If you learn this lesson, you will grow into a wise, wealthy, and happy young man. If you don’t, you will spend your life blaming a job, low pay, or your boss for your problems. You’ll live life always hoping for that big break that will solve all your money problems.


Or if you’re the kind of person who has no guts, you just give up every time life pushes you. If you’re that kind of person, you’ll live all your life playing it safe, doing the right things, saving yourself for some event that never happens. Then you die a boring old man. You’ll have lots of friends who really like you because you were such a nice hardworking guy. But the truth is that you let life push you into submission. Deep down you were terrified of taking risks. You really wanted to win, but the fear of losing was greater than the excitement of winning. Deep inside, you and only you will know you didn’t go for it. You chose to play it safe.


You boys are the first people who have ever asked me to teach them how to make money. I have more than 150 employees, and not one of them has asked me what I know about money. They ask me for a job and a paycheck, but never to teach them about money. So most will spend the best years of their lives working for money, not really understanding what it is they are working for.


No, simply because it’s easier to learn to work for money, especially if fear is your primary emotion when the subject of money is discussed.


Learning how to make money work for you is a lifetime study. Most people go to college for four years, and their education ends. I already know that my study of money will continue over my lifetime, simply because the more I find out, the more I find out I need to know. Most people never study the subject.


Most people have a price. And they have a price because of human emotions named fear and greed. First, the fear of being without money motivates us to work hard, and then once we get that paycheck, greed or desire starts us thinking about all the wonderful things money can buy.


Instead of admitting the truth about how they feel, they react to their feelings and fail to think.


In fact, the reason many rich people are rich isn’t because of desire, but because of fear. They believe that money can eliminate the fear of being poor, so they amass tons of it, only to find the fear gets worse.


Emotions are what make us human. The word “emotion” stands for “energy in motion.” Be truthful about your emotions and use your mind and emotions in your favor, not against yourself.

Most people do not know that it’s their emotions that are doing the thinking. Your emotions are your emotions, but you have got to learn to do your own thinking.


The main cause of poverty of financial struggle is fear and ignorance, not the economy or the government or the rich. It’s self-inflicted fear and ignorance that keep people trapped.


As you get older, your toys get more expensive — a new car, a boat, and a big house to impress your friend.


To spend your life living in fear, never exploring your dreams, is cruel. To work hard for money, thinking that it will buy you things that will make you happy is also cruel.


You must know the difference between an asset and a liability, and buy assets.

If you want to be rich, this is all you need to know. It is rule number one. It is the only rule.


Money often makes obvious our tragic human flaws, putting a spotlight on what we don’t know. That is why, all too often, a person who comes into a sudden windfall of cash — let’s say an inheritance, a pay raise, or lottery winnings — soon returns to the same financial mess, if not worse, than the mess they were in before. Money only accentuates the cash-flow pattern running in your head.


It is said that the fear of public speaking is a fear greater than death for most people. The fear of public speaking is caused by the fear of ostracism, the fear of standing out, the fear of criticism, the fear of ridicule, and the fear of being an outcast. The fear of being different prevents most people from seeking new ways to solve their problems.

That is why my educated dad said the Japanese valued the power of the mirror the most, for it is only when we look into it that we find truth. Fear is the main reason that people say, “Play it safe.” That goes for anything, be it sports, relationships, careers, or money.


Real assets fall into the following categories:

  • Businesses that do not require my presence. I own them, but they are managed or run by other people. If I have to work there, it’s not a business. It becomes my job.
  • Stocks
  • Bonds
  • Income-generating real estate
  • Notes (IOUs)
  • IP royalties
  • Anything else that has value, produces income or appreciates, and has a ready market

As a young boy, my educated dad encouraged me to find a safe job. By my rich dad encouraged me to begin acquiring assets that I loved. “If you don’t love it, you won’t take care of it.”


As your cash flow grows, you can indulge in some luxuries. An important distinction is that rich people buy luxuries last, while the poor and middle class tend to buy luxuries first. The poor and middle class often buy luxury items like big houses, diamonds, furs, jewelry, or boats because they want to look rich.


It is this Robin Hood fantasy, or taking from the rich to give to the poor, that has caused the most pain for the poor and the middle class. The reason the middle class is so heavily taxed is because of the Robin Hood ideal. The reality is that the rich are not taxed. It’s the middle class, especially the educated upper-income middle class, who pays for the poor.


The idea of taxes was made popular, and accepted by the majority, by telling the poor and the middle class that taxes were created only to punish the rich. This is how the masses voted for the law, and it became constitutionally legal. Although it was intended to punish the rich, in reality it wound up punishing the very people who voted for it, the poor and the middle class.


