5 Money Rules The Rich Have Mastered

5 MONEY RULES
THE RICH HAVE

MASTERED
ROBERT KIYOSAKI
5 MONEY RULES THE RICH HAVE MASTERED
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Ta b l e o f C o n t e n t s
Introduction 11
Rich Dad and Poor Dad 12
Why My Poor Dad Was Never Rich 13
The Way the Rich and Poor See Money 13
How I Came to Know the Difference Between Rich and Poor 15
The Importance Of Learning And Mastering Financial

Intelligence 18
Rule #1: Protect Your Money 19
Rule #2: Leverage Your Money 20
Rule #3: Create Money 21
Rule #4: Multiply Your Money 22
Rule #5: Build the Perfect Team 22
What Is Financial Intelligence? 23
Developing Your Financial Intelligence 26
1. Read 26
2. Studying the Success of Others 28
3. Mentors 29
4. Trial and Error 29
5. Failing 30
Critical Topics to Study and Master for Financial Intelligence 31
The CASHFLOW® Quadrant 31
Taxes 34
Assets Versus Liabilities 35
Ta b l e o f C o n t e n t s 4
Rich or Poor…It’s Up to You 36
The Conspiracy Of The Rich 40

The Economy and Why You Are Poor 40
Currency Versus Money—Off the Gold Standard 41
The Crash 41
Most People are Financially Illiterate 42
STOP Saving 44
Biggest Myths About the Rich 45
Rich People are All Mean and Greedy 46
Rich People Have a High Salary 48
Rich People Buy Expensive Things 49
How the Rich Look at Money 52
Rich People Respect Money 55
Job Security Versus Financial Freedom 55
Understanding the CASHFLOW® Quadrants 57
E is for Employment 58
S is for Specialist/Self-Employed 59
B is for Big Business Owner 60
I is for Investor 60
The Rich Get Richer 61
Rule #1: Protect 63

Is it fair? 64
Why You Need to Understand Taxes 65
Losing Income to the Government 66
It Guides Your Money Strategy 66
Moving From Earn-Tax-Spend to Earn-Spend-Tax 67
How Taxes Penalize the E and S Quadrants 71
How Taxes Favor People in the B and I Quadrants 72
The History of Income Tax 73
Taxes, Businesses and Corporations 74
What the Rich Know About Taxes? 75
Rule #2: Leverage 76

What Is Leverage? 76
Other People’s Money 78
Loans 78
Investors 80
How to Treat OPM 80
The Importance of Debt 81
The Poor and Bad Debt 81
The Rich and Good Debt 82
Debt and Income Tax 84
Be Careful with Debt 84
Other People’s Time 85
Employees 86
Subcontractors 88
Save Your Time for Making More 88
Leverage Can Make You Rich or Poor 89
Study Every Deal 89
Go Study 90
Rule #3: Create 91
Earned, Passive, Portfolio 92
Big Business Versus Self-Employment: Myths About Entrepreneurship 93
Creating a Job for Yourself 94
The Difference of a Business 95
Scaling Your Business 96
Freelance Writing to Copy Agency 97
Store Owner to Franchise Owner 98
From A Piece of Property to a Management Company 99
Traits of Successful Entrepreneurs 100
Bravery 101
Automation 102
Taking Advantage of Free Time 103
How to Become an Entrepreneur 104
Purchasing a Business 105
Starting a Business 106
Find a Problem and Solve It 107
Essential Information to Have Before Starting Your Business 107
Taxes and Laws 108
Market Research 108
Study the Competition 108
Envision Your Brand 109
You Don’t Have to Reinvent the Wheel 109
If It Can’t Generate Passive Income… 110
Entrepreneurship Isn’t for Everyone 110
Rule #4: Multiply 111
Making Your Money Work for You 111
Why Real Estate Is a Business 113
How to Grow Your Wealth While Keeping It Safe 114
1. You Need to Invest 115
2. You Need to Purchase Insurance 116
3. You Need to Continue Your Education 118
Why Real Estate Is a Great Investment 119
People Always Need Real Estate 120
Investors Versus Traders 121
Real Estate and the Crash 122
Getting Into Real Estate 123
Take Courses 124
Put Your Own Money Away 124
Other People’s Money 125
Making Money Work 125
Rule #5: Building Your Team 127

