,
andtheotherforcesyoutothink.Mysoon-to-be-richdadwouldexplain
thatbyautomaticallysayingthewords“Ican'taffordit,”yourbrainstops
working.Byaskingthequestion“HowcanIaffordit?”yourbrainisput
to work. He didnot mean buy everything you wanted. He was fanatical
about exercising your mind, the mostpowerful computer in the world.
“My brain gets stronger every day because I exercise it.The stronger it
gets,themoremoneyIcanmake.”Hebelievedthatautomaticallysaying
“Ican'taffordit”wasasignofmentallaziness.

Althoughbothdadsworkedhard,Inoticedthatonedadhadahabitof

putting his brain tosleep when it came to money matters, and the other
hadahabitofexercisinghisbrain.Thelong-termresultwasthatonedad
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
basisversus someone who sits on the couch watching television. Proper
physical exerciseincreases your chances for health, and proper mental
exercise increases your chances forwealth. Laziness decreases both
healthandwealth.

Mytwodadshadopposingattitudesinthought.Onedadthoughtthat

therichshouldpaymoreintaxestotakecareofthoselessfortunate.The
othersaid,“Taxespunishthosewhoproduceandrewardthosewhodon't
produce.”

Onedadrecommended,“Studyhardsoyoucanfindagoodcompany

to work for.” The otherrecommended, “Study hard so you can find a
goodcompanytobuy.”Onedadsaid,“ThereasonI'mnotrichisbecause
Ihaveyoukids.”Theothersaid,“ThereasonImustberichisbecause I
haveyoukids.”Oneencouragedtalkingaboutmoneyandbusinessatthe
dinner,table.Theotherforbadethesubjectofmoneytobediscussedover
a meal. One said,“When it comes to money, play it safe, don't take
risks.”Theothersaid,“Learntomanagerisk.”

One believed, “Our home is our largest investment and our greatest

asset.” The otherbelieved,“Myhouseisaliability,andifyourhouseis
yourlargestinvestment,you'reintrouble.”

Bothdadspaidtheirbillsontime,yetonepaidhisbillsfirstwhilethe

otherpaidhisbillslast.

Onedadbelievedinacompanyorthegovernmenttakingcareofyou

and your needs. He wasalways concerned about pay raises, retirement
plans,medicalbenefits,sickleave,vacationdaysandotherperks.Hewas
impressed with two of his uncles who joined themilitary and earned a
retirement and entitlement package for life after twenty years ofactive
service. He loved the idea of medical benefits and PX privileges the
militaryprovided its retirees. He also loved the tenure system available
throughtheuniversity.Theideaofjobprotectionforlifeandjobbenefits
seemedmoreimportant,attimes,thanthejob.Hewouldoftensay,“I've
workedhardforthegovernment,andI'mentitledtothesebenefits.”

The other believed in total financial self-reliance. He spoke out

against the“entitlement” mentality and how it was creating weak and
financially needy people. He wasemphatic about being financially
competent.

One dad struggled to save a few dollars. The other simply created

investments.

OnedadtaughtmehowtowriteanimpressiveresumesoIcouldfind

a good job. The othertaught me how to write strong business and
financialplanssoIcouldcreatejobs.

Being a product of two strong dads allowed me the luxury of

observing the effectsdifferentthoughtshaveonone'slife.Inoticedthat
peoplereallydoshapetheirlifethroughtheirthoughts.

Forexample,mypoordadalwayssaid,“I'llneverberich.”Andthat

prophesybecamereality.Myrichdad,ontheotherhand,alwaysreferred
to himself as rich. He would saythings like, “I'm a rich man, and rich
peopledon'tdothis.”Evenwhenhewasflatbrokeafteramajorfinancial
setback, he continued to refer to himself as a rich man. He wouldcover
himself by saying, “There is a difference between being poor and being
broke.-Brokeistemporary,andpooriseternal.”

My poor dad would also say, “I'm not interested in money,” or

“Moneydoesn'tmatter.”Myrichdadalwayssaid,“Moneyispower.”

Thepowerofourthoughtsmayneverbemeasuredorappreciated,but

itbecameobvioustomeasayoungboytobeawareofmythoughtsand
howIexpressedmyself.Inoticedthatmypoordadwaspoornotbecause
oftheamountofmoneyheearned,whichwassignificant,but

because of his thoughts and actions. As a young boy, having two

fathers, I became acutelyaware of being careful which thoughts I chose
to adopt as my own. Whom should I listento-my rich dad or my poor
dad?

Although both men had tremendous respect for education and

learning,theydisagreedinwhattheythoughtwasimportanttolearn.One
wanted me to study hard, earn a degree andget a good job to work for
money.Hewantedmetostudytobecomeaprofessional,anattorney or
an accountant or to go to business school for my MBA. The other
encouraged metostudytoberich,tounderstandhowmoneyworksand
to learn how to have it work forme. “I don't work for money!” were
wordshewouldrepeatoverandover,“Moneyworksforme!”

At the age of 9, I decided to listen to and learn from my rich dad

about money. In doingso, I chose not to listen to my poor dad, even
thoughhewastheonewithallthecollegedegrees.

ALessonFromRobertFrost
Robert Frost is my favourite poet. Although I love many of his

poems,myfavoriteisTheRoadNotTaken.Iuseitslessonalmostdaily:

TheRoadNotTaken
Two roads diverged in a yellow wood,And sorry I could not travel

bothAnd be onetraveler, long I stoodAnd looked down one as far as I
couldTowhereitbentintheundergrowth;

Then took the other, as just as fair, And having perhaps the better

claim, Because it wasgrassy and wanted wear Though as for that the
passingthereHadwornthemreallyaboutthesame,

And both that morning equally lay In leaves no step had trodden

black. Oh, I kept thefirst for another day!Yet knowing how way leads
ontoway,IdoubtedifIshouldevercomeback.

I shall be telling this with a sigh Somewhere ages and ages hence;

Two roads diverged in a wood, and I took the one less traveled by,And
thathasmadeallthedifference.

RobertFrost(1916)
Andthatmadeallthedifference.
Over the years, I have often reflected upon Robert Frost's poem.

Choosing not to listen tomy highly educated dad's advice and attitude
aboutmoneywasapainfuldecision,butitwasadecisionthatshapedthe
restofmylife.

Once I made up my mind whom to listen to, my education about

money began. My rich dadtaught me over a period of 30 years, until I
wasage39.HestoppedonceherealizedthatIknewandfullyunderstood
whathehadbeentryingtodrumintomyoftenthickskull.

Moneyisoneformofpower.Butwhatismorepowerfulisfinancial

education. Money comesand goes, but if you have the education about
howmoneyworks,yougainpoweroveritandcanbeginbuildingwealth.
Thereasonpositivethinkingalonedoesnotworkisbecausemostpeople
wenttoschoolandneverlearnedhowmoneyworks,sotheyspendtheir
livesworkingformoney.

BecauseIwasonly9yearsoldwhenIstarted,thelessonsmyrichdad

taught me weresimple.And when it was all said and done, there were
only six main lessons, repeated over30 years. This book is about those
six lessons, put as simply as possible as my rich dadput 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
matterwhathappensinaworldofincreasingchangeanduncertainty.

Lesson#1TheRichDon'tWorkforMoney
Lesson#2WhyTeachFinancialLiteracy?
Lesson#3MindYourownBusiness
Lesson#4TheHistoryofTaxesandthePowerofCorporations
Lesson#5TheRichInventMoney
Lesson#6WorktoLearnDon'tWorkforMoney

RichDad,PoorDad

CHAPTERTWO

LessonOne:TheRichDon'tWorkForMoney
“Dad,CanYouTellMeHowtoGetRich?”
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 theirbeach house for the weekend. He took three of
his friends, but Mike and I weren't invited.They told us we weren't
invitedbecausewewere`poorkids'.”

“Theydid?”mydadaskedincredulously.
“Yeah,theydid.”Irepliedinahurttone.
My dad silently shook his head, pushed his glasses up the bridge of

his nose and went backto reading the paper. I stood waiting for an
answer.

The year was 1956. I was 9 years old. By some twist of fate, I

attendedthesamepublicschoolwheretherichpeoplesenttheirkids.We
were primarily a sugar plantation town.The managers of the plantation
and the other affluent people of the town, such as doctors,business
owners, and bankers, sent their children to this school, grades 1 to 6.
Aftergrade 6, their children were generally sent off to private schools.
Because my familylivedononesideofthestreet,Iwenttothisschool.
Had I lived on the other side ofthe street, I would have gone to a
different school, with kids from families more likemine. After grade
6,thesekidsandIwouldgoontothepublicintermediateandhighschool.
Therewasnoprivateschoolforthemorforme.

Mydadfinallyputdownthepaper.Icouldtellhewasthinking.
“Well, son,” he began slowly. “If you want to be rich, you have to

learntomakemoney.”

“HowdoImakemoney?”Iasked.
“Well, use your head, son,” he said, smiling. Which really meant,

“That's all I'm going totell you,” or “I don't know the answer, so don't
embarrassme.”

APartnershipIsFormed
Thenextmorning,Itoldmybestfriend,Mike,whatmydadhadsaid.

As best I could tell,Mike and I were the only poor kids in this school.
Mike was like me in that he was in thisschool by a twist of fate.
Someonehaddrawnajoginthelinefortheschooldistrict,andwewound
upinschoolwiththerichkids.Weweren'treallypoor,butwefeltasif
wewerebecausealltheotherboyshadnewbaseballgloves,,,,y

newbicycles,neweverything.
Momanddadprovideduswiththebasics,likefood,shelter,clothes.

:, But that wasabout it. My dad used to say, “If you want something,
work for it.” We wanted things, but there was not much work available
for9-,year-oldboys.

“Sowhatdowedotomakemoney?”Mikeasked.
“Idon'tknow,”Isaid.“Butdoyouwanttobemypartner?”
He agreed and so on that Saturday morning, Mike became my first

business partner. We spent allmorningcomingupwithideasonhowto
1'make money. Occasionally we talked about allthe “cool guys” at
Jimmy's beach house having fun. It hurt a little, but that hurt wasgood,
foritinspiredustokeepthinkingofawaytomakemoney.Finally,that
afternoon,a bolt of lightning came through our heads. It was an idea
Mike had gotten from a sciencebook he had read. Excitedly, we shook
hands,andthepartnershipnowhadabusiness.

Forthenextseveralweeks,MikeandIranaroundourneighborhood,

knocking on doors andasking our neighbors if they would save their
toothpastetubesforus.Withpuzzledlooks,mostadultsconsentedwitha
smile. Some asked us what we were doing. To which we replied,“We
can'ttellyou.It'sabusinesssecret.”

Mymomgrewdistressedastheweeksworeon.Wehadselecteda
sitenexttoherwashingmachineastheplacewewouldstockpileour

raw materials. In abrown cardboard box that one time held catsup
bottles,ourlittlepileofusedtoothpastetubesbegantogrow.

Finally my mom put her foot down. The sight of her neighbors' ,

messy, crumpled usedtoothpastetubeshadgottentoher.“Whatareyou
boys doing?” she asked. “And I don'twant to hear again that it's a

business secret. Do something with this mess or I'm goingto throw it
out.”

MikeandIpleadedandbegged,explainingthatwewouldsoonhave

enough and then we wouldbegin production. We informed her that we
werewaitingonacoupleofneighborstofinishusinguptheirtoothpaste
sowecouldhavetheirtubes.Momgrantedusaone-weekextension.

Thedatetobeginproductionwasmovedup.Thepressurewason.My

first partnership wasalready being threatened with an eviction notice
fromourwarehousespacebymyownmom.ItbecameMike'sjobtotell
the neighbors to quickly use up their toothpaste, sayingtheir dentist
wanted them to brush more often anyway. I began to put together the
productionline.

Onedaymydaddroveupwithafriendtoseetwo9-year-oldboys.in

the driveway with aproduction line operating at full speed. There was
fine white powder everywhere. On a longtable were small milk cartons
fromschool,andourfamily'shibachigrillwasglowingwithredhotcoals
atmaximumheat.

Dad walked up cautiously, having to park the car at the base of the

driveway, since theproduction line blocked the carport. As he and his
friendgotcloser,theysawasteelpotsittingontopofthecoals,withthe
toothpaste tubes being melted down. In those days,toothpaste did not
comeinplastictubes.Thetubesweremadeoflead.Sooncethepaintwas
burned off, the tubes were dropped in the small steel pot, melted until
theybecameliquid,andwithmymom'spotholderswewerepouringthe
leadthroughasmallholeinthetopofthemilkcartons.

Themilkcartonswerefilledwithplaster-of-Paris.Thewhitepowder

everywherewastheplasterbeforewemixeditwithwater.Inmyhaste,I
hadknockedthebagover,andtheentirearealooklikeithadbeenhitby
a snowstorm. The milk cartons were the outercontainers for plaster-of-
Parismolds.

Mydadandhisfriendwatchedaswecarefullypouredthemoltenlead

throughasmallholeinthetopoftheplaster-of-Pariscube.

“Careful,”mydadsaid.
Inoddedwithoutlookingup.

Finally, once the pouring was through, I put the steel pot down and

smiledatmydad.

“Whatareyouboysdoing?”heaskedwithacautioussmile.
“We'redoingwhatyoutoldmetodo.We'regoingtoberich,”Isaid.
“Yup,”saidMike,grinningandnoddinghishead.“We'repartners.”
“Andwhatisinthoseplastermolds?”dadasked.
“Watch,”Isaid.“Thisshouldbeagoodbatch.”
Withasmallhammer,Itappedatthesealthatdividedthecubein
half.Cautiously,Ipulledupthetophalfoftheplastermoldandalead

nickelfellout."

“Oh,myGod!”mydadsaid.“You'recastingnickelsoutoflead.”
“That's right,” Mike said. “We doing as you told us to do. We're

makingmoney.”

My dad's friend turned and burst into laughter. My dad smiled and

shookhishead.Alongwithafireandaboxofspenttoothpastetubes,in
front of him were two little boyscovered with white dust and smiling
fromeartoear.

Heaskedustoputeverythingdownandsitwithhimonthefrontstep

of our house. With asmile, he gently explained what the word
“counterfeiting”meant.

Ourdreamsweredashed.“Youmeanthisisillegal?”askedMikeina
quiveringvoice.
“Let them go,” my dad's friend said. “They might be developing a

naturaltalent.”

Mydadglaredathim.
“Yes, it is illegal,” my dad said gently. “But you boys have shown

great creativity andoriginal thought. Keep going. I'm really proud of
you!”

Disappointed, Mike and I sat in silence for about twenty minutes

beforewebegancleaningupourmess.Thebusinesswasoveronopening
day.Sweepingthepowderup,IlookedatMikeandsaid,“IguessJimmy
andhisfriendsareright.Wearepoor.”

My father was just leaving as I said that. “Boys,” he said. "You're

only poor if you giveup. The most important thing is that you did

something.Mostpeopleonlytalkanddreamofgettingrich.You'vedone
something.I'mveryproudofthetwoofyou.Iwillsayitagain.

Keepgoing.Don'tquit."
MikeandIstoodthereinsilence.Theywerenicewords,butwestill

didnotknowwhattodo.

“Sohowcomeyou'renotrich,dad?”Iasked.
“Because I chose to be a schoolteacher. Schoolteachers really don't

thinkaboutbeingrich.Wejustliketoteach.IwishIcouldhelpyou,butI
reallydon'tknowhowtomakemoney.”

MikeandIturnedandcontinuedourcleanup.
“I know,” said my dad. “If you boys want to learn how to be rich,

don'taskme.Talktoyourdad,Mike.”

“Mydad?”askedMikewithascrunchedupface.
“Yeah, your dad,” repeated my dad with a smile. “Your dad and I

have the same banker, andhe raves about your father. He's told me
several times that your father is brilliant whenit comes to making
money.”

“Mydad?”Mikeaskedagainindisbelief.“Thenhowcomewedon't

haveanicecarandanicehouseliketherichkidsatschool?”

“Anicecarandanicehousedoesnotnecessarilymeanyou'rerichor

youknowhowtomakemoney,”mydadreplied.“Jimmy'sdadworksfor
the sugar plantation. He's not muchdifferent from me. He works for a
company,andIworkforthegovernment.Thecompanybuysthecarfor
him. The sugar company is in financial trouble, and Jimmy's dad may
soon havenothing.YourdadisdifferentMike.Heseemstobebuilding
anempire,andIsuspectinafewyearshewillbeaveryrichman.”

With that, Mike and I got excited again. With new vigor, we began

cleaning up the messcaused by our now defunct first business. As we
werecleaning,wemadeplansonhowandwhentotalktoMike'sdad.The
problemwasthatMike'sdadworkedlonghoursandoftendid not come
homeuntillate.Hisfatherownedwarehouses,aconstructioncompany,a
chainofstores,andthreerestaurants.Itwastherestaurantsthatkepthim
outlate.

Mikecaughtthebushomeafterwehadfinishedcleaningup.Hewas

going to talk to hisdad when he got home that night and ask him if he
wouldteachushowtobecomerich.Mikepromisedtocallassoonashe
hadtalkedtohisdad,evenifitwaslate.

Thephonerangat8:30p.m.
“OK,”Isaid.“NextSaturday.”Andputthe phone down. Mike's dad

hadagreedtomeetwithMikeandme.

At7:30Saturdaymorning,Icaughtthebustothepoorsideoftown.
TheLessonsBegin:
“I'llpayyou10centsanhour.”
Evenby1956paystandards,10centsanhourwaslow.
Michael and I met with his dad that morning at 8 o'clock. He was

already busy and had beenat work for more than an hour. His
construction supervisor was just leaving in his pickuptruck as I walked
uptohissimple,smallandtidyhome.Mikemetmeatthedoor.

“Dad's on the phone, and he said to wait on the back porch,” Mike

saidasheopenedthedoor.

TheoldwoodenfloorcreakedasIsteppedacrossthethresholdofthis

aging house. Therewas a cheap mat just inside the door. The mat was
theretohidetheyearsofwearfromcountlessfootstepsthatthefloorhad
supported.Althoughclean,itneededtobereplaced.

IfeltclaustrophobicasIenteredthenarrow living room, which was

filledwitholdmustyoverstuffedfurniturethattodaywouldbecollector's
items.Sittingonthecouchweretwowomen,alittleolderthanmymom.
Acrossfromthewomensatamaninworkman'sclothes.He wore khaki
slacks and a khaki shirt, neatly pressed but without starch, and polished
workbooks.Hewasabout10yearsolderthanmydad;I'dsayabout45
years old. TheysmiledasMikeandIwalkedpastthem,headingforthe
kitchen,whichleadtotheporchthatoverlookedthebackyard.Ismiled
backshyly.

“Whoarethosepeople?”Iasked.
“Oh,theyworkformydad.Theoldermanrunshiswarehouses,and

the women are themanagers of the restaurants. And you saw the
constructionsupervisor,whoisworkingonaroadprojectabout50miles
from here. His other supervisor, who is building a track ofhouses, had

alreadyleftbeforeyougothere.”

“Doesthisgoonallthetime?”Iasked.
“Not always, but quite often,” said Mike, smiling as he pulled up a

chairtositdownnexttome.

“Iaskedhimifhewouldteachustomakemoney,”Mikesaid.
“Oh,andwhatdidhesaytothat?”Iaskedwithcautiouscuriosity.
“Well, he had a funny look on his face at first, and then he said he

wouldmakeusanoffer.”“Oh,”Isaid,rockingmychairbackagainstthe
wall;Isatthereperchedontworearlegsofthechair.Mikedidthesame
thing.“Doyouknowwhattheofferis?”Iasked.“No,butwe'llsoonfind
out.”Suddenly,Mike'sdadburstthroughthericketyscreendoorandonto
the

porch.MikeandIjumpedtoourfeet,notoutofrespectbutbecause

wewerestartled.

“Readyboys?”Mike'sdadaskedashepulledupachairtositdown
withus.
Wenoddedourheadsaswepulledourchairsawayfromthewallto

sitinfrontofhim.

He was a big man, about 6 feet tall and 200 pounds. My dad was

taller,aboutthesameweight,andfiveyearsolderthanMike'sdad.They
sortoflookedalike,thoughnotofthesameethnicmakeup.Maybetheir
energywassimilar.

“Mike says you want to learn to make money? Is that correct,

Robert?”

Inoddedmyheadquickly,butwithalittleintimidation.Hehadalot

ofpowerbehindhiswordsandsmile.

“OK,here'smyoffer.I'llteachyou,butIwon'tdoitclassroom-style.

You work for me, I'll teach you.You don't work for me, I won't teach
you.Icanteachyoufasterifyouwork,andI'mwastingmytimeifyou
justwanttositandlisten,likeyoudoinschool.That'smyoffer.Takeit
orleaveit.”

“Ah...mayIaskaquestionfirst?”Iasked.
“No. Take it or leave it. I've got too much work to do to waste my

time.Ifyoucan'tmakeupyouminddecisively,thenyou'llneverlearnto

make money anyway. Opportunities comeand go. Being able to know
when to make quick decisions is an important skill. You have an
opportunity that you asked for. School is beginning or it's over in ten
seconds,”Mike'sdadsaidwithateasingsmile.

“Takeit,”Isaid.`
“Takeit,”saidMike.
“Good,” said Mike's dad. “Mrs. Martin will be by in ten minutes.

AfterI'mthroughwithher,youridewithhertomysuperetteandyoucan
beginworking.I'llpayyou10centsanhourandyouwillworkforthree
hourseverySaturday.”

“ButIhaveasoftballgametoday,”Isaid.
Mike'sdadloweredhisvoicetoasterntone.“Takeitorleaveit,”he
“I'lltakeit,”Ireplied,choosingtoworkandlearninsteadofplaying

softball.

30CentsLater
By9a.m.onabeautifulSaturdaymorning,MikeandIwereworking

forMrs.Martin.Shewasakindandpatientwoman.Shealwayssaidthat
Mike and I reminded her of her two sonswho were grown and gone.
Although kind, she believed in hard work and she kept us working.She
was a task master. We spent three hours taking canned goods off the
shelves and, withafeatherduster,brushingeachcantogetthedustoff,
andthenre-stackingthemneatly.Itwasexcruciatinglyboringwork.

Mike's dad, whom I call my rich dad, owned nine of these little

superetteswithlargeparkinglots.Theyweretheearlyversionofthe7-11
convenience stores. Littleneighborhood grocery stores where people
boughtitemssuchasmilk,bread,butterandcigarettes.Theproblemwas,
thiswasHawaiibeforeairconditioning,andthestorescouldnotcloseits
doorsbecauseoftheheat.Ontwosidesofthestore,thedoorshadtobe
wideopentotheroadandparkinglot.Everytimeacardrovebyorpulled
intotheparkinglot,dustwouldswirlandsettleinthestore.

Hence,wehadajobforaslongastherewasnoairconditioning.
Forthreeweeks,MikeandIreportedtoMrs.Martinandworkedour

three hours. By noon,our work was over, and she dropped three little
dimesineachofourhands.Now,evenattheageof9inthemid-1950s,

30centswasnottooexciting.Comicbookscost10centsbackthen,soI
usuallyspentmymoneyoncomicbooksandwenthome.

ByWednesdayofthefourthweek,Iwasreadytoquit.Ihadagreedto

workonlybecauseIwantedtolearntomakemoneyfromMike'sdad,and
now I was a slave for 10 cents an hour.On top of that, I had not seen
Mike'sdadsincethatfirstSaturday.

“I'm quitting,” I told Mike at lunchtime. The school lunch was

miserable.Schoolwasboring,andnowIdidnotevenhavemySaturdays
tolookforwardto.Butitwasthe30centsthatreallygottome.

ThistimeMikesmiled.
“Whatareyoulaughingat?”Iaskedwithangerandfrustration.
“Dad said this would happen. He said to meet with him when you

werereadytoquit.”

“What?”Isaidindignantly.“He'sbeenwaitingformetogetfedup?”
“Sortof,”Mikesaid.“Dad'skindofdifferent.Heteachesdifferently

from your dad.Your mom and dad lecture a lot. My dad is quiet and a
man of few words. You just wait till this Saturday. I'll tell him .you're
ready.”

“YoumeanI'vebeensetup?”
“No,notreally,butmaybe.DadwillexplainonSaturday.”
WaitinginLineonSaturday
I was ready to face him and I was prepared. Even my real dad was

angrywithhim.Myrealdad,theoneIcallthepoorone,thoughtthatmy
richdadwasviolatingchildlaborlawsandshouldbeinvestigated.

MyeducatedpoordadtoldmetodemandwhatIdeserve.Atleast25

centsanhour.MypoordadtoldmethatifIdidnotgetaraise,Iwasto
quitimmediately.

“You don't need that damned job anyway,” said my poor dad with

indignity.At 8 o'clock Saturday morning, I was going through the same
ricketydoorofMike'shouse.

“Takeaseatandwaitinline,”Mike'sdadsaidasIentered.Heturned

anddisappearedintohislittleofficenexttoabedroom.

I looked around the room and did not see Mike anywhere. Feeling

awkward,Icautiouslysatdownnexttothesametwowomenwhowhere

there four weeks earlier. They smiled and slidacrossthecouchtomake
roomforme.

Forty-fiveminuteswentby,andIwassteaming.Thetwowomenhad

met with him and leftthirtyminutesearlier.Anoldergentlemanwasin
therefortwentyminutesandwasalsogone.

Thehousewasempty,andIsatoutinhismustydarklivingroomona

beautiful sunnyHawaiian day, waiting to talk to a cheapskate who
exploitedchildren.Icouldhearhimrustlingaroundtheoffice,talkingon
the phone, and ignoring me. I was now ready to walkout, but for some
reasonIstayed.

Finally,fifteenminuteslater,atexactly9o'clock,richdadwalkedout

ofhisoffice,saidnothing,andsignaledwithhishandformetoenterhis
dingyoffice.

“Iunderstandyouwantaraiseoryou'regoingtoquit,”richdadsaid

asheswiveledinhisofficechair.

“Well, you're not keeping your end of the bargain,” I blurted out

nearlyintears.Itwasreallyfrighteningfora9-year-oldboytoconfronta
grownup.

“You said that you would teach me if I worked for you. Well, I've

worked for you. I'veworked hard. I've given up my baseball games to
work for you. And you don't keep yourword. You haven't taught me
anything.You are 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 mewaitanddon'tshowmeanyrespect.I'monlyalittleboy,
andIdeservetobetreatedbetter.”

Rich dad rocked back in his swivel chair, hands up to his chin,

somewhatstaringatme.Itwaslikehewasstudyingme.

“Notbad,”hesaid.“Inlessthanamonth,yousoundlikemostofmy

employees.”

“What?”Iasked.Notunderstandingwhathewassaying,Icontinued

with my grievance. “Ithought you were going to keep your end of the
bargainandteachme.Insteadyouwanttotortureme?That'scruel.That's
reallycruel.”

“Iamteachingyou,”richdadsaidquietly.

“What have you taught me? Nothing!” I said angrily. "You haven't

eventalkedtomeoncesinceIagreedtoworkforpeanuts.Tencentsan
hour.Hah!Ishouldnotifythegovernmentaboutyou.

We have child labor laws, you know. My dad works for the

government,youknow."

“Wow!” said rich dad. “Now you sound just like most of the people

whousedtoworkforme.PeopleI'veeitherfiredorthey'vequit.”

“Sowhatdoyouhavetosay?”Idemanded,feelingprettybravefora

little kid. “You lied to me. I've worked for you, and you have not kept
yourword.Youhaven'ttaughtmeanything.”

“HowdoyouknowthatI'venottaughtyouanything?”askedrichdad

calmly.

“Well, you've never talked to me. I've worked for three weeks, and

youhavenottaughtmeanything,”Isaidwithapout.

“Doesteachingmeantalkingoralecture?”richdadasked.
“Well,yes,”Ireplied.
“That's how they teach you in school,” he said smiling. “But that is

not how life teachesyou,andIwouldsaythatlifeisthebestteacherof
all.Mostofthetime,lifedoesnottalktoyou.Itjustsortofpushesyou
around.Eachpushislifesaying,`Wakeup. There'ssomethingIwantyou
tolearn.'”

“What is this man talking about?” I asked myself silently. “Life

pushingmearoundwaslifetalkingtome?”NowIknewIhadtoquitmy
job.Iwastalkingtosomeonewhoneededtobelockedup.

“If you learn life's lessons, you will do well. If not, life will just

continue to pushyou around. People do two things. Some just let life
push them around. Others get angryand push back. But they push back
against their boss, or their job, or their husband orwife. They do not
knowit'slifethat'spushing.”

Ihadnoideawhathewastalkingabout.
“Lifepushesallofusaround.Somegiveup.Othersfight.Afewlearn

the lesson and moveon. They welcome life pushing them around. To
thesefewpeople,itmeanstheyneedandwanttolearnsomething.They
learnandmoveon.Mostquit,andafewlikeyoufight.”

Rich dad stood and shut the creaky old wooden window that needed

repair. “If you learnthis lesson, you will grow into a wise, wealthy and
happy young man. If you don't, youwill spend your life blaming a job,
low pay or your boss for your problems.You'll live life hoping for that
bigbreakthatwillsolveallyourmoneyproblems.”

RichdadlookedoveratmetoseeifIwasstilllistening.Hiseyesmet

mine.Westared ateachother,streamsofcommunicationgoingbetween
us through our eyes. Finally, Ipulled away once I had absorbed his last
message.Iknewhewasright.Iwasblaminghim,andIdidasktolearn.I
wasfighting.

Richdadcontinued.“Orifyou'rethekindofpersonwhohasnoguts,

youjustgiveupeverytimelifepushesyou.Ifyou'rethatkindofperson,
you'll live all your lifeplaying it safe, doing the right things, saving
yourself for some event that neverhappens. Then, you die a boring old
man. You'll have lots of friends who really like you because you were
suchanicehard-workingguy.Youspentalifeplayingitsafe,doingthe
rightthings.Butthetruthis,youletlifepushyouintosubmission.Deep
downyouwereterrifiedoftakingrisks.Youreallywantedtowin,butthe
fear of losing was greaterthan the excitement of winning. Deep inside,
you and only you will know you didn't go forit. You chose to play it
safe.”

Our eyes met again. For ten seconds, we looked at each other, only

pullingawayoncethemessagewasreceived.

“You'vebeenpushingmearound”Iasked.
“Some people might say that,” smiled rich dad. "I would say that I

just

gaveyouatasteoflife.“”Whattasteoflife?"Iasked,stillangry,but

nowcurious.Evenreadytolearn.

“Youboysarethefirstpeoplethathaveeveraskedmetoteachthem

how to make money. Ihave more than 150 employees, and not one of
themhasaskedmewhatIknowaboutmoney.Theyaskmeforajoband
apaycheck,butnevertoteachthemaboutmoney.Somostwillspendthe
best years of their lives working for money, not really understanding
whatitistheyareworkingfor.”

Isattherelisteningintently.
“So when Mike told me about you wanting to learn how to make

money, I decided to design acourse that was close to real life. I could
talk until I was blue in the face, but youwouldn't hear a thing. So I
decidedtoletlifepushyouaroundabitsoyoucouldhearme.That'swhy
Ionlypaidyou10cents.”

“So what is the lesson I learned from working for only 10 cents an

hour?”Iasked.“Thatyou'recheapandexploityourworkers?”

Richdadrockedbackandlaughedheartily.Finally,afterhislaughing

stopped, he said,“You'd best change your point of view. Stop blaming
me,thinkingI'mtheproblem.IfyouthinkI'mtheproblem,thenyouhave
tochangeme.Ifyourealizethatyou'retheproblem,thenyoucanchange
yourself, learn something and grow wiser. Most people want everyone
elseintheworldtochangebutthemselves.Letmetellyou,it'seasierto
changeyourselfthaneveryoneelse.”

“Idon'tunderstand,”Isaid.
“Don't blame me for your problems,” rich dad said, growing

impatient.

“Butyouonlypayme10cents.”
“Sowhatareyoulearning?”richdadasked,smiling.
“Thatyou'recheap,”Isaidwithaslygrin.
“See,youthinkI'mtheproblem,”saidrichdad.
“Butyouare.”
"Well,keepthatattitudeandyoulearnnothing.Keeptheattitude
thatI'mtheproblemandwhatchoicesdoyouhave?"
“Well,ifyoudon'tpaymemoreorshowmemorerespectandteach

me,I'llquit.”

“Well put,” rich dad said. “And that's exactly what most people do.

They quit and golooking for another job, better opportunity, and higher
pay,actuallythinkingthatanewjobormorepaywillsolvetheproblem.
Inmostcases,itwon't.”

“Sowhatwillsolvetheproblem?”Iasked.“Justtakethismeasly10

centsanhourandsmile?”

Rich dad smiled. “That's what the other people do. Just accept a

paycheck knowing thatthey and their family will struggle financially.
But that's all they do, waiting for araisethinkingthatmoremoneywill
solve the problem. Most just accept it, and some takea second job
workingharder,butagainacceptingasmallpaycheck.”

Isatstaringatthefloor,beginningtounderstandthelessonrichdad

was presenting. Icould sense it was a taste of life. Finally, I looked up
andrepeatedthequestion.“Sowhatwillsolvetheproblem?”

“This,” he said tapping me gently on the head. “This stuff between

yourears.”

It was at that moment that rich dad shared the pivotal point of view

that separated himfromhisemployeesandmypoordad-andledhimto
eventually become one of the richest menin Hawaii while my highly
educated,butpoor,dadstruggledfinanciallyallhislife.Itwasasingular
pointofviewthatmadeallthedifferenceoveralifetime.

Rich dad said over and over, this point of view, which I call Lesson

No.1.

“The poor and the middle class work for money.” “The rich have

moneyworkforthem.”

On that bright Saturday morning, I was learning a completely

differentpointofviewfromwhatIhadbeentaughtbymypoordad.At
theageof9,Igrewawarethatbothdadswantedmetolearn.Bothdads
encouragedmetostudy...butnotthesamethings.