“1031” is jargon for Section 1031 of the Internal 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 of real estate. Real estate is one investment vehicle that has a great tax advantage. As long as you keep trading up in value, you will not be taxed on the gains until you liquidate.


The poor and middle class don’t have the same resources. They sit there and let the government’s needles enter their arm and allow the blood donation to begin.


Why not own the ladder?


Each dollar in my asset column was a great employee, working hard to make more employees and buy the boss a new Porsche.


Investing is the science of “money making money.”


A corporation can do many things that an employee cannot, like pay expenses before paying taxes. Employees earn and get taxed, and they try to live on what is left. A corporation earns, spends everything it can, and is taxed on anything that is left. It’s one of the biggest legal tax loopholes that the rich use.


By owning your own corporation, your vacations can be board meetings in Hawaii.


I have heard it called many things: guts, chutzpah, balls, audacity, bravado, cunning, daring, tenacity, and brilliance. This factor, whatever it is labeled, ultimately decides one’s future much more than school grades do.

Inside each of us is one of these brave, brilliant, and daring characters. There is also the flip side of that character: people who could get down on their knees and beg if necessary.


As a teacher, I recognized that it was excessive fear and self-doubt that were the greatest detractors of personal genius. It broke my heart to see students know the answers, yet lack the courage to act on the answer. Often in the real world, it’s not the smart who get ahead, but the bold.


Money is not real. Money is what we agree it is.

The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth seemingly instantaneously. An untrained mind can also create extreme poverty that can crush a family for generation.


Investments come and go. The market goes up and down. Economies improve and crash. The world is always handing you opportunities of a lifetime, everyday of your life, but all too often we fail to see them. But they are there.


If baby boomers discover they don’t have enough money to live on when they’re older, they can always blow their brains out.


Life is much like going to the gym. The most painful part is deciding to go. Once you get past that, it’s easy. There have been many days I have dreaded going to the gym, but once I am there and in motion, it is a pleasure. After the workout is over, I am always glad I talked myself into going.


So if most of you can cook a better hamburger, how come McDonald’s makes more money than you?

The answer is obvious: McDonald’s is excellent at business systems.


The more specialized you become, the more you are trapped and dependent on that specialty. Although your salary goes up, your choices diminish. It is like professional athletes who suddenly are injured or are too old to play.


The primary difference between a rich person and a poor person is how they manage fear.


Fear. Cynicism. Laziness. Bad habits. Arrogance.


Texans don’t bury their failures. They get inspired by them. They take their failures and turn them into rallying cries. Failure inspires Texans to become winners. But that formula is not just the formula for Texans. It is the formula for all winners.


I often meet people who are too busy to take care of their wealth. And there are people too busy to take care of their health. The cause is the same. They’re busy, and they stay busy as a way of avoiding something they do not want to face. Nobody has to tell them. Deep down they know. In fact, if you remind them, they often respond with anger or irritation.

Deep down they know they are avoiding something important. That’s the most common form of laziness: laziness by staying busy.


Rich dad forbade the words, “I can’t afford it.” He believed that the words “I can’t afford it” shut down your brain. It didn’t have to think anymore. “How can I afford it?” opened up the brain and forced it to think and search for answers.

But most importantly, he felt the words, “I can’t afford it,” were a lie. And the human spirit knows it. “The human spirit is very powerful. It knows it can do anything.” By having a lazy mind that says, “I can’t afford it,” a war breaks out inside you. Your spirit is angry, and your lazy mind must defend its lie.

“I can’t afford it” also causes sadness, a helplessness that leads to despondency and often depression. “How can I afford it?” opens up possibilities, excitement, and dreams. It creates a stronger mind and a dynamic spirit.


Guilt is worse than greed, for guilt robs the body of its soul.


Do what you feel in your heart to be right — for you’ll be criticized anyway. You’ll be damned if you do, and damned if you don’t.


Choice is the main reason people want to live in a free country. We want the power to choose.

Financially, with every dollar we get in our hands, we hold the power to choose our future: to be rich, poor, or middle class. Our spending habits reflect who we are.


Invest first in education. In reality, the only real asset you have is your mind, the most powerful tool we have dominion over.


Their friends who have no money have never come to them to ask them how they did it. But they do come asking for one of two things, or both: a loan, or a job.


It’s all “insider trading.” There are forms of insider trading that are illegal, and there are forms of insider trading that are legal. But either way, it’s insider trading. The only distinction is: How far away from the inside are you? The reason why you want rich friends is because that is where the money is made. It’s made on information. You want to hear about the next boom, get in, and get out before the next bust.


Taxes are highest on earned income. The least-taxed income is passive income.