Why You Need a Team 127
Finding a Great Mentor 129
Be Willing to Ask for Help 129
Swallow Your Pride 130
Find an Expert 130
Where to Find an Expert 131
Prepare for Rejection 132
Give Value, Take Value 133
Use What You Are Learning 133
A Great Place to Start 133
Finding a Great Financial Planner 134
What to Ask Your Potential Planner 134
Credentials 135
Payment 136
Reputation 136
What Are THEY Doing with Their Finances? 136
Find Someone You Can Trust 137
Finding a Great Broker 137
Discount Brokers 137
Why Good Brokers Are Hard to Find 138
Tom and John 138
The Difference Between Good and Bad Brokers 138
Finding a Great Accountant 139
The Difference Between an Accountant and a Financial Planner 139
Other Services Provided by an Accountant 140
Finding Great Lawyers 140
Searching for the Right Lawyers 141
Synchronicity In Your Team 142
TRUST Your Team 143
How The Rules Are Impacted By A Global Economy 145

Global Intelligence 146
The China Boom 147
Connected Economies 147
Prepare to Go Global 148
Money in an International Market 149
Exemptions and Credits 150
Overseas Banks 151
Keep Your Money Safe 151
International Debt 152
How to Treat International Debt 152
Why International Debt? 153
Going International 153
Foreign People’s Time 154
More for Less 154
Hiring Online 155
The Future is Global 156
The 5 Rules That Will Change Your Life 157

Rule #1: Protect 157
Rule #3: Create 159
Rule #4: Multiply 160
Rule #5: Build Your Team 161
The Importance of Money 162
Choose to Be Rich 162
I n t r o d u cti o n
Everyone wants to be rich, but few people want to take the time to learn the rules.
Instead, most people rely on advice that they heard growing up—mainly from people
who never become wealthy. They buy into a line of thinking that is fundamentally
flawed, and this ruins their chances of ever truly being rich.
It’s no surprise…from a young age we are taught to be employees instead of business

owners or investors. We are taught to fall in line, to not stick out and to not take risks.
This is fine if you want an average life in which you are always one layoff or recession
away from disaster.
If you want to leave a legacy, though, and if you want to be financially independent,
you need to start learning the rules that govern money. There are certain rules that
the rich know that help them to stay rich, and if you can learn these rules and then
put them into practice, you too can learn to not only make extraordinary amounts of
money, but keep it as well.
Before I get too far ahead of myself, I want to tell you a story about my two dads. You
may have heard this one, but whether you have or not, it’s an important story to dis-
cuss before we get into the rules of money.
This story helps to illustrate what happens when you have a rich mentality, versus a
poor mentality. These two dads both meant a lot to me, and they both taught me a
lot about life, but the advice of one father made me rich, while the advice of the other
would have led me to abject failure.
I n t r o d u cti o n 11
Rich Dad and Poor Dad
Growing up, I was fortunate enough to have two dads—a rich dad and a poor dad.
My poor dad was my father. My rich dad was my best friend’s father. They were both
strong men that I looked up to, but they both viewed the world in fundamentally dif-
ferent ways.
My poor dad believed the advice that was passed on to him, and that has probably
been passed on to many of you:
Work hard, stay in school, get a college degree, find a steady income, invest in mutu-
al funds or a 401 (k), retire at sixty-five.
Does this sound familiar?
The same advice that he got years ago is probably the advice you are getting today. The
problem is, over the years, the rules of money have changed. We’ll get into that later.
What’s important to see here is that he had a very traditional view of money, and that
view kept him poor.
My poor dad wasn’t poor because he wasn’t intelligent. In fact, he had a Ph. D and at-
tended the top schools in the country. He got his four year undergraduate in two years,
and he excelled as a scholar.
My rich dad, on the other hand, dropped out of school in the eighth grade. His edu-
cation was of a different variety. Instead studying philosophy or science, he studied
business, investments and trends.
These two different paths meant the world as far as making money went. While one
dad should have been rich, but wasn’t, the other dad succeeded with less than what is
considered the bare minimum.
Why My Poor Dad Was Never Rich
Even with all of his education, all of his planning, and all of his years of doing what he
was “supposed” to do, my dad died extremely poor. Instead of leaving an inheritance,
he left debt. Instead of leaving a legacy, he left a cautionary tale.
I loved my father, and it broke my heart to see his life fall apart. He was so intelligent,
so well-educated and such a hard worker—yet he could never really get ahead. Sure,
he became the Head of Education in Hawaii, but even that wasn’t enough to spare him
from the horrors that came from a lack of financial intelligence.
Various members of my family got very sick in a short period, and this led to crippling
medical debt. This, mixed with him running for lieutenant governor and losing, began
the decline.
He was jobless, he was just about broke, and then he made one of the worst invest-
ments of his life into a national ice cream franchise—in which he lost everything. Mix
this with my mother passing at the age of forty-eight, and you have a man that just
never recovered.
This made him bitter, and his view of money and of the rich became even more ven-
omous. This didn’t come out of nowhere, though. His relationship with money was
always different than my rich dad’s, and this difference in values and the way that they
saw money fundamentally split their financial paths.
The Way the Rich and Poor See Money