MyhighlyeducateddadrecommendedthatIdowhathedid.“Son,I

wantyoutostudyhard,getgoodgrades,soyoucanfindasafe,securejob
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 itwork for
me. These lessons I would learn through life with his guidance, not
becauseofaclassroom.

Myrichdadcontinuedmyfirstlesson,“I'mgladyougotangryabout

workingfor10centsanhour.Ifyouhadnotgottenangryandhadgladly
acceptedit,IwouldhavetotellyouthatIcouldnotteachyou.Yousee,
truelearningtakesenergy,passion,aburning desire.Angerisabigpart
ofthatformula,forpassionisangerandlovecombined.Whenit comes
to money, most people want to play it safe and feel secure. So passion

doesnotdirectthem:Feardoes.”

“Soisthatwhythey'lltakeajobwithlowpar?”Iasked.
“Yes,” said rich dad. “Some people say I exploit people because I

don't pay as much as thesugar plantation or the government. I say the
peopleexploitthemselves.It'stheirfear,notmine.”

“Butdon'tyoufeelyoushouldpaythemmore?”Iasked.
“Idon'thaveto.Andbesides,moremoneywillnotsolvetheproblem.

Justlookatyourdad.Hemakesalotofmoney,andhestillcan'tpayhis
bills.Mostpeople,givenmoremoney,onlygetintomoredebt.”

“Sothat'swhythe10centsanhour,”Isaid,smiling.“It'sapartofthe

lesson.”

“That'sright,”smiledrichdad.“Yousee,yourdadwenttoschooland

got an excellenteducation,sohecouldgetahigh-payingjob.Whichhe
did. But he still has moneyproblemsbecauseheneverlearnedanything
about money at school. On top of that, hebelieves in working for
money.”

“Andyoudon't?”Iasked.
“No, not really,” said rich dad. “If you want to learn to work for

money,thenstayinschool.Thatisagreatplacetolearntodothat.Butif
youwanttolearnhowtohavemoneyworkforyou,thenIwillteachyou
that.Butonlyifyouwanttolearn.”

“Wouldn'teveryonewanttolearnthat”Iasked.
“No,” said rich dad. “Simply because it's easier to learn to work for

money, especially iffear is your primary emotion when the subject of
moneyisdiscussed.”

“Idon'tunderstand,”Isaidwithafrown.
"Don't worry about that for now. Just know that it's fear that keeps

mostpeopleworkingatajob.Thefearofnotpayingtheirbills.Thefear
ofbeingfired.Thefearofnothavingenoughmoney.Thefearof

starting over. That's the price of studying to learn a profession or

trade, and thenworking for money. Most people become a slave to
money...andthengetangryattheirboss."

“Learning to have money work for you is a completely different

courseofstudy?”Iasked.

“Absolutely,”richdadanswered,“absolutely.”
We sat in silence on that beautiful Hawaiian Saturday morning. My

friends would have justbeen starting their Little League baseball game.
But far some reason, I was now thankful Ihad decided to work for 10
cents an hour. I sensed that I was about to learn something myfriends
wouldnotlearninschool.

“Readytolearn?”askedrichdad.
“Absolutely,”Isaidwithagrin.
“Ihavekeptmypromise.I'vebeenteachingyoufromafar,”myrich

dad said. “At 9 yearsold, you've gotten a taste of what it feels like to
workformoney.Justmultiplyyourlastmonthbyfiftyyearsandyouwill
haveanideaofwhatmostpeoplespendtheirlifedoing.”

“Idon'tunderstand,”Isaid.
“How did you feel waiting in line to see me? Once to get hired and

oncetoaskformoremoney?”

“Terrible,”Isaid.
“If you choose to work for money, that is what life is like for many

people,”saidrichdad.

“AndhowdidyoufeelwhenMrs.Martindroppedthreedimesinyour

handforthreehours'work?”

“I felt like it wasn't enough. It seemed like nothing. I was

disappointed,”Isaid.

“And that is how most employees feel when they look at their

paychecks.Especiallyafterallthetaxandotherdeductionsaretakenout.
Atleastyougot100percent.”

“You mean most workers don't get paid everything?” I asked with

amazement.

“Heavensno!”saidrichdad.“Thegovernmentalwaystakesitsshare

first.”

“Howdotheydothat.”Iasked.
“Taxes,” said rich dad. “You're taxed when you earn. You're taxed

when you spend. You're taxed when you save. You're taxed when you
die.”

“Whydopeopleletthegovernmentdothattothem?”

“Therichdon't,”saidrichdadwithasmile.“Thepoorandthemiddle

classdo.I'llbetyouthatIearnmorethanyourdad,yethepaysmorein
taxes.”

“Howcanthatbe?”Iasked.Asa9-year-oldboy,thatmadenosense

tome.“Whywouldsomeoneletthegovernmentdothattothem?”

Richdadsatthereinsilence.Iguesshewantedmetolisteninsteadof

jabberawayatthemouth.

Finally, I calmed down. I did not like what I had heard. I knew my

dad complainedconstantlyaboutpayingsomuchintaxes,butreallydid
nothingaboutit.Wasthatlifepushinghimaround?

Richdadrockedslowlyandsilentlyinhischair,justlookingatme.
“Readytolearn?”heasked.
Inoddedmyheadslowly.
“AsIsaid,thereisalottolearn.Learninghowtohavemoneywork

foryouisalifetimestudy.Mostpeoplegotocollegeforfouryears,and
their education ends. I already knowthat my study of money will
continueovermylifetime,simplybecausethemoreIFindout,themore
IfindoutIneedtoknow.Mostpeopleneverstudythesubject.Theygoto
work,gettheirpaycheck,balancetheircheckbooks,andthat'sit.Ontop
of that, they wonderwhy they have money problems. Then, they think
thatmoremoneywillsolvetheproblem.Fewrealizethatit'stheirlackof
financialeducationthatistheproblem.”

“Somydadhastaxproblemsbecausehedoesn'tunderstandmoney?”

Iasked,confused.

“Look,” said rich dad. “Taxes are just one small section on learning

howtohavemoneyworkforyou.Today,Ijustwantedtofindoutifyou
stillhavethepassiontolearnaboutmoney.Mostpeopledon't.Theywant
togotoschool,learnaprofession,havefunattheirwork,andearnlotsof
money. One day they wake up with big money problems, and thenthey
can't stop working. That's the price of only knowing how to work for
money instead ofstudyinghowtohavemoneyworkforyou.Sodoyou
stillhavethepassiontolearn?”askedrichdad.

Inoddedmyhead.
“Good,”saidrichdad.“Nowgetbacktowork.Thistime,Iwillpay

younothing.”

“What?”Iaskedinamazement.
"Youheardme.Nothing.Youwillworkthesamethreehoursevery
Saturday, but this time you will not be paid 10 cents per hour.You

saidyouwantedtolearntonotworkformoney,soI'mnotgoingtopay
youanything."

Icouldn'tbelievewhatIwashearing.
“I'vealreadyhadthisconversationwithMike.He'salreadyworking,

dusting and stackingcanned goods for free. You'd better hurry and get
backthere.”

“That'snotfair,”Ishouted.“You'vegottopaysomething.”
“Yousaidyouwantedtolearn.Ifyoudon'tlearnthisnow,you'llgrow

uptobelikethetwowomenandtheoldermansittinginmylivingroom,
workingformoneyandhopingIdon'tfirethem.Orlikeyourdad,earning
lotsofmoneyonlytobeindebtuptohiseyeballs,hopingmoremoney
willsolvetheproblem.Ifthat'swhatyouwant,I'llgobacktoouroriginal
dealof10centsanhour.Oryoucandowhatmostpeoplegrowuptodo.
Complain that there is not enough pay, quit and go looking for another
job.”

“ButwhatdoIdo?”Iasked.
Rich dad tapped me on the head. “Use this,” he said. “If you use it

well,youwillsoonthankmeforgivingyouanopportunity,andyouwill
growintoarichman.”

I stood there still not believing what a raw deal I had been handed.

HereIcametoaskforaraise,andnowIwasbeingtoldtokeepworking
fornothing.

Rich dad tapped me on the head again and said, “Use this. Now get

outofhereandgetbacktowork.”

LESSON#l:TheRichDon'tWorkForMoney
I didn't tell my poor dad I wasn't being paid. He would not have

understood,andIdidnotwanttotrytoexplainsomethingthatIdidnot
yetunderstandmyself.

For three more weeks, Mike and I worked for three hours, every

Saturday, for nothing. Thework didn't bother me, and the routine got

easier. It was the missed baseball games andnotbeingabletoaffordto
buyafewcomicbooksthatgottome.

Rich dad stopped by at noon on the third week. We heard his truck

pullupintheparkinglotandsputterwhentheenginewasturnedoff.He
entered the store and greeted Mrs.Martin with a hug.After finding out
howthingsweregoinginthestore,hereachedintotheice-creamfreezer,
pulledouttwobars,paidforthem,andsignalledtoMikeandme.

“Let'sgoforawalkboys.”
Wecrossedthestreet,dodgingafewcars,andwalkedacrossalarge

grassy field, where afewadultswereplayingsoftball.Sittingdownata
remotepicnictable,hehandedMikeandmetheice-creambars.

“How'sitgoingboys?”
“OK,”Mikesaid.
Inoddedinagreement.
“Learnanythingyet?”richdadasked.
Mike and I looked at each other, shrugged our shoulders and shook

ourheadsinunison.

AvoidingOneofLife'sBiggestTraps
“Well, you boys had better start thinking. You're staring at one of

life's biggestlessons.Ifyoulearnthelesson,you'llenjoyalifeofgreat
freedom and security. Ifyou don't learn the lesson, you'll wind up like
Mrs. Martin and most of the people playingsoftball in this park. They
workveryhard,forlittlemoney,clingingtotheillusionofjob security,
lookingforwardtoathree-weekvacationeachyearandaskimpypension
afterforty-fiveyearsofwork.Ifthatexcitesyou,I'llgiveyouaraiseto
25centsanhour.”

“But these are good hard-working people. Are you making fun of

them?”Idemanded.

Asmilecameoverrichdad'sface.
“Mrs. Martin is like a mother to me. I would never be that cruel. I

maysoundcruelbecauseI'mdoingmybesttopointsomethingouttothe
two of you. I want to expand yourpoint of view so you can see
something. Something most people never have the benefit ofseeing
because their vision is too narrow. Most people never see the trap they

arein.”

MikeandIsatthereuncertainofhismessage.Hesoundedcruel,yet

wecouldsensehewasdesperatelywantingustoknowsomething.

With a smile, rich dad said, “Doesn't that 25 cents an hour sound

good?Doesn'titmakeyourheartbeatalittlefaster.”

I shook my head “no,” but it really did. Twenty five cents an hour

wouldbebigbuckstome.

“OK,I'llpayyouadollaranhour,”richdadsaid,withaslygrin.
Nowmyheartwasbeginningtorace.Mybrainwasscreaming,
An
“Takeit.Takeit.”IcouldnotbelievewhatIwashearing.Still,Isaid

nothing.

“OK,$2anhour.”
Mylittle9-year-oldbrainandheartnearlyexploded.Afterall,itwas

1956 and beingpaid $2 an hour would have made me the richest kid in
theworld.Icouldn'timagineearningthatkindofmoney.Iwantedtosay
“yes.” I wanted the deal. I could see a newbicycle, new baseball glove,
and adoration of my friends when I flashed some cash. On topof that,
Jimmyandhisrichfriendscouldnevercallmepooragain.Butsomehow
mymouthstayedsilent.

Maybemybrainhadoverheatedandblownafuse.Butdeepdown,I

badlywantedthat$2anhour.

The ice cream had melted and was running down my hand. The ice-

cream stick was empty, andunder it was a sticky mess of vanilla and
chocolate that ants were enjoying. Rich dad waslooking at two boys
staring back at him, eyes wide open and brains empty. He knew he was
testing us, and he knew there was a part of our emotions that wanted to
takethedeal.Heknewthateachhumanbeinghasaweakandneedypart
oftheirsoulthatcanbebought.Andheknewthateachhumanbeingalso
hadapartoftheirsoulthatwasstrongandfilledwitharesolvethatcould
never be bought. It was only a question of which one wasstronger. He
had tested thousands of souls in his life. He tested souls every time he
interviewedsomeoneforajob.

“OK,$5anhour.”

Suddenlytherewasasilencefrominsideme.Somethinghadchanged.

Theofferwastoobigandhadgottenridiculous.Nottoomanygrownups
in 1956 made more than $5 an hour. Thetemptation disappeared, and a
calmsetin.SlowlyIturnedtomylefttolookatMike.Helookedbackat
me.Thepartofmysoulthatwasweakandneedywassilenced.Thepart
ofmethathadnopricetookover.Therewasacalmandacertaintyabout
moneythatenteredmybrainandmysoul.IknewMikehadgottentothat
pointalso.

“Good,” rich dad said softly. “Most people have a price. And they

haveapricebecauseofhumanemotionsnamedfearandgreed.First,the
fearofbeingwithoutmoneymotivatesustoworkhard,andthenoncewe
get that paycheck, greed or desire starts us thinking aboutall the
wonderfulthingsmoneycanbuy.Thepatternisthenset.”

“Whatpattern?”Iasked.
“Thepatternofgetup,gotowork,paybills,getup,gotowork,pay

bills... Theirlivesarethenrunforeverbytwoemotions,fearandgreed.
Offer them more money, and they continue the cycle by also increasing
theirspending.ThisiswhatIcalltheRatRace.”

“Thereisanotherway?”Mikeasked.
“Yes,”saidrichdadslowly.“Butonlyafewpeoplefindit.”
“Andwhatisthatway?”Mikeasked.
“That'swhatIhopeyouboyswillfindoutasyouworkandstudywith

me.ThatiswhyItookawayallformsofpay.”

“Any hints?” Mike asked. “We're kind of tired of working hard,

especiallyfornothing.”

“Well,thefirststepistellingthetruth,”saidrichdad.
“Wehaven'tbeenlying.”Isaid.
“Ididnotsayyouwerelying.Isaidtotellthetruth,”richdadcame
back.
“Thetruthaboutwhat?”Iasked.
“How you're feeling,” rich dad said. “You don't have to say it to

anyoneelse.Justyourself.”

“Youmeanthepeopleinthispark,thepeoplewhoworkforyou,Mrs.

Martin,theydon'tdothat?”Iasked.

“I doubt it,” said rich dad. “Instead, they feel the fear of not having

money. Instead ofconfrontingthefear,theyreactinsteadofthink.They
reactemotionallyinsteadofusingtheirheads,”richdadsaid,tappingus
on our heads. “'Then, they get a few bucks intheir hands, and again the
emotion of joy and desire and greed take over, and again theyreact,
insteadofthink.”

“Sotheiremotionsdotheirthinking,”Mikesaid.
“That'scorrect,”saidrichdad."Insteadoftellingthetruthabouthow

theyfeel,theyreacttotheirfeeling,failtothink.Theyfeelthefear,they
go to work, hoping thatmoney will soothe the fear, but it doesn't. That
oldfearhauntsthem,andtheygobacktowork,hopingagainthatmoney
will calm their fears, and again it doesn't. Fear has themin this trap of
working,earningmoney,working,earningmoney,hopingthefearwillgo
away. But every day they get up, and that old fear wakes up with them.
Formillionsofpeople,thatoldfearkeepsthemawakeallnight,causing
anightofturmoilandworry.Sotheygetupandgotowork,hopingthata
paycheckwillkillthatfeargnawingattheirsoul.Moneyisrunningtheir
lives,andtheyrefusetotellthetruthaboutthat.

Moneyisincontroloftheiremotionsandhencetheirsouls."
Richdadsatquietly,lettinghiswordssinkin.MikeandIheardwhat

he said, but reallydid not understand fully what he was talking about. I
justknewthatIoftenwonderedwhygrownupshurriedofftowork.Itdid
notseemlikemuchfun,andtheyneverlookedthathappy,butsomething
keptthemhurryingofftowork.

Realizingwehadabsorbedasmuchaspossibleofwhathewastalking

about, rich dad said,“I want you boys to avoid that trap. That is really
whatIwanttoteachyou.Notjusttoberich,becausebeingrichdoesnot
solvetheproblem.”

“Itdoesn't?”Iasked,surprised.
“No, it doesn't. Let me finish the other emotion, which is desire.

Some call it greed, butI prefer desire. It is perfectly normal to desire
somethingbetter,prettier,morefunor exciting.Sopeoplealsoworkfor
moneybecauseofdesire.Theydesiremoneyforthejoytheythinkitcan
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 keepworking, thinking money will soothe their souls
thatistroubledbyfearanddesire.Butmoneycannotdothat.”

“Evenrichpeople?”Mikeasked.
“Richpeopleincluded,”saidrichdad.“Infact,thereasonmanyrich

peoplearerichisnotbecauseofdesirebutbecauseoffear.Theyactually
think that money can eliminatethat fear of not having money, of being
poor, so they amass tons of it only tofind out thefear gets worse. They
now fear losing it. I have friends who keep working even though they
haveplenty.Iknowpeoplewhohavemillionswhoaremoreafraidnow
thanwhentheywerepoor.They'reterrifiedoflosingalltheirmoney.The
fearsthatdrovethemtogetrichgotworse.Thatweakandneedypartof
their soul is actually screaming louder. They don'twant to lose the big
houses, the cars, the high life that money has bought them. Theyworry
aboutwhattheirfriendswouldsayiftheylostalltheirmoney.Manyare
emotionally desperate and neurotic, although they look rich and have
moremoney.”

“Soisapoormanhappier?”Iasked.
“No, I don't think so,” replied rich dad. “The avoidance of money is

justaspsychoticasbeingattachedtomoney.”

As if on cue, the town derelict went past our table, stopping by the

large rubbish can andrummaging around in it. The three of us watched
himwithgreatinterest,whenbeforeweprobablywouldhavejustignored
him.

Rich dad pulled a dollar out of his wallet and gestured to the older

man. Seeing themoney, the derelict came over immediately, took the
bill, thanked rich dad profusely andhurried off ecstatic with his good
fortune.

“He'snotmuchdifferentfrommostofmyemployees,”saidrichdad.

“I'vemetsomanypeoplewhosay,`Oh,I'mnotinterestedinmoney.'Yet
they'llworkatajobforeighthoursaday.That'sadenialoftruth.Ifthey
weren't interested in money, then why arethey working? That kind of
thinkingisprobablymorepsychoticthanapersonwhohoardsmoney.”

AsIsattherelisteningtomyrichdad,mymindwasflashingbackto

the countless timesmyowndadsaid,“I'mnotinterestedinmoney.”He
said those words often. He also coveredhimself by always saying, “I
workbecauseIlovemyjob.”

“Sowhatdowedo?”Iasked.“Notworkformoneyuntilalltracesof

fearandgreedaregone?”

“No, that would be a waste of time,” said rich dad. “Emotions are

whatmakeushuman.Makeusreal.Theword`emotion'standsforenergy
in motion. Be truthful about your emotions,and use your mind and
emotionsinyourfavor,notagainstyourself.”

“Whoa!”saidMike.
“Don'tworryaboutwhatIjustsaid.Itwillmakemoresenseinyears

tocome.justbeanobserver,notareactor,toyouremotions.Mostpeople
do not know that it's theiremotions that are doing the thinking. Your
emotions are your emotions, but you have got tolearn to do your own
thinking.”

“Canyougivemeanexample?”Iasked.
“Sure,”repliedrichdad.“Whenapersonsays,`Ineedtofindajob,'

it'smostlikelyanemotiondoingthethinking.Fearofnothavingmoney
generatesthatthought.”

“Butpeopledoneedmoneyiftheyhavebillstopay,”Isaid.
“Suretheydo,”smiledrichdad.“AllI'msayingisthatit'sfearthatis

all too oftendoing the thinking.” “I don't understand,” said Mike. “For
example,”saidrichdad."Ifthefearofnothavingenoughmoney

arises, instead of immediately running out to get a job so they can

earn a few bucks tokillthefear,theyinsteadmightaskthemselvesthis
question.`Willajobbethebestsolutiontothisfearoverthelongrun?'
In my opinion, the answer is `no.' Especiallywhen you look over a
person's lifetime. A job is really a short-term solution to a long-term
problem."

"But my dad is always saying, `Stay in school, get good grades, so

youcanfindasafe,securejob.'Ispokeout,somewhatconfused.

“Yes,Iunderstandhesaysthat,”saidrichdad,smiling.“Mostpeople

recommend that, andit's a good idea for most people. But people make
thatrecommendationprimarilyoutoffear.”

“Youmeanmydadsaysthatbecausehe'safraid?”
“Yes,” said rich dad. “He's terrified that you won't be able to earn

money and won't fitintosociety.Don'tgetmewrong.Helovesyouand
wantsthebestforyou.AndIthinkhisfearisjustified.Aneducationand
ajobareimportant.Butitwon'thandlethefear.You see,thatsamefear
thatmakeshimgetupinthemorningtoearnafewbucksisthefearthat
iscausinghimtobesofanaticalaboutyougoingtoschool.”

“Sowhatdoyourecommend?”Iasked.
“Iwanttoteachyoutomasterthepowerofmoney.Notbeafraidof

it.Andtheydon'tteachthatinschool.Ifyoudon'tlearnit,youbecomea
slavetomoney.”

Itwasfinallymakingsense.Hedidwantustowidenourviews.To.

see what Mrs. Martincouldnotsee,hisemployeescouldnotsee,ormy
dadforthatmatter.Heusedexamplesthatsoundedcruelatthetime,but
I'veneverforgottenthem.Myvisionwidenedthatday, andIcouldbegin
toseethetrapthatlayaheadformostpeople.

“You see, we're all employees ultimately. We just work at different

levels,”saidrichdad.“Ijustwantyouboystohaveachancetoavoidthe
trap.Thetrapcausedbythosetwoemotions,fearanddesire.Usethemin
your favor, not against you. That's what I wantto teach you. I'm not
interestedinjustteachingyoutomakeapileofmoney.Thatwon'thandle
the fear or desire. If you don't first handle fear and desire, and you get
rich,you'llonlybeahigh-paidslave.”

“Sohowdoweavoidthetrap?”Iasked.
“The main cause of poverty or financial struggle is fear and

ignorance, not the economy orthe government or the rich. It's
selfinflictedfearandignorancethatkeepspeopletrapped.Soyouboysgo
to school and get your college degrees. I'll teach you how to stayout of
thetrap.”

Thepiecesofthepuzzlewereappearing.Myhighlyeducateddadhad

a great education anda great career. But school never told him how to
handlemoneyorhisfears.ItbecameclearthatIcouldlearndifferentand
importantthingsfromtwofathers.

“So you've been talking about the fear of not having money. How

doesthedesireofmoneyaffectourthinking?”Mikeasked.

“How did you feel when I tempted you with a pay raise? Did you

noticeyourdesiresrising?”

Wenoddedourheads.
“By not giving in to your emotions, you were able to delay your

reactions and think. Thatis most important. We will always have
emotionsoffearandgreed.Fromhereonin,itismostimportantforyou
to use those emotions to your advantage and for the long term, andnot
simply let your emotions run you by controlling your thinking. Most
people use fearand greed against themselves. That's the start of
ignorance.Mostpeoplelivetheirliveschasingpaychecks,payraisesand
job security because of the emotions of desire and fear,not really
questioning where those emotion-driven thoughts are leading them. It's
justlikethepictureofadonkey,draggingacart,withitsownerdangling
a carrot just infront of the donkey's nose. The donkey's owner may be
going where he wants to go, but thedonkey is chasing an illusion.
Tomorrowtherewillonlybeanothercarrotforthedonkey.”

“You mean the moment I began to picture a new baseball glove,

candyandtoys,that'slikeacarrottoadonkey?”Mikeasked.

“Yeah.And as you get older, your toys get more expensive.A new

car,aboatandabighousetoimpressyourfriends,”saidrichdadwitha
smile. “Fear pushes you out the door,and desire calls to you. Enticing
youtowardtherocks.That'sthetrap.”

“Sowhat'stheanswer,”Mikeasked.
“What intensifies fear and desire is ignorance. That is why rich

people with lots of moneyoften have more fear the richer they get.
Money is the carrot, the illusion. If the donkeycould see the whole
picture,itmightrethinkitschoicetochasethecarrot.”

Richdadwentontoexplainthatahuman'slifeisastrugglebetween

ignoranceandillumination.

Heexplainedthatonceapersonstopssearchingforinformationand

knowledgeofone'sself,ignorancesetsin.Thatstruggleisamoment-to-
momentdecision-tolearntoopenorcloseone'smind.

“Look, school is very, very important. You go to school to learn a

skill or profession soas to be a contributing member of society. Every
culture needs teachers, doctors,mechanics, artists, cooks, business
people, police officers, firefighters, soldiers.Schools train them so our
culturecanthriveandflourish,”saidrichdad.“Unfortunately,for many
people,schoolistheend,notthebeginning.”

Therewasalongsilence.Richdadwassmiling.Ididnotcomprehend

everythinghesaidthatday.Butaswithmostgreatteachers,whosewords
continue to teach for years, oftenlong after they're gone, his words are
stillwithmetoday.

“I've been a little cruel today,” said rich dad. "Cruel for a reason. I

want you to alwaysremember this talk. I want you to always think of
Mrs.Martin.

Iwantyoualwaystothinkofthedonkey.Neverforget,becauseyour

two emotions, fearand desire, can lead you into life's biggest trap, if
you're not aware of them controllingyour thinking. To spend your life
living in fear, never exploring your dreams, is cruel.To work hard for
money,thinkingthatmoneywillbuyyouthingsthatwillmakeyouhappy
isalsocruel.Towakeupinthemiddleofthenightterrifiedaboutpaying
bills is ahorrible way to live. To live a life dictated by the size of a
paycheck is not really alife. Thinking that a job will make you feel
secureislyingtoyourself.That'scruel,andthat'sthetrapIwantyouto
avoid,ifpossible.I'veseenhowmoneyrunspeople'slives.Don'tletthat
happentoyou.Pleasedon'tletmoneyrunyourlife."

A softball rolled under our table. Rich dad picked it up and threw it

back.

“Sowhatdoesignorancehavetodowithgreedandfear?”Iasked.
“Becauseitisignoranceaboutmoneythatcausessomuchgreedand

somuchfear,”saidrichdad."Letmegiveyousomeexamples.Adoctor,
wantingmoremoneytobetterprovideforhisfamily,raiseshisfees.By
raisinghisfees,itmakeshealthcaremoreexpensiveforeveryone.Now,
ithurtsthepoorpeoplethemost,sopoorpeoplehaveworsehealththan
thosewithmoney.

"Because the doctors raise their rates, the attorneys raise their rates.

Because theattorneys' rates have gone up, schoolteachers want a raise,

whichraisesourtaxes,andonandonandon.Soon,therewillbesucha
horrifyinggapbetweentherichandthepoorthatchaoswillbreakoutand
another great civilization will collapse. Greatcivilizations collapsed
whenthegapbetweenthehavesandhavenotswastoogreat.Americais
onthesamecourse,provingonceagainthathistoryrepeatsitself,because
we do notlearn from history. We only memorize historical dates and
names,notthelesson.

“Aren'tpricessupposedtogoup?”Iasked.
“Not in an educated society with a well-run government. Prices

should actually come down.Of course, that is often only true in theory.
Prices go up because of greed and fearcaused by ignorance. If schools
taughtpeopleaboutmoney,therewouldbemoremoneyandlowerprices,
butschoolsfocusonlyonteachingpeopletoworkformoney,nothowto
harnessmoney'spower.”

“But don't we have business schools?” Mike asked. “Aren't you

encouragingmetogotobusinessschoolformymaster'sdegree?”

“Yes,” said rich dad. “But all too often, business schools train

employees who aresophisticated bean counters. Heaven forbid a bean
counter takes over a business. All theydo is look at the numbers, fire
peopleandkillthebusiness.IknowbecauseIhirebeancounters.Allthey
think about is cutting costs and raising prices, which cause more
problems.Beancountingisimportant.Iwishmorepeopleknewit,butit,
too,isnotthewholepicture,”addedrichdadangrily.

“Soisthereananswer?”askedMike.
“Yes,”saidrichdad.“Learntouseyouremotionstothink,notthink

with your emotions.When you boys mastered your emotions, first by
agreeing to work for free, I knew there washope. When you again
resistedyouremotionswhenItemptedyouwithmoremoney,youwere
againlearningtothinkinspiteofbeing emotionally charged. That's the
firststep.”

“Whyisthatstepsoimportant”Iasked.
“Well,that'suptoyoutofindout.Ifyouwanttolearn,I'lltakeyou

boys into thebriarpatch.Thatplacewherealmosteveryoneelseavoids.
I'll take you to that placewhere most people are afraid to go. If you go

withme,you'llletgooftheideaofworkingformoneyandinsteadlearn
tohavemoneyworkforyou.”

“Andwhatwillwegetifwegowithyou.Whatifweagreetolearn

from you? What will weget?” I asked. “The same thing Briar Rabbit
got,”saidrichdad.“FreedomfromtheTarBaby.”

“Isthereabriarpatch?”Iasked.
“Yes,”saidrichdad.“Thebriarpatchisourfearandourgreed.Going

intoourfearandconfrontingourgreed,ourweaknesses,ourneedinessis
the way out. And the way out isthrough the mind, by choosing our
thoughts.”

“Choosingourthoughts?”Mikeasked,puzzled.
“Yes. Choosing what we think rather than reacting to our emotions.

Insteadofjustgettingupandgoingtoworktosolveyourproblems,just
becausethefearofnothavingthemoneytopayyourbillsisscaringyou.
Thinkingwouldbetakingthetimetoaskyourselfaquestion.Aquestion
like, `Is working harder at this the best solution to this problem?'Most
people are so terrified at not telling themselves the truth-that fear is in
control-thattheycannotthink,andinsteadrunoutthedoor.Tarbabyisin
control.That'swhatImeanbychoosingyourthoughts.”

“Andhowdowedothat?”Mikeasked.
"That's what I will be teaching you. I'll be teaching you to have a

choice of thoughts toconsider, rather than knee-jerk reacting, like
gulpingdownyourmorningcoffeeandrunningoutthedoor.

“RememberwhatIsaidbefore:Ajobisonlyashort-termsolutionto

a long-term problem.Most people have only one problem in mind, and
it'sshortterm.It'sthebillsattheendofthemonth,theTarBaby.Money
nowrunstheirlives.OrshouldIsaythefearandignoranceaboutmoney.
Sotheydoastheirparentsdid,getupeverydayandgoworkformoney.
Not having the time to say, `Is there another way?' Their emotions now
controltheirthinking,nottheirheads.”

“Canyoutellthedifferencebetweenemotionsthinkingandthehead

thinking?”Mikeasked.

“Oh, yes. I hear it all the time,” said rich dad. “I hear things like,

`Well,everyonehastowork.'Or`Thericharecrooks.'Or`I'llgetanother

job. I deserve this raise. You can't push me around.' Or `I like this job
because it's secure.' Instead of, `Is theresomething I'm missing here?'
whichbreakstheemotionalthought,andgivesyoutimetothinkclearly.”

I must admit, it was a great lesson to be getting. To know when

someone was speaking outof emotions or out of clear thought. It was a
lesson that served me well for life.Especially when I was the one
speakingoutofreactionandnotfromclearthought.

Asweheadedbacktothestore,richdadexplainedthattherichreally

did “make money.”Theydidnotworkforit.Hewentontoexplainthat
whenMikeandIwerecasting5-centpiecesoutoflead,thinkingwewere
making money, we were very close to thinking the waythe rich think.
The problem was that it was illegal for us to do it. It was legal for the
government and banks to do it, but not us. He explained that there are
legalwaystomakemoneyandillegalways.

Rich dad went on to explain that the rich know that money is an

illusion, truly like thecarrot for the donkey. It's only out of fear and
greed that the illusion of money is heldtogether by billions of people
thinkingthatmoneyisreal.Moneyisreallymadeup.Itwasonlybecause
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 the
donkey'scarrotwasmorevaluablethanmoney.”

HetalkedaboutthegoldstandardthatAmericawason,andthateach

dollar bill wasactuallyasilvercertificate.Whatconcernedhimwasthe
rumor that we would someday gooff the gold standard and our dollars
wouldnolongerbesilvercertificates.

“Whenthathappens,boys,allhellisgoingtobreakloose.Thepoor,

the middle class andthe ignorant will have their lives ruined simply
because they will continue to believethat money is real and that the
companytheyworkfor,orthegovernment,willlookafterthem.”

We really did not understand what he was saying that day, but over

theyearsitmademoreandmoresense.

SeeingWhatOthersMiss
Asheclimbedintohispickuptruck,outsideofhislittleconvenience

store, he said,“Keep working boys, but the sooner you forget about

needing a paycheck, the easier youradult life will be. Keep using your
brain,workforfree,andsoonyourmindwillshowyouwaysofmaking
money far beyond what I could ever pay you. You will see things that
otherpeople never see. Opportunities right in front of their noses. Most
people never see theseopportunities because they're looking for money
andsecurity,sothat'salltheyget.Themomentyouseeoneopportunity,
youwillseethemfortherestof your life. The momentyoudothat,I'll
teachyousomethingelse.Learnthis,andyou'llavoidoneoflife'sbiggest
traps.You'llnever,ever,touchthatTarBaby.”

MikeandIpickedupourthingsfromthestoreandwavedgoodbyeto

Mrs. Martin. We went back to the park, to the same picnic bench, and
spentseveralmorehoursthinkingandtalking.

Wespentthenextweekatschool,thinkingandtalking.Fortwomore

weeks,wekeptthinking,talking,andworkingforfree.

AttheendofthesecondSaturday,IwasagainsayinggoodbyetoMrs.

