Transcription
They don't want what we know out there; they'll never get those on CNBC. But our school system will never tell us; it does their part of the posse. Fake money, fake future. Stay back; I know the game of the rich. My rich dad taught me, you know, because you're the banker. The bankers and the rich play a game that is different from what they teach you in school all over the world. What does the school teach you about money? The answer is nothing, and that's not a mistake; that's not an accident. I knew that, and most people know that the way to keep the poor and middle class working hard is to never teach them what the rich know.
So if you read "Rich Dad Poor Dad," which came out in 1997, it's about what the rich teach our kids about money that the poor and middle class do not. Poverty hurts; I mean, I don't like it, and I don't like that our academic system is so corrupt. We know the banking system is corrupt; we know politics is corrupt, but academics is just as corrupt. I mean, it's one thing if it's the banking and the politics, but this is where we send our children, and we trust them to do the right things for them, and yet they're not taught something so fundamental. Like, you asked your dad when you were a kid, "Dad, oh yeah, Stratego, teach us about money," and it was just never, never, and they never will.
You know something? What do you know? Share it. What is financial education? It's not "get a job, work hard, save money, and invest in a well-diversified portfolio of stocks, bonds, mutual funds, and ETFs." The financial industry is two things: debt and taxes. In 1971, Nixon took the dollar off the gold standard, and the US dollar became debt. Yet we still tell kids to go to school, get a job, work hard, save money, and get out of debt. Now, who tells them to do that? That's the most ridiculous thing there is. The book starts, and it says line number one: saving money will make you rich. And ever, well, you know that. We were all taught that as kids. Why would you save it, and why would you work for it if they can print it faster than you can work for it? Why do you keep saving when they're printing it?
Rich don't work for money. Don't you touch that stuff; it's very subtle. Yeah, they don't say, "I'm going to train you to be a worker bee for the rest of your life," but they educate you in a way where that's what you come out as. Right? What else was he trying to do those first few months when you were working for him? What was he trying to get across to you? Because he taught you the hard way about money, and he said, "If you're going to be successful in your lives, you've got to find the best teachers." A great teacher is somebody who comes from the inside, not the outside. But in school, you don't know if your instructor is for real or not; that's where the fake teacher comes from.
I said, "I want you to teach me about money." So he said, "Why should I teach you?" I said, "But if I teach you, you work for me for free." And I said, "Why for free? My dad, my poor dad, whatnot." He says, "If I pay you, you think like an employee. Your brain will change. If you learn never to work for money, you'll be a rich man." And this is powerful. Once you give someone a paycheck, their brain turns off, right? Because it had been the promise of a pension, right? And job security, which is kind of a paycheck in disguise, correct?
After you stop, "Give a man a fish, he eats for a day. Teach him to fish, he eats for a lifetime." Most poor people confuse assets and liabilities; they think their home is an asset. It's actually a liability, right? An asset is a noun, like a house; cash flow is a verb. So to understand if it's an asset or a liability, it takes a noun plus a verb. If the cash is flying out of your pocket, it's a liability. If the cash is flowing into your pocket, it’s an asset. That's it.
So I own 7,000 rental properties; those are assets. Every month, the cash flows in, whereas many people have the big house on the hill, and the cash is flowing out. Right now, they're going broke. Right? It's like a frame of mind. The other thing the poor don't understand is that the number one expense for most people is taxes, and yet we don't even see it. Isn't that weird? You walk around, and you look at the paycheck and say, "Oh, that doesn't seem right," and you don't realize that the government has a huge hand in your pocket, and you are doing nothing to minimize that.
Again, this is what is very different about the rich and the poor. The rich don't work for money; the number one expense is tax. See, there are three kinds of income: earned, portfolio, and passive. Earned income is if I get a job; that's earned income. If I'm a doctor or a programmer, that's earned income because I'm working for it. If I buy US by pilots an apple for ten dollars and sell it for twenty, that's portfolio income—capital gains. Yeah, but passive income, which is cash flow, is never taxed. That's all of these guys are screaming right now in America: "Tax the rich." Good luck, because most of the guys complaining don't know the three kinds of income, and the rich don't have jobs anyway; they have assets.
So the average small, poor guy, you know, sends the kid to school; they don't learn this. You see, very few people will buy what I do: make a million dollars and pay zero tax. My rich dad taught me that playing Monopoly; that's how it started. You know, four greenhouses, one red hotel, or the McDonald's. For me, I write about it—McDonald's, Ray Kroc. Yeah, McDonald's is in the real estate business. So they sell hamburgers, but they buy real estate. They pay no taxes. You know this guy Bezos, with his sixteen billion dollars—how much tax did he pay on sixteen billion? And that's all legal. Anyone can do it; everybody could do it. Most people lack the education.
So once you learn how to use debt as money, you can never say, "I can't afford it," because the banks will give you. So the banks, after the crash of 2008, gave me 300 million dollars tax-free. When they asked the average guy, "Can you?" Why don't you use debt? They can't even get a loan because their FICO scores, when only we have them here, are so bad. The schoolteachers will never tell you about it because they don't know it. My poor dad never knew that you don't know if something is an asset or a liability until you can see which way the cash flows.
So a house is a liability if it's taking money from your pocket; it's a liability. If it's putting money in your pocket, it's an asset. The US government wants me to provide housing, wants me to provide jobs, wants me to borrow money because that's how money is created—through debt. I get huge tax breaks; everybody can do the same thing if they had the financial education to do it. If people understood the tax code, we'd be more prosperous.
But can poverty be passed through genetics? Yes, because it's some type of way of thinking; it's an attitude. It's very simple. When I wanted people to ask, "How do I stop it?" I just never say, "I can't afford it." Ask yourself, "How can I?" The reason I have so much money is that I don't say, "I can't do it." I just ask, "How can I do it?" And I guess I make a lot of mistakes, but that's how I learn. "How can I?" And poor people, like my poor dad, always say, "I can't afford it. You think I'm made of money? I'm a school teacher; I can't do that." And I picked that up, and my rich dad never said those words.
So when I meet poor people that use the words "I can't" a lot, the people that say, "I can't afford it," "I can't do this," "I can't get to college," the rich are able to say, "I choose not to participate in that." And that's one thing people could change today, right now, is that dialogue in their head to stop saying the word "can't." "I can't," right? So how can I? How can I afford that? Because that opens them up to looking at it as an investment for a greater future.
You know, when I borrowed three hundred million dollars, I couldn't do it. When I went to ask, I got turned down so many times. I said, "Look, do me a favor. Why did you turn me down? You tell me; you business out the numbers are out here. So I get these numbers fixed; can I come see you again?" They said, "Sure." So it's called rejection, same as my wife rejected me for six months. It's just a matter of personal willpower; it was a spiritual signal. If they can do it, I can do it. And how can I?
And I think you once said, "Words become flesh." Yep, I was a Bible. Intelligence increases through your mistakes, through the ups and downs of what you've learned. Real estate is real estate. What I learned made me richer, not the money. You don't need money to make money. You know, I think all of us, every human being, has a low point in their life, and if they get the message, a new life begins. If you don't get the message, you keep going down. The richer I got was because I didn't need any money; I could use this to make money. But how did I get there? I made a lot of mistakes. People are afraid of making mistakes, and all those fears of failing—nice, nice, so very nice. So many people are trapped in the same device.