Even before my father lost everything, he had a negative view of money. He believed
that money was the root of all evil. My rich dad, on the other hand, believed that the
lack of money was the root of all evil.
This view made my poor dad resentful when everything fell apart. When he saw his
classmates succeeding while his life fell apart, he lashed out and blamed everyone and
everything but himself. He would say, “I dedicated my life to educating the children of
Hawaii, and what did I get? Nothing. My fat-cat classmates get richer, and what do I
get? Nothing.”
He really thought that the world owed him. He thought that getting an education would
mean more opportunity, and that opportunity would lead to him becoming rich. He
was wrong.
My mother thought the same way, so when I was young she told me that I needed to
become a doctor, a lawyer or some other kind of specialist in order to make a lot of
money. She also thought school was the answer.
My poor dad would tell me, “Study hard so you can get a job at a good company.” My
rich dad would tell me, “Study hard so you can find a good company to buy.”
My poor dad told me, “The reason I’m not rich is because I have you kids.” My rich dad
told me, “The reason I must be rich is because I have kids.”
Poor dad told me, “Play it safe, don’t take risks.” Rich dad taught me to manage risks,
and use them to my advantage.
Really, the difference came down to a statement and a question that helped me to un-
derstand the difference between being rich and being poor. This opened my mind up
to an entirely new way of thinking, and I think it may open yours up as well.
My poor dad would tell me, “I can’t afford it.” This was his go-to. We never had the
money for anything—even tithings. We were always going to save, invest, spend and
tithe when we had the money…and we never did.
My rich dad, on the other hand, forbade me from even saying, “I can’t afford it.” In-
stead, he said I needed to reframe it as a question… “How can I afford it?”
This little distinction illustrates the difference in the approach that rich people and
poor people take to money. It is what keeps poor people poor, and has helped rich
people to become rich for centuries.
That statement is closed off. It is an open and shut case. “I CAN’T afford it.” It’s final,
with no wiggle room.
The question leaves space for so many different possibilities. “HOW can I afford it?”
makes it a puzzle that you can solve. It gives you the opportunity to find a way to get
whatever you want in life, and with the right level of financial intelligence, you’ll be
able to solve that puzzle.
How I Came to Know the Difference Between Rich and Poor