Martin and lookingat the comic-book stand with a longing gaze. The
hard thing about not even getting 30cents every Saturday was that I
didn'thaveanymoneytobuycomicbooks.Suddenly,asMrs.Martinwas
saying goodbye to Mike and me, I saw something she was doing that I
hadnever seen her do before. I mean, I had seen her do it, but I never
tooknoticeofit.

Mrs.Martinwascuttingthefrontpageofthecomicbookinhalf.She

waskeepingthetophalfofthecomicbookcoverandthrowingtherestof
thecomicbookintoalargebrowncardboardbox.WhenIaskedherwhat
shedidwiththecomicbooks,shesaid,“Ithrowthemaway.Igivethetop
half of the cover back to the comic-book distributor for credit whenhe
bringsinthenewcomics.He'scominginanhour.”

Mike and I waited for an hour. Soon the distributor arrived and I

askedhimifwecouldhavethecomicbooks.Towhichhereplied,“You
canhavethemifyouworkforthisstoreanddonotresellthem.”

Our partnership was revived. Mike's mom had a spare room in the

basementthatnooneused.Wecleaneditout,andbeganpilinghundreds
of comic books in that room. Soon ourcomic-book library was open to
the public. We hired Mike's younger sister, who loved to study, to be

headlibrarian.Shechargedeachchild10centsadmissiontothelibrary,
which was open from 2:30 to 4:30 p.m. every day after school. The
customers,thechildrenoftheneighborhood,couldreadasmanycomics
astheycouldintwohours.Itwasabargainforthemsinceacomiccosts
10centseach,andtheycouldreadfiveorsixintwohours.

Mike's sister would check the kids as they left, to make sure they

weren't borrowing anycomicbooks.Shealsokeptthebooks,loggingin
how many kids showed up each day, whothey were, and any comments
theymighthave.MikeandIaveraged$9.50perweekoverathreemonth
period.Wepaidhissister$1aweekandallowedhertoreadthecomics
forfree,whichsherarelydidsinceshewasalwaysstudying.

Mike and F kept our agreement by working in the store every

Saturdayandcollectingallthecomicbooksfromthedifferentstores.We
keptouragreementtothedistributorbynotsellinganycomicbooks.We
burnedthemoncetheygottootattered.Wetriedopeninga branchoffice,
but we could never quite find someone as dedicated as Mike's sister we
couldtrust.

Atanearlyage,wefoundouthowharditwastofindgoodstaff.
Three months after the library first opened, a fight broke out in the

room. Some bulliesfromanotherneighborhoodpushedtheirwayinand
startedit.Mike'sdadsuggestedweshutdownthebusiness.Soourcomic-
book business shut down, and we stopped working onSaturdays at the
convenience store. Anyway, rich dad was excited because he had new
thingshewantedtoteachus.Hewashappybecausewehadlearnedour
first lesson so well. We had learned to have money work for us. By not
getting paid for our work at the store, wewere forced to use our
imaginations to identify an opportunity to make money. By startingour
own business, the comic-book library, we were in control of our own
finances, notdependent on an employer. The best part was that our
businessgeneratedmoneyforus,evenwhenweweren'tphysicallythere.
Ourmoneyworkedforus.Insteadofpayingusmoney,richdadhadgiven
ussomuchmore.

RichDad,PoorDad

CHAPTERTHREE

LessonTwo:WhyTeachFinancialLiteracy?
In1990,mybestfriend,Mike,tookoverhisfather'sempireandis,in

fact,doingabetterjobthanhisdaddid.Weseeeachotheronceortwice
a year on the golf course. Heand his wife are wealthier than you could
imagine.Richdad'sempireisingreathands,andMikeisnowgrooming
hissontotakehisplace,ashisdadhadgroomedus.

In 1994, I retired at the age of 47, and my wife, Kim, was 37.

Retirementdoesnotmeannotworking.Tomywifeandme,itmeansthat
barring unforeseen cataclysmic changes, wecan work or not work, and
ourwealthgrowsautomatically,stayingwayaheadofinflation.Iguessit
meansfreedom.Theassetsarelargeenoughto grow by themselves. It's
likeplanting a tree. You water it for years and then one day it doesn't
needyouanymore.It'srootshavegonedowndeepenough.Then,thetree
providesshadeforyourenjoyment.

MikechosetoruntheempireandIchosetoretire.
Whenever I speak to groups of people, they often ask what I would

recommendorwhatcouldtheydo?“Howdotheygetstarted?”“Istherea
good book I would recommend?” “What shouldtheydotopreparetheir
children?”“Whatisthesecrettosuccess?”“HowdoImakemillions?”I
amalwaysremindedofthisarticleIwasoncegiven.Itgoesasfollows.

THERICHESTBUSINESSMEN
In1923agroupofourgreatestleadersandrichestbusinessmenhelda

meeting at theEdgewater Beach hotel in Chicago. Among them were
CharlesSchwab,headofthelargestindependentsteelcompany;Samuel
Instill, president of the world's largest utility;Howard Hopson, head of
the largest gas company; Ivar Kreuger president of theInternational
Match Co., one of the world's largest companies at that time; Leon
Frazier,president of the Bank of International Settlements; Richard
Whitney,presidentoftheNewYorkStockExchange;ArthurCottonand
JesseLivermore,twoofthebiggeststockspeculators;andAlbertFall,a
member of President Harding's cabinet. Twenty five yearslater nine of

them(thoselistedabove)endedasfollows.Schwabdiedpennilessafter
living for five years on borrowed money. Instill died broke living in a
foreign land.Kreuger and Cotton also died broke. Hopson went insane.
Whitney and Albert Fall were justreleased from prison. Fraser and
Livermorecommittedsuicide.

Idoubtifanyonecansaywhatreallyhappenedtothesemen.Ifyou

look at the date,1923, it was just before the 1929 market crash and the
Great Depression, which I suspecthad a great impact on these men and
theirlives.Thepointisthis:Todayweliveintimesofgreaterandfaster
changethanthesemendid.Isuspecttherewillbemanyboomsandbusts
inthenext25yearsthatwillparalleltheupsanddownsthesemenfaced.
Iamconcernedthattoomanypeoplearefocusedtoomuchonmoneyand
nottheirgreatestwealth,whichistheireducation.Ifpeopleareprepared
to be flexible, keep an open mindand learn, they will grow richer and
richerthroughthechanges.Iftheythinkmoneywillsolveproblems,Iam
afraid those people will have a rough ride. Intelligence solvesproblems
andproducesmoney.Moneywithoutfinancialintelligenceismoneysoon
gone.

Mostpeoplefailtorealizethatinlife,it'snothowmuchmoneyyou

make,it'showmuchmoneyyoukeep.Wehaveallheardstoriesoflottery
winners who are poor, then suddenlyrich, then poor again. They win
millions and are soon back to where they started. Orstories of
professional athletes, who, at the age of 24, are earning millions of
dollarsayear,andaresleepingunderabridgebyage34.Inthepaperthis
morning,asIwritethis,thereisastoryofayoungbasketballplayerwho
a year ago had millions. Today, he claims his friends, attorney and
accountanttookhismoney,andnowheworksatacarwashforminimum
wage.

Heisonly29.Hewasfiredfromthecarwashbecauseherefusedto

takeoffhischampionshipringashewaswipingoffthecars,sohisstory
made the newspaper. He isappealinghistermination,claiminghardship
and discrimination and that the ring is allhe has left. He claims that if
youtakethataway,he'llcrumble.

In 1997, I know so many people who are becoming instant

millionaires. It's the Roaring'20s one more time.And while I am glad
peoplehavebeengettingricherandricher,Ionlycautionthatinthelong
run,it'snothowmuchyoumake,it'showmuchyoukeep,andhowmany
generationsyoukeepit.

Sowhenpeopleask,“WheredoIgetstarted?”or“Tellmehowtoget

richquick,”theyoftenaregreatlydisappointedwithmyanswer.Isimply
saytothemwhatmyrichdadsaidbacktomewhenIwasalittlekid.“If
youwanttoberich,youneedtobefinanciallyliterate.”

That idea was drummed into my head every time we were together.

As I said, my educated dadstressed the importance of reading books,
whilemyrichdadstressedtheneedtomasterfinancialliteracy.

IfyouaregoingtobuildtheEmpireStateBuilding,thefirstthingyou

need to do is diga deep hole and pour a strong foundation. If you are
goingtobuildahomeinthesuburbs,allyouneedtodoispoura6-inch
slabofconcrete.Mostpeople,intheirdrivetogetrich,aretryingtobuild
anEmpireStateBuildingona6-inchslab.

Our school system, having been created in the Agrarian Age, still

believes in homes withno foundation. Dirt floors are still the rage. So
kids graduate from school with virtuallyno financial foundation. One
day,sleeplessanddeepindebtinsuburbia,livingtheAmerican Dream,
theydecidethattheanswertotheirfinancialproblemsistofindawayto
getrichquick.

Construction on the skyscraper begins. It goes up quickly, and soon,

instead of the EmpireState Building, we have the Leaning Tower of
Suburbia.Thesleeplessnightsreturn.

As for Mike and me in our adult years, both of our choices were

possible because we weretaught to pour a strong financial foundation
whenwewerejustkids.

Now, accounting is possibly the most boring subject in the world. It

alsocouldbethemostconfusing.Butifyouwanttoberich,longterm,it
couldbethemostimportantsubject.Thequestionis,howdoyoutakea
boringandconfusingsubjectandteachittokids?Theansweris,makeit
simple.Teachitfirstinpictures.

My rich dad poured a strong financial foundation for Mike and me.

Sincewewerejustkids,hecreatedasimplewaytoteachus.Foryearshe
only drew pictures and used words. Mikeand I understood the simple
drawings, the jargon, the movement of money, and then in later years,
richdadbeganaddingnumbers.Today,Mikehasgoneontomastermuch
more complexandsophisticatedaccountinganalysisbecausehehashad
to. He has a billion-dollarempire to run. I am not as sophisticated
because my empire is smaller, yet we come fromthe same simple
foundation. In the following pages, I offer to you the same simple line
drawings Mike's dad created for us. Though simple, those drawings
helped guide two littleboys in building great sums of wealth on a solid
anddeepfoundation.

Rule One. 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 No. 1. It is the onlyrule. This may sound absurdly
simple, but most people have no idea how profound this ruleis. Most
people struggle financially because they do not know the difference
betweenanassetandaliability.

“Rich people acquire assets. The poor and middle class acquire

liabilities,buttheythinktheyareassets”

When rich dad explained this to Mike and me, we thought he was

kidding. Here we were,nearly teenagers and waiting for the secret to
gettingrich,andthiswashisanswer.Itwassosimplethatwehadtostop
foralongtimetothinkaboutit.

“Whatisanasset?”askedMike.
“Don't worry right now,” said rich dad. “Just let the idea sink in. If

you can comprehendthe simplicity, your life will have a plan and be
financiallyeasy.Itissimple;thatiswhytheideaismissed.”

“Youmeanallweneedtoknowiswhatanassetis,acquirethemand

we'llberich?”Iasked.

Richdadnoddedhishead.“It'sthatsimple.”
“Ifit'sthatsimple,howcomeeveryoneisnotrich?”Iasked.
Richdadsmiled."Becausepeopledonotknowthedifference
betweenanassetandaliability."
Irememberasking,“Howcouldadultsbesosilly.Ifitisthatsimple,

ifitisthatimportant,whywouldeveryonenotwanttofindout?”

It took our rich dad only a few minutes to explain what assets and

liabilitieswere.

As an adult, I have difficulty explaining it to other adults. Why?

Because adults aresmarter. In most cases, the simplicity of the idea
escapes most adults because they havebeen educated differently. They
have been educated by other educated professionals, suchas bankers,
accountants, real estate agents, financial planners, and so forth. The
difficulty comes in asking adults to unlearn, or become children again.
An intelligentadult often feels it is demeaning to pay attention to
simplisticdefinitions.

Rich dad believed in the KISS principle-“Keep It Simple Stupid”-so

he kept it simple fortwo young boys, and that made the financial
foundationstrong.

Sowhatcausestheconfusion?Orhowcouldsomethingsosimplebe

so screwed up? Why wouldsomeone buy an asset that was really a
liability.Theanswerisfoundinbasiceducation.

We focus on the word “literacy” and not “financial literacy.” What

defines something to bean asset, or something to be a liability are not
words. In fact, if you really want to beconfused, look up the words
“asset”and“liability”inthedictionary.Iknowthedefinitionmaysound
good to a trained accountant, but for the average person it makes no
sense.Butweadultsareoftentooproudtoadmitthatsomethingdoesnot
makesense.

Asyoungboys,richdadsaid,“Whatdefinesanassetisnotwordsbut

numbers. And if youcannot read the numbers, you cannot tell an asset
fromaholeintheground.”

“In accounting,” rich dad would say, "it's not the numbers, but what

thenumbersaretellingyou.It'sjustlikewords.It'snotthewords,butthe
storythewordsaretellingyou.

Many people read, but do not understand much. It's called reading

comprehension. And weall have different abilities when it comes to
reading comprehension. For example, Irecently bought a new VCR. It
came with an instruction book that explained how to programthe VCR.

All I wanted to do was record my favorite TV show on Friday night. I
nearlywentcrazytryingtoreadthemanual.Nothinginmyworldismore
complexthanlearninghowtoprogrammyVCR.Icouldreadthewords,
butIunderstoodnothing.Igetan“A”forrecognizingthewords.Igetan
“F” for comprehension.And so it is with financialstatements for most
people.

“Ifyouwanttoberich,you'vegottoreadandunderstandnumbers.”

IfIheardthatonce,Ihearditathousandtimesfrommyrichdad.AndI
alsoheard,“Therichacquireassetsandthepoorandmiddleclassacquire
liabilities.”

Here is how to tell the difference between an asset and a liability.

Most accountants andfinancial professionals do net agree with the
definitions, but these simple drawings werethe start of strong financial
foundationsfortwoyoungboys.

To teach pre?teen boys, rich dad kept everything simple, using as

manypicturesaspossible,asfewwordsaspossible,andnonumbersfor
years.

“ThisistheCashFlowpatternofanasset.”
+------------------------+
--------------->|Income|
||-------------------------
||Expense|
|+------------------------+
|
-----------------------------------+
|Assets|Liabilities|
|||
|_________|____________|
TheaboveboxisanIncomeStatement,oftencalledaProfitandLoss

Statement. Itmeasures income and expenses. Money in and money out.
ThebottomdiagramistheBalanceSheet.Itiscalledthatbecauseitis

supposedtobalanceassetsagainstliabilities.Manyfinancialnovices

don't know therelationship between the Income Statement and the
BalanceSheet.Thatrelationshipisvitaltounderstand.

The primary cause of financial struggle is simply not knowing the

differencebetweenanassetandaliability.Thecauseoftheconfusionis
found in the definition of the twowords. If you want a lesson in
confusion, simply look up the words “asset” and “liability”in the
dictionary.

Now it may make sense to trained accountants, but to the average

person,itmayaswellbewritteninMandarin.Youreadthewordsinthe
definition,buttruecomprehensionisdifficult.

So as I said earlier, my rich dad simply told two young boys that

“assetsputmoneyinyourpocket.”Nice,simpleandusable.

“ThisisCashFlowpatternofaliability.”
+------------------------+
|Income|
|-------------------------
|Expense|
+-----|\-------------------+
|\------------------------------>
---------------------------|--------+
|Assets|Liabilities|
|||
|_________|____________|
Nowthatassetsandliabilitieshavebeendefinedthroughpictures,it

maybeeasiertounderstandmydefinitionsinwords.

Anassetissomethingthatputsmoneyinmypocket.
Aliabilityissomethingthattakesmoneyoutofmypocket.
This is really all you need to know. If you want to be rich, simply

spend your life buyingassets. If you want to be poor or middle class,
spend your life buying liabilities. It'snot knowing the difference that
causesmostofthefinancialstruggleintherealworld.

Illiteracy, both in words and numbers, is the foundation of financial

struggle. If peoplearehavingdifficultiesfinancially,thereissomething
that they cannot read, either innumbers or words. Something is
misunderstood. The rich are rich because they are moreliterate in
differentareasthanpeoplewhostrugglefinancially.Soifyouwanttobe

richandmaintainyourwealth,it'simportanttobefinanciallyliterate,in
wordsaswellasnumbers.

Thearrowsinthediagramsrepresenttheflowofcash,or“cashflow.”

Numbersalonereallymeanlittle.Justaswordsalonemeanlittle.It'sthe
story that counts. Infinancial reporting, reading numbers is looking for
theplot,thestory.Thestoryofwherethecashisflowing.In80percent
ofmostfamilies,thefinancialstoryisastoryofworkinghardinaneffort
togetahead.Notbecausetheydon'tmakemoney.Butbecausetheyspend
theirlivesbuyingliabilitiesinsteadofassets.

Forinstance,thisisthecashflowpatternofapoorperson,orayoung

personstillathome:

Job (provides income)-> Expenses(Taxes Food Rent Clothes Fun

Transportation)

Asset(none)
Liability(none)
Thisisthecashflowpatternofapersoninthemiddleclass:
Job(providesincome)->Expenses(TaxesFoodMortgageClothesFun

Transportation)

Asset(none)
Liability(MortgageConsumerloansCreditCards)
Thisisthecashflowpatternofawealthyperson:
Assets(stocks bonds notes real estate intellectual property)->income

(dividendsinterestrentalincomeroyalties)

Liabilities(none)
All of these diagrams were obviously oversimplified. Everyone has

livingexpenses,theneedforfood,shelterandclothing.

Thediagramsshowtheflowofcashthroughapoor,middleclassor

wealthyperson'slife.Itisthecashflowthattellsthestory.Itisthestory
of how a person handles theirmoney, what they do after they get the
moneyintheirhand.

ThereasonIstartedwiththestoryoftherichestmeninAmericaisto

illustrate theflaw in the thinking of so many people. The flaw is that
money will solve all problems.That is why I cringe whenever 1 hear
people ask me how to get rich quicker. Or where dothey start? I often

hear,“I'mindebtsoIneedlomakemoremoney.”

But more money will often not solve the problem; in fact, it may

actually accelerate theproblem. Money often makes obvious our tragic
humanflaws.Moneyoftenputsaspotlightonwhatwedonotknow.That
iswhy,alltoooften,apersonwhocomesintoasuddenwindfallofcash-
let'ssayaninheritance,apayraiseorlotterywinnings-soonreturnstothe
samefinancialmess,ifnotworsethanthemesstheywereinbeforethey
received the money.Money only accentuates the cash flow pattern
runninginyourhead.Ifyourpatternistospendeverythingyouget,most
likelyanincreaseincashwilljustresultinanincreaseinspending.Thus,
the saying, “A fool and his money is one big party,” I have said many
timesthatwegotoschooltogainscholasticskillsandprofessionalskills,
bothimportant.Welearntomakemoneywithourprofessionalskills.In
the 1960s, when I wasin high school, if someone did well in school
academically, almost immediately peopleassumed this bright student
wouldgoontobeamedicaldoctor.Oftennooneaskedthechildifthey
wanted to be a doctor. It was assumed. It was the profession with the
promiseofthegreatestfinancialreward.

Today,doctorsarefacingfinancialchallengesIwouldnotwishonmy

worst enemy;insurance companies taking control of the business,
managed health care, governmentintervention, and malpractice suits, to
name a few. Today, kids want to be basketball stars, golfers like Tiger
Woods,computernerds,moviestare,rockstars,beautyqueens, ortraders
on Wall Street. Simply because that is where the fame, money and
prestige is.That is the reason it is so hard to motivate kids in school
today. They know thatprofessionalsuccessisnolongersolelylinkedto
academicsuccess,asitoncewas.

Because students leave school without financial skills, millions of

educated people pursuetheir profession successfully, but later find
themselvesstrugglingfinancially.Theyworkharder,butdon'tgetahead.
Whatismissingfromtheireducationisnothowtomakemoney,buthow
to spend money-what to do after you make it. It's called financial
aptitude-what you do with the money once you make it, how to keep
peoplefromtakingitfromyou,howlongyoukeepit,andhowhardthat

money works for you. Most people cannottell why they struggle
financially because they don't understand cash flow. A person can be
highly educated, professionally successful and financially illiterate.
These peopleoften work harder than they need to because they learned
howtoworkhard,butnothowtohavetheirmoneyworkforthem.

The story of bow the quest for a Financial Dream turns into a

financial nightmare. Themoving-picture show of hard-working people
has a set pattern. Recently married, the happy,highly educated young
couple move in together, in one of their cramped rented apartments.
Immediately, they realize that they are saving money because two can
liveascheaplyas

one.
Theproblemis,theapartmentiscramped.Theydecidetosavemoney

to buy their dreamhome so they can have kids. They now have two
incomes,andtheybegintofocusontheircareers.

Theirincomesbegintoincrease.
Astheirincomesgoup...theirexpensesgoupaswell.
The No. 1 expense for most people is taxes. Many people think it's

income tax, but formostAmericans their highest tax is Social Security.
As an employee, it appears as if theSocial Security tax combined with
the Medicare tax rate is roughly 7.5 percent, but it'sreally 15 percent
sincetheemployermustmatchtheSocialSecurityamount.Inessence,it
ismoneytheemployercannotpayyou.Ontopofthat,youstillhaveto
pay income tax onthe amount deducted from your wages for Social
Securitytax,incomeyouneverreceivebecauseitwentdirectlytoSocial
Securitythroughwithholding.Then,theirliabilitiesgoup.

This is best demonstrated by going back to the young couple. As a

resultoftheirincomesgoingup,theydecidetogooutandbuythehouse
oftheirdreams.Onceintheirhouse,theyhaveanewtax,calledproperty
tax.Then,theybuyanewcar,newfurnitureandnewappliancestomatch
[heir new house. Ail of a sudden, they wake up and their liabilities
columnisfullofmortgagedebtandcredit-carddebt.

They'renowtrappedintheratrace.Achildcomesalong.Theywork

harder. The processrepeats itself. More money and higher taxes, also

called bracket creep, A 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 clearoff the high-interest consumer debt by
paying off their credit card.And besides, interest ontheirhomeisatax
deduction. They go for it, and pay off those high-interest creditcards.
Theybreatheasighofrelief.Theircreditcardsarepaidoff.

They've now folded their consumer debt into their home mortgage.

Theirpaymentsgodownbecausetheyextendtheirdebtover30years.It
isthesmartthingtodo.

Theirneighborcallstoinvitethemtogoshopping-theMemorialDay

sale is on. A chance to save some money. They say to themselves, “I
won't buy anything. I'll just go look.” Butjust in case they find
something,theytuckthatcleancreditcardinsidetheirwallet.

I run into this young couple all the time. Their names change, but

theirfinancialdilemmaisthesame.Theycometooneofmytalkstohear
what I have to say. They ask me, “Canyou tell us how to make more
money?”Theirspendinghabitshavecausedthemtoseekmoreincome.

They don't even know that the trouble is really how they choose to

spendthemoneytheydohave,andthatistherealcauseoftheirfinancial
struggle. It is caused by financialilliteracy and not understanding the
differencebetweenanassetandaliability.

Moremoneyseldomsolvessomeone'smoneyproblems.Intelligence

solvesproblems,Thereisasayingafriendofminesaysoverandoverto
peopleindebt.

“Ifyoufindyouhavedugyourselfintoahole...stopdigging.”
Asachild,mydadoftentoldusthattheJapanesewereawareofthree

powers;“Thepowerofthesword,thejewelandthemirror.”

The sword symbolizes the power of weapons. America has spent

trillions of dollars onweapons and, because of this, is the supreme
militarypresenceintheworld.

The jewel symbolizes the power of money. There is some degree of

truth to the saying,“Remember the golden rule. He who has the gold

makestherules.”

The mirror symbolizes the power of self-knowledge. This self-

knowledge, according toJapanese legend, was the most treasured of the
three.

Thepoorandmiddleclassallloooftenallowthepowerofmoneyto

control them. Bysimply getting up and working harder, failing to ask
themselves if what they do makessense, they shoot themselves in the
foot as they leave for work every morning. By notfully understanding
nioney,thevastmajorityofpeopleallowtheawesomepowerofmoneyto
controlthem.Thepowerofmoneyisusedagainstthem.

If they used the power of the mirror, they would have asked

themselves, “Does this makesense?” All too often, instead of trusting
theirinnerwisdom,thatgeniusinsideofthem,mostpeoplegoalongwith
thecrowd.Theydothingsbecauseeverybodyelsedoesit.Theyconform
rather than question. Often, they mindlessly repeat what they have been
told.Ideassuchas“diversify”or“yourhomeisanasset.”“Yourhomeis
your biggestinvestment.” “You get a tax break for going into greater
debt.”“Getasafejob.”“Don'tmakemistakes.”“Don'ttakerisks.”

Itissaidthatthefearofpublicspeakingisafeargreaterthandeath

formostpeople.Accordingtopsychiatrists,thefearofpublicspeakingis
caused by the fear ofostracism, the fear of standing out, the fear of
criticism, the fear of ridicule, the fearof being an outcast. The fear of
being different prevents most people from seeking newways to solve
theirproblems.

That is why my educated dad said the Japanese valued the power of

themirrorthemost,foritisonlywhenweashumanslookintothemirror
dowefindtruth.Andthemainreasonthatmostpeoplesay"Playitsafe1'
is out of fear. That goes for anything, be it sports,relationships, career,
money.

It is that same fear, the fear of ostracism that causes people to

conformandnotquestioncommonlyacceptedopinionsorpopulartrends.
“Your home is an asset.” “Get a bill consolidation loan and get out of
debt.” “Work harder.” “It's a promotion.” “Someday I'll be a vice
president.” “Save money.” “When ! get a raise, I'll buy us a bigger

house.”“Mutualfundsaresafe.”“TickleMeElmodollsareoutofstock,
butIjusthappentohaveoneinbackthatanothercustomerhasnotcome
byforyet.”

Many great financial problems are caused by going along with the

crowdandtryingtokeepupwiththeJoneses.Occasionally,weallneed
to look in the mirror and be true to ourinner wisdom rather than our
fears.

BythetimeMikeandIwere16yearsold,webegantohaveproblems

in school. We were not bad kids. We just began to separate from the
crowd. We worked for Mike's dad after school and on the weekends.
MikeandIoftenspenthoursafterworkjustsittingatatablewithhisdad
whileheheldmeetingswithhisbankers,attorneys,accountants,brokers,
investors,managersandemployees.Herewasamanwhohadleftschool
attheageof13,nowdirecting,instructing,orderingandaskingquestions
ofeducatedpeople.Theycameathisbeckandcall,andcringedwhenhe
didnotapproveofthem.

Here was a man who had not gone along with the crowd. He was a

manwhodidhisownthinkinganddetestedthewords,“Wehavetodoit
thiswaybecausethat'sthewayeveryoneelsedoesit.”Healsohatedthe
word“can't.”Ifyouwantedhimtodosomething,justsay,"Idon'tthink

youcandoit."
MikeandIlearnedmoresittingathismeetingsthanwedidinallour

years of school,college included. Mike's dad was not school educated,
buthewasfinanciallyeducatedandsuccessfulasaresult.Heusetotell
usoverandoveragain.“Anintelligentpersonhirespeoplewhoaremore
intelligent than they are.” So Mike and I had the benefit ofspending
hourslisteningtoand,intheprocess,learningFrom

intelligentpeople.
Butbecauseofthis,bothMikeandIjustcouldnotgoalongwiththe

standard dogma thatour teachers preached, And that caused the
problems.Whenevertheteachersaid,“Ifyoudon'tgetgoodgrades,you
won't do well in the real world,” Mike and I just raised oureyebrows.
When we were told to follow set procedures and not deviate from the
rules, wecould see how this schooling process actually discouraged

creativity.Westartedto understandwhyourrichdadtoldusthatschools
weredesignedtoproducegoodemployeesinsteadofemployers.

OccasionallyMikeorIwouldaskourteachershowwhatwestudied

was applicable, or weasked why we never studied money and how it
worked. To the later question, we often gotthe answer that money was
not important, that if we excelled in our education, the moneywould
follow.

The more we knew about the power of money, the more distant we

grewfromtheteachersandourclassmates.

Myhighlyeducateddadneverpressuredmeaboutmygrades.Ioften

wonderedwhy.Butwedidbegintoargueaboutmoney.BythetimeIwas
16,Iprobablyhadafarbetterfoundationwithmoneythanbothmymom
and dad. I could keep books, I listened to taxaccountants, corporate
attorneys, bankers, real estate brokers, investors and so forth. Mydad
talkedtoteachers.

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
whyIthoughtahousewasnotagoodinvestment.

The following diagram illustrates the difference in perception

betweenmyrichdadandmypoordadwhenitcametotheirhomes.One
dad thought his house was an asset, and theother dad thought it was a
liability.

I remember when I drew a diagram for my dad showing him the

directionofcashflow.Ialsoshowedhimtheancillaryexpensesthatwent
alongwithowningthehome.Abiggerhome meantbiggerexpenses,and
thecashflowkeptgoingoutthroughtheexpensecolumn.

Today,Iamstillchallengedontheideaofahousenotbeinganasset.

And1knowthatformanypeople,itistheirdreamaswellastheirlargest
investment.Andowningyourownhomeisbetterthannothing.Isimply
offeranalternatewayoflookingatthispopulardogma.IfmywifeandI
were to buy a bigger, more flashy house we realize itwould not be an
asset,itwouldbea

liability,sinceitwouldtakemoneyoutof
ourpocket.

SohereistheargumentIputforth.Ireallydonotexpectmostpeople

to agree with itbecauseanicehomeisanemotionalthing.Andwhenit
comes to money, high emotions tendto lower financial intelligence. 1
know from personal experience that money has a way ofmaking every
decisionemotional.

1 .When it comes to houses, I point out that most people work all

theirlivespayingforahometheyneverown.Inotherwords,mostpeople
buyanewhouseeverysomanyyears,eachtimeincurringanew30-year
loantopayoffthepreviousone.

2 .Even though people receive a tax deduction for interest on

mortgage payments, they payfor all their other expenses with after-tax
dollars.Evenaftertheypayofftheirmortgage.

3.Propertytaxes.Mywife'sparentswereshockedwhentheproperty

taxes on their homewent to $1,000 a month. This was after they had
retired, so the increase put a strain ontheir retirement budget, and they
feltforcedtomove.

4 Houses do not always go up in value. In 1997, I still have friends

who owe a milliondollars for a home that will today sell for only
$700,000.

5.Thegreatestlossesofallarethosefrommissedopportunities.Ifall

your money istiedupinyourhouse,youmaybe forced to work harder
because your money continuesblowing out of the expense column,
insteadofaddingtotheassetcolumn,theclassicmiddleclasscashflow
pattern.Ifayoungcouplewouldputmoremoneyintotheirassetcolumn
earlyon,theirlateryearswouldgeteasier,especiallyastheypreparedto
sendtheirchildrentocollege.Theirassetswouldhavegrownandwould
beavailabletohelpcoverexpenses.Alltoooften,ahouseonlyservesas
avehicleforincurringahome-equityloantopayformountingexpenses.
In summary, the end result in making adecision to own a house that is
tooexpensiveinlieuofstartinganinvestmentportfolioearlyonimpacts
anindividualinatleastthefollowingthreeways:

1.Lossoftime,duringwhichotherassetscouldhavegrowninvalue.
2.Lossofadditionalcapital,whichcouldhavebeeninvestedinstead

ofpayingforhigh-maintenanceexpensesrelateddirectlytothehome.

3.Lossofeducation.Toooften,peoplecounttheirhouse,savingsand

retirementplanasalltheyhaveintheirassetcolumn.Becausetheyhave
no money to invest, they simply donot invest. This costs 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 thenturn around and sell them to the
people playing it safe. I am not saying don't buy ahouse. I am saying,
understandthedifferencebetweenanassetandaliability.WhenI wanta
biggerhouse,Ifirstbuyassetsthatwillgeneratethecashflowtopayfor
thehouse.

Myeducateddad'spersonalfinancialstatementbestdemonstratesthe

lifeofsomeoneintheratrace.Hisexpensesseemtoalwayskeepupwith
his income, never allowing him toinvest in assets. As a result, his
liabilities,suchashismortgageandcreditcarddebtsarelargerthanhis
assets.Thefollowingpictureisworthathousandwords:

EducatedDad'sFinancialStatement
Income=Expense
Asset<Liability
Myrichdad'spersonalfinancialstatement,ontheotherhand,reflects

theresultsofalifededicatedtoinvestingandminimizingliabilities:

RichDad'sFinancialStatement
Income>Expense
Asset>Liability
A review of my rich dad's financial statement is why the rich get

richer. The asset columngenerates more than enough income to cover
expenses, with the balance reinvested into theasset column. The asset
column continues to grow and, therefore, the income it producesgrows
withit.

Theresultbeing:Therichgetricher!
WhytheRichGetRicher
Income ->Assets -> More Income Expenses are low, Liabilities are

low

Themiddleclassfindsitselfinaconstantstateoffinancialstruggle.

Their primary-incomeisthroughwages,andastheirwagesincrease,so
do their taxes. Their expensestend to increase in equal increments as
their wages increase; hence the phrase “the ratrace.” They treat their
home as their primary asset, instead on investing inincome-producing
assets.

WhytheMiddleClassStruggle
Incomegoesup,Expensesgoup
Assetsdonotincrease,Liabilitiesdoincrease
This pattern of treating your home as an investment and the

philosophy that a pay raisemeans you can buy a larger home or spend
more is the foundation of today's debt-riddensociety. This process of
increased spending throws families into greater debt and intomore
financial uncertainty, even though they may be advancing in their jobs
andreceivingpayraisesonaregularbasis.Thisishighrisklivingcaused
byweakfinancialeducation.

Themassivelossofjobsinthe1990s-thedownsizingofbusinesses-

has brought to lighthow shaky the middle class really is financially.
Suddenly, company pension plans arebeing replaced by 401k plans.
Social Security is obviously in trouble and cannot be lookedat as a
source for retirement. Panic has sei in for the middle class. The good
thingtodayisthatmanyofthesepeoplehaverecognizedtheseissuesand
have begun buying mutualfunds. This increase in investing is largely
responsible for the huge rally we have seenin the stock market. Today,
there are more and more mutual funds being created to answerthe
demandbythemiddleclass.