It was by watching my two dads that I was able to see what the difference between rich
and poor was, and (believe it or not) it’s not what you probably think.
My rich dad, even when he was broke, would always say that he was rich. He told me
that there was a difference between being “broke” and being “poor.” You can recover
from being broke, and you can still be rich while you are doing it. Recovering from
being poor is a different story.
This is because rich and poor are just mentalities. When you have the mentality that
you are rich, you will make decisions that rich people would make. You consider prob-
lems the way a rich person would.
When my rich dad was broke, he always asked himself, “How would a rich person
handle this? What would a rich person do?”
This allowed him to earn his money back, and this lead to him NEVER being perma-
nently broke.
My poor dad, on the other hand, obsessed over money. It was all he ever thought
about! He didn’t see being broke as temporary, either. He didn’t feel he was rich. He
was bitter about being poor, and he accepted his finances as his reality.
The system had failed him. Old wisdom had failed him. Everything that he had been
taught about money was fundamentally wrong, and this led to him being poor for the
rest of his days.
I learned through both my rich dad and my poor dad that being rich or poor has little
to do with what you have in the bank—it’s all about your mindset, your relationship
with money, your financial intelligence and your financial education.
While my poor dad spent years in college learning more about being an employee, my
rich dad spent his life learning about the nature of finances, and what it took to get and
stay rich. He passed these lessons on to me, and he taught me the five money rules that
the rich have mastered.
I want to teach you the lessons that my rich dad taught me. I want you to change the
way that you look at money, and your relationship with your finances. Most of all, I
want you to learn to change your mentality, and your overall philosophy of what it
means to be rich.
Yes, you are going to learn how I became rich and how you can become rich as well,
but I want you to approach everything I teach you from a new mindset. That’s where
all change begins. Let go of your old ideas of what being rich or poor means. Let go of
the idea that money determines whether you are rich or not, and don’t allow yourself
to fall prey to the idea that money is evil. Money isn’t evil.
Both of my dads were great men, and I learned a great deal about life from each of
them. When it came to being rich, though, one dad taught me everything I needed to
know, while the other repeated old and stale information that he learned from other
poor people.
Very early on I learned how much it matters who you take your advice from. If you
want to succeed, you need to look at what successful people do. If you want to be rich,
you need to look at what rich people do. You need to stop listening to what poor people
tell you that your life should look like, and you need to instead take the road less taken.
That is why the poem, “The Road Not Taken,” by Robert Frost is my favorite poem. As
it states:
I took the one less traveled by,

And that has made all the difference.
I embarked on a journey led by rich dad, and I learned to take risks. I learned that the
safe road that most people take will never lead to being rich. Instead, it will lead to
endless hours of hard work that may or may not lead to some form of success.
Even when the poor become successful, though, they can never become rich. Your
income will cap, you will grow weary and you will retire with very little…if anything at
all.
I want you to take the road less traveled with me, and I want you to learn what rich
people have known for years. I want you to learn the secrets that have made the rich
wealthy, and also what has kept them wealthy.
Don’t let your poor dad, mom, teacher or anyone else tell you how to stay poor. In-
stead, join me on the road less traveled and become truly rich.
T h e I m p o r ta n c e O f L e a r n i n g
A n d M a s t e r i n g Fi n a n ci a l
Intelligence
The difference between being rich and being poor often comes down to education…
and I don’t mean whether or not you went to college. In order to be successful with
building your finances and keeping them, you need to grow your financial intelligence.
This is something that I am a firm believer in, and I am going to discuss with you a lot
throughout this course. The five money rules the rich have mastered are all centered
around this idea of financial intelligence.
Imagine trying to learn a language by only learning the words and phrases, and not the
sentence structure. While you may have a collection of words, you aren’t going to get
very far with that language.
The same idea goes for financial education. You may have money, but without a strong
financial education, you won’t know what to do with it. Because of this, you’ll never be
rich—you’ll simply have money, until you don’t.
My rich dad was a financial genius, and this was not by accident. He learned what
made and kept the rich wealthy, and he was always working on his financial education.
My poor dad, on the other hand, was stuck in the old ideas of money. He still believed
that in order to succeed, he just needed to work harder and find a higher paying job.
After years of chasing money, he was still broke. He had the problem of not having
enough money, where my rich dad had the problem of having too much money. I’d
personally rather have the latter problem than the former.
T h e I m p o r t a n c e O f L e a r n i n g A n d M a s t e r i n g Fi n a n ci a l I n t e l l i g e n c e 18
Let’s take a quick look at the five rules that you are going to learn in this book, so you
have a better idea of what a strong financial education looks like…
Rule #1: Protect Your Money

As long as you are making lots of money, people will be looking to take that money
away from you. You’ll run into con men, bad investments and—worst of all—the gov-
ernment. They’ll want to take your hard earned money in the form of income and pay-
roll taxes, and they’ll do so with the promise of investing it in a future that may never
come.
After all, it’s no secret that Social Security and Medicare are financial disasters that
are throwing this country into massive debt. While these programs—as well as most
welfare programs—were well intentioned, they ended up costing the taxpayer money,
and they continue to lead to a growing national debt, which we are pretending to pay
off by printing money out of thin air.
The government wants to tell you where to put your money, with the promise of tak-
ing it back out later in life . Social Security is supposed to help the American people to
collectively save their money, so it’ll be there later in life when they need it.
Sadly for this current generation, that money might not be there when they are old
enough to claim it. It will be either squandered or used to pay off the national debt,
which is constantly growing larger.
I mention all of this is because I want you to understand that in order to stay rich,
you need to learn to protect your money. You don’t want the government to take it to
spend on wars overseas or lining their own pockets. Instead, you want to hold on to as
much money as possible so you can use it for your own family.
I am going to teach you how to better understand the tax system so you can pay far less
in taxes, and invest your money the way you see fit.
Rule #2: Leverage Your Money

No matter who you are, your resources are limited. You only have so much time, mon-
ey, energy, focus and so on, and you need to learn how to use it wisely. Part of properly
utilizing what you have is leveraging it, so you can do more with less.
This involves using other people’s time and money, mixed with your own, to grow your
finances and make you rich!
Leverage is something that only works with a strong financial intelligence, though.
Rich people are able to use leverage to make them richer, while poor people only find
themselves more in debt.
Part of having a strong leverage over your finances is having control over your invest-
ments. The more control you have, the better leverage you have, and the more you can
make your money work for you.
Poor people either don’t make “higher risk” investments or lose out on them not be-
cause they are inherently risky, but because they lack control of those investments.
The more control you have over the investment, the better chance you have at suc-
ceeding with that investment.
Rule #3: Create Money

The third rule of money that we will discuss is creating more money by becoming a
businessperson and an investor.
It’s not enough to work for someone else and squirrel away your money into a savings
account or a 401 (k). Even a diversified stock portfolio is not enough to truly grow your
money, and mixing these together spells financial disaster.
Many people live paycheck to paycheck, or make just enough money to get by, and
they can’t seem to change that. This is because most people are working for an hourly
pay, or even worse, they are putting in ungodly hours for a small, unchanging salary.
This is no way to get rich. Even with raises, even with promotions, as an employee
you’ll probably cap somewhere around $500,000 a year…and that’s if you are one of
the top earners in your company. Also keep in mind that you’ll most likely be sacrific-
ing quality of life to get to that level as an employee.
If you are able to create your own money, though, your cap becomes unlimited. There
is nothing stopping you from making more and more money, and the sky becomes the
limit!
I am going to teach you how to become an entrepreneur and how to make your own
money, so you can break your reliance on employers and break the cycle of trading
your time for money.
Rule #4: Multiply Your Money
The next rule is all about taking your money, and making it work for you. This is
something that my rich dad taught me that has stuck with me through the years. You
shouldn’t be working for your money, it should be the other way around.
This is a major example of where people don’t understand the way money works. This
lack of financial education leads to being poor, and to always having to work hard,
week to week, for a paycheck. The rich operate under a completely different paradigm.
I am going to teach you to grow your wealth, while also keeping it safe.
I am also going to teach you about one of my favorite types of investments, which is
real estate. If you know how to properly invest in real estate, make good deals and use
leverage, you can make a significant amount of money for minimal risk.
Rule #5: Build the Perfect Team