Mutual funds are popular because they represent safety. Average

mutual fund buyers are toobusy working to pay taxes and mortgages,
save for their children's college and pay offcredit cards. They do not
havetimetostudytolearnhowtoinvest,sotheyrelyontheexpertiseof
the manager of a mutual fund. Also, because the mutual fund includes
m a n ydifferent types of investments, they feel their money is safer
becauseiiis“diversified.”

This group of educated middle class subscribes to the “diversify”

dogma put out by mutualfund brokers and financial planners. Play it

safe.Avoidrisk.

The real tragedy is that the lack of early financial education is what

creates the riskfaced by average middle class people. The reason they
havetoplayitsafeisbecausetheirfinancialpositionsaretenuousatbest.
Their balance sheets are not balanced. Theyare loaded with liabilities,
with no real assets that generate income. Typically, their only source of
incomeistheirpaycheck.Theirlivelihoodbecomesentirelydependenton
theiremployer.

Sowhengenuine“dealsofalifetime”comealong,thosesamepeople

cannottakeadvantageoftheopportunity.Theymustplayitsafe,simply
because they are working so hard, aretaxed to the max, and are loaded
withdebt.

As I said at the start of this section, the most important rule is to

knowthedifferencebetweenanassetandaliability.Onceyouunderstand
the difference, concentrate yourefforts on only buying income-
generatingassets.That'sthebestwaytogetstartedonapathtobecoming
rich.Keepdoingthat,andyourassetcolumnwillgrow.Focusonkeeping
liabilities and expenses down. This will make more money available to
continue pouringinto the asset column. Soon, the asset base will be so
deep that you can afford to look atmore speculative investments.
Investmentsthatmayhavereturnsof100percenttoinfinity.Investments
thatfor$5,000aresoonturnedinto$1millionormore.Investmentsthat
the middle class calls “too risky.” The investment is not risky. It's the
lack ofsimple financial intelligence, beginning with financial literacy,
thatcausestheindividualtobe“toorisky,”

Ifyoudowhatthemassesdo,yougetthefollowingpicture.
Income=WorkforOwnerExpense=WorkforGovernmentAsset=

(none)Liability=WorkforBank

As an employee who is also a homeowner, your working efforts are

generallyasfollows:

1.Youworkforsomeoneelse.Mostpeople,workingforapaycheck,

are making the owner,or the shareholders richer. Your efforts and
successwillhelpprovidefortheowner'ssuccessandretirement.

2.Youworkforthegovernment.Thegovernmenttakesitssharefrom

your paycheck beforeyou even see it. By working harder, you simply
increasetheamountoftaxestakenbythegovernment-mostpeoplework
fromJanuarytoMayjustforthegovernment.

3 .You work for the bank.After taxes, your next largest expense is

usuallyyourmortgageandcreditcarddebt.

The problem with simply working harder is that each of these three

levels takes a greatershare of your increased efforts.You need to learn
howtohaveyourincreasedeffortsbenefityouandyourfamilydirectly.

Onceyouhavedecidedtoconcentrateonmindingyourownbusiness,

how do you set yourgoals? For most people, they must keep their
professionandrelyontheirwagestofundtheiracquisitionofassets.

Astheirassetsgrow,howdotheymeasuretheextentoftheirsuccess?

Whendoessomeonerealizethattheyarerich,thattheyhavewealth?As
well as having my own definitionsfor assets and liabilities, I also have
myowndefinitionforwealth.ActuallyIborroweditfromamannamed
BuckminsterFuller.Somecallhimaquack,andotherscallhimaliving
genius.Yearsagohegotallthearchitectsbuzzingbecauseheappliedfor
a patentin 1961 for something called a geodesic dome. But in the
application, Fuller also saidsomething about wealth. It was pretty
confusingatfirst,butafterreadingitforawhile,itbegantomakesome
sense: Wealth is a person's ability to survive so many number of days
forward...orifIstoppedworkingtoday,howlongcouldIsurvive?

Unlike net worth-the difference between your assets and liabilities,

whichisoftenfilledwithaperson'sexpensivejunkandopinionsofwhat
things are worth-this definitioncreates the possibility for developing a
trulyaccuratemeasurement.Icouldnowmeasureandreallyknowwhere
Iwasintermsofmygoaltobecomefinanciallyindependent.

Although net worth often includes these non-cash-producing assets,

like stuff you boughtthatnowsitsinyourgarage,wealthmeasureshow
much money your money is making and,therefore, your financial
survivability.

Wealth is the measure of the cash flow from the asset column

comparedwiththeexpensecolumn.

Let's use an example. Let's say I have cash flow from my asset

column of S"J,000 a month.And I have monthly expenses of 52,000.
Whatismywealth?

Let'sgobacktoBuckminsterFuller'sdefinition.Usinghisdefinition,

howmanydaysforwardcanIsurvive?Andlet'sassumea30-daymonth.
Bythatdefinition,Ihaveenoughcashflowforhalfamonth.

WhenIhaveachieved$2,000amonthcashflowfrommyassets,then

Iwillbewealthy.

SoIamnotyetrich,butIamwealthy.Inowhaveincomegenerated

from assets each monththatfullycovermymonthlyexpenses.IfIwant
to increase my expenses, I first mustincreasemycashflowfromassets
tomaintainthislevelofwealth.TakenoticethatitisatthispointthatI
no longer am dependent on my wages. I have focused on and been
successful in building an asset column that has made me financially
independent.IfIquitmyjobtoday,Iwouldbeabletocovermymonthly
expenseswiththecashflowfrommyassets.

Mynextgoalwouldbetohavetheexcesscashflowfrommyassets

reinvestedintotheassetcolumn.Themoremoneythatgoesintomyasset
column,themoremyassetcolumngrows.Themoremyassetsgrow,the
moremycashflowgrows.AndaslongasIkeepmyexpenses less than
thecashflowfromtheseassets,Iwillgrowricher,withmoreandmore
incomefromsourcesotherthanmyphysicallabor.

Asthisreinvestmentprocesscontinues,Iamwellonmywaytobeing

rich. The actualdefinitionofrichisintheeyeofthebeholder.Youcan
neverbetoorich.

Justrememberthissimpleobservation:Therichbuyassets.Thepoor

only have expenses.The middle class buys liabilities they think are
assets.SohowdoIstartmindingmyownbusiness?Whatistheanswer?
ListentothefounderofMcDonald's.

RichDad,PoorDad

CHAPTERFOUR

LessonThree:MindYourOwnBusiness
In1974,RayKroc,thefounderofMcDonald's,wasaskedtospeakto

the MBA class at theUniversity of Texas at Austin. A dear friend of
mine, Keith Cunningham, was a student inthat MBA class. After a
powerful and inspiring talk, the class adjourned and the studentsasked
Rayifhewouldjointhemattheirfavoritehangouttohaveafewbeers.
Raygraciouslyaccepted.

“What business am I in?” Ray asked, once the group had all their

beersinhand.

“Everyonelaughed,”saidKeith.“MostoftheMBAstudentsthought

Raywasjustfoolingaround.”

Nooneanswered,soRayaskedthequestionagain.“Whatbusinessdo

youthinkI'min?”

The students laughed again, and finally one brave soul yelled out,

“Ray, who in the worlddoes not know that you're in the hamburger
business.”

Raychuckled.“ThatiswhatIthoughtyouwouldsay.”Hepausedand

then quickly said,'ladies and gentlemen, I'm not in the hamburger
business.Mybusinessisrealestate."

Keith said that Ray spent a good amount of time explaining his

viewpoint. In theirbusiness plan, Ray knew that the primary business
focus was to sell hamburger franchises,but what he never lost sight of
was the location of each franchise. He knew that the realestate and its
locationwasthemostsignificantfactorinthesuccessofeachfranchise.
Basically, the person that bought the franchise was also paying for,
buying,thelandunderthefranchiseforRayKroc'sorganization.

McDonald's today is the largest single owner of real estate in the

world, owning even morethan the Catholic Church. Today, McDonald's
owns some of the most valuable intersectionsand street corners in
America,aswellasinotherpartsoftheworld.

Keithsaiditwasoneofthemostimportantlessonsinhislife.Today,

Keithownscarwashes,buthisbusinessistherealestateunderthosecar
washes.

The previous chapter ended with the diagrams illustrating that most

people work foreveryone else but themselves. They work first for the
owners of the company, then for thegovernment through taxes, and
finallyforthebankthatownstheirmortgage.

Asayoungboy,wedidnothaveaMcDonald'snearby.Yet,myrich

dad was responsible forteachingMikeandmethesamelessonthatRay
KroctalkedaboutattheUniversityofTexas.ItissecretNo.3oftherich.

The secret is: "Mind your own business/' Financial struggle is often

directlytheresultofpeopleworkingalltheirlifeforsomeoneelse.Many
peoplewillhavenothingattheendoftheirworkingdays.

Again,apictureisworthathousandwords.Hereisadiagramofthe

income statement andbalance sheet that best describes Ray Kroc's
advice:

Mostpeople
YourProfession->YourIncome
TheRich
YourAssets->YourIncome
Ourcurrenteducationalsystemfocusesonpreparingtoday'syouthto

get good jobs bydeveloping scholastic skills. Their lives will revolve
around their wages, or as describedearlier, their income column. And
afterdevelopingscholasticskills,theygoontohigherlevelsofschooling
to enhance their professional abilities. They study to becomeengineers,
scientists, cooks, police officers, artists, writers and so on. These
professional skills allow them to enter the workforce and work for
money.

Thereisabigdifferencebetweenyourprofessionandyourbusiness.

OftenIaskpeople,“Whatisyourbusiness?”Andtheywillsay,“OhI'ma
banker.”ThenIaskthemiftheyownthebank?Andtheyusuallyrespond.
“No,Iworkthere.”

In that instance, they have confused their profession with their

business. Theirprofessionmaybeabanker,buttheystillneedtheirown
business. Ray Kroc was clear onthe difference between his profession

and his business. His profession was always thesame. Me was a
salesman.Atonetimehesoldmixersformilkshakes,andsoonthereafter
hewassellinghamburgerfranchises-Butwhilehisprofessionwasselling
hamburgerfranchises, his business was the accumulation of income-
producingrealestate.

Aproblemwithschoolisthatyouoftenbecomewhatyoustudy.Soif

you study, say, cooking, you become a chef. If you study the law, you
become an attorney, and a study ofauto mechanics makes you a
mechanic. The mistake in becoming what you study is that toomany
peopleforgettomindtheirownbusiness.Theyspendtheirlivesminding
someoneelse'sbusinessandmakingthatpersonrich.

To become financially secure, a person needs to mind their own

business.Yourbusinessrevolvesaroundyourassetcolumn,asopposedto
your income column. As stated earlier, the No. 1 rule is to know the
difference between an asset and a liability, and to buy assets. The rich
focusontheirassetcolumnswhileeveryoneelsefocusesontheirincome
statements.

That is why we hear so often: “I need a raise.” “If only I had a

promotion.” “I am goingto go back to school to get more training so I
cangetabetterjob.”“Iamgoingtoworkovertime.”“MaybeIcangeta
secondjob.”“I'mquittingintwoweeks.Ifoundajobthatpaysmore.”

In some circles, these are sensible ideas. Yet, if you listen to Ray

Kroc, you are stillnot minding your own business. These ideas all still
focus on the income column and willonly help a person become more
financially secure if the additional money is used topurchase income-
generatingassets.

The primary reason the majority of the poor and middle class are

fiscallyconservative-which means. “I can't afford to take risks”-is that
theyhavenofinancialfoundation.Theyhavetoclingtotheirjobs.They
havetoplayitsafe.

Whendownsizingbecamethe“in”thinglodo,millionsofworkers|

foundouttheirlargestso-calledasset,theirhome,waseatingthemalive,
j Their asset, called a house, stillcost them money every month. Their
car,another“asset,”waseatingthemalive.Thegolfclubsinthegarage

that cost $1,000 were not worth 51,000 anymore. Without job security,
theyhadnothingtofallbackon.Whattheythoughtwereassetscouldnot
helpthemsurviveinatimeoffinancialcrisis.

1assumemostofushavefilledoutacreditapplicationforabanker

tobuyahouseortobuyacar.Itisalwaysinterestingtolookatthe"net
worth'1 section. It is interestingbecause of what accepted banking and
accountingpracticesallowapersontocountasassets.

Oneday,togetaloan,myfinancialpositiondidnotlooktoogood.So

I added my newgolf clubs, my art collection, books, stereo, television,
Armanisuits,wristwatches,shoesandotherpersonaleffectstoboostthe
numberintheassetcolumn.

But I was turned down for the loan because I had too much

investment real estate. The loancommittee did not like that 1 made so
muchmoneyoffofapartmenthouses.TheywantedtoknowwhyIdidnot
haveanormaljob,withasalary.TheydidnotquestiontheArmani suits,
golfclubsorartcollection.Lifeissometimestoughwhenyoudonotfit
the“standard”profile.

IcringeeverytimeIhearsomeonesaytomethattheirnetworthisa

milliondollarsor$100,000dollarsorwhatever.Oneofthemainreasons
networthisnotaccurateissimplybecausethemomentyoubeginselling
yourassets,youaretaxedforanygains.

So many people have put themselves in deep financial trouble when

theyrunshortofincome.Toraisecash,theyselltheirassets.First,their
personalassetscangenerallybesoldforonlyafractionofthevaluethat
islistedintheirpersonalbalancesheet.Orifthereisagainonthesaleof
theassets,theyaretaxedonthegain.Soagain,thegovernmenttakesits
shareofthegain,thusreducingtheamountavailabletohelpthemout

Ofdebt.ThatiswhyIsaysomeone'snetworthisoften“worthless”

thantheythink.

Start minding your own business. Keep your daytime job, but start

buying real assets, notliabilities or personal effects that have no real
valueonceyougetthemhome.Anewcar losesnearly25percentofthe
price you pay for it the moment you drive it off the lot.It is not a true
asset even if your banker lets you list it as one. My $400 new titanium

driverwasworthS150themomentIteedoff.

For adults, keep your expenses low, reduce your liabilities and

diligentlybuildabaseofsolidassets.Foryoungpeoplewhohavenotyet
lefthome,itisimportantforparentstoteachthemthedifferencebetween
an asset and a liability. Get them to start building asolid asset column
beforetheyleavehome,getmarried,buyahouse,havekidsandgetstuck
in a risky financial position, clinging to a job and buying everything on
credit.Iseesomanyyoungcoupleswhogetmarriedandtrapthemselves
into a lifestyle that willnot let them get out of debt for most of their
workingyears.

Formostpeople,justasthelastchildleaveshome,theparentsrealize

they have notadequately prepared for retirement and they begin to
scramble to put some money away.Then, their own parents become ill
andtheyfindthemselveswithnewresponsibilities.

So what kind of assets am I suggesting that you or your children

acquire?Inmyworld,realassetsfallintoseveraldifferentcategories:

1. Businesses that do not require my presence. I own them, but they

are managed or run byother people. If I have to work there, it's not a
business.Itbecomesmyjob.

?.Stocks.
?.Bonds.
?.Mutualfunds.
?.Income-generatingrealestate.
?.Notes(lOUs).
?.Royaltiesfromintellectualpropertysuchasmusic,scripts,patents.
?.8.Andanythingelsethathasvalue,producesincomeorappreciates

andhasareadymarket.

As a young boy, my educated dad encouraged me to find a safe job.

Myrichdad,ontheotherhand,encouragedmetobeginacquiringassets
thatIloved.“Ifyoudon'tloveit,youwon'ttakecareofit.”Icollectreal
estatesimplybecauseIlovebuildingsandland.Iloveshoppingforthem.
1couldlookatthemalldaylong.Whenproblemsarise,theproblemsare
not so bad that it changes my love for real estate. For people who hate
realestate,theyshouldn'tbuyit.

I love stocks of small companies, especially startups. The reason is

that I am anentrepreneur, not a corporate person. In my early years. I
worked in large organizations, such as Standard Oil of California, the
U.S. Marine Corps, and Xerox Corp. I enjoyed mytime with those
organizationsandhavefondmemories,butIknowdeepdownIamnota
companyman.Ilikestartingcompanies,notrunningthem.Somyslock
buys are usually ofsmall companies, and sometimes I even start the
companyandtakeitpublic.Fortunesaremadeinnew-stockissues,andI
love the game. Many people are afraid of small-capcompanies and call
themrisky,andtheyare.Butriskisalwaysdiminishedifyoulovewhat
the investment is, understand it and know the game. With small
companies,myinvestmentstrategyistobeoutofthestockinayear.My
real estate strategy, on theotherhand,istostartsmallandkeeptrading
the properties up for bigger propertiesand, therefore, delaying paying
taxes on the gain. This allows the value to increasedramatically. I
generallyholdrealestatelessthansevenyears.

For years, even while I was with the Marine Corps and Xerox, I did

whatmyrichdadrecommended.Ikeptmydaytimejob,butIstillminded
my own business. I was active in myasset column. I traded real estate
and small stocks. Rich dad always stressed theimportance of financial
literacy. The better I was at understanding the accounting andcash
management, the better I would be at analyzing investments and
eventuallystartingandbuildingmyowncompany.

I would not encourage anyone to start a company unless they really

want to. Knowing what Iknow about running a company, I would not
wish that task on anyone. There are times whenpeople cannot find
employment,wherestartingacompanyisasolutionforthem.Theodds
areagainstsuccess:Nineoutof10companiesfailinfiveyears.Ofthose
that survivethefirstfiveyears,nineoutofevery10ofthoseeventually
fail, as well. So only ifyou really have the desire to own your own
companydoIrecommendit.Otherwise,keepyourdaytimejobandmind
yourownbusiness.WhenIsaymindyourownbusiness,1meantobuild
andkeepyourassetcolumnstrong.Onceadollargoesintoit,neverletit
comeout.Thinkofitthisway,onceadollargoesintoyourassetcolumn,

itbecomesyouremployee.Thebestthingaboutmoneyisthatitworks24
hours a day and can work for generations.Keep your daytime job, be a
greathard-workingemployee,butkeepbuildingthatassetcolumn.

As your cash flow grows, you can buy some luxuries.An important

distinctionisthatrichpeoplebuyluxurieslast,whilethepoorandmiddle
classtendtobuyluxuriesfirst.Thepoorandthemiddleclassoftenbuy
luxuryitemssuchasbighouses,diamonds,furs,jewelryorboatsbecause
theywanttolookrich.Theylookrich,butinrealitytheyjustget deeper
in debt on credit. The old-money people, the long-term rich, built their
assetcolumn first. Then, the income generated from the asset column
bought their luxuries. Thepoorandmiddleclassbuyluxurieswiththeir
ownsweat,bloodandchildren'sinheritance.

Atrueluxuryisarewardforinvestinginanddevelopingarealasset.

For example, whenmy wife and I had extra money coming from our
apartmenthouses,shewentoutandboughtherMercedes.Itdidnottake
anyextraworkorriskonherpartbecausetheapartmenthouseboughtthe
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 topay for the car. But the luxury, the Mercedes, was a
true reward because she had provedshe knew how to grow her asset
column.Thatcarnowmeansalotmoretoherthansimplyanotherpretty
car.Itmeanssheusedherfinancialintelligencetoaffordit.

Whatmostpeopledoistheyimpulsivelygooutandbuyanewcar,or

some other luxury, oncredit. They may feel bored and just want a new
toy. Buying a luxury on credit oftencauses a person to sooner or later
actually resent that luxury because the debt on theluxury becomes a
financialburden.

After you've taken the time and invested in and built your own

business,youarenowreadytoaddthemagictouch-thebiggestsecretof
therich.Thesecretthatputstherichwayaheadofthepack.Thereward
at the end of the road for diligently taking the time tomind your own
business.

RichDad,PoorDad

CHAPTERFIVE

LessonFour:TheHistoryofandThePowerofCorporation
I remember in school being told the story of Robin Hood and his

Merry Men. Myschoolteacher thought it was a wonderful story of a
romantichero,aKevinCostnertype,whorobbedfromtherichandgave
to the poor. My rich dad did not see Robin Hood as ahero. He called
RobinHoodacrook.

RobinHoodmaybelonggone,buthisfollowersliveon.HowoftenI

stillhearpeoplesay,“Whydon'ttherichpayforit?”Or“Therichshould
paymoreintaxesandgiveittothepoor.”

It is this idea of Robin Hood, or taking from the rich to give to the

poorthathascausedthemostpainforthepoorandthemiddleclass.The
reasonthemiddleclassissoheavilytaxedisbecauseoftheRobinHood
ideal.Therealrealityisthatthericharenottaxed.It'sthemiddleclass
who pays for the poor, especially the educated upper-income middle
class.

Again,tounderstandfullyhowthingshappen,weneedtolookatthe

historicalperspective.Weneedtolookatthehistoryoftaxes.Although
my highly educated dad wasan expert on the history of education, my
richdadfashionedhimselfasanexpertonthehistoryoftaxes.

Rich dad explained to Mike and me that in England and America

originally,therewerenotaxes.Occasionallythereweretemporarytaxes
levied in order to pay for wars. The kingor the president would put the
wordoutandaskeveryoneto“chipin.”TaxeswereleviedinBritainfor
thefightagainstNapoleonfrom1799to1816,andinAmericataxeswere
leviedtopayfortheCivilWarfrom1861to1865.

In 1874, England made income tax a permanent levy on its citizens.

In 1913, an income taxbecame permanent in the United States with the
adoption of the 16th Amendment to theConstitution. At one time,
Americanswereanti-tax.Ithadbeentheexcessivetaxonteathatledto
thefamousTeaPartyinBostonHarbor,anincidentthathelpedignitethe
RevolutionaryWar.Ittookapproximately50yearsinbothEnglandand'•

theUnitedStatestoselltheideaofaregularincometax.;

What these historical dates fail to reveal is that both of these taxes

were initiallyleviedagainstonlytherich.Itwasthispointthatrichdad
wanted Mike and me tounderstand. He explained that the idea of taxes
wasmadepopular,andacceptedbythemajority,bytellingthepoorand
the middle class that taxes were created only to punishthe 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 it wound up
punishingtheverypeoplewhovotedforit,thepoorandmiddleclass.

“Oncegovernmentgotatasteofmoney,theappetitegrew,”saidrich

dad.“YourdadandI areexactlyopposite.He'sagovernmentbureaucrat,
and I am a capitalist. We get paid, and our success is measured on
opposite behaviors. He gets paid to spend money and hirepeople. The
morehespendsandthemorepeoplehehires,thelargerhisorganization
becomes. In the government, the larger his organization, the more he is
respected.Ontheotherhand,withinmyorganization,thefewerpeopleI
hireandthelessmoneyIspend,themoreIamrespectedbymyinvestors.
That'swhyIdon'tlikegovernmentpeople.Theyhavedifferentobjectives
frommostbusinesspeople.Asthegovernmentgrows,moreandmoretax
dollarswillbeneededtosupportit.”

Myeducateddadsincerelybelievedthatgovernmentshouldhelp
people.HelovedJohnF.KennedyandespeciallytheideaofthePeace

Corps. He loved theideasomuchthatbothheandmymomworkedfor
the Peace Corps training volunteers to goto Malaysia, Thailand and the
Philippines. He always strived for additional grants andincreases in his
budgetsohecouldhiremorepeople,bothinhisjobwiththeEducation
DepartmentandinthePeaceCorps.Thatwashisjob.

From the time I was about 10 years old, I would hear from my rich

dad that governmentworkers were a pack of lazy thieves, and from my
poor dad I would hear how the rich weregreedy crooks who should be
madetopaymoretaxes.Bothsideshavevalidpoints.Itwasdifficult to
gotoworkforoneofthebiggestcapitalistsintownandcomehometoa
fatherwhowasaprominentgovernmentleader.Itwasnoteasyknowing
whotobelieve.

Yet, when you study the history of taxes, an interesting perspective

emerges. As I said, the passage of taxes was only possible because the
masses believed in the Robin Hoodtheory of economics, which was to
take from the rich and give to everyone else. Theproblem was that the
government's appetite for money was so great that taxes soon neededto
beleviedonthemiddleclass,andfromthereitkept“tricklingdown.”

Therich,ontheotherhand,sawanopportunity.Theydonotplayby

the same set ofrules. As I've stated, the rich already knew about
corporations,whichbecamepopularinthedaysofsailingships.Therich
createdthecorporationasavehicletolimittheirrisktotheassetsofeach
voyage. The rich put their money into a corporation to financethe
voyage.ThecorporationwouldthenhireacrewtosailtotheNewWorld
tolookfortreasures.Iftheshipwaslost,thecrewlosttheirlives,butthe
losstotherichwouldbelimitedonlytothemoneytheyinvestedforthat
particular voyage. The diagram thatfollows shows how the corporate
structuresitsoutsideyourpersonalincomestatementandbalancesheet.

HowtheRichPlaytheGame
Isreduced/diminishedbyexpensesAssets--------------------------------

---------------->Income(throughpersonalcorporation)

It is the knowledge of the power of the legal structure of the

corporation that reallygivestherichavastadvantageoverthepoorand
themiddleclass.Havingtwofathersteachingme,oneasocialistandthe
other a capitalist, I quickly began to realize thatthe 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.Nomatterwhatthe“Takefromtherich”crowdcameupwith,
the rich always found a way tooutsmart them. That is how taxes were
eventually levied on the middle class. The richoutsmarted the
intellectuals, solely because they understood the power of money, a
subjectnottaughtinschools.

Howdidtherichoutsmarttheintellectuals?Oncethe“Takefromthe

rich” tax was passed,cash started flowing into government coffers.
Initially, people were happy. Money was handed out to government
workersandtherich.Itwenttogovernmentworkersintheformof jobs

andpensions.Itwenttotherichviatheirfactoriesreceivinggovernment
contracts. The government became a large pool of money, but the
problem was the fiscalmanagement of that money. There really is no
recirculation. In other words, the governmentpolicy, if you were a
governmentbureaucrat,wastoavoidhavingexcessmoney.Ifyoufailed
tospendyourallottedfunding,youriskedlosingitinthenextbudget.

You would certainly not be recognized for being efficient. Business

people,ontheotherhand,arerewardedforhavingexcessmoneyandare
recognizedfortheirefficiency.

Asthiscycleofgrowinggovernmentspendingcontinued,thedemand

formoneyincreasedandthe“Taxtherich”ideawasnowbeingadjusted
toincludelower-incomelevels,downtotheverypeoplewhovoteditin,
thepoorandthemiddleclass.

True capitalists used their financial knowledge to simply find a way

to escape. Theyheaded back to the protection of a corporation. A
corporation protects the rich. But whatmany people who have never
formed a corporation do not know is that a corporation is notreally a
thing.Acorporationismerelyafilefolderwithsomelegaldocumentsin
i t ,sitting in some attorney's office registered with a state government
agency.It'snotabigbuildingwiththenameofthecorporationonit.It's
not a factory or a group ofpeople. A corporation is merely a legal
documentthatcreatesalegalbodywithoutasoul.Thewealthoftherich
was once again protected. Once again, the use of corporationsbecame
popular-once the permanent income laws were passed- because the
income-tax rate ofthe corporation was less than the individual income-
taxrates.Inaddition,asdescribedearlier,certainexpensescouldbepaid
withpre-taxdollarswithinthecorporation.

This war between the haves and have-nots has been going on for

hundreds of years. It isthe “Take from the rich” crowd versus the rich.
The battle is waged whenever and whereverlaws are made. The battle
will go on forever. The problem is, the people who lose are the
uninformed.Theoneswhogetupeverydayanddiligentlygotoworkand
pay taxes. If theyonly understood the way the rich play the game, they
couldplayittoo.Then,theywouldbeontheirwaytotheirownfinancial

independence.ThisiswhyIcringeeverytimeIhearaparentadvisetheir
childrentogotoschool,sotheycanfindasafe,securejob.Anemployee
withasafe,securejob,withoutfinancialaptitude,hasnoescape.

AverageAmericanstodayworkfivetosixmonthsforthegovernment

before they make enoughto cover their taxes. In my opinion, that is a
longtime.Theharderyouwork,themoreyoupaythegovernment.That
iswhyIbelievethatthe

ideaof“Takefromtherich”backfiredontheverypeoplewhovoted

itin.

Everytimepeopletrytopunishtherich,therichdon'tsimply
comply,theyreact.Theyhavethemoney,powerandintenttochange

things. They do notjust sit there and voluntarily pay more taxes. They
searchforwaystominimizetheirtaxburden.Theyhiresmartattorneysj
and accountants, and persuade politicians to changelaws or create legal
loopholes.Theyhavetheresourcestoeffectchange.

TheTaxCodeoftheUnitedStatesalsoallowsotherwaystosaveon

taxes. Most of thesevehicles are available to anyone, but it is the rich
whousuallylookforthembecausetheyaremindingtheirownbusiness.
For example, “1031” is jargon for Section 1031 of theInternal Revenue
Code, which allows a seller to delay paying taxes on a piece of real
estate; that is sold for a capital gain through an exchange for a more
expensive piece ofrealestate.Realestateisoneinvestmentvehiclethat
allows such a great tax advantage.As long as you keep trading up in
value, you I will not be taxed on the gains, until youliquidate. People
who do not take advantage of these tax savings offered legally are
missingagreatopportunitytobuildtheirassetcolumns.

The poor and middle class do not have the same resources. They sit

thereandletthegovernment'sneedlesentertheirarmandallowtheblood
donation to begin. Today, I am 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
intimidatingagovernmenttaxagentcanbe.Ihavehadfriendswhohave
had theirbusinesses shut down and destroyed, only to find out it was a
mistakeonthepartofthegovernment.Irealizeallthat.Butthepriceof

working from January to mid-May is a highprice to pay for that
intimidation. My poor dad never fought back. My rich dad didn'teither.
He just played the game smarter, and he did it through corporations-the
biggestsecretoftherich.

YoumayrememberthefirstlessonIlearnedfrommyrichdad.Iwas

alittleboyof9whohadtositandwaitforhimtochoosetotalktome.I
oftensatinhisofficewaitingforhimto“gettome.”Hewasignoringme
onpurpose.Hewantedmetorecognizehispoweranddesiretohavethat
powerformyselfoneday.ForalltheyearsIstudiedJandlearnedfrom
him,healwaysremindedmethatknowledgewaspower.Andwithmoney
comesgreatpowerthatrequirestherightknowledgetokeepitandmake
it multiply. Without that knowledge, theworldpushesyouaround.Rich
dadconstantlyremindedMikeandmethatthebiggestbullywasnotthe
boss or the supervisor, but the tax man. The tax man will always take
moreifyoulethim.

Thefirstlessonofhavingmoneyworkforme,asopposedtoworking

formoney,isreallyallaboutpower.Ifyouworkformoney,yougivethe
power up to your employer. If yourmoneyworksforyou,youkeepand
controlthepower.

Once we had this knowledge of the power of money working for us,

he wanted us to befinancially smart and not let bullies push us around.
Youneedtoknowthelawandhowthe systemworks.Ifyou'reignorant,
itiseasytobebullied.Ifyouknowwhatyou'retalkingabout,youhavea
fighting chance. That is why he paid so much for smart taxaccountants
andattorneys.Itwaslessexpensivetopaythemthanpaythegovernment.
Hisbest lesson to me, which I have used most of my life, is “Be smart
and you won't be pushedaround as much.” He knew the law because he
was a law-abiding citizen. He knew the lawbecauseitwasexpensiveto
notknowthelaw.“Ifyouknowyou'reright,you'renotafraidoffighting
back.”EvenifyouaretakingonRobinHoodandhisbandofMerryMen.

My highly educated dad always encouraged me to seek a good job

withastrongcorporation.Hespokeofthevirtuesof“workingyourway
upthecorporateladder.”Hedidn'tunderstandthat,byrelyingsolelyona
paycheck from a corporate employer, I would be adocile cow ready for

milking.

When I told my rich dad of my father's advice, he only chuckled.

“Whynotowntheladder?”wasallhesaid.

Asayoungboy,Ididnotunderstandwhatrichdadmeantbyowning

my own corporation. Itwas an idea that seemed impossible, and
intimidating.AlthoughIwasexcitedbytheidea,myyouthwouldnotlet
me envision the possibility that grownups would someday work for a
companyIwouldown.

Thepointis,ifnotformyrichdad,Iwouldhaveprobablyfollowed

my educated dad'sadvice. It was merely the occasional reminder of my
richdadthatkepttheideaofowningmyowncorporationaliveandkept
meonadifferentpath.BythetimeIwas15or16,IknewIwasnotgoing
tocontinuedownthepathmyeducateddadwasrecommending.Ididnot
know how I was going to do it, but I was determined not to head in the
directionmostofmyclassmateswereheading.Thatdecisionchangedmy
life.

ItwasnotuntilIwasinmymid-20sthatmyrichdad'sadvicebegan

tomakemoresense.IwasjustoutoftheMarineCorpsandworkingfor
Xerox. I was making a lot of money, butevery time I looked at my
paycheck, I was always disappointed. The deductions were solarge, and
the more I worked, the greater the deductions. As I became more
successful, mybosses talked about promotions and raises. It was
flattering, but I could hear my rich dadasking me in my ear: “Who are
youworkingfor?Whoareyoumakingrich?”

In 1974, while still an employee for Xerox, I formed my first

corporationandbegan“mindingmyownbusiness.”Therewerealreadya
few assets in my asset column, but now Iwas determined to focus on
making it bigger. Those paychecks with all the deductions madeall the
yearsofmyrichdad'sadvicemaketotalsense.IcouldseethefutureifI
followedmyeducateddad'sadvice.