The final rule that we are going to discuss in this book will really mean the difference
between your success and failure not only with money, but life in general. This is your
team.
A lot of people like to do things on their own, and that is fine up to a point. Once you
hit a certain level of success, though, rugged individualism becomes a detriment and it
holds you back from the success that you would have been able to reach if you simply
asked for help every once in a while.
Behind every great success story is an amazing team of dedicated people that have
helped that person to reach and maintain their success. Some of them are people that
you would never think of, like their lawyers or brokers. Others, they may mention by
name, like their mentors.
I have my own team of experts in various fields of business. Each of them plays a cru-
cial role in my success.
If you want to build your wealth and hold on to it, you need to make sure that you have
a team of experts around you that have your best interests at heart.
I am going to walk you through the different members of your team that you’ll need,
and what traits you should look for when picking people for your team. There are thou-
sands of brokers out there, for instance. You’ll want to find the right broker, though, if
you want to succeed.
When you put this team together, you’ll be unstoppable.
What Is Financial Intelligence?

So, we’ve discussed how importance it is to build your financial intelligence through fi-
nancial education, but what exactly is financial intelligence? To put it simply, financial
intelligence is your level of knowledge when it comes to how money works. The more
you know about finances, and the higher your level of financial education, the more
likely you are to get and stay rich.
To better understand what having strong financial intelligence looks like, let’s look at
a couple of examples of people that have poor financial intelligences…
One example that you see a lot on the news are people that won the lottery, but went
broke within a couple of months. Even with a few million dollars in the bank, these
people didn’t have a strong understanding of money, and because of this, they were
never truly rich.
Just like with my rich dad’s distinction between “broke” and “poor,” there is a strong
distinction between “having cash” and being “rich.” You may have a lot of currency in
your bank account, but that doesn’t mean that it will stay there—nor does it mean that
it will have the same worth a few years down the line. We’ll get into that later.
Another example (one of my favorites), is the rapper MC Hammer. He made millions

seemingly overnight, and either blew it or spent it on liabilities instead of assets. There
was a commercial with him, and at the end was a shot of the “foreclosure” sign on his
house. That has always stuck with me, because it illustrates how you can have lots of
money one day, but have nothing the next.
As much as people want to look at money as this magical thing that will solve all of
their problems, that simply isn’t the case. Even with an influx of cash, many people
end up more broke than when they started. Bad investments, mortgages, car pay-
ments; all of these things add up. Mix this with taking out loans, credit cards and using
your house as an atm, and you will become broke again pretty quickly.
Poor people believe that everything would be okay if they simply had money. The truth
is when they get it, it’s never enough.
This is also why people stay at jobs that they hate for years on end. They see mile mark-
ers along the way, like raises and promotions, so they stick it out. They think that if they
work hard enough for long enough, they will squirrel enough money away in their 401
(k) that they can retire and live comfortably for the rest of their lives.
Not only do I believe that 401 (k)s are a bad investment, but I also know that this “safe
route” will keep you always struggling to make a little more, or it will leave you com-
pletely broke.
I couldn’t tell you the amount of people that I’ve known that have gotten that “safe
job,” only to be laid off or fired somewhere down the line. Then they go into panic
mode, taking out loans and taking a lower paying job simply to pay the bills.
This is not what a high financial IQ looks like.
Financially intelligent people find a way to make their money work for them. They
don’t rely on an employer that may or may not give them a raise, and may fire them
at any point. Instead, they are the employer, and they make wise investments instead
of trusting that a 401 (k) will keep them safe in the future. They also find ways to keep
this money either very low on taxes or tax-free.
You may hear people complaining about how the rich never pay taxes, but this isn’t
because they simply dodge their taxes. It’s because rich people have more financial
intelligence, and they know where to put their money to keep it from the prying hands
of the government.
Financially intelligent people also know that there will always be people that want to
take your money, promising to keep it safe. This may be through social security, a 401
(k), a diversified portfolio of mutual funds or a savings account.
The trouble with these are that they are unstable, and mostly depend upon the strength
of currency. Remember, there is a difference between money and currency. When we
went off the gold standard, we transitioned to currency, which is not backed by any-
thing tangible except the “full faith and credit” of the government.
The word “currency” is derived from the word “current.” Just like a current, the value
of currency is always changing. People who are financially educated know this, so they
know that they shouldn’t trust the value of a dollar to stay the same from one day to
the next.
Basically, when you hear “financial intelligence,” I want you to think of what intelli-
gence means overall, which is defined as “the ability to acquire and apply knowledge
and skills.”You can have a strong scholastic intelligence, musical intelligence, math-
ematical intelligence and so on. Financial intelligence is the same. It simply means
knowing how money works, and being able to apply that knowledge.
Now that you know what financial intelligence is, let’s get into how you can better de-
velop it.
Developing Your Financial Intelligence