Many employers feel that advising their workers to mind their own

business is bad forbusiness. I am sure it can be for certain individuals.
Butforme,focusingonmyownbusiness,developingassets,mademea
better employee. I now had a purpose. I came inearly and worked

diligently, amassing as much money as possible so I could begin
investingin real estate. Hawaii was just set to boom, and there were 4
fortunestobemade.ThemoreIrealizedwewereinthebeginningstages
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 werefrom my
paycheck.Itwasinspiring.Iwantedoutofthetrapofbeinganemployee
sobadlythatIworkedharder,notless.By1978,Iwasconsistentlyoneof
thetopfivesalespeopleinsales,oftenNo.1.Ibadlywantedoutoftherat
race.

In less than three years, I was making more in my own little

corporation,whichwasarealestateholdingcompany,thanIwasmaking
at Xerox.And the money I was making in my assetcolumn, in my own
corporation, was money working for me. Not me pounding on doors
sellingcopiers. My rich dad's advice made much more sense. Soon the
cashflowfrommypropertieswassostrongthatmycompanyboughtme
my first Porsche. My fellow Xerox salespeoplethought I was spending
mycommissions.Iwasn't.Iwasinvestingmycommissionsinassets.

Mymoneywasworkinghardtomakemoremoney.Eachdollarinmy

asset column was a greatemployee, working hard to make more
employees and buy the boss a new Porsche withbefore-tax dollars. I
begantoworkharderforXerox.Theplanwasworking,andmyPorsche
wastheproof.

ByusingthelessonsIlearnedfrommyrichdad,Iwasabletogetout

of the “proverbialratrace”ofbeinganemployeeatanearlyage.Itwas
made possible because of the strongfinancial knowledge I had acquired
through these lessons. Without this financialknowledge, which I call
financial IQ, my road to financial independence would have beenmuch
moredifficult.Inowteachothersthroughfinancialseminarsinthehope
that I mayshare my knowledge with them. Whenever I do my talks, I
remindpeoplethatfinancialIQismadeupofknowledgefromfourbroad
areasofexpertise.

No.1isaccounting.WhatIcallfinancialliteracy.Avitalskillifyou

want to build anempire. The more money you are responsible for, the
moreaccuracyisrequired,orthehousecomestumblingdown.Thisisthe

leftbrainside,orthedetails.Financialliteracyistheabilitytoreadand
understand financial statements. This ability allows you toidentify the
strengthsandweaknessesofanybusiness.

No.2isinvesting.WhatIcallthescienceofmoneymakingmoney.

This involvesstrategiesandformulas.Thisistherightbrainside,orthe
creativeside.

No. 3 is understanding markets. The science of supply and demand.

There is a need to knowthe “technical” aspects of the market, which is
emotiondriven;theTickleMeElmodollduringChristmas1996isacase
of a technical or emotion-driven market. The other marketfactor is the
“fundamental” or the economic sense of an investment. Does an
investmentmake sense or does it not make sense based on the current
marketconditions.

Many people think the concepts of investing and understanding the

market are too complexfor kids. They fail to see that kids know those
subjects intuitively. For those notfamiliar with the Elmo doll, it was a
Sesame Street character that was highly touted tothe kids just before
Christmas. Most all kids wanted one, and put it at the top of their
Christmaslist.Manyparentswonderedifthecompanyintentionallyheld
theproductoffthemarket,whilecontinuingtoadvertiseitforChristmas.
Apanicsetinduetohighdemandandlackofsupply.Havingnodollsto
buy in the stores, scalpers saw anopportunity to make a small fortune
fromdesperateparents.Theunluckyparentswhodidnotfindadollwere
forcedtobuyanothertoyforChristmas.Theincrediblepopularityofthe
TickleMeElmodollmadenosensetome,butitservesasanexcellent
exampleofsupplyanddemandeconomics.Thesamethinggoesoninthe
stock,bond,realestateandbaseball-cardmarkets.

No.4isthelaw.Forinstance,utilizingacorporationwrappedaround

the technicalskills of accounting, investing and markets can aid
explosive growth. An individual withthe knowledge of the tax
advantagesandprotectionprovidedbyacorporationcangetrichsomuch
faster than someone who is an employee or a small-business sole
proprietor.It'slikethedifferencebetweensomeonewalkingandsomeone
flying.Thedifferenceisprofoundwhenitcomestolong-termwealth.

1. Tax advantages: A corporation can do so many things that an

individual cannot. Like payfor expenses before it pays taxes. That is a
whole area of expertise that is so exciting,but not necessary to get into
unless you have sizable assets or a business. Employees earnand get
taxed and they try to live on what is left. A corporation earns, spends
everythingit can, and is taxed on anything that is left. It's one of the
biggest legal tax loopholesthat the rich use. They're easy to set up and
are not expensive if you own investmentsthat are producing good cash
flow.Forexample;byowningyourowncorporation-vacationsareboard
meetings in Hawaii. Car payments, insurance, repairs are company
expenses.Health club membership is a company expense. Most
restaurant meals are partial expenses.And on and on - but do it legally
withpre-taxdollars.

2.Protectionfromlawsuits.Weliveinalitigioussociety.Everybody

wants a piece ofyour action. The rich hide much of their wealth using
vehicles such as corporations andtrusts to protect their assets from
creditors. When someone sues a wealthy individual theyare often met
with layers of legal protection, and often find that the wealthy person
actually owns nothing. They control everything, but own nothing. The
poorandmiddleclasstrytoowneverythingandloseittothegovernment
or to fellow citizens who like to suethe rich. They learned it from the
RobinHoodstory.Takefromtherich,givetothepoor.

Itisnotthepurposeofthisbooktogointothespecificsofowninga

corporation.ButIwillsaythatifyouownanykindoflegitimateassets,I
wouldconsiderfindingoutmoreaboutthebenefitsandprotectionoffered
byacorporationassoonaspossible.Therearemanybooks

writtenonthesubjectthatwilldetailthebenefitsandevenwalkyou

through the stepsnecessary to set up a corporation. One book in
particular, Inc. and Grow Rich provides awonderful insight into the
powerofpersonalcorporations.

FinancialIQisactuallythesynergyofmanyskillsandtalents.ButI

would say it is thecombination of the four technical skills listed above
thatmakeupbasicfinancialintelligence.Ifyouaspiretogreatwealth,it
isthecombinationoftheseskillsthatwillgreatlyamplifyanindividual's

financialintelligence.

Insummary
1.Spend2.PayTaxes
2.PayTaxes3.Spend
As part of your overall financial strategy, we strongly recommend

owningyourowncorporationwrappedaroundyourassets.

RichDad,PoorDad

CHAPTERSIX

LessonFive:TheRichInventMoney
Lastnight,ItookabreakfromwritingandwatchedaTVprogramon

thehistoryofayoungmannamedAlexanderGrahamBell.Bellhadjust
patented his telephone, and was havinggrowing pains because the
demandforhisnewinventionwassostrong.Needingabiggercompany,
hethenwenttothegiantatthattime,WesternUnion,andaskedthemif
theywouldbuyhispatentandhistinycompany.Hewanted$100,000for
the whole package. Thepresident of Western Union scoffed at him and
turned him down, saying the price wasridiculous.Therestishistory.A
multi-billion-dollarindustryemerged,andAT&Twasborn.

TheeveningnewscameonrightafterthestoryofAlexanderGraham

Bell ended. On the newswas a story of another downsizing at a local
company. The workers were angry andcomplained that the company
ownershipwasunfair.Aterminatedmanagerofabout45years ofagehad
hiswifeandtwobabiesattheplantandwasbeggingtheguardstolethim
talktotheownerstoaskiftheywouldreconsiderhistermination.Hehad
justboughtahouseandwasafraidoflosingit.Thecamerafocusedinon
hispleadingforalltheworldtosee.Needlesstosay,itheldmyattention.

I have been teaching professionally since 1984. It has been a great

experienceandrewarding.Itisalsoadisturbingprofession,forIhave

taughtthousandsofindividualsandIseeonethingincommoninall

ofus,myselfincluded.Weallhavetremendouspotential,andweallare
blessed with gifts. Yet, the one thing that holds all of us back is some
degree of self-doubt. It is not so much thelackoftechnicalinformation
thatholdsusback,butmorethelackofself-confidence.Somearemore
affectedthanothers.

Onceweleaveschool,mostofusknowthatitisnotasmuchamatter

ofcollegedegreesorgoodgradesthatcount.Intherealworldoutsideof
academics, something more thanjust grades is required. I have heard it
called “guts,” “chutzpah,” “balls,” “audacity,”“bravado,” “cunning,”
“daring,” “tenacity” and “brilliance.” This factor, whatever it islabeled,

ultimatelydecidesone'sfuturemuchmorethanschoolgrades.

Insideeachofusisoneofthesebrave,brilliantanddaringcharacters.

Thereisalsotheflipsideofthatcharacter:peoplewhocouldgetdownon
their knees and beg ifnecessary.After a year in Vietnam, as a Marine
Corps pilot, I intimately got to know bothof those characters-inside of
me.Oneisnotbetterthantheother.

Yet, as a teacher, I recognized that it was excessive fear and self-

doubt that were thegreatest detractors of personal genius. It broke my
hearttoseestudentsknowtheanswers,yetlackthecouragetoactonthe
answer. Often in the real world, it's not thesmartthatgetaheadbutthe
bold.

In my personal experience, your financial genius requires both

technicalknowledgeaswellascourage.Iffearistoostrong,thegeniusis
suppressed.InmyclassesIstronglyurgestudentstolearntotake•risks,
tobebold,tolettheirgeniusconvertthatfearintopowerandbrilliance.
Itworksforsomeandjustterrifiesothers.Ihavecometorealizethatfor
most people, when it comes to the subject of money, they would rather
play itsafe.Ihavehadtofieldquestionssuchas:Whytakerisks?Why
should I botherdeveloping my financial IQ? Why should I become
financiallyliterate?

AndIanswer,“Justtohavemoreoptions.”
Therearehugechangesuphead.JustasIstartedwiththestoryofthe

younginventorAlexanderGrahamBell,inthecomingyearstherewillbe
morepeoplejustlikehim.TherewillbeahundredpeoplelikeBillGates
and hugely successful companies like Microsoftcreated every year, all
over the world.And there also will be many more bankruptcies,layoffs
anddownsizing.

SowhybotherdevelopingyourfinancialIQ?Noonecananswerthat

but you.Yet, I can tell you why I myself do it. I do it because it is the
most exciting time to be alive. I'drather be welcoming change than
dreading change. I'd rather be excited about makingmillions than
worrying about not getting a raise. This period we are in now is a most
exciting time, unprecedented in our world's history. Generations from
now, people willlookbackatthisperiodoftimeandremarkatwhatan

excitingeraitmusthavebeen.Itwasthedeathoftheoldandbirthofthe
new.Itwasfullofturmoilanditwasexciting.

SowhybotherdevelopingyourfinancialIQ?Becauseifyoudo,you

will prosper greatly.And if you don't, this period of time will be a
frighteningone.Itwillbeatimeofwatchingpeoplemoveboldlyforward
whileothersclingtodecayingliferings.

Land was wealth 300 years ago. So the person who owned the land

owned the wealth. Then, itwas factories and production, and America
rose to dominance. The industrialist owned thewealth. Today, it is
information.And the person who has the most timely information owns
thewealth.Theproblemis,informationfliesallaroundtheworldatthe
speed of light.The new wealth cannot be contained by boundaries and
borders as land and factories were.The changes will be faster and more
dramatic. There will be a dramatic increase in thenumber of new
multimillionaires.Therealsowillbethosewhoareleftbehind.

Today, I find so many people struggling, often working harder,

simply because they clingto old ideas. They want things to be the way
theywere;theyresistchange.Iknowpeoplewhoarelosingtheirjobsor
their houses, and they blame technology or the economy ortheir boss.
Sadly they fail to realize that they might be the problem. Old ideas are
theirbiggestliability.Itisaliabilitysimplybecausetheyfailtorealize
that while thatidea or way of doing something was an asset yesterday,
yesterdayisgone.

One afternoon I was teaching investing using a board game I had

invented,CASHFLOW,asa teachingtool.Afriendhadbroughtsomeone
along to attend the class. This friend of afriend was recently divorced,
hadbeenbadlyburnedinthedivorcesettlement,andwasnowsearching
forsomeanswers.Herfriendthoughttheclassmighthelp.

The game was designed to help people learn how money works. In

playing the game, theylearn about the interaction of the income
statementwiththebalancesheet.Theylearnhow“cashflows”between

the two and how the road to wealth is through striving to increase

yourmonthlycashflowfromtheassetcolumntothepointthatitexceeds
your j monthly expenses. Once youaccomplish this, you are able to get

outofthe“RatRace”andoutontothe“FastTrack”.

AsIhavesaid,somepeoplehatethegame,someloveit,andothers

miss the point. Thiswoman missed a valuable opportunity to learn
something.Intheopeninground,shedrewa“doodad”cardwiththeboat
on it.At first she was happy. “Oh, I've got a boat.” Then, as her friend
tried to explain how the numbers worked on her income statement and
balancesheet,shegotfrustratedbecauseshe“hadneverlikedmath.The
rest of her table waitedwhile her friend continued explaining the
relationship between the income statement,balance sheet and monthly
cash flow. Suddenly, when she realized how the numbers worked, it
dawned on her that her boat was eating her alive. Later on in the game,
shewasalso”downsized"andhadachild.Itwasahorriblegameforher.

After the class, her friend came by and told me that she was upset.

She had come to theclass to learn about investing and did not like the
ideathatittooksolongtoplayasillygame.

Her friend attempted to tell her to look within herself to see if the

game“reflected”onherselfinanyway.Withthatsuggestion,thewoman
demandedhermoneyback.Shesaidthattheveryideathatagamecould
beareflectionofherwasridiculous.Hermoneywaspromptly refunded
andsheleft.

Since 1984, I have made millions simply by doing what the school

system does not. Inschool, most teachers lecture. I hated lectures as a
student;Iwassoonboredandmymindwoulddrift.

In 1984,I began teaching via games and simulations. I always

encouraged adult students tolook at games as reflecting back to what
they know, and what they needed to learn. Mostimportantly, a game
reflectsbackonone'sbehavior.It'saninstantfeedbacksystem.Insteadof
theteacherlecturingyou,thegameisfeedingbackapersonalizedlecture,
custommadejustforyou.

The friend of the woman who left later called to give me an update.

She said her friendwas fine and had calmed down. In her cooling-off
period,shecouldseesomeslightrelationshipbetweenthegameandher
life.

Althoughsheandherhusbanddidnotownaboat,theydidown

everything else imaginable. She was angry after their divorce, both

because he had run offwith a younger woman and because after twenty
yearsofmarriage,theyhadaccumulatedlittleinthewayofassets.There
wasvirtuallynothingforthemtosplit.Theirtwentyyearsofmarriedlife
had been incredible fun, but all they had accumulated was a ton of
doodads.

She realized that her anger at doing the numbers-the income

statement and balancesheet-came from her embarrassment of not
understanding them. She had believed thatfinances were the man's job.
She maintained the house and did the entertaining, and hehandled the
finances. She was now quite certain that in the last five years of their
marriage,hehadhiddenmoneyfromher.Shewasangryatherselffornot
being more awareof where the money was going, as well as for not
knowingabouttheotherwoman.

Justlikeaboardgame,theworldisalwaysprovidinguswithinstant

feedback.Wecouldlearnalotifwetunedinmore.Onedaynotlongago,
I complained to my wife that thecleaners must have shrunk my pants.
My wife gently smiled and poked me in the stomach toinform me that
thepantshadnotshrunk,somethingelsehadexpandedme!

The game CASHFLOW was designed to give every player personal

feedback.Itspurposeistogiveyouoptions.Ifyoudrawtheboatcardand
itputsyouintodebt,thequestionis,“Nowwhatcanyoudo?”Howmany
differentfinancialoptionscanyoucomeupwith?Thatisthepurposeof
thegame:toteachplayerstothinkandcreatenewandvariousfinancial
options.

I have watched this game played by more than 1,000 people. The

people who get out of the“Rat Race” in the game the quickest are the
peoplewhounderstandnumbersandhavecreativefinancialminds.They
recognize different financial options. People who take thelongest are
peoplewhoarenotfamiliarwithnumbersandoftendonotunderstandthe
powerof investing. Rich people are often creative and take calculated
risks.

TherehavebeenpeopleplayingCASHFLOWwhogainlotsofmoney

in the game, but they don'tknowwhattodowithit.Mostofthemhave

notbeenfinanciallysuccessfulinreallifeeither.Everyoneelseseemsto
begettingaheadofthem,eventhoughtheyhavemoney.And thatistrue
inreallife.Therearealotofpeoplewhohavealotofmoneyanddonot
getaheadfinancially.

RichDad,PoorDad

CHAPTERSEVEN

LessonSix:WorktoLearn-Don'tWorkforMoney
In 1995,1 granted an interview with a newspaper in Singapore. The

young female reporterwas on time, and the interview got under way
immediately.Wesatinthelobbyofa luxurioushotel,sippingcoffeeand
discussing the purpose of my visit to Singapore. I wasto share the
platform with Zig Ziglar. He was speaking on motivation, and I was
speakingon“TheSecretsoftheRich.”

“Someday,Iwouldliketobeabest-sellingauthorlikeyou,”shesaid.

I had seen some ofthe articles she had written for the paper, and I was
impressed. She had a tough, clearstyle of writing. Her articles held a
reader'sinterest.

“Youhaveagreatstyle,”Isaidinreply.“Whatholdsyoubackfrom

achievingyourdream?”

“My work does not seem to go anywhere,” she said quietly.

“Everyone says that my novelsare excellent, but nothing happens. So I
keep my job with the paper.At least it pays the bills. Do you have any
suggestions?”

“Yes,Ido,”Isaidbrightly.“AfriendofminehereinSingaporeruns

aschoolthattrainspeopletosell.Herunssales-trainingcoursesformany
ofthetopcorporationshereinSingapore,andIthinkattendingoneofhis
courseswouldgreatlyenhanceyourcareer.”

Shestiffened.“AreyousayingIshouldgotoschooltolearntosell?”
Inodded.
“Youaren'tserious,areyou?”
Again,Inodded.“Whatiswrongwiththat?”Iwasnowbackpeddling.

She was offended bysomething,andnowIwaswishing11hadnotsaid
anything. In my attempt to be helpful, Ifound myself defending my
suggestion.

“I have a master's degree in English Literature. Why would I go to

schooltolearntobeasalesperson?Iamaprofessional.Iwenttoschool
to be trained in a profession so Iwould not have to be a salesperson. I

hatesalespeople.Alltheywantismoney.Sotellme why|Ishouldstudy
sales?” She was now packing her briefcase forcibly. The interview was
over.

Onthecoffeetablesatacopyofanearlierbest-sellingbookIwrote.I

Ipickeditupaswellasthenotesshehadjotteddownonherlegalpad.|
“Doyouseethis?”Isaidpointingtohernotes.

Shelookeddownathernotes.“What,”shesaid,confused.
Again,Ipointeddeliberatelytohernotes.Onherpadshehadwritten

“RobertKiyosaki,best-sellingauthor.”

“Itsays'best-sellingauthor,'notbest'writing'author.”
Hereyeswidenedimmediately.
“Iamaterriblewriter.Youareagreatwriter.Iwenttosalesschool.

Youhavea master'sdegree.Putthemtogetherandyougeta'best-selling
author'anda'best-writingauthor.'”

Angerflaredfromhereyes.“I'llneverstoopsolowastolearnhowto

sell. People likeyou have no business writing. I am a professionally
trainedwriterandyouareasalesman.Itisnotfair.”

Therestofhernoteswereputaway,andshehurriedoutthroughthej,

largeglassdoorsintothehumidSingaporemorning.

Atleastshegavemeafairandfavorablewrite-upthenextmorning.
The world is filled with smart, talented, educated and gifted people.

Wemeetthemeveryday.Theyareallaroundus.

Afewdaysago,mycarwasnotrunningwell.Ipulledintoagarage,

andtheyoungmechanichaditfixedinjustafewminutes.Heknewwhat
waswrongbysimplylisteningtotheengine.Iwasamazed.

Thesadtruthis,greattalentisnotenough.
Iamconstantlyshockedathowlittletalentedpeopleearn.Iheardthe

otherdaythatlessthan5percentofAmericansearnmorethan$100,000
a year. I have 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 andchiropractors
strugglefinancially.Allthistime,Ithoughtthatwhentheygraduated,the
dollars would pour in. It was this business consultant who gave me the
phrase,“Theyareoneskillawayfromgreatwealth.”

What this phrase means is that most people need only to learn and

masteronemoreskillandtheirincomewouldjumpexponentially.Ihave
mentioned before that financialintelligence is a synergy of accounting,
investing, marketing and law. Combine those fourtechnical skills and
makingmoneywithmoneyiseasier.Whenitcomestomoney,theonly
skillmostpeopleknowistoworkhard.

Theclassicexampleofasynergyofskillswasthatyoungwriterfor

thenewspaper.Ifshediligentlylearnedtheskillsofsalesandmarketing,
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 would learn how to communicate in
“shortcuts”thatareusedinsuccessfuladvertising.Shealsowouldspend
timelearningpublicrelations,animportantskill.Shewouldlearnhowto
getmillionsinfreepublicity.Then,atnightandonweekends,shecould
bewritinghergreatnovel.Whenitwasfinished,shewouldbebetterable
to sell her book. Then, in a short while, she could be a “best-selling
author.”

WhenIfirstcameoutwithmyfirstbookIfYouWantToBeRichand

Happy, Don't Go toSchool? a publisher suggested I change the tide to
The Economics of Education. I told thepublisher that with a title like
that,Iwouldselltwobooks:onetomyfamilyandonetomybestfriend.
Theproblemis,theywouldexpectitforfree.TheobnoxioustitleIfYou
WantToBeRichandHappy,Don'tGotoSchool?waschosenbecausewe
knew it would gettons of publicity. I am pro-education and believe in
educationreform.Otherwise,whywouldIcontinuetopressforchanging
our antiquated educational system? So I chose atitle that would get me
on more TV and radio shows, simply because I was willing to be
controversial. Many people thought I was a fruitcake, but the book sold
andsold.

WhenIgraduatedfromtheU.S.MerchantMarineAcademyin1969,

myeducateddadwashappy.StandardOilofCaliforniahadhiredmefor
its oil-tanker fleet. I was a third mate, andthe pay was low compared
with my classmates, but it was OK for a first real job aftercollege. My

startingpaywasabout$42,000ayear,includingovertime,andIonlyhad
,toworkforsevenmonths.Ihadfivemonthsofvacation.IfIhadwanted
to, I could havetaken the run to Vietnam with a subsidiary shipping
company,andeasilydoubledmypayinsteadoftakingthefiveJmonths'
vacation.

Ihadagreatcareeraheadofme,yetIresignedaftersixmonthswith

the company andjoined the Marine Corps to learn how to fly. My
educateddadwasdevastated.Richdadcongratulatedme.

In school and in the workplace, the popular opinion is the idea of

“specialization.” Thatis,inordertomakemoremoneyorgetpromoted,
youneedto“specialize.”Thatiswhymedicaldoctorsimmediatelybegin
toseekaspecialtysuchasorthopedicsorpediatrics.Thesameistruefor
accountants,architects,lawyers,pilotsandothers.

My educated dad believed in the same dogma. That is why he was

thrilledwhenheeventuallyachievedhisdoctorate.Heoftenadmitted•;•
thatschoolsrewardpeoplewhostudymoreandmoreaboutlessandless.

Rich dad encouraged me to do exactly the opposite. “You want to '

know a little about alot” was his suggestion. That is why for years I
worked in different areas of hiscompanies. For awhile, I worked in his
accounting department. Although I would probablynever have been an
accountant,hewantedmetolearnvia“osmosis.”RichdadknewIwould
pickup“jargon”andasenseofwhatisimportantandwhatisnot.Ialso
worked as a busboy and construction worker, as well as in sales,
reservations and marketing. He was“grooming” Mike and me. That is
why he insisted we sit in on the meetings with hisbankers, lawyers,
accountantsandbrokers.Hewantedustoknowalittleabouteveryaspect
ofhisempire.

WhenIquitmyhigh-payingjobwithStandardOil,myeducateddad

had a heart-to-heartwith me. He was bewildered. He could not
understand my decision to resign from a careerthat offered high pay,
greatbenefits,lotsoftimeoff,andopportunityforpromotion.When he
askedmeoneevening,“Whydidyouquit?”Icouldnotexplainittohim,
asmuchasItried.Mylogicdidnotfithislogic.Thebigproblemwasthat
mylogicwasmyrichdad'slogic.

Job security meant everything to my educated dad. Learning meant

everythingtomyrichdad.

EducateddadthoughtIwenttoschooltolearntobeaship'sofficer.

RichdadknewthatIwenttoschooltostudyinternationaltrade.Soasa
student, I made cargo runs,navigating large freighters, oil tankers and
passenger ships to the Far East and the SouthPacific. Rich dad
emphasized that I stay in the Pacific instead of taking ships to Europe
because he knew that the “emerging nations” were inAsia, not Europe.
While most of myclassmates, including Mike, were partying at their
fraternity houses, I was studyingtrade, people, business styles and
cultures in Japan, Taiwan, Thailand, Singapore, HongKong, Vietnam,
Korea,Tahiti,SamoaandthePhilippines.Ialsowaspartying,butitwas
notinanyfrathouse.Igrewuprapidly.

EducateddadjustcouldnotunderstandwhyIdecidedtoquitandjoin

theMarineCorps.ItoldhimIwantedtolearntofly,butreallyIwanted
tolearntoleadtroops.Richdadexplainedtomethatthehardestpartof
running a company is managing people. He hadspent three years in the
Army;myeducateddadwasdraft-exempt.Richdadtoldmeofthevalue
of learning to lead men into dangerous situations. “Leadership is what
you need tolearn next,” he said. “If you're not a good leader, you'll get
shotintheback,justliketheydoinbusiness.”

Returning from Vietnam in 1973,1 resigned my commission, even

thoughIlovedflying.IfoundajobwithXeroxCorp.Ijoineditforone
reason,anditwasnotforthebenefits.Iwasashyperson,andthethought
ofsellingwasthemostfrighteningsubjectintheworld.Xeroxhasoneof
thebestsales-trainingprogramsinAmerica.

Richdadwasproudofme.Myeducateddadwasashamed.Beingan

intellectual, he thoughtthat salespeople were below him. I worked with
XeroxforfouryearsuntilIovercamemyfearofknockingondoorsand
being rejected. Once I could consistently be in the top fivein sales, I
againresignedandmovedon,leavingbehindanothergreatcareerwithan
excellentcompany.

In1977,1formedmyfirstcompany.RichdadhadgroomedMikeand

me to take overcompanies.SoInowhadtolearntoformthemandput

them together. My first product, thenylon and velcro wallet, was
manufactured in the Far East and shipped to a warehouse inNew York,
nearwhereIhadgonetoschool.Myformaleducationwascomplete,and
itwastimetotestmywings.IfIfailed,Iwentbroke.Richdad

thoughtitbesttogobrokebefore30.“Youstillhavetimetorecover”
washisadvice.Ontheeveofmy30thbirthday,myfirstshipmentleft

,,

KoreaforNewYork.
Today, I still do business internationally. And as my rich dad

encouraged me to do, I keepseeking the emerging nations. Today my
investmentcompanyinvestsinSouthAmerica,Asia, NorwayandRussia.
There is an old cliche that goes, “Job is an acronym for 'Just Over
Broke.'” And unfortunately, I would say that the saying applies to
millionsofpeople.Becauseschooldoesnotthinkfinancialintelligenceis
an intelligence, most workers“live within their means.” They work and
theypaythebills.

There is another horrible management theory that goes, “Workers

work hard enough to not befired, and owners pay just enough so that
workerswon'tquit.”Andifyoulookatthepayscalesofmostcompanies,
againIwouldsaythereisadegreeoftruthinthatstatement.

The net result is that most workers never get ahead. They do what

they've been taught todo: “Get a secure job.” Most workers focus on
working for pay and benefits that rewardthem in the short term, but is
oftendisastrousinthelong.InsteadIrecommendtoyoungpeopletoseek
workforwhattheywilllearn,morethanwhattheywillearn.Lookdown
theroad at what ; skills they want to acquire before choosing a specific
professionandbeforegettingtrappedinthe“RatRace.”

Oncepeoplearetrappedinthelifelongprocessofbillpaying,they1

become like thoselittle hamsters running around in those little metal
wheels.Theirlittlefurrylegsarespinningfuriously,thewheelisturning
furiously,butcometomorrowmorning,they'llstillbeinthesamecage:
greatjob.

In the movie Jerry Maguire, starring Tom Cruise, there are many

greatoneliners.Probablythemostmemorableis“Showmethemoney.”

But there is one line I thought most truthful.It comes from the scene
where Tom Cruise is leaving the firm. He has just been fired, andhe is
askingtheentirecompany“Whowantstocomewithme?”Andthewhole
placeissilentandfrozen.Onlyonewomanspeaksupandsays,“I'dlike
tobutI'mdueforapromotioninthreemonths.”

That statement is probably the most truthful statement in the whole

movie.Itisthetypeofstatementthatpeopleusetokeepthemselves

busy working away to pay bills. I know my educated dad looked

forwardtohispayraiseeveryyear,andeveryyearhewasdisappointed.
Sohewouldgobacktoschooltoearnmorequalificationssohecouldget
anotherraise,butagain,itwouldbeanotherdisappointment.

ThequestionIoftenaskpeopleis,“Whereisthisdailyactivitytaking

you?” Just likethelittlehamster,Iwonderifpeoplelookatwheretheir
hardworkistakingthem.Whatdoesthefuturehold?

Cyril Brickfield, the former executive director of The American

AssociationofRetiredPeople,reportsthat“privatepensionsareinastate
of chaos. First of all, 50 percentof the workforce today has no pension.
Thataloneshouldbeofgreatconcern.And75to80percentoftheother
50 percent have ineffective pensions that pay $55 or $150 or $300 a
month.”

In his book The Retirement Myth, Craig S. Karpel writes: “I visited

the headquarters of amajor national pension consulting firm and met
with a managing director who specializes indesigning lush retirement
plansfortopmanagement.WhenIaskedherwhatpeoplewhodon'thave
corner offices will be able to expect in the way of pension income, she
saidwithaconfidentsmile:”TheSilverBullet.'

"'What,'Iasked,'isTheSilverBullet?'
“She shrugged, 'If baby boomers discover they don't have enough

money to live on whenthey're older, they can always blow their brains
out.'” Karpel goes on to explain thedifference between the old Defined
Benefit retirement plans and the new 401K plans whichare riskier. It is
not a pretty picture for most people working today.And that is just for
retirement. When medical fees and long-term nursing home care are
added to thepicture, the picture is frightening. In his 1995 book, he

indicatesthatnursing-homefeesrunfrom$30,000to$125,000peryear.
Hewenttoacleanno-frillsnursinghomeinhisareaandfoundtheprice
tobe$88,000ayearin1995.

Already,manyhospitalsincountrieswithsocializedmedicineneedto

make tough decisionssuch as “Who will live and who will die?” They
makethosedecisionspurelyonhowmuchmoneytheyhaveandhowold
thepatientsare.Ifthepatientisold,theyoftenwillgivethemedicalcare
to someone younger. The older poor patient gets put to the back of the
line.Sojustastherichcanaffordbettereducation,therichwillbeable
tokeepthemselvesalive,whilethosewhohavelittlewealthwilldie.

So I wonder, are workers looking into the future or just until their

nextpaycheck,neverquestioningwheretheyareheaded?

When I speak to adults who want to earn more money, I always

recommend the same thing. Isuggest taking a long view of their life.
Insteadofsimplyworkingforthemoneyandsecurity,whichIadmitare
important,Isuggesttheytakeasecondjobthatwillteachthemasecond
skill. Often I recommend joining a network marketing company, also
calledmultilevel marketing, if they want to learn sales skills. Some of
these companies haveexcellent training programs that help people get
overtheirfearoffailureandrejection,whicharethemainreasonspeople
/j are unsuccessful. Education is more valuable thanmoney, in the long
run.

WhenIofferthissuggestion,Ioftenhearinresponse,“Ohthatistoo

muchhassle,”or“IonlywanttodowhatIaminterestedin.”

Tothestatementof“It'stoomuchofahassle,”Iask,“Soyouwould;

rather work allyour life giving 50 percent of what you earn to the
government'”Totheotherstatement-“IonlydowhatIaminterestedin”-I
say, “I'm not interested in going to the gym, but I gobecause I want to
feelbetterandlivelonger.”

Unfortunately, there is some truth to the old statement “You can't

teach an old dog newtricks.” Unless a person is used to changing, it's
hardtochange.

Butforthoseofyouwhomightbeonthefencewhenitcomestothe

idea of working tolearn something new, I offer this word of

encouragement: Life is much like going to thegym. The most painful
partisdecidingtogo.Onceyougetpastthat,it'seasy.Therehave been
manydaysIhavedreadedgoingtothegym,butonceIamthereandin
motion, itis a pleasure. After the workout is over, I am always glad I
talkedmyselfintogoing.

If you are unwilling to work to learn something new and insist on,

instead, becominghighly specialized within your field, make sure the
companyyouworkforisunionized.Laborunionsaredesignedtoprotect
specialists.

Myeducateddad,afterfallingfromgracewiththegovernor,became

the head of theteachers union in Hawaii. He told me that it was the
hardest job he ever held. My richdad, on the other hand, spent his life
doing his best to keep his companies from becomingunionized. He was
successful.Althoughtheunionscameclose,richdadwasalwaysableto
fightthemoff.

Personally, I take no sides because I can see the need for and the

benefits of both sides.If you do as school recommends, become highly
specialized,thenseekunionprotection.Forexample,hadIcontinuedon
withmyflyingcareer,Iwouldhavesoughtacompanythathada strong
pilots union. Why? Because my life would be dedicated to learn a skill
that wasvaluable in only one industry. If I were pushed out of that
industry,mylife'sskillswouldnotbeasvaluabletoanotherindustry.A
displacedseniorpilot-with100,000hoursofheavyairlinetransporttime,
earning $150,000 a year-would have a hard time finding anequivalent
high-payingjobinschoolteaching.Theskillsdonotnecessarilytransfer
fromindustrytoindustry,becausetheskillsthepilotsarepaidforinthe
airlineindustryarenotasimportantin,say,theschoolsystem.