Developing your financial intelligence is like any other form of study…it takes reading,
speaking with experts, practice, failure and eventually success. As you open yourself
up to the world of finances and you begin to learn what works and what doesn’t, your
financial intelligence will continue to grow.
This is an active form of growth, though. You aren’t going to want to sit around all day
reading or speaking with a mentor, and never pull the trigger. You’ll eventually need
to put yourself out there to develop financial intelligence, and part of the learning pro-
cess will end up coming from trial and error.
I want to break down some of the different elements of financial education that will
lead to a higher financial IQ with you. Each of these different factors are just as im-
portant as the last, and you’ll need to include all of them in your financial education.
1. Read
That is exactly what you are doing now! So you’re on the right track.
I encourage you to keep reading, though, even after this book. Not only do I have more
books, but there are also tons of other books that will teach you a lot of what you need
to know about money.
One you may want to consider is by Dr. R. Buckminster Fuller, and it’s called Grunch
of the Giants. Grunch is an acronym, and it stands for “Gross Universal Cash Heist.”
In this book, Dr. Fuller discusses how financial education was essentially denied from
the people, and how the government works with corporations to make them even rich-
er. Dr. Fuller was a mentor of mine, and this book is a MUST READ.
Some other books that you’ll want to check out are:
• The Dollar Crisis by Richard Duncan
• Family Fortunes: How to Build Wealth and Hold on to It for 100 Years by Bill
Bonner and Will Bonner
• The Battle for the Soul of Capitalism by John Bogle
• Hot Commodities by Jim Rogers
Reading is an excellent way to dip your toes into the waters of financial education,
with no risk to you at all. As Dr. Fuller would say, “Words are the most powerful tools
invented by humans.” And the good news is that words are free. If you find the right
books from the right authors, you’ll be able to learn all kinds of insider information
that you would have spent years discovering on your own.
Now, this isn’t to say that you shouldn’t read books that disagree with my view of mon-
ey…you should. It’s good to be well-informed on not only what works, but also what
doesn’t. There are plenty of books that discuss the old rules of money—even books that
were written within the last decade!
This counterpoint will help you to build an even better understanding of what others
think about money, and why they think it. Who knows…you may uncover a secret that
still holds up to this day.
I always say that there are three sides to a coin, the two sides and the edge. Cultivating
a wide understanding allows you to be on the edge and see both sides of the coin.
Like with any other form of study, part of the learning process should involve read-
ing. This will lay the foundation that you need to start learning about the way money
works, before spending it.
2. Studying the Success of Others
While reading may be included in this, there are also other ways to study the success
of others, and you should take advantage of them.
For instance, I have produced a few different videos on growing your financial intelli-
gence, and to this day I host an amazing podcast in which I discuss current hot topics
that deal with money and the economy.
These give you access to me without ever having to meet me. Actually, the podcast is
FREE. You can learn all kinds of amazing money secrets without costing you a dime.
The same goes for many other financial experts and successful businesspeople out
there. You can follow their careers, read their biographies, listen to their speeches and
even check out their podcasts. There are more ways to access the rich and successful
than ever before.
Someone that you really need to study is my good friend Donald Trump. Through a
variety of different business ventures, he has learned all about success, failure and the
art of the deal. In fact, The Art of the Deal is the name of one of his books!
Donald Trump is an example of a very successful man, who built an empire and even
went on to become the President of the United States. I’ve had the fortune of being
friends with him for years, and we even wrote a couple of books together.
You’ll learn a lot by simply looking at the lives of successful people like President
Trump. This doesn’t mean you have to agree of even like these people, but there is
always something to learn.
We all have different paths, and the more you study successful people, the more you’ll
see certain markers of success come up again and again. Make this a lifelong practice,
and you will be rewarded.
3. Mentors
An important step when you are trying to build your financial intelligence is finding a
mentor that can help you along the way. Mentors can give you the necessary guidance
that will lead to your success, and can help you to avoid the pitfalls.
I was lucky enough to have a mentor from a very young age…my rich dad. He contin-
ued to mentor me for decades, and I still learn from the lessons he taught me and the
values he instilled in me.
Not everyone is as fortunate, though. Some people don’t have a mentor readily avail-
able, and that’s okay. You’ll just need to look a little harder, and be prepared. You’ll
need to build your financial IQ using the last two steps that we discussed, and then ap-
proach someone once you’ve gathered enough information to follow along with what
your potential mentor may advise you. We’ll discuss this in more detail in a later chap-
ter.
For now, I want you to understand that in order to build your financial intelligence,
you’ll want to have someone around that has more knowledge and a higher financial
IQ than you. It could be one of the most important relationships of your life.
4. Trial and Error