The same is true even for doctors today. With all the changes in

medicine, many medicalspecialists are needing to conform to medical
organizationssuchasHMO's.Schoolteachersdefinitelyneedtobeunion
members. Today in America, the teachers union is the largest and the
richestlaborunionofall.TheNEA,NationalEducationAssociation,has
tremendous political clout. Teachers need the protection of their union
because theirskills are also of limited value to an industry outside of

education. So the rule of thumbis, “Highly specialized, then unionize.”
It'sthesmartthingtodo.

WhenIasktheclassesIteach,“Howmanyofyoucancookabetter

hamburgerthanMcDonald's?”almostallthestudentsraisetheirhands.I
then ask, “So if most of you cancook a better hamburger, how come
McDonald'smakesmoremoneythanyou?”

Theanswerisobvious:McDonald'sisexcellentatbusinesssystems.

The reason so manytalented people are poor is because they focus on
building a better hamburger and knowlittle to nothing about business
systems.

A friend of mine in Hawaii is a great artist. He makes a sizable

amount of money. One dayhis mother's attorney called to tell him that
she had left him $35,000. That is what wasleft 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.Twomonthslater,hisfirstfour-color,full-pageadappearedin
an expensive magazinethat targeted the very rich. The ad ran for three
months.Hereceivednorepliesfromthead,andallofhisinheritanceis
nowgone.Henowwantstosuethemagazineformisrepresentation.

This is a common case of someone who can build a beautiful

hamburger, but knows little about business. When I asked him what he
learned, his only reply was that “advertisingsalespeople are crooks.” I
then asked him if he would be willing to take a course in salesand a
courseindirectmarketing.Hisreply,“Idon'thavethetime,andIdon't
wanttowastemymoney.”

Theworldisfilledwithtalentedpoorpeople.Alltoooften,they're•

poor or strugglefinancially or earn less than they are capable of, not f
becauseofwhattheyknowbutbecauseofwhattheydonotknow.They
focusonperfectingtheirskillsatbuildingabetterhamburgerratherthan
the skills of selling and delivering the hamburger. Maybe McDonald's
doesnotmakethebesthamburger,buttheyarethebestatfsellingand
deliveringabasicaverageburger.

Poor dad wanted me to specialize. That was his view on how to be

paidmore.EvenafterbeingtoldbythegovernorofHawaiithathecould

no longer work in state government, myeducated dad continued to
encouragemetogetspecialized.Educateddadthentookupthecause of
theteachersunion,campaigningforfurtherprotectionandbenefitsforI
thesehighly skilled and educated professionals. We argued often, but I
knowheneveragreedthatoverspecializationiswhatcausedtheneedfor
union protection. He never understoodthat the more specialized you
become,themoreyouaretrappedanddependentonthatspecialty.

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 persontosomedaytakeover
the company. So these bright young employees do not specialize in one
department; they are moved from department to department to learn all
theaspectsofbusinesssystems.Therichoften“groom”theirchildrenor
the children of others. Bydoing so, their children gain an overall
knowledge of the operations of the business andhow the various
departmentsinterrelate.

For the World War II generation, it was considered “bad” to skip

from company to company.Today, it is considered smart. Since people
will skip from company to company, rather thanseek greater
specialization, why not seek to “learn” more than “earn.” In the short
term,it may earn you less. In the long term, it will pay off in large
dividends.

Themainmanagementskillsneededforsuccessare:
1.Themanagementofcashflow
2 .The management of systems (including yourself and time with

family).

3.Themanagementofpeople.
The most important specialized skills are sales and understanding

marketing. It is theability to sell--therefore, to communicate to another
humanbeing,beitacustomer,employee,boss,spouseorchild-thatisthe
baseskillofpersonalsuccess.Itiscommunicationskillssuchaswriting,
speakingandnegotiatingthatarecrucialtoalifeofsuccess.Itisaskill
that I work on constantly, attending courses or buyingeducational tapes
toexpandmyknowledge.

AsIhavementioned,myeducateddadworkedharderandharderthe

more competent hebecame. He also became more trapped the more
specialized he got.Although his salary wentup, his choices diminished.
Soon after he was locked out of government work, he found outhow
vulnerable he really was professionally. It is like professional athletes
who suddenlyare injured or are too old to play. Their once high-paying
positionisgone,andtheyhavelimitedskillstofallbackon.Ithinkthat
iswhymyeducateddadsidedsomuchwithunionsafterthat.Herealized
howmuchaunionwouldhavebenefitedhim.

Rich dad encouraged Mike and me to know a little about a lot. He

encouraged us to workwith people smarter than we were and to bring
smart people together to work as a team.Today it would be called a
synergyofprofessionalspecialities.

Today, I meet ex-schoolteachers earning hundreds of thousands of

dollars a year. They earnthatmuchbecausetheyhavespecializedskills
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 importantthan selling as
well as marketing. The skills of selling and marketing are difficult for
mostpeopleprimarilyduetotheirfearofrejection.Thebetteryouareat
communicating,negotiating and handling your fear of rejection, the
easier life is. Just as I advisedthat newspaper writer who wanted to
become a “best-selling author,” I advise anyone elsetoday. Being
technicallyspecializedhasitsstrengthsaswellasitsweaknesses.Ihave
friends who are geniuses, but they cannot communicate effectively with
other human beingsand, as a result, their earnings are pitiful. I advise
themtojustspendayearlearningtosell.Eveniftheyearnnothing,their
communicationskillswillimprove.Andthatispriceless.

Inadditiontobeinggoodlearners,sellersandmarketers,weneedto

begoodteachersaswellasgoodstudents.Tobetrulyrich,weneedtobe
able to give as well as to receive.In cases of financial or professional
struggle, there is often a lack of giving andreceiving. I know many
people who are poor because they are neither good students nor good
teachers.

Bothofmydadsweregenerousmen.Bothmadeitapracticetogive

first.Teachingwasoneoftheirwaysofgiving.Themoretheygave,the
more they received. One glaringdifference was in the giving of money.
Myrichdadgavelotsofmoneyaway.Hegavetohischurch,tocharities,
tohisfoundation.Heknewthattoreceivemoney,youhadtogivemoney.
Giving money is the secret to most great wealthy families. That is why
there areorganizations like the Rockefeller Foundation and the Ford
Foundation. These areorganizations designed to take their wealth and
increaseit,aswellasgiveitawayinperpetuity.

My educated dad always said, “When I have some extra money, I'll

give it.” The problemwas, there was never any extra. So he worked
harder to draw more money in rather thanfocus on the most important
law of money: “Give and you shall receive.” Instead, hebelieved in
“Receiveandthenyougive.”

In conclusion, I became both dads. One part of me is a hard-core

capitalistwholovesthegameofmoneymakingmoney.Theothersideis
': a socially responsible teacher who isdeeplyconcernedwiththisever-
widening gap between the haves and have nots. I personallyhold the
archaiceducationalsystemprimarilyresponsibleforthisgrowinggap.

RichDad,PoorDad

CHAPTEREIGHT

OvercomingObstacles
Once people have studied and become financially literate, they may

stillfaceroadblockstobecomingfinanciallyindependent.Therearefive
main reasons why financially literatepeople may still not develop
abundantassetcolumns.Assetcolumnsthatcouldproducelargesumsof
cashflow.Assetcolumnsthatcouldfreethemtolivethelifetheydream
of,insteadofworkingfulltimejusttopaybills.Thefivereasonsare:

1.Fear.
2.Cynicism.
3.Laziness.
4.Badhabits.
5.Arrogance.
ReasonNo.1.Overcomingthefearoflosingmoney.Ihavenevermet

anyonewhoreallylikeslosingmoney.Andinallmyyears,Ihavenever
metarichpersonwhohasneverlostmoney.ButIhavemetalotofpoor
peoplewhohaveneverlostadime...investing,thatis.

Thefearoflosingmoneyisreal.Everyonehasit.Eventherich.But

it's not fear thatis the problem. It's how you handle fear. It's how you
handle losing. It's how you handlefailure that makes the difference in
one's life. That goes for anything in life, not justmoney. The primary
difference between a rich person and a poor person is how they handle
thatfear.

It'sOKtobefearful.It'sOKtobeacowardwhenitcomestomoney.

You can still be rich. We're all heroes at something and cowards at
somethingelse.Myfriend'swifeisanemergencyroomnurse.When;she
sees blood, she flies into action. When I mentioninvesting, she runs'j
away.WhenIseeblood,Idon'trun.Ipassout.Myrichdadunderstood
phobiasaboutmoney.“Somepeopleareterrifiedofsnakes.Somepeople
areterrifiedaboutlosingmoney.Botharephobias,”hewouldsay.Sohis
solutiontothephobiaoflosingmoneywasthislittlerhyme:“Ifyouhate
riskandworry...startearly.”

That'swhybanksrecommendsavingsasahabitwhenyou'reyoung.J

Ifyoustartyoung,it'seasytoberich.Iwon'tgointoithere,butthereisa
largedifferencebetweena personwhostartssavingatage20versusage
30.Astaggeringdifference.

It is said that one of the wonders of the world is the power of

compoundinterest.ThepurchaseofManhattanIslandissaidtobeoneof
the greatest bargains of all time. NewYork was purchased for $24 in
trinkets and beads. Yet, if that $24 had been invested, at 8 percent
annually,that$24wouldhavebeenworthmorethan$28trillionby1995,
Manhattancould be repurchased with money left over to buy much of
L.A.,especiallyat1995'srealestateprices.

Myneighborworksforamajorcomputercompany.Hehasbeenthere

25years.Infivemoreyearshewillleavethecompanywith$4millionin
his 401k retirement plan. It isinvested mostly in high-growth mutual
funds, which he will convert to bonds and governmentsecurities. He'll
onlybe55whenhegetsout,andhewillhave-apassivecashflowofover
$300,000ayear,morethanhemakesfromhissalary.Soitcanbedone,
even if youhate losing or hate risk. But you must start early and
definitely set up a retirementplan, and you should hire a financial
planneryoutrusttoguideyoubeforeinvestinginanything.

But what if you don't have much time left or would like to retire

early?Howdoyouhandlethefearoflosingmoney?

My poor dad did nothing. He simply avoided the issue, refusing to

discussthesubject.

My rich dad, on the other hand, recommended that I think like a

Texan.“IlikeTexasandTexans,”heusedtosay.“InTexas,everythingis
bigger. When Texans win, they win big. And when they lose, it's
spectacular.”

“Theylikelosing?”Iasked.
“That's not what I'm saying. Nobody likes losing. Show me a happy

loser, and I'll show youa loser,” said rich dad. “It's a Texan's attitude
toward risk, reward and failure I'mtalking about. It's how they handle
life.Theyliveitbig.Notlikemostofthepeoplearoundhere,livinglike
roaches when it comes to money. Roaches terrified that someonewill

shinealightonthem.Whimperingwhenthegroceryclerkshortchanges
themaquarter.”

Richdadwentontoexplain.
“WhatIlikebestistheTexasattitude.They'reproudwhentheywin,

and they brag whentheylose.Texanshaveasaying,”Ifyou'regoingto
gobroke,gobig.Youdon'twantto admityouwentbrokeoveraduplex.
Mostpeoplearoundherearesoafraidoflosing,theydon'thaveaduplex
togobrokewith."

He constantly told Mike and me that the greatest reason for lack of

financialsuccesswasbecausemostpeopleplayedittoosafe.“Peopleare
soafraidoflosingthattheylose”werehiswords.

Fran Tarkenton, a one-time great NFL quarterback, says it still

another way: “Winningmeans being unafraid to lose.” In my own life,
I'venoticedthatwinningusuallyfollowslosing.BeforeIfinallylearned
torideabike,Ifirstfelldownmanytimes.I'venevermeta

golferwhohasneverlostagolfball.I'venevermetpeoplewhohave

falleninlovewhohaveneverhadtheirheartbroken.AndI'venevermet
someonerichwhohasneverlostmoney.

So for most people, the reason they don't win financially is because

thepainoflosingmoneyisfargreaterthanthejoyofbeingrich.Another
sayinginTexasis,“EveryonewantstogotoHeaven,butnoonewantsto
die.”Mostpeopledreamofbeingrich,butareterrifiedoflosingmoney.
SotheynevergettoHeaven.

RichdadusedtotellMikeandmestoriesabouthistripstoTexas.“If

you really want tolearn the attitude of how to handle risk, losing and
failure,gotoSanAntonioandvisittheAlamo.TheAlamoisagreatstory
ofbravepeoplewhochosetofight,knowingtherewasnohopeofsuccess
against overwhelming odds. They chose to die instead ofsurrendering.
It's an inspiring story worthy of study; nonetheless, it's still a tragic
military defeat. They got their butts kicked.A failure if you will. They
lost. So how doTexans handle failure? They still shout, 'Remember the
Alamo!'”

MikeandIheardthisstoryalot.Healwaystoldusthisstorywhenf

hewasabouttogointoabigdealandhewasnervous.Afterhehaddone

all his due diligence and now it wasput up or shut up, he told us this
story.Everytimehewasafraidofmakingamistake,orlosingmoney,he
toldusthisstory.Itgavehimstrength,foritremindedhimthathecould
always turn a financial loss into a financial win. Rich dad I knew that
failurewould only make him stronger and smarter. It's not that! he
wanted to lose; he just knewwhohewasandhowhewouldtakealoss.
Hewouldtakealossandmakeitawin.That'swhatmadehimawinner
and others losers. It gave him the courage to cross the line whenothers
backedout.“That'swhyIlikeTexanssomuch.Theytookagreatfailure
andturneditintoatouristdestinationthatmakesthemmillions.”

But probably his words that mean the most to me today are these:

“Texansdon'tburytheirfailures.Theygetinspiredbythem.Theytakei
theirfailuresandturnthemintorallyingcries.FailureinspiresTexansto
'becomewinners.ButthatformulaisnotjusttheformulaforTexans.Itj
istheformulaforallwinners.”

JustasIalsosaidthatfallingoffmybikewaspartoflearningtoride.

I rememberfalling off only made me more determined to learn to ride.
Not less. I also said that Ihavenevermetagolferwhohasneverlosta
ball. To be a top professional golfer, losing a ball or a tournament only
inspiresgolferstobebetter,topracticeharder,tostudymore.That'swhat
makes them better. For winners, losing inspires them. For losers, losing
defeatsthem.

Quoting John D. Rockefeller, “I always tried to turn every disaster '

intoanopportunity.”

And being Japanese-American, I can say this. Many people say that

PearlHarborwasanAmericanmistake.IsayitwasaJapanesemistake.
FromthemovieTora,Tora,Tom,a somberJapaneseadmiralsaystohis
cheeringsubordinates,“Iamafraidwehaveawakenedasleeping giant.”
“Remember Pearl Harbor” became a rallying cry. It turned one of
America'sgreatest losses into the reason to win. This great defeat gave
Americastrength,andAmericasoonemergedasaworldpower.

Failure inspires winners.And failure defeats losers. It is the biggest

secret of winners.It's the secret that losers do not know. The greatest
secretofwinnersisthatfailureinspireswinning;thus,they'renotafraid

of losing. Repeating Fran Tarkenton's quote,“Winning means being
unafraid to lose.” People like Fran Tarkenton are not afraid oflosing
because they know who they are. They hate losing, so they know that
losing willonlyinspirethemtobecomebetter.Thereisabigdifference
betweenhatinglosingandbeingafraidtolose.Mostpeoplearesoafraid
oflosingmoneythattheylose.Theygobrokeoveraduplex.Financially
they play life too safe and too small. They buy bighouses and big cars,
but not big investments. The main reason that over 90 percent of the
American public struggles financially is because they play not to lose.
Theydon'tplaytowin.

Theygototheirfinancialplannersoraccountantsorstockbrokersand

buyabalancedportfolio.MosthavelotsofcashinCDs,low-yieldbonds,
mutual funds that can be tradedwithin a mutual-fund family, and a few
individual stocks. It is a safe and sensibleportfolio. But it is not a
winningportfolio.Itisaportfolioofsomeoneplayingnottolose.

Don'tgetmewrong.It'sprobablyabetterportfoliothanmorethan70

percentofthepopulation,andthat'sfrightening.Becauseasafeportfolio
is a lot better than noportfolio. It's a great portfolio for someone who
lovessafely.Butplayingitsafeandgoing“balanced”onyourinvestment
portfolio is not the way successful investors play thegame. If you have
little money and you want to be rich, you must first be “focused,” not
“balanced.” If you look at anyone successful, at the start they were not
balanced.Balanced people go nowhere. They stay in one spot. To make
progress, you must first gounbalanced. Just look at how you make
progresswalking.

ThomasEdisonwasnotbalanced.Hewasfocused.BillGateswasnot

balanced. He wasfocused. Donald Trump is focused. George Soros is
focused.GeorgePattondidnottakehistankswide.Hefocusedthemand
blew through the weak spots in the German line. The Frenchwent wide
withtheMaginotLine,andyouknowwhathappenedtothem.

Ifyouhaveanydesireofbeingrich,youmustfocus.Putalotofyour

eggs in a fewbaskets.Donotdowhatpoorandmiddleclasspeopledo:
puttheirfeweggsinmanybaskets.

Ifyouhatelosing,playitsafe.Iflosingmakesyouweak,playitsafe.

Go with balancedinvestments. If you're over 25 years old and are
terrified of taking risks, don't change.Play it safe, but start early. Start
accumulatingyournesteggearlybecauseitwilltaketime.

Butifyouhavedreamsoffreedom-ofgettingoutoftheratrace-the

firstquestiontoaskyourselfis,“HowdoIrespondtofailure?”Iffailure
inspiresyoutowin,maybeyoushouldgoforit-butonlymaybe.Iffailure
makes you weak or causes you to throw tempertantrums-like spoiled
bratswhocallanattorneytofilealawsuiteverytimesomethingdoesnot
go their way-then play it safe. Keep your daytime job. Or buy bonds or
mutualfunds.Butremember,thereisriskinthosefinancialinstruments
also,eventhoughtheyaresafer.

Isayallthis,mentioningTexasandFranTarkenton,becausestacking

the asset column iseasy. It's really a low-aptitude game. It doesn't take
mucheducation.Fifth-grademathwilldo.Butstakingtheassetcolumn'J
isahigh-attitudegame.Ittakesguts,patienceandagreatattitudetoward
failure. Losers avoid failing.And failure turns losers intowinners.'' Just
remembertheAlamo.

ReasonNo.2.Overcomingcynicism.“Theskyis falling. The sky is

falling.” Most of usknowthestoryof“ChickenLittle,”whoranaround
warning the barnyard of impending doom.We all know people who are
thatway.Butweallhavea“ChickenLittle”insideeachofus.

AndasIstatedearlier,thecynicisreallyalittlechicken.Weallgeta

littlechickenwhenfearanddoubtcloudourthoughts.

Allofushavedoubts.“I'mnotsmart.”“I'mnotgoodenough.”“So'$

andsoisbetterthanme.”Orourdoubtsoftenparalyzeus.Weplaythe.|
“Whatif?”game.“WhatiftheeconomycrashesrightafterIinvest?”Or
“WhatifIlosecontrolandIcan'tpaythemoneyback?”“Whatifthings
don'tgoasIplanned?”Orwehavefriendsorlovedoneswhowillremind
us of our shortcomings regardless of whether we ask. They often say,
“Whatmakes you think you can do that?” Or “If it's such a good idea,
how come someone elsehasn'tdoneit?”Or“Thatwillneverwork.You
don'tknowwhatyou'retalkingabout.”Thesewordsofdoubtoftengetso
loud that we fail to act. A horrible feeling builds in our stomach.
Sometimeswecan'tsleep.Wefailtomoveforward.Sowestaywithwhat

issafe and opportunities pass us by. We watch life passing by as we sit
immobilized with acold knot in our body. We have all felt this at one
timeinourlives,somemorethanothers.

Peter Lynch of Fidelity Magellan mutual fund fame refers to

warningsabouttheskyfallingas“noise,”andweallhearit.

“Noise” is either created inside our heads or comes from outside.

Often from friends,family,co-workersandthemedia.Lynchrecallsthe
timeduringthe1950swhenthethreatofnuclearwarwassoprevalentin
thenewsthatpeoplebeganbuildingfalloutsheltersandstoringfoodand
water. If they had invested that money wisely in the market, insteadof
building a fallout shelter, they'd probably be financially independent
today.

When the riots broke out in LosAngeles a few years ago, gun sales

wentupalloverthecountry.Apersondiesfromrarehamburgermeatin
Washington State and theArizona Health Department orders restaurants
to have all beef cooked well-done.A drug company runs a national TV
commercial showing people catching the flu. The ad runs in February.
Coldsgoupaswellassalesoftheircoldmedicine.

Mostpeoplearepoorbecausewhenitcomestoinvesting,theworldis

filled with ChickenLittles running around yelling, “The sky is falling.
Theskyisfalling.”AndChickenLittlesareeffectivebecauseeveryoneof
us is a little chicken. It often takes greatcourage to not let rumors and
talkofdoomandgloomaffectyourdoubtsandfears.

In1992,afriendnamedRichardcamefromBostontovisitmywife

and me in Phoenix. Hewas impressed with what we had done through
stocks and real estate. The prices of realestate in Phoenix were
depressed. We spent two days with him showing him what we thought
wereexcellentopportunitiesforcashflowandcapitalappreciation.

My wife and I are not real estate agents. We are strictly investors.

After identifying aunit in a resort community, we called an agent who
sold it to him that afternoon. Theprice was a mere $42,000 for a two-
bedroomtownhome.Similarunitsweregoingfor$65,000.Hehadfound
abargain.Excited,heboughtitandreturnedtoBoston.

Two weeks later, the agent called to say that our friend had backed

out. I calledimmediatelytofindoutwhy.Allhesaidwasthathetalked
to his neighbor, and hisneighbor told him it was a bad deal. He was
payingtoomuch.

I asked Richard if his neighbor was an investor. Richard said “no.”

WhenIaskedwhyhelistenedtohim,Richardgotdefensiveandsimply
saidhewantedtokeeplooking.

TherealestatemarketinPhoenixturned,andby1994,thatlittleunit

was renting for$1,000 a month-$2,500 in the peak winter months. The
unitwasworth$95,000in1995.AllRichardhadtoputdownwas$5,000
andhewouldhavehadastartatgettingoutoftheratrace.Today,hestill
has done nothing. And the bargains in Phoenix are still here; you just
havetolookalotharder.

Richard's backing out did not surprise me. It's called “buyer's

remorse,”anditaffectsallofus.It'sthosedoubtsthatgetus.Thelittle1
chickenwon,andachanceatfreedomwaslost.

In another example, I hold a small portion of my assets in tax lien

certificates insteadof CDs. I earn 16 percent per year on my money,
which certainly beats the 5 percent thebank offers. The certificates are
securedbyrealestateandenforcedbystatelaw,whichisalsobetterthan
most banks. The formula they're bought on makes them safe. They just
lackliquidity.SoIlookatthemas2to7-yearCDs.AlmosteverytimeI
tell someone,especially if they have money in CDs, that I hold my
moneythisway,theywilltellmeit'srisky.TheytellmewhyIshouldnot
doit.WhenIaskthemwheretheygettheirinformation,theysayfroma
friend or an investment magazine. They've never done it, andthey're
telling someone who's doing it why they shouldn't. The lowest I yield I
lookforis16percent,butpeoplewhoarefilledwithdoubtarewillingto
accept5percent.Doubtisexpensive.

Mypointisthatit'sthosedoubtsandcynicismthatkeepmostpeople?

poorandplayingitsafe.Therealworldissimplywaitingforyoutoget
rich.Onlyaperson'sdoubtskeepthempoor.AsIsaid,gettingoutofthe
rat race is technically easy. It doesn't takemuch education, but those
doubtsarecripplersformostpeople.

“Cynicsneverwin,”saidrichdad.“Uncheckeddoubtandfearcreates

i a cynic. Cynicscriticize, and winners analyze” was another of his
favoritesayings.Richdadexplainedthatcriticismblindedwhileanalysis
opened -< eyes.Analysis allowed winners to see thatcritics were blind,
and to see opportunities that everyone else missed. And finding what
peoplemissis|keytoanysuccess.

Realestateisapowerfulinvestmenttoolforanyoneseekingfinancial

independenceorfreedom.Itisauniqueinvestmenttool.Yet,everytimeI
mentionrealestateasavehicle,Ioftenhear,“Idon'twanttofixtoilets.”

That'swhatPeterLynchcalls“noise.”That'swhatmyrichdadwould

sayisthecynictalking.Someonewhocriticizesanddoesnot

analyze. Someone who lets their doubts and fears close their mind

insteadofopentheireyes."

So when someone says, “I don't want to fix toilets,” I want to fire

back,“WhatmakesyouthinkIwantto?”They'resayingatoiletismore
important than what they want. I talkabout freedom from the rat race,
and they focus on toilets. That is the thought patternthat keeps most
peoplepoor.Theycriticizeinsteadofanalyze.

“'Idon'twants'holdthekeytoyoursuccess,”richdadwouldsay.
Because I, too, do not want to fix toilets, I shop hard for a property

manager who doesfix toilets.And by finding a great property manager
who runs houses or apartments, well,my cash flow goes up. But more
importantly a great property manager allows me to buy a lotmore real
estatesinceIdon'thavetofixtoilets.Agreatpropertymanageriskeyto
success in real estate. Finding a good manager is more important to me
than the realestate.Agreatpropertymanageroftenhearsofgreatdeals
beforerealestateagentsdo,whichmakesthemevenmorevaluable.

Thatiswhatrichdadmeantby“'Idon'twants'holdthekeytoyour

success.”BecauseIdonotwanttofixtoiletseither,Ifiguredouthowto
buy more real estate and expeditemy getting out of the rat race. The
people who continue to say “I don't want to fixtoilets” often deny
themselvestheuseofthispowerfulinvestmentvehicle.Toiletsaremore
importantthantheirfreedom.

In the stock market, I often hear people say, “I don't want to lose

money.” Well, what makes them think I or anyone else likes losing

money? They don't make money because theychose to not lose money.
Instead of analyzing, they close their minds to another powerful
investmentvehicle,thestockmarket.

In December 1996,1 was riding with a friend past our neighborhood

gasstation.Helookedupandsawthatthepriceofoilwasgoingup.My
friend is a worry wart or a “ChickenLittle.” To him, the sky is always
goingtofall,anditusuallydoes,onhim.

Whenwegothome,heshowedmeallthestatsastowhythepriceof

oilwasgoingtogoupoverthenextfewyears.StatisticsIhadneverseen
before, even though I already owned asubstantial share block of an
existing oil company. With that information, I immediately began
lookingforandfoundanewundervaluedoilcompanythatwasaboutto
find some oildeposits.Mybrokerwasexcitedaboutthisnewcompany,
andIbought15,000sharesfor65centspershare.

In February 1997, this same friend and I drove by the same gas

station, and sure enough,the price per gallon had gone up nearly 15
percent. Again, the “Chicken Little” worriedand complained. I smiled
becauseinJanuary1997,thatlittleoilcompanyhitoilandthose 15,000
shareswentuptomorethan$3persharesincehehadfirstgivenmethe
tip.Andthepriceofgaswillcontinuetogoupifwhatmyfriendsaysis
true.

Instead of analyzing, their little chicken closes their mind. If most

people understoodhowa“stop”workedinstock-marketinvesting,there
wouldbemorepeople-investingtowininsteadofinvestingnottolose.A
“stop”issimplyacomputercommandthatsellsyourstockautomatically
ifthepricebeginstodrop,helpingtominimizeyourlossesandmaximize
somegains.It'sagreattoolforthosewhoareterrifiedoflosing.

So whenever I hear people focusing on their “I don't wants,” rather

than what they dowant, I know the “noise” in their head must be loud.
Chicken Little has taken over theirbrain and is yelling, “The sky is
falling and toilets are breaking.” So they avoid their“don't wants,” but
theypayahugeprice.Theymaynevergetwhattheywantinlife.

Rich dad gave me a way of looking at Chicken Little. “Just do what

ColonelSandersdid.”Attheageof66,helosthisbusinessandbeganto

live on his Social Security check. Itwasn'tenough.Hewentaround,the
country selling his recipe for fried chicken. He wasturned down 1,009
timesbeforesomeonesaid“yes.”Andhewentontobecomea

multimillionaireatanagewhenmostpeoplearequitting.“Hewasa

braveandtenaciousman,”richdadsaidofHarlanSanders.

Sowhenyou'reindoubtandfeelingalittleafraid,justdowhatCol.

Sandersdidtohislittlechicken.Hefriedit.

ReasonNo.3.Laziness.Busypeopleareoftenthemostlazy.Wehave

all heard stories ofa businessman who works hard to earn money. He
works hard to be a good provider for hiswife and children. He spends
longhoursattheofficeandbringsworkhomeonweekends.Onedayhe
comeshometoanemptyhouse.Hiswifehasleftwiththekids.Heknew
he andhis wife had problems, but rather than work to make the
relationshipstrong,hestayedbusyatwork.Dismayed,hisperformanceat
workslipsandheloseshisjob.

Today, I often meet people who are too busy to take care of their

wealth. And there arepeople too busy to take care of their health. The
causeisthesame.They'rebusy,andtheystaybusyasawayofavoiding
somethingtheydonotwanttoface.Nobodyhastotellthem.Deepdown
theyknow.Infact,ifyouremindthem,theyoftenrespondwithangeror
irritation.

If they aren't busy at work or with the kids, they're often busy

watching TV, fishing, playing golf or shopping. Yet, deep down they
know they are avoiding something important.That's the most common
formoflaziness.Lazinessbystayingbusy.

Sowhatisthecureforlaziness?Theanswerisalittlegreed.
For many of us, we were raised thinking of greed or desire as bad.

“Greedy people are badpeople,” my mom use to say.Yet, we all have
inside of us this yearning to have nicethings, new things or exciting
things. So to keep that emotion of desire under control,often parents
foundwaysofsuppressingthatdesirewithguilt.

“You only think about yourself. Don't you know you have brothers

and sisters?” was one ofmy mom's favorites. Or “You want me to buy
you what?” was a favorite of my dad. “Do youthink we're made of

money?Doyouthinkmoneygrowsontrees?We'renotrichpeople,you
know.”

Itwasn'tsomuchthewordsbuttheangryguilt-tripthatwentwiththe

wordsthatgottome.

Or the reverse guilt-trip was the “I'm sacrificing my life to buy this

foryou.I'mbuyingthisforyoubecauseIneverhadthisadvantagewhen
Iwasakid.”Ihaveaneighborwhoisstonebroke,butcan'tparkhiscar
in his garage. The garage is filled with toys forhis kids. Those spoiled
bratsgeteverythingtheyaskfor.“Idon'twantthemtoknowthefeeling
of want” are his everyday words. He has nothing set aside for their
college or hisretirement, but his kids have every toy ever made. He
recently got a new credit card inthe mail and took his kids to visit Las
Vegas.“I'mdoingitforthekids,”hesaidwithgreatsacrifice.

Richdadforbadethewords“Ican'taffordit.”
In my real home, that's all I heard. Instead, rich dad required his

children to say, “HowcanIaffordit?”Hisreasoning,thewords“Ican't
afford it” shut down your brain. Itdidn't have to think anymore. “How
can I afford it'” opened up the brain. Forced it tothink and search for
answers.

Butmostimportantly,hefeltthewords“Ican'taffordit”werealie.

Andthehumanspiritknewit.“Thehumanspiritisvery,very,powerful,”
hewouldsay.“Itknowsitcandoanything.”Byhavingalazymindthat
says,“Ican'taffordit,”awarbreaksoutinsideyou.Yourspiritisangry,
and your lazy mind must defend its lie. The spirit isscreaming, “Come
on.Let'sgotothegymandworkout.”Andthelazymindsays,“ButI'm
tired.Iworkedreallyhardtoday.”Orthehumanspiritsays,“I'msickand
tired of beingpoor. Let's get out there and get rich.” To which the lazy
mindsays,"Richpeoplearegreedy.Besidesit'stoomuchbother.

It's not safe. I might lose money. I'm working hard enough as it is.

I've got too much todo at work anyway. Look at what I have to do
tonight.Mybosswantsitfinishedbythemorning."

“Ican'taffordit”alsobringsupsadness.Ahelplessnessthatleadsto'

despondencyandoftendepression.“Apathy”isanotherword.“HowcanI
afford it?” opens up possibilities,excitement and dreams. So rich dad ,

wasnotsoconcernedaboutwhatyouwantedtobuy,butthat“Howcan'f
jIaffordit?”createdastrongermindandadynamicspirit.

Thus, he rarely gave Mike or me anything. Instead he would ask,

“How can you afford it?”and that included college, which we paid for
ourselves. It was not the goal but theprocess of attaining the goal we
desiredthathewantedustolearn.TheproblemIsensetodayisthatthere
are millions of people who feel guilty about their greed. It's an old
conditioning from their childhood. Their desire to have the finer things
thatlifeoffers.Mosthavebeenconditionedsubconsciouslytosay,“You
can'thavethat,”or;

“You'llneveraffordthat.”
When I decided to exit the rat race, it was simply a question. “How

can I afford to neverwork again?” And my mind began to kick out
answers and solutions. The hardest part wasfighting my real parents'
dogmaof“Wecan'taffordthat.”Or“Stopthinkingonlyabout yourself.”
Or“Whydon'tyouthinkaboutothers?”andothersuchwordsdesignedto
instillguilttosuppressmygreed.

So how do you beat laziness? The answer is a little greed. It's that

radiostationWII-FM,whichstandsfor“What'sInIt-ForMe?”Aperson
needs to sit down and ask, “What's in itfor me if I'm healthy, sexy and
good looking?” Or “What would my life be like if I neverhad to work
again?”Or“WhatwouldIdoifIhadallthemoneyIneeded?”Without
thatlittle greed, the desire to have something better, progress is not
made. Our worldprogresses because we all desire a better life. New
inventionsaremadebecausewedesiresomethingbetter.Wegotoschool
andstudyhardbecausewewantsomethingbetter.Sowheneveryoufind
yourselfavoidingsomethingyouknowyoushouldbedoing,thentheonly
thingtoaskyourselfis“What'sinitforme?”Bealittlegreedy.It'sthe
bestcureforlaziness.

Toomuchgreed,however,asanythinginexcesscanbe,isnotgood.

ButjustrememberwhatMichaelDouglassaidinthemovieWallStreet.
“Greedisgood.”Richdadsaiditdifferently:"Guiltisworsethangreed.

For guilt robs the body of its soul.“ And to me, Eleanor Roosevelt

said it best: ”Do whatyou feel in your heart to be right-for you'll be

criticizedanyway.You'llbedamnedifyoudo,anddamnedifyoudon't."

Reason No. 4. Habits. Our lives are a reflection of our habits more

than our education.After seeing the movie Conan, starring Arnold
Schwarzenegger, a friend said, “I'd love tohave a body like
Schwarzenegger.”Mostoftheguysnoddedinagreement.

“I even heard he was really puny and skinny at one time,” another

friendadded.

“Yeah,Iheardthattoo,”anotheroneadded.“Iheardhehasahabitof

workingoutalmosteverydayinthegym.”

“Yeah,I'llbethehasto.”
“Nah,”saidthegroupcynic.“I'llbethewasbornthatway.Besides,

let'sstoptalkingaboutArnoldandgetsomebeers.”

Thisisanexampleofhabitscontrollingbehavior.Irememberasking

my rich dad about thehabits of the rich. Instead of answering me
outright,hewantedmetolearnthroughexample,asusual.

“Whendoesyourdadpayhisbills?”richdadasked.
“Thefirstofthemonth,”Isaid.
“Doeshehaveanythingleftover?”heasked.
“Verylittle,”Isaid.
“That's the main reason he struggles,” said rich dad. “He has bad

habits.”

“Yourdadpayseveryoneelsefirst.Hepayshimselflast,butonlyif

hehasanythingleftover.”

“Which he usually doesn't,” I said. “But he has to pay his bills,

doesn'the?You'resayingheshouldn'tpayhisbills?”

“Ofcoursenot,”saidrichdad.“Ifirmlybelieveinpayingmybillson

time.Ijustpaymyselffirst.BeforeIpayeventhegovernment.”

“Butwhathappensifyoudon'thaveenoughmoney?”Iasked.“What

doyoudothen?”

“Thesame,”saidrichdad.“Istillpaymyselffirst.EvenifI'mshort

of money. My assetcolumn is far more important to me than the
government.”

“But,”Isaid.“Don'ttheycomeafteryou?”
“Yes,ifyoudon'tpay,”saidrichdad.“Look,Ididnotsaynottopay.

IjustsaidIpaymyselffirst,evenifI'mshortofmoney.”

“But,”Ireplied.“Howdoyoudothat'”
“It'snothow.Thequestionis'Why,'”richdadsaid.
“OK,why?”
“Motivation,”saidrichdad“Whodoyouthinkwillcomplainlouder

ifIdon'tpaythem-meormycreditors?”

“Your creditors will definitely scream louder than you,” I said,

responding to theobvious.“Youwouldn'tsayanythingifyoudidn'tpay
yourself.”

“Soyousee,afterpayingmyself,thepressuretopaymytaxesandthe

othercreditorsissogreatthatitforcesmetoseekotherformsofincome.
The pressure to pay becomes mymotivation. I've worked extra jobs,
startedothercompanies,tradedinthestockmarket,anythingjusttomake
sure those guys don't start yelling at me. That pressure made mework
harder, forced me to think, and all in all made me smarter and more
active when itcomes to money. If I had paid myself last, I would have
feltnopressure,butI'dbebroke.”

“SoitisthefearofthegovernmentorotherpeopleyouowemoneyI

tothatmotivatesyou?”

“That'sright,”saidrichdad.“Yousee,governmentbillcollectorsare

big bullies. Soarebillcollectorsingeneral.Mostpeoplegiveintothese
bullies.Theypaythemandneverpaythemselves.Youknowthestoryof
the96?poundweaklingwhogetssandkickedinhisface?”

Inodded.“Iseethatadforweightliftingandbodybuildinglessonsin

thecomicbooksallthetime.”

"Well,mostpeopleletthebullieskicksandintheirfaces.Idecidedto

usethefearofthebullytomakemestronger.Othersgetweaker.Forcing
myselftothinkabouthowtomakeextramoneyislikegoingtothegym
and working out with weights. The more I work mymental money
musclesout,thestrongerIget.Now,I'mnotafraidofthosebullies.

I liked what rich dad was saying. “So if I pay myself first, I get

financiallystronger,mentallyandfiscally.”

Richdadnodded.
“And if I pay myself last, or not at all, I get weaker. So people like

bosses, managers,tax collectors, bill collectors and landlords push me
aroundallmylife.JustbecauseIdon'thavegoodmoneyhabits.”

Richdadnodded.“Justlikethe96-poundweakling.”
ReasonNo.5.Arrogance.Arroganceisegoplusignorance.I“WhatI

knowmakesmemoney.WhatIdon'tknowlosesmemoney.EverytimeI
havebeenarrogant,Ihavelostmoney.BecausewhenI'marrogant,Itruly
believethatwhatIdon'tknowisnotimportant,”richdadwouldoftentell
me.

Ihavefoundthatmanypeopleusearrogancetotrytohidetheirown

ignorance. It oftenhappens when I am discussing financial statements
withaccountantsorevenotherinvestors.

Theytrytoblustertheirwaythroughthediscussion.Itiscleartome

that they don'tknow what they're talking about. They're not lying, but
theyarenottellingthetruth.

There are many people in the world of money, finances and

investmentswhohaveabsolutelynoideawhatthey'retalkingabout.Most
peopleinthemoneyindustryarejustspoutingoffsalespitcheslikeused-
carsalesmen.

Whenyouknowyouareignorantinasubject,starteducatingyourself

byfindinganexpertinthefieldorfindabookonthesubject.

RichDad,PoorDad

CHAPTERNINE

GettingStarted
IwishIcouldsayacquiringwealthwaseasyforme,butitwasn't.
So in response to the question “How do I start?” I offer the thought

processIgothroughonaday-by-daybasis.Itreallyiseasytofindgreat
deals. I promise you that. It'sjust like riding a bike. After a little
wobbling, it's a piece of cake. But when it comesto money, it's the
determinationtogetthroughthewobblingthat'sapersonalthing.

Tofindmillion-dollar“dealsofalifetime”requiresustocallonour

financialgenius.Ibelievethateachofushasafinancialgeniuswithinus.
The problem is, our financialgenius lies asleep, waiting to be called
upon.Itliesasleepbecauseourculturehaseducatedusintobelievingthat
theloveofmoneyistherootof all evil. It hasencouragedustolearna
professionsowecanworkformoney,butfailedtoteachushowto have
money work for us. It taught us not to worry about our financial future,
ourcompanyorthegovernmentwouldtakecareofuswhenourworking
days are over. However, it is our children, educated in the same school
system,whowillenduppayingforit.Themessageisstilltoworkhard,
earnmoneyandspendit,andwhenwerunshort,wecanalways borrow
more.

Unfortunately, 90 percent of the Western world subscribes to the

above dogma, simplybecause it's easier to find a job and work for
money. If you are not one of the masses, Ioffer you the following ten
stepstoawakenyourfinancialgenius.IsimplyofferyouthestepsIhave
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
developitsownlist.

WhileinPeru,withagoldminerof45years,Iaskedhimhowhewas

so confident aboutfinding a gold mine. He replied, “There is gold
everywhere.Mostpeoplearenottrainedtoseeit.”

AndIwouldsaythatistrue.Inrealestate,Icangooutandinaday

comeupwithfourorfivegreatpotentialdeals,whiletheaverageperson

willgooutandfindnothing.Evenlookinginthesameneighborhood.The
reasonistheyhavenottakenthetimetodeveloptheirfinancialgenius.

IofferyouthefollowingtenstepsasaprocesstodevelopyourGod-

givenpowers.Powersonlyyouhavecontrolover.

1. I NEEDA REASON GREATER THAN REALITY: The power of

spirit.Ifyouaskmostpeopleiftheywouldliketoberichorfinancially
free, they would say “yes.” But then realitysets in. The road seems too
longwithtoomanyhillstoclimb.It'seasiertojustworkformoneyand
handtheexcessovertoyourbroker.Ioncemetayoungwomanwhohad
dreamsofswimmingfortheU.SOlympicteam.Therealitywas,shehad
togetupeverymorningat4a.m.toswimforthreehoursbeforegoingto
school. She did not party with her friendsonSaturdaynight.Shehadto
studyandkeephergradesup,justlikeeveryoneelse.

When I asked her what compelled her with such super-human

ambitionandsacrifice,shesimplysaid,“Idoitformyselfandthepeople
Ilove.It'slovethatgetsmeoverthehurdlesandsacrifices.”

Areasonorapurposeisacombinationof“wants”and“don'twants.”

When people ask mewhat my reason for wanting to be rich is, it is a
combinationofdeepemotional“wants”and“don'twants.”

Iwilllistafew.Firstthe“don'twants,”fortheycreatethe“wants.”I

don'twanttoworkallmylife.Idon'twantwhatmyparentsaspiredfor,
which was job security and ahouse in the suburbs. I don't like being an
employee.Ihatedthatmydadalwaysmissedmyfootballgamesbecause
he was so busy working on his career. I hated it when my dad worked
hardallhislifeandthegovernmenttookmostofwhatheworkedforat
hisdeath.Hecouldnotevenpassonwhatheworkedsohardforwhenhe
died. The rich don't do that.They work hard and pass it on to their
children.

Now the wants. I want to be free to travel the world and live in the

lifestyle I love. Iwant to be young when I do this. I want to simply be
free.Iwantcontrolovermytimeandmylife.Iwantmoneytoworkfor
me.

Thosearemydeep-seated,emotionalreasons.Whatareyours?Ifthey

are not strongenough,thentherealityoftheroadaheadmaybegreater

thanyourreasons.Ihavelostmoneyandbeensetbackmanytimes,butit
was the deep emotional reasons that kept mestanding up and going
forward.Iwantedtobefreebyage40,butittookmeuntilIwas4?with
manylearningexperiencesalongtheway.

AsIsaid,IwishIcouldsayitwaseasy.Itwasn't,butitwasn'thard

either.Butwithoutastrongreasonorpurpose,anythinginlifeishard.

IF YOU DO NOT HAVE A STRONG REASON, THERE IS NO

SENSE READING FURTHER. IT WILL SOUND LIKE TOO MUCH
WORK.

2.ICHOOSEDAILY:Thepowerofchoice.Thatisthemainreason

peoplewanttoliveinafreecountry.Wewantthepowertochoose.

Financially,witheverydollarwegetinourhands,weholdthepower

tochooseourfuturetoberich,poorormiddleclass.Ourspendinghabits
reflectwhoweare.Poorpeoplesimplyhavepoorspendinghabits.

The benefit I had as a boy was that I loved playing Monopoly

constantly. Nobody told meMonopoly was only for kids, so I just kept
playingthegameasanadult.Ialsohadarichdadwhopointedouttome
the difference between an asset and a liability. So a long time ago, as a
littleboy,Ichosetoberich,andIknewthatallIhadtodowaslearnto
acquire assets, real assets. My best friend, Mike, had an asset column
handed to him, buthe still had to choose to learn to keep it. Many rich
familieslosetheirassetsinthenextgenerationsimplybecausetherewas
noonetrainedtobeagoodstewardovertheirassets.

Mostpeoplechoosenottoberich.For90percentofthepopulation,

beingrichis“toomuchofahassle.”Sotheyinventsayingsthatgo,“I'm
not interested in money.” Or “I'llnever 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
problemwiththosestatementsistheyrobthepersonwhochoosesto

think such thoughts of two things: one is time, which is your most

precious asset, and twois learning. Just because you have no money,
should not be an excuse to not learn. Butthat is a choice we all make
daily,thechoiceofwhatwedowithourtime,ourmoneyandwhatweput
in our heads. That is the power of choice.All of us have choice. I just

choosetoberich,andImakethatchoiceeveryday.

INVEST FIRST IN EDUCATION: In reality, the only real asset you

haveisyourmind,themostpowerfultoolwehavedominionover.Justas
Isaidaboutthepowerofchoice,eachofushasthechoiceofwhatweput
inourbrainoncewe'reoldenough.YoucanwatchMTVall day,orread
golfmagazines,orgotoceramicsclassoraclassonfinancialplanning.
Youchoose.Mostpeoplesimplybuyinvestmentsratherthan

firstinvestinlearningaboutinvesting.
A friend of mine, who is a rich woman, recently had her apartment

burglarized.ThethievestookherTVandVCRandleftallthebooksshe
reads.And we all have that choice.Again, 90 percent of the population
buysTVsetsandonlyabout10percentbuybooksonbusinessortapeson
investments.

SowhatdoIdo?Igotoseminars.Ilikeitwhentheyareatleasttwo

days long becauseI like to immerse myself in a subject. In 1973, I was
watching TV and this guy came onadvertising a three-day seminar on
howtobuyrealestatefornothingdown.Ispent$385andthatcoursehas
mademeatleast$2million,ifnotmore.Butmoreimportantly,itbought
me life. I don't have to work for the rest of my life because of that one
course.Igotoatleasttwosuchcourseseveryyear.

Iloveaudiotapes.Thereason:Icanrewindquickly.Iwaslisteningto

a tape by PeterLynch, and he said something I completely disagreed
with.Insteadofbecomingarrogantandcritical,Isimplypushed“rewind”
and I listened to that five-minute stretch of tape atleast twenty times.
Possibly more. But suddenly, by keeping my mind open, I understood
whyhe said what he said. It was like magic. I felt like I had a window
into the mind of oneof the greatest investors of our time. I gained
tremendousdepthandinsightintothevastresourcesofhiseducationand
experience.

The net result: I still have the old way I used to think, and I have

Peter's way oflooking at the same problem or situation. I have two
thoughtsinsteadofone.Onemorewaytoanalyzeaproblemortrend,and
thatispriceless.Today,Ioftensay,“HowwouldPeter Lynchdothis,or
DonaldTrumporWarrenBuffettorGeorgeSoros?”TheonlywayIcan

accesstheirvastmentalpoweristobehumbleenoughtoreadorlistento
what they haveto say.Arrogant or critical people are often people with
low self-esteem who are afraidof taking risks. You see, if you learn
somethingnew,youarethenrequiredtomakemistakesinordertofully
understandwhatyouhavelearned.

If you have read this far, arrogance is not one of your problems.

Arrogantpeoplerarelyreadorbuytapes.Whyshouldthey?Theyarethe
centeroftheuniverse.

There are so many “intelligent” people who argue or defend when a

new idea clashes withthe way they think. In this case, their so-called
“intelligence”combinedwith“arrogance”equals“ignorance”.Eachofus
knows people who are highly educated, or believe they aresmart, but
their balance sheet paints a different picture.A truly intelligent person
welcomes new ideas, for new ideas can add to the synergy of other
accumulated ideas.Listeningismoreimportantthantalking.Ifthatwas
nottrue,Godwouldnothavegivenustwoearsandonlyonemouth.Too
many people think with their mouth instead oflistening to absorb new
ideasandpossibilities.Theyargueinsteadofaskingquestions.

Itakealongviewonmywealth.Idonotsubscribetothe“Getrich

quick”mentalitymostlotteryplayersorcasinogamblershave.Imaygo
in and out of stocks, but I am long oneducation. If you want to fly an
airplane,Iadvisetakinglessonsfirst.Iamalwaysshockedatpeoplewho
buy stocks or real estate, but never invest in their greatest asset,their
mind. Just because you bought a house or two does not make you an
expertatrealestate.

3.CHOOSEFRIENDSCAREFULLY:Thepowerofassociation.First

of all, I do not choose myfriends by their financial statements. I have
friendswhohaveactuallytakenthevowofpovertyaswellasfriendswho
earn millions every year. The point is I learn from all ofthem, and I
consciouslymaketheefforttolearnfromthem.

Now I will admit that there are people I have actually sought out

becausetheyhadmoney.ButIwasnotaftertheirmoney;Iwasseeking
their knowledge. In some cases, thesepeople who had money have
becomedearfriends,butnotall.

ButthereisonedistinctionthatIwouldliketopointout.I'venoticed

that my friendswith money talk about money.And I do not mean brag.
They're interested in the subject. SoI learn from them, and they learn
fromme.Myfriends,whomIknowareindirestraitsfinancially,donot
liketalkingaboutmoney,businessorinvesting.Theyoftenthinkitrude
or unintellectual. So I also learn from my friends who struggle
financially.Ifindoutwhatnottodo.

I have several friends who have generated over a billion dollars in

their short lifetimes.The three of them report the same phenomenon:
Theirfriendswhohavenomoneyhavenevercometothemtoaskthem
howtheydidit.Buttheydocomeaskingforoneoftwothings,orboth:1.
aloan,or2.ajob.

AWARNING:Don'tlistentopoororfrightenedpeople.Ihavesuch

friends,andIlovethemdearly,buttheyarethe“ChickenLittles”oflife.
When it comes to money, especiallyinvestments, “The sky is always
falling.” They can always tell you why something won'twork. The
problem is, people listen to them, but people who blindly accept doom-
and-gloominformation are also “Chicken Littles.” As that old saying
goes,“Chickensofafeatheragreetogether.”

IfyouwatchCNBC,whichisagoldmineofinvestmentinformation,

they often have a panelof so-called “experts.” One expert will say the
market is going to crash, and the otherwill say it's going to boom. If
you'resmart,youlistentoboth.Keepyourmindopenbecausebothhave
validpoints.Unfortunately,mostpoorpeoplelistento“ChickenLittle.”

I have had more close friends try to talk me out of a deal or an

investment.Afewyears ago,afriendtoldmehewasexcitedbecausehe
founda6percentcertificateofdeposit.ItoldhimIearn16percentfrom
the state government. The next day he sent me an articleabout why my
investmentwasdangerous.Ihavereceived16percentforyearsnow,and
hestillreceives6percent.

Iwouldsaythatoneofthehardestthingsaboutwealthbuildingisto

betruetoyourselfandbewillingtonotgoalongwiththecrowd.Forin
themarket,itisusuallythecrowdthatshowsuplateandisslaughtered.
Ifagreatdealisonthefrontpage,it'stoolateinmostinstances.Lookfor

anewdeal.Asweusedtosayassurfers:“Thereisalwaysanotherwave.”
People who hurry and catch a wave late usually are the ones who wipe
out.

Smartinvestorsdon'ttimemarkets.Iftheymissawave,theysearch
forthenextoneandgetthemselvesinposition.Whythisishardfor

most investors isbecause buying what is not popular is frightening to
them.Timidinvestorsarelikesheepgoingalongwiththecrowd.Ortheir
greed gets them in when wise investors have alreadytaken their profits
and moved on. Wise investors buy an investment when it's not popular.
They know their profits are made when they buy, not when they sell.
They wait patiently.As I said, they do not time the market. Just like a
surfer,theygetinpositionforthenextbigswell.

It's all “insider trading.” There are forms of insider trading that are

illegal, and thereare forms of insider trading that are legal. But either
way, it's insider trading. Theonly distinction is how far away from the
insideareyou?Thereasonyouwanttohaverichfriendswhoarecloseto
the inside is because that is where the money is made. It's madeon
information.You want to hear about the next boom, get in and get out
before the nextbust. I'm not saying do it illegally, but the sooner you
know, the better your chances arefor profits with minimal risk. That is
whatfriendsarefor.Andthatisfinancialintelligence.

4. MASTERA FORMULAAND THEN LEARNA NEW ONE: The

poweroflearningquickly.Inordertomakebread,everybakerfollowsa
recipe, even if it's only held in their head. The sameis true for making
money.That'swhymoneyisoftencalled“dough.”

Most of us have heard the saying “You are what you eat.” I have a

differentslantonthesamesaying.Isay,“Youbecomewhatyoustudy.”
Inotherwords,becarefulwhatyoustudyandlearn,becauseyourmindis
sopowerfulthatyoubecomewhatyouputinyourhead.Forexample, if
you study cooking, you then tend to cook. You become a cook. If you
don't wanttobeacookanymore,thenyouneedtostudysomethingelse.
Let's say, a schoolteacher. After studying teaching, you often become a
teacher.Andsoon.Choosewhatyoustudycarefully.

When it comes to money, the masses generally have one basic

formulatheylearnedinschool.Andthatis,workformoney.Theformula
Iseethatispredominantintheworldisthateverydaymillionsofpeople
get up and go to work, earn money, pay bills, balancecheckbooks, buy
some mutual funds and go back to work. That is the basic formula, or
recipe.

Ifyou'retiredofwhatyou'redoing,oryou'renotmakingenough,it's

simplyacaseofchangingtheformulaviawhichyoumakemoney.

Yearsago,whenIwas26,1tookaweekendclasscalled“HowtoBuy

RealEstateForeclosures.”Ilearnedaformula.Thenexttrickwastohave
thedisciplinetoactuallyputintoactionwhatIhadlearned.Thatiswhere
most people stop. For three years, whileworking for Xerox, I spent my
spare time learning to master the art of buyingforeclosures. I've made
severalmilliondollarsusingthatformula,buttoday,it'stooslowandtoo
manyotherpeoplearedoingit.

SoafterImasteredthatformula,Iwentinsearchofotherformulas.

Formanyoftheclasses,IdidnotusetheinformationIlearneddirectly,
'i|butIalwayslearnedsomethingnew.

I have attended classes designed for only derivative traders, also a

classforcommodityoptiontradersandaclassforChaologists.Iwasway
out of my league, being in a roomfull of people with doctorates in
nuclearphysicsandspacescience.Yet,Ilearnedalotthatmademystock
and real estate investing more meaningful and lucrative. Most junior
collegesandcommunitycollegeshaveclassesonfinancialplanningand
buyingoftraditionalinvestments.Theyaregreatplacestostart.

So I always search for a faster formula. That is why, on a fairly

regularbasis,Imakemoreinadaythanmanypeoplewillmakeintheir
lifetime.

Another side note. In today's fast-changing world, it's not so much

whatyouknowanymorethatcounts,becauseoftenwhatyouknowisold.
It is how fast you learn. That skill ispriceless. It's priceless in finding
fasterformulas-recipes,ifyouwill,formakingdough.Workinghardfor
moneyisanoldformulaborninthedayofcavemen.

5. PAY YOURSELF FIRST: The power of self-discipline. If you

cannotgetcontrolofyourself,donottrytogetrich.Youmightfirstwant

tojointheMarineCorpsorsomereligiousordersoyoucangetcontrolof
yourself. It makes no sense to invest, makemoney and blow it. It is the
lackofself-disciplinethatcausesmostlotterywinnerstogo broke soon
afterwinningmillions.Itisthelackofself-disciplinethatcausespeople
whogetaraisetoimmediatelygooutandbuyanewcarortakeacruise.

Itisdifficulttosaywhichofthetenstepsisthemostimportant.But

of all the steps,thisstepisprobablythemostdifficultto master if it is
not already a part of yourmakeup. I would venture to say that it is the
lack of personal self-discipline that is theNo. 1 delineating factor
betweentherich,thepoorandthemiddleclass.

Simply put, people who have low self-esteem and low tolerance for

financialpressurecannever,andImeannever,berich.AsIhavesaid,a
lesson learned from my rich dad wasthat “the world will push you
around.” The world pushes people around not because otherpeople are
bullies, but because the individual lacks internal control and discipline.
People who lack internal fortitude often become victims of those who
haveself-discipline.

IntheentrepreneurclassesIteach,Iconstantlyremindpeopletonot

focus on theirproduct, service or widget, but to focus on developing
management skills. The three mostimportant management skills
necessarytostartyourownbusinessare:

1.Managementofcashflow.
2.Managementofpeople.
3.Managementofpersonaltime.
I would say, the skills to manage these three apply to anything, not

just entrepreneurs.The three matter in the way you live your life as an
individual,oraspartofafamily,abusiness,acharitableorganization,a
cityoranation.

Eachoftheseskillsisenhancedbythemasteryofselfdiscipline.Ido

nottakethesaying“payyourselffirst”lightly.

The Richest Man in Babylon, by George Classen, is where the

statement“payyourselffirst”comesfrom.Millionsofcopieshavebeen
sold.Butwhilemillionsofpeoplefreelyrepeatthatpowerfulstatement,
few follow the advice. As I said, financial literacy allows oneto read

numbers, and numbers tell the story. By looking at a person's income
statement andbalance sheet, I can readily see if people who spout the
words“payyourselffirst”actuallypracticewhattheypreach.

A picture is worth a thousand words. So let's again compare the

financialstatementsofpeoplewhopaythemselvesfirstagainstsomeone
whodoesn't.

Peoplewhopaythemselvesfirst
+------------------------+
Job--------------->|Income|----
^|-------------------------|
||Expense||
\+------------------------+|
\+--------------------------------------<
----\-----|------------------------+
|Assets|Liabilities|
|||
|_________|____________|
Someonewhopayseveryoneelsefirst-Oftenthereisnothingleft
+------------------------+
Job--------------->|Income|
|-------------------------
|Expense|---->Nothingleft!
+------------------------+
-----------------------------------+
|Assets|Liabilities||||
|_________|____________|
Study the diagrams and notice if you can pick up some distinctions.

Again, it has to dowith understanding cash flow, which tells the story.
Most people look at the numbers andmiss the story. If you can truly
begintounderstandthepowerofcashflow,youwillsoonrealizewhatis
wrong with the picture on the next page, or why 90 percent of most
peopleworkhardalltheirlivesandneedgovernmentsupportlikeSocial
Securitywhentheyarenolongerabletowork.

Doyouseeit?Thediagramabovereflectstheactionsofanindividual

who chooses to payhimself first. Each month, they allocate money to
their asset column before they pay theirmonthly expenses. Although
millions of people have read Classen's book and understand thewords
“payyourselffirst,”inrealitytheypaythemselveslast.

NowIcanhearthehowlsfromthoseofyouwhosincerelybelievein

paying your billsfirst.And I can hear all the “responsible” people who
paytheirbillsontime.Iamnotsayingbeirresponsibleandnotpayyour
bills.All I am saying is do what the book says,which is “pay yourself
first.” And the diagram above is the correct accounting picture ofthat
action.Nottheonethatfollows.

My wife and I have had many bookkeepers and accountants and

bankerswhohavehadamajorproblemwiththiswayoflookingat“pay
yourselffirst.”Thereasonisthatthesefinancialprofessionalsactuallydo
whatthemassesdo,whichispaythemselveslast.Theypayeveryoneelse
first.

There have been months in my life, when for whatever reason, cash

flow was far less thanmy bills. I still paid myself first. My accountant
andbookkeeperscreamedinpanic.“They'regoingtocomeafteryou.The
IRSisgoingtoputyouinjail.”“You'regoingto ruinyourcreditrating.”
“They'llcutofftheelectricity.”Istillpaidmyselffirst.

“Why?” you ask. Because that's what the story The Richest Man In

Babylon was all about.The power of self-discipline and the power of
internalfortitude.“Guts,”inlesselegantterms.Asmyrichdadtaughtme
the first month I worked for him, most people allow theworld to push
themaround.Abillcollectorcallsandyou“payorelse.”Soyoupayand
notpayyourself.Asalesclerksays,“Oh,justputitonyourchargecard.”
Yourrealestateagenttellsyouto“goahead-thegovernmentallowsyoua
tax deduction on yourhome.” That is what the book is really about.
Havingthegutstogoagainstthetideandgetrich.Youmaynotbeweak,
butwhenitcomestomoney,manypeoplegetwimpy.

Iamnotsayingbeirresponsible.ThereasonIdon'thavehighcredit

card debt, anddoodad debt, is because I want to pay myself first. The
reason I minimize my income isbecause I don't want to pay it to the
government. That is why, for those of you who havewatched the video

The Secrets of the Rich, my income comes from my asset column,
throughaNevadacorporation.IfIworkformoney,thegovernmenttakes
it.

AlthoughIpaymybillslast,Iamfinanciallyastuteenoughtonotget

intoatoughfinancialsituation.Idon'tlikeconsumerdebt.Iactuallyhave
liabilitiesthatarehigherthan99percentofthepopulation,butIdon'tpay
for them; other people pay formy liabilities. They're called tenants. So
ruleNo.1inpayingyourselffirstisdon'tgetintodebtinthefirstplace.
Although I pay my bills last, I set it up to have onlysmall unimportant
bills,thatIwillhavetopay.

Secondly,whenIoccasionallycomeupshort,Istillpaymyselffirst.I

letthecreditorsandeventhegovernmentscream.Ilikeitwhentheyget
tough.Why?Becausethoseguysdomeafavor.Theyinspiremetoigo
outandcreatemoremoney.SoIpaymyselffirst,investthemoney,and
let the creditors yell. I generally pay them right away anyway. Mywife
andIhaveexcellentcredit.Wejustdon'tcaveintothepressureandspend
oursavingsorliquidatestockstopayforconsumerdebt.Thatisnottoo
financiallyintelligent.

Sotheansweris:
1 .Don't get into large debt positions that you have to pay for. Keep

yourexpenseslow.Buildupassetsfirst.Then,buythebighouseornice
car.Beingstuckintheratraceisnotintelligent.

2.Whenyoucomeupshort,letthepressurebuildanddon'tdipinto

your savings orinvestments. Use the pressure to inspire your financial
genius to come up with new ways ofmaking more money and then pay
yourbills.Youwillhaveincreasedyourabilitytomake more money as
well as your financial intelligence. ; : So many times I have gotten into
financial hot water, and used my brain to create more income, while
staunchly defendingthe assets in my asset column. My bookkeeper has
screamedanddivedforcover,butIwaslikeagoodtrooperdefendingthe
fort,FortAssets.

Poor people have poor habits. A common bad habit is innocently

called “Dipping intosavings.”Therichknowthatsavingsareonlyused
tocreatemoremoney,nottopaybills.

Iknowthatsoundstough,butasIsaid,ifyou'renottoughinside,the

worldwillalwayspushyouaroundanyway.

If you do not like financial pressure, then find a formula that works

foryou.Agoodone istocutexpenses,putyourmoneyinthebank,pay
morethanyourfairshareofincometax,buysafemutualfundsandtake
thevowoftheaverage.Butthisviolatesthe“payyourselffirst”rule.

The rule does not encourage self-sacrifice or financial abstinence. It

doesn'tmeanpayyourselffirstandstarve.Lifewasmeanttobeenjoyed.
Ifyoucallonyourfinancialgenius,youcanhaveallthegoodiesoflife,
get rich and pay bills, without sacrificingthe good life. And that is
financialintelligence.

6.PAYYOURBROKERSWELL:Thepowerofgoodadvice.Ioften

see people posting a sign infront of their house that says, “For Sale by
Owner.” Or I see on TV today many peopleclaiming 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, realestate brokers and
stockbrokers. Why? Because if, and I do mean if, the people are
professionals, their services should make you money. And the more
moneytheymake,themoremoneyImake.

We live in the Information Age. Information is priceless. A good

broker should provide youwith information as well as take the time to
educate you. I have several brokers who arewilling to do that for me.
SometaughtmewhenIhadlittleornomoney,andIamstillwith them
today.

WhatIpayabrokeristinyincomparisonwithwhatkindofmoneyI

canmakebecauseoftheinformationtheyprovide.Iloveitwhenmyreal
estate broker or stockbroker makes alot of money. Because it usually
meansImadealotofmoney.

A good broker saves me time in addition to making me money-as

whenIboughtthepieceofvacantlandfor$9,000andsolditimmediately
forover$25,000,soIcouldbuymyPorschequicker.

Abrokerisyoureyesandearstothemarket.They'rethereeveryday

soIdonothavetobe.I'dratherplaygolf.

Also, people who sell their house on their own must not value their

timemuch.WhywouldIwanttosaveafewbuckswhenIcouldusethat
time to make more money or spend it withthose I love? What I find
funny is that so many poor and middle class people insist ontipping
restauranthelp15to20percentevenforbadserviceandcomplainabout
payingabroker3to7percent.Theyenjoytippingpeopleinthe

expense column and stiffing people in the asset column. That is not

financiallyintelligent.

All brokers are not created equal. Unfortunately, most brokers are

onlysalespeople.Iwouldsaytherealestatesalespeoplearetheworst.

Theysell,buttheythemselvesownlittleornorealestate.Thereisa

tremendousdifference between a broker who sells houses and a broker
whosellsinvestments.Andthatistrueforstock,bond,mutualfundand
insurancebrokerswhocallthemselvesfinancialplanners.Asinthefairy
tale, you kiss a lot of frogs to find one prince. Just rememberthe old
saying, “Never ask an encyclopedia salesperson if you need an
encyclopedia.”

When I interview any paid professional, I first find out how much

property or stocks theypersonally own and what percentage they pay in
taxes. And that applies to my tax attorneyas well as my accountant. I
have an accountant who minds her own business. Her professionis
accounting, but her business is real estate. I used to have an accountant
thatwasasmallbusinessaccountant,buthehadnorealestate.Iswitched
becausewedidnotlovethesamebusiness.

Findabrokerwhohasyourbestinterestsatheart.Manybrokerswill

.';spendthetimeeducatingyou,andtheycouldbethebestassetyoufind.
Just be fair, and most of themwill be fair to you. If all you can think
about is cutting their commissions, then whyshould they want to be
aroundyou?It'sjustsimplelogic.

AsIsaidearlier,oneofthemanagementskillsisthemanagementof

people.Manypeopleonlymanagepeopletheyfeelsmarterthanandthey
havepowerover,suchassubordinatesinaworksituation.Manymiddle
managersremainmiddlemanagers,failingtogetpromotedbecause they

know how to work with people below them, but not with people above
them.Therealskillistomanageandpaywellthepeoplewhoaresmarter
thanyouinsometechnicalarea.Thatiswhycompanieshaveaboardof
directors.Youshouldhaveone,too.Andthatisfinancialintelligence.

7.BEAN“INDIANGIVER”:Thisisthepowerofgettingsomething

for nothing. When thefirst white settlers came to America, they were
taken aback by a cultural practice someAmerican Indians had. For
example,ifasettlerwascold,theIndianwouldgivethepersonablanket.
Mistaking it for a gift, the settler was often offended when the Indian
askedforitback.

TheIndiansalsogotupsetwhentheyrealizedthesettlersdidnotwant

to give it back.That is where the term “Indian giver” came from. A
simpleculturalmisunderstanding.

In the world of the “asset column,” being an Indian giver is vital to

wealth. Thesophisticated investor's first question is, “How fast do I get
my money back?” They alsowant to know what they get for free, also
called a piece of the action. That is why theROI, or return of and on
investment,issoimportant.

Forexample,Ifoundasmallcondominium,afewblocksfromwhere

Ilive,thatwasinforeclosure.Thebankwanted$60,000,andIsubmitted
a bid for $50,000, which they took,simply because, along with my bid,
was a cashier's check for $50,000. They realized I wasserious. Most
investors would say, aren't you tying up a lot of cash? Would it not be
bettertogetaloanonit?Theansweris,notinthiscase.Myinvestment
company usesthis as a vacation rental in the winter months, when the
“snowbirds” come to Arizona, andrent it for $2,500 a month for four
monthsoutoftheyear.Forrentalduringtheoff?season,itrentsforonly
$1,000 a month. I had my money back in about three years.Now I own
thisasset,whichpumpsmoneyoutforme,monthinandmonthout.

Thesameisdonewithstocks.Frequently,mybrokerwillcallmeand

recommend I move asizable amount of money into the stock of a
companythathefeelsisjustabouttomakeamovethatwilladdvalueto
thestock,likeannouncinganewproduct.Iwillmovemymoneyinfora
weektoamonthwhilethestockmovesup.Then,Ipullmyinitialdollar

amountout, and stop worrying about the fluctuations of the market,
becausemyinitialmoneyisbackandreadytoworkonanotherasset.So
my money goes in, and then it comes out, and Iown an asset that was
technicallyfree.

True, I have lost money on many occasions. But I only play with

moneyIcanaffordtolose.Iwouldsay,onanaverageteninvestments,I
hithomerunsontwoorthree,whilefiveorsixdonothing,andIloseon
two or three. But I limit my losses to only themoney I have in at that
time.

Forpeoplewhohaterisk,theyputtheirmoneyinthebank.Andinthe

long run, savingsare better than no savings. But it takes a long time to
get your money back and, in mostinstances, you don't get anything for
freewithit.Theyusedtohandouttoasters,buttheyrarelydothatthese
days.

Oneveryoneofmyinvestments,theremustbeanupside,something

for free. A condominium, a mini-storage, a piece of free land, a house,
stock shares, office building.And there must be limited risk, or a low-
riskidea.TherearebooksdevotedentirelytothissubjectthatIwillnot
getintohere.RayKroc,ofMcDonald'sfame,soldhamburgerfranchises,
notbecausehelovedhamburgers,butbecausehewantedtherealestate;
underthefranchiseforfree.

SowiseinvestorsmustlookatmorethanROI;it'stheassetsyouget

forfreeonceyougetyourmoneyback.Thatisfinancialintelligence.:

8. ASSETS BUY LUXURIES: The power of focus. A friend's child

hasbeendevelopinganastyhabitofburningaholeinhispocket.Just16,
he naturally wanted his own car. Theexcuse, “All his friends' parents
gavetheirkidscars.”Thechildwantedtogointo|

hissavingsanduseitforadownpayment.Thatwaswhenhisfather

called me. “Do youthink I should let him do it, or should I just do as
otherparentsdoandjustbuyhimacar?”

TowhichIanswered.“Itmightrelievethepressureintheshortterm,

butwhathaveyoutaughthiminthelongterm?Canyouusethisdesireto
ownacarandinspireyoursontolearnsomething?”Suddenlythelights
wenton,andhehurriedhome.

TwomonthslaterIranintomyfriendagain.“Doesyoursonhavehis

newcar?”Iasked.

“No,hedoesn't.ButIwentandhandedhim$3,000forthecar.Itold

him to use my moneyinstead of his college money.” “Well, that's
generousofyou,”Isaid.

“Notreally.Themoneycamewithahitch.Itookyouradviceofusing

his strong desire tobuy a car and use that energy so he could learn
something.”

“Sowhatwasthehitch?”Iasked.
“Well,firstwebrokeoutyourgameagain,CASHFLOW.Weplayed

itandhadalongdiscussionaboutthewiseuseofmoney.Ithengavehim
a subscription to the Wall Street Journal, and a few books on the stock
market.”

“Thenwhat?”Iasked.“Whatwasthecatch?”
“I told him the $3,000 was his, but he could not directly buy a car

withit.Hecoulduseittobuyandsellstocks,findhisownstockbroker,
andoncehehadmade$6,000withthe$3,000,themoneywouldbehisfor
thecar,andthe$3,000wouldgointohiscollegefund.”

“Andwhataretheresults?”Iasked.
"Well, he got lucky early in his trading, but lost all he gained a few

days later. Then,hereallygotinterested.Today,Iwouldsayheisdown
$2,000,buthisinterestisup.HehasreadallthebooksIboughthimand
he's gone to the library to get more. He reads theWall Street Journal
voraciously, watching for indicators, and he watches CNBC instead of
MTV.He'sgotonly$1,000left,buthisinterestandlearningareskyhigh.
He knows thatifhelosesthatmoney,hewalksfortwomoreyears.But
hedoesnotseemtocare.Heevenseems

uninterested in getting a car because he's found a game that is more

fun."

“Whathappensifhelosesallthemoney?”Iasked.
“We'll cross that bridge when we get to it. I'd rather have him lose

everythingnowratherthanwaittillhe'souragetorisklosingeverything.
Andbesides,thatisthebest$3,000I'veeverspentonhiseducation.What
heislearningwillservehimforlife,andheseemstohavegainedanew

respectforthepowerofmoney.Ithinkhe'sstoppedtheburningofholes
inhispockets.”

As I said in the section “Pay Yourself First,” if a person cannot

master the power ofself-discipline, it is best not to try to get rich. For
whiletheprocessofdevelopingcashflowfromanassetcolumnintheory
iseasy,itisthementalfortitudeofdirectingmoneythatishard.Dueto
external temptations, it is much easier in today's consumerworld to
simply blow it out the expense column. Because of weak mental
fortitude, thatmoneyflowsintothepathsofleastresistance.Thatisthe
causeofpovertyandfinancialstruggle.

I gave this numerical example of financial intelligence, in this case

the ability todirectmoneytomakemoremoney.Ifwegave100people
$10,000atthestartoftheyear,Igavemyopinionthatattheendofthe
year:

80wouldhavenothingleft.Infact,manywouldhavecreatedIgreater

debtbymakingadownpaymentonanewcar,refrigerator,TV,VCRora
holiday.16wouldhaveincreasedthat$10,000by5percentto10percent.
4wouldhaveincreaseditto$20,000orintothemillions.

Wegotoschooltolearnaprofessionsowecanworkformoney.Itis

myopinionthatitisalsoimportanttolearnhowtohavemoneyworkfor
you.

I love my luxuries as much as anyone else. The difference is, some

peoplebuytheirluxuriesoncredit.It'sthekeep-up-with-the-Jonesestrap.
When I wanted to buy aPorsche, the easy road would have been to call
my banker and get a loan. Instead ofchoosing to focus in the liability
column,Ichosetofocusintheassetcolumn.

As a habit, I used my desire to consume to inspire and motivate my

financialgeniustoinvest.

Too often today, we focus to borrowing money to get the things we

want instead of focusingon creating money. One is easier in the short
term, but harder in the long term. It's abadhabitthatweasindividuals
andasanationhavegotteninto.Remember,theeasyroadoftenbecomes
hard,andthehardroadoftenbecomeseasy.

Theearlieryoucantrainyourselfandthoseyoulovetobemastersof

money, the better. Moneyisapowerfulforce.Unfortunately,peopleuse
the power of money against them. Ifyour financial intelligence is low,
money will run all over you. It will be smarter thanyou. If money is
smarterthanyou,youwillworkforitallyourlife.

To be the master of money, you need to be smarter than it. Then

moneywilldoasitistold.Itwillobeyyou.Insteadofbeingaslavetoit,
youwillbethemasterofit.Thatisfinancialintelligence.

9.THENEEDFORHEROES:Thepowerofmyth.WhenIwasakid,

I greatly admired WillieMays, HankAaron,Yogi Berra. They were my
heroes.As a kid playing Little League, Iwanted to be just like them. I
treasuredtheirbaseballcards.Iwantedtoknoweverythingaboutthem.I
knewthestats,theRBI,theERAs,theirbattingaverages,howmuchthey
gotpaid, and how they came up 1 from the minors. I wanted to know
everythingbecauseIwantedtobejustlikethem.

Every time, as a 9 or 10 year-old kid, when I stepped up to bat or

playedfirstbaseorcatcher,Iwasn'tme.IwasYogiorHank.It'soneof
themostpowerfulwayswelearnthatweoftenloseasadults.Weloseour
heroes.Weloseournaivete.

Today,Iwatchyoungkidsplayingbasketballnearmyhome.Onthe

court they're not littleJohnny; they're Michael Jordan, Sir Charles or
Clyde. Copying or emulating heroes is truepower learning.And that is
why when someone like O.J. Simpson falls from grace, there issuch a
hugeoutcry.

There is more than just a courtroom trial. It is the loss of a hero.

Someone people grewup with, looked up to, and wanted to be like.
Suddenlyweneedtoridourselvesofthatperson.

I have new heroes as I grow older. I have golf heroes such as Peter

Jacobsen,FredCouplesandTigerWoods.Icopytheirswingsanddomy
best to read everything I can about them. Ialso have heroes such as
Donald Trump, Warren Buffett, Peter Lynch, George Soros and Jim
Rogers. In my older years, I know their stats just like I knew the ERAs
andRBIofmybaseballheroes.IfollowwhatWarrenBuffettinvestsin,
and read anything I can abouthis point of view on the market. I read
Peter Lynch's book to understand how he choosesstocks. And I read

aboutDonaldTrump,tryingtofindouthowhenegotiatesandputsdeals
together.

JustasIwasnotmewhenIwasuptobat,whenI'minthemarketor

I'm negotiating adeal, I am subconsciously acting with the bravado of
Trump. Or when analyzing a trend, Ilook at it as though Peter Lynch
weredoingit.Byhavingheroes,wetapintoatremendoussourceofraw
genius.

Butheroesdomorethansimplyinspireus.Heroesmakethingslook

easy.It'sthemakingitlookeasythatconvincesustowanttobejustlike
them.“Iftheycandoit,socanI.”

When it comes to investing, too many people make it sound hard.

Insteadfindheroeswhomakeitlookeasy.

10.TEACHANDYOUSHALLRECEIVE:Thepowerofgiving.Both

ofmydadswereteachers.MyrichdadtaughtmealessonIhavecarried
allmylife,andthatwasthenecessityofbeingcharitableorgiving.My
educated dad gave a lot by the way of time and knowledge,but almost
never gave away money. As I said, he usually said that he would give
whenhehadsomeextramoney.Ofcourse,therewasrarelyanyextra.

Myrichdadgavemoneyaswellaseducation.Hebelievedfirmlyin

tithing.“Ifyouwantsomething,youfirstneedtogive,”hewouldalways
say.Whenhewasshortofmoney,he simplygavemoneytohischurchor
tohisfavoritecharity.

IfIcouldleaveonesingleideawithyou,itisthatidea.Wheneveryou

feel “short” orin “need” of something, give what you want first and it
will come back in buckets. That istrue for money, a smile, love,
friendship.Iknowitisoftenthelastthingapersonmaywanttodo,but;
ithasalwaysworkedforme.Ijusttrustthattheprincipleofreciprocityit
is true, and I give what I want. I want money, so I give money, and it
comes back in multiples. I want sales, so I help someone else sell
something,andsalescometome.IwantcontactsandIhelpsomeoneelse
getcontacts,andlikemagic,contactscometome.Iheardasayingyears
agothatwent,“Goddoesnotneedtoreceive,buthumansneedtogive.”

Myrichdadwouldoftensay,“Poorpeoplearemoregreedythanrich

people.” He wouldexplain that if a person was rich, that person was

providingsomethingthatotherpeoplewanted.Inmylife,overallthese;
years, whenever I have felt needy or short of moneyor short of help, I
simplywentoutorfoundinmyheartwhatIwanted,anddecidedtogive
itfirst.AndwhenIgave,italwayscameback.

Itremindsmeofthestoryoftheguysittingwithfirewoodinhisarms

onacoldfreezingnight,andheisyellingatthepot-belliedstove,“When
yougivemesomeheat,thenI'llputsomewoodin.”Andwhenitcomes
tomoney,love,happiness,salesandcontacts,alloneneedstoremember
isfirsttogivewhatyouwantanditwillcomebackindroves.?Oftenjust
theprocessofthinkingofwhatIwant,andhowcouldIgivewhatIwant
t osomeone else, breaks free a torrent of bounty. Whenever I feel that
peoplearen'tsmilingatme,Isimplybeginsmilingandsayinghello,and
likemagic,therearesuddenlymoresmilingpeoplearoundme.Itistrue
thatyourworldisonlyamirrorofyou.

Sothat'swhyIsay,“Teachandyoushallreceive.”Ihavefoundthat

the more I sincerelyteach those who want to learn, the more I learn. If
youwanttolearnaboutmoney,teachittosomeoneelse.Atorrentofnew
ideasandfinerdistinctionswillcomein.

TherearetimeswhenIhavegivenandnothinghascomebackorwhat

IhavereceivedisnotwhatIwanted.Butuponcloserinspectionandsoul
searching, I was often giving toreceive in those instances, instead of
givingtogive.

Mydadtaughtteachers,andhebecameamasterteacher.Myrichdad

always taught youngpeople his way of doing business. In retrospect, it
wastheirgenerositywithwhattheyknewthatmadethemsmarter.There
arepowersinthisworldthataremuchsmarterthanweare.Youcanget
thereonyourown,butit'seasierwiththehelpofthepowersthatbe.All
you need to be is generous with what you have, and the powers will be
generouswithyou.

RichDad,PoorDad

CHAPTERTEN

StillWantMore?HereareSomeToDo's
Manypeoplemaynotbesatisfiedwithmytensteps.Theyseethem

more as philosophiesthan actions. I think understanding the philosophy
isjustasimportantastheaction.Therearemanypeoplewhowanttodo,
instead of think, and then there are people whothink but do not do. I
wouldsaythatIamboth.IlovenewideasandIloveaction.

Soforthosewhowant“todos”onhowtogetstarted,Iwillsharewith

yousomeofthethingsIdo,inabbreviatedform.

Stopdoingwhatyou'redoing.Inotherwords,takeabreakandassess

what is workingand what is not working. The definition of insanity is
doingthesamethingandexpectingadifferentresult.Stopdoingwhatis
notworkingandlookforsomethingnewtodo.

Look for new ideas. For new investing ideas, I go to bookstores and

look for books ondifferent and unique subjects. I call them formulas. I
buyhow-to

booksonaformulaIknownothingabout.Forexample,itwasinthe

bookstore that I foundthe book The 16 Percent Solution, by Joel
Moskowitz.Iboughtthebookandreadit.

TAKEACTION! The next Thursday, I did exactly as the book said.

Step by step. I have alsodone that with finding real estate bargains in
attorneys'officesandinbanks.Mostpeopledonottakeaction,ortheylet
someone talk them out of whatever new formula theyare studying. My
neighbortoldmewhy16percentwouldnotwork.Ididnotlistentohim
becausehe'sneverdoneit.

Findsomeonewhohasdonewhatyouwanttodo.Takethemtolunch.

Askthemfortips,forlittletricksofthetrade.Asfor16percenttaxlien
certificates, I went to thecounty tax office and found the government
employeewhoworkedintheoffice.Ifoundoutthatshe,too,investedin
the tax liens. Immediately, she was invited to lunch. She wasthrilled to
tellmeeverythingsheknewandhowtodoit.Afterlunch,shespentall
afternoon showing me everything. By the next day, I found two great

properties with herhelp and have been accruing interest at 16 percent
eversince.Ittookadaytoreadthebook,adaytotakeaction,anhourfor
lunch,andadaytoacquiretwogreatdeals.

Take classes and buy tapes. I search the newspapers for new and

interestingclasses.Manyareforfreeorasmallfee.Ialsoattendandpay
for expensive seminars on what Iwant to learn. I am wealthy and free
from needing a job simply because of the courses Itook. I have friends
whodidnottakethoseclasseswhotoldmeIwaswastingmymoney,and
yetthey'restillatthesamejob.

Makelotsofoffers.WhenIwantapieceofrealestate,Ilookatmany

propertiesandgenerallywriteanoffer.Ifyoudon'tknowwhatthe“right
offer”is,neitherdoI.Thatis'thejoboftherealestateagent.Theymake
theoffers.Idoaslittleworkaspossible.

Afriendwantedmetoshowherhowtobuyapartmenthouses.Soone

Saturday she, her agentand I went and looked at six apartment houses.
Four were dogs, but two were good. I saidto write offers on all six,
offeringhalfofwhattheownersaskedfor.Sheandtheagent nearly had
heart attacks. They thought it would be rude, that I might offend the
sellers,butIreallydon'tthinktheagentwantedtoworkthathard.Sothey
didnothingandwentonlookingforabetterdeal.

No offers were ever made, and that person is still looking for the

“right”dealattherightprice.Well,youdon'tknowwhattherightprice
isuntilyouhaveasecondpartywhowantstodeal.Mostsellersasktoo
much. It is rare that a seller will actually ask aprice that is less than
somethingisworth.

Moralofthestory:Makeoffers.Peoplewhoarenotinvestorshaveno

ideawhatitfeelsliketobetryingtosellsomething.Ihavehadapieceof
real estate that I wanted tosell for months. I would have welcomed
anything.Iwouldnotcarehowlowtheprice.Theycouldhaveofferedme
tenpigsandIwouldhavebeenhappy.Notattheoffer,butjust because
someonewasinterested.Iwouldhavecountered,maybeforapigfarmin
exchange.Butthat'showthegameworks.Thegameofbuyingandselling
isfun.Keepthatinmind.It'sfunandonlyagame.Makeoffers.Someone
mightsay“yes.”

AndIalwaysmakeofferswithescapeclauses.Inrealestate,Imake

anofferwiththewords“subjecttoapprovalofbusinesspartner.”Inever
specifywhothebusinesspartneris.Mostpeopledonotknowmypartner
is my cat. If they accept the offer, and I don't want the deal, I call my
homeandspeaktomycat.Imakethisabsurdstatementtoillustratehow
absurdly easy and simple the game is. So many people make things too
difficultandtakethemtooseriously.

Finding a good deal, the right business, the right people, the right

investors, orwhateverisjustlikedating.Youmustgotothemarketand
talk to a lot of people, makea lot of offers, counteroffers, negotiate,
rejectandaccept.Iknowsinglepeoplewhositathomeandwaitforthe
phone to ring, but unless you're Cindy Crawford or Tom Cruise, Ithink
you'd best go to the market, even if it's only the supermarket. Search,
offer, reject, negotiate and accept are all parts of the process of almost
everythinginlife.

• Jog, walk or drive a certain area once a month for ten minutes. I

havefoundsomeofmybestrealestateinvestmentswhilejogging.Iwill
jogacertainneighborhoodforayear.WhatIlookforischange.Forthere
tobeprofitinadeal,theremustbetwoelements:abargainandchange.
There are lots of bargains, but it's change that turns a bargain into a
profitableopportunity.SowhenIjog,IjoganeighborhoodImightlike
toinvestin.Itistherepetitionthatcausesmetonoticeslightdifferences.
Inoticerealestatesignsthatareupforalongtime.Thatmeanstheseller
mightbemoreagreeabletodeal.Iwatchformovingtrucks,goinginor
out.Istopandtalktothedrivers.Italktothepostalcarriers.It'samazing
howmuchinformationtheyacquireaboutanarea.

Ifindabadarea,especiallyanareathatthenewshasscaredeveryone

awayfrom.Idriveitforsometimesayearwaitingforsignsofsomething
changing for the better. I talk toretailers, especially new ones, and find
outwhythey'removingin.Ittakesonlyafewminutesamonth,andIdo
itwhiledoingsomethingelse,likeexercising,orgoing

toandfromthestore.
As for stocks, I like Peter Lynch's book Beating the Street for his

formula forselecting stocks that grow in value. I have found that the

principles of finding value arethe same regardless if it's real estate,
stocks, mutual funds, new companies, a new pet, anew home, a new
spouse, or a bargain on laundry detergent. The process is always the
same.Youneedtoknowwhatyou'relookingforandthengolookforit!

Whyconsumerswillalwaysbepoor.Whenthesupermarkethasasale

on,say,toiletpaper,theconsumerrunsinandstocksup.Whenthestock
market has a sale, most oftencalledacrashorcorrection,theconsumer
runsawayfromit.Whenthesupermarketraisesitsprices,theconsumer
shops elsewhere. When the stock market raises its prices, theconsumer
startsbuying.

Look in the right places. A neighbor bought a condominium for

$100,000. I bought theidentical condo next door to his for $50,000. He
told me he's waiting for the price to goup. I told him that his profit is
made when you buy, not when you sell. He shopped with areal estate
broker who owns no property of her own. I shopped at the foreclosure
department of a bank. I paid $500 for a class on how to do this. My
neighborthoughtthatthe$500forarealestateinvestmentclasswastoo
expensive.Hesaidhecouldnotaffordit,andhecouldn'taffordthetime.
Sohewaitsforthepricetogoup.

Ilookforpeoplewhowanttobuyfirst,thenIlookforsomeonewho

wantstosell.A friendwaslookingforacertainpieceofland.Hehadthe
moneyanddidnothavethetime.Ifoundalargepieceoflandlargerthan
whatmyfriendwantedtobuy,tieditupwithanoption,calledmyfriend
andhewantedapieceofit.SoIsoldthepiecetohimandthenboughtthe
land.Ikepttheremaininglandasmineforfree.Moralofthestory:Buy
thepieandcutitinpieces.Mostpeoplelookforwhattheycanafford,so
they looktoo small. They buy only a piece of the pie, so they end up
payingmoreforless.

Smallthinkersdon'tgetthebigbreaks.Ifyouwanttogetricher,think

biggerfirst.

Retailerslovegivingvolumediscounts,simplybecausemostbusiness

people love bigspenders. So even if you're small, you can always think
big.Whenmycompanywasinthemarketforcomputers,Icalledseveral
friends and asked them if they were ready to buyalso. We then went to

differentdealersandnegotiatedagreatdealbecausewewantedtobuyso
many. I have done the same with stocks. Small people remain small
becausetheythinksmall;actalone,ordon'tactall.

• Learn from history. All the big companies on the stock exchange

started out as smallcompanies. Colonel Sanders did not get rich until
afterhelosteverythinginhis60s.BillGateswasoneoftherichestmen
intheworldbeforehewas30.

•Actionalwaysbeatsinaction.
These are just a few of the things I have done and continue to do to

recognizeopportunities.Theimportantwordsbeing“done”and“do”.As
repeated many timesthroughout the book, you must take action before
youcanreceivethefinancialrewards.Actnow!

EPILOGUE
HowToPayforaChild'sCollegeEducationfor$7000
Asthebookdrawstoacloseandapproachespublication,Iwouldlike

toshareafinalthoughtwithyou.ThemainreasonIwrotethisbookwas
toshareinsightsintohowincreasedfinancialintelligencecanbeusedto
solvemanyoflife'scommonproblems.Withoutfinancialtraining,weall
too often use the standard formulas to get throughlife, such as to work
hard, save, borrow and pay excessive taxes. Today we need better
information.

I use the following story as a final example of a financial problem

that confronts manyyoung families today. How do you afford a good
educationforyourchildrenandprovideforyourownretirement?Itisan
example of using financial intelligence instead of hard workto achieve
thesamegoal.

Afriendofminewasgripingonedayabouthowharditwastosave

money for his fourchildren's college education. He was putting $300
away in a mutual fund each month and hadso far accumulated about
$12,000. He estimated he needed $400,000 to get four childrenthrough
college.Hehad12yearstosaveforit,sincehisoldestchildwasthen6
yearsofage.

Theyearwas1991,andtherealestatemarketinPhoenixwasterrible.

Peopleweregivinghousesaway.Isuggestedtomyclassmatethathebuy

a house with some of the money in hismutual fund. The idea intrigued
himandwebegantodiscussthepossibility.Hisprimaryconcernwasthat
he did not have the credit with the bank to buy another house, since he
wassoover-extended.Iassuredhimthattherewereotherwaystofinance
apropertyotherthanthroughthebank.

We looked for a house for two weeks, a house that would fit all the

criteria we werelooking for. There were a lot to choose from, so the
shoppingwaskindoffun.Finally,wefounda3bedroom2bathhomein
aprimeneighborhood.Theownerhadbeendownsizedandneededtosell
that day because he and his family were moving to California where
anotherjobwaited.

He wanted $102,000, but we offered only $79,000. He took it

immediately. The home had onit what is called a non-qualifying loan,
which means even a bum without a job could buy itwithout a banker's
approval.Theownerowed$72,000soallmyfriendhadtocomeupwith
was $7,000, the difference in price between what was owed and what it
sold for. As soon as the owner moved, my friend put the house up for
rent.After all expenses were paid,including the mortgage, he put about
$125inhispocketeachmonth.

Hisplanwastokeepthehousefor12yearsandletthemortgageget

paiddownfaster,byapplyingtheextra$125totheprincipleeachmonth.
We figured that in 12 years, a large portion of the mortgage would be
paidoffandhecouldpossiblybeclearing$800amonthbythetimehis
first child went to college. He could also sell the house if it had
appreciatedinvalue.

In 1994, the real estate market suddenly changed in Phoenix and he

wasoffered$156,000forthesamehousebythetenantwholivedinitand
lovedit.Again,heaskedmewhatIthought,andInaturallysaidsell,ona
1031tax-deferredexchange.

Suddenly, he had nearly $80,000 to operate with. I called another

friend in Austin, Texas who then moved this tax deferred money into a
mini-storagefacility.Withinthreemonths, hebeganreceivingchecksfor
alittlelessthana$1,000amonthinincomewhichhethenpoured back
intothecollegemutualfundthatwasnowbuildingmuchfaster.In1996,

themini-warehousesoldandhereceivedacheckfornearly$330,000as
proceeds from the salewhich was again rolled into a new project that
would now throw off over $3,000 a month inincome, again, going into
the college mutual fund. He is now very confident that his goalof
$400,000willbemeteasily,anditonlytook$7,000tostartandalittle
financialintelligence. His children will be able to afford the education
thattheywantandhewillthenusetheunderlyingasset,wrappedinhisC
Corporation, to pay for his retirement. Asa result of this successful
investmentstrategyhewillbeabletoretireearly.

Thankyouforreadingthisbook.Ihopeithasprovidedsomeinsights

into utilizing thepower of money to work for you. Today, we need
greater financial intelligence to simplysurvive. The idea that it takes
money to make money is the thinking of financiallyunsophisticated
people.Itdoesnotmeanthatthey'renotintelligent.Theyhavesimplynot
learnedthescienceofmakingmoney.

Moneyisonlyanidea.Ifyouwantmoremoneysimplychangeyour

thinking. Every self-madepersonstartedsmallwithanidea,thenturned
itintosomethingbig.Thesameapplieswithinvesting.Ittakesonlyafew
dollars to start and grow it into something big. Imeet so many people
who spend their lives chasing the big deal, or trying to mass a lot of
moneytogetintoabigdeal,buttomethatisfoolish.ToooftenIhave
seenunsophisticatedinvestorsputtheirlargenesteggintoonedealand
losemostofitrapidly.Theymayhavebeengoodworkersbuttheywere
notgoodinvestors.

Educationandwisdomaboutmoneyareimportant.Startearly.Buya

book. Go to a seminar.Practice.Startsmall.Iturned$5,000cashintoa
$1 million dollar asset producing$5,000 a month cash flow in less than
sixyears.ButIstartedlearningasakid.Iencourageyoutolearnbecause
it'snotthathard.Infact,it'skindofeasyonceyougetthehangofit.

IthinkIhavemademymessageclear.It'swhatisinyourheadthat

determineswhatisinyourhands.Moneyisonlyanidea.Thereisagreat
bookcalledThinkandGrowRich.ThetitleisnotWorkHardandGrow
Rich.Learntohavemoneyworkhardforyouandyourlifewillbeeasier
andhappier.Today,don'tplayitsafe,playitsmart.

TakeAction!
Manyofyouweregiventwogreatgifts:yourmindandyourtime.It

is up to you to dowhat you please with both. With each dollar bill that
enters your hand, you and only youhave the power to determine your
destiny.Spenditfoolishly,youchoosetobepoor.Spend itonliabilities,
youjointhemiddleclass.Investitinyourmindandlearnhowtoacquire
assetsandyouwillbechoosingwealthasyourgoalandyourfuture.The
choiceisyoursandonlyyours.Everydaywitheverydollar,youdecideto
berich,poorormiddleclass.

Choosetosharethisknowledgewithyourchildren,andyouchooseto

preparethemfortheworldthatawaits.Nooneelsewill.

You and your children's future will be determined by choices you

maketoday,nottomorrow.

Wewishyougreatwealthandmuchhappinesswiththisfabulousgift

calledlife.

RobertKiyosaki,SharonLechter
AbouttheAuthors-RobertT.Kiyosaki
“The main reason people struggle financially is because they spent

years in school butlearned nothing about money. The result is, people
learntoworkformoney...butneverlearntohavemoneyworkforthem.”
saysRobert.

Born and raised in Hawaii, Robert is fourth-generation Japanese

American. He comes from aprominent family of educators. His father
was the head of education for the State ofHawaii. "After high school,
RobertwaseducatedinNewYorkandupongraduation,hejoined the U.
S. Marine Corps and went to Vietnam as an officer and a helicopter
gunshippilot.

Returning from the war, Robert's business career began. In 1977 he

foundedacompanythatbroughttothemarketthefirstnylonandVelcro
“surfer” wallets, which grew into amulti-million dollar worldwide
product. He and his products were featured in Runner'sWorld,
Gentleman'sQuarterly,SuccessMagazine,Newsweek,andevenPlayboy.

Leaving the business world, he co-founded in 1985, an international

education company thatoperated in seven countries, teaching business

andinvestingtotensofthousandsofgraduates.

Retiring at age 47, Robert does what he enjoys most... investing.

Concerned about thegrowing gap between the haves and have nots,
RobertcreatedtheboardgameCASHFLOW,which teachesthegameof
money,herebeforeonlyknownbytherich.

Although Robert's business is real estate and developing small cap

companies, his truelove and passion is teaching. He has shared the
speakingstagewithsuchgreatsasOgMandino,ZigZiglar,andAnthony
Robbins. Robert Kiyosaki's message is clear. “Take responsibility for
yourfinancesortakeordersallyourlife.You'reeitheramasterof money
or a slave to it.” Robert holds classes that last from 1 hour to 3 days
teachingpeople about the secrets of the rich.Although his subjects run
frominvestingforhighreturnsandlowrisk;toteachingyourchildrento
be rich; to starting companies andselling them; he has one solid earth
shakingmessage.Andthatmessageis,AwakenTheFinancialGeniusthat
lieswithinyou.Yourgeniusiswaitingtocomeout.

ThisiswhatworldfamousspeakerandauthorAnthonyRobbinssays

aboutRobert'swork.

“RobertKiyosaki'sworkineducationispowerful,profound,andlife

changing. I salutehis efforts and recommend him highly.” During this
timeofgreateconomicchange,Robert'smessageispriceless.

AbouttheAuthors-SharonL.Lechter
Wifeandmotherofthree,CPA,consultanttothetoyandpublishing

industries

andbusiness owner, Sharon Lechter has dedicated her

professionaleffortstothefieldofeducation.

She graduated with honors from Florida State University with a

degree in accounting. Shejoined the ranks of what was then one of the
big eight accounting firms, and went on tobecome the CFO of a
turnaroundcompanyinthecomputerindustry,taxdirectorforanational
insurance company and founder and Associate Publisher of the first
regionalwoman's magazine in Wisconsin, all while maintaining her
professionalcredentialsasaCPA.

Herfocusquicklychangedtoeducationasshewatchedherownthree

children grow. It wasa struggle to get them to read. They would rather

watchTV.

So she was delighted to join forces with the inventor of the first

electronic“talkingbook”andhelpexpandtheelectronicbookindustryto
amulti-milliondollarinternationalmarket.Today,sheremainsapioneer
indevelopingnewtechnologiestobringthebookbackinto

children'slives.
Asherownchildrengrew,shewaskeenlyinvolvedintheireducation.

She became a vocalactivist in the areas of mathematics, computers,
readingandwritingeducation.

“Ourcurrenteducationalsystemhasnotbeenabletokeeppacewith

the global andtechnologicalchangesintheworldtoday.Wemustteach
our young people the skills, bothscholastic and financial, that they will
neednotonlytosurvive,buttoflourish,intheworldtheyface.”

As co-author of Rich Dad Poor Dad and the CASHFLOW Quadrant

she now focuses her efforts inhelping to create educational tools for
anyoneinterestedinbetteringtheirownfinancialeducation.