At a certain point, you’ll have to actually get your feet wet and start taking some risks.
This may mean starting a business, investing or both. When you do this, you probably
won’t make money upfront, and that’s okay. You are going to need to change the way
you view being “paid,” and how you interact with money if you want to be successful
with money.
Instead of working for an hourly wage, you’ll have money come and go. Actually, you
may not start making money in a business venture for a couple of years!
With that in mind, you are going to have to put in a lot of work and try different things.
Some of your efforts may go well, others may not. The point is to gain real-world expe-
rience, and to learn from it.
5. Failing
The best lessons you will learn, and the best way to gain real-world experience, is
through failing. This is something that every successful business person and investor
has in common—they’ve all failed. Most of them have failed many times.
I know that I’ve failed quite a few times. I’ve gone from having a lot of money, to being
broke, to earning that money back. The reason why I am able to bounce back, though,
is that I learned that failure is necessary for success. You need to learn how to take one
on the chin, and keep pushing forward.
How you deal with failure will greatly determine whether you are rich or poor. Poor
people avoid failure like a plague. They want nothing to do with it! Because of this
mentality, though, they never take any real risks. No risks, no rewards.
I would rather try and fail than fail because I never tried. If you never take the chance,
you’ll default to failure. At least when you try and fail you learn an important lesson,
and you can know deep down that you gave it your all. From there, you can pick your-
self back up, see what you did wrong and make some corrections.
Learn to be comfortable with failure…that’s the only way to really understand and
appreciate success.
Critical Topics to Study and Master for Financial Intelligence

Now that you have an understanding of what financial intelligence is, and you have a
better understanding of how to develop it, I want to discuss a few topics with you that
you’ll need to study and master to improve your financial IQ.
Consider these different factors as major parts of your financial education. We are go-
ing to go over a few of these in more depth in this book, and some you will recognize
from previous chapters.
Let’s start with something we went over previously…
The CASHFLOW® Quadrant

As you know, the CASHFLOW® quadrant is made up of four different ways to earn
money, and those are:
• E for Employee
• S for Self-Employed or Specialist
• B for Big Business Owner
• I for Investor
TM
In order to grow your financial intelligence and continue your financial education, you
need to really understand these four different quadrants, because there is a strong
likelihood that you’ll be involved with more than one at a time.
Now, this doesn’t mean that you’ll be actively participating in more than one…for in-
stance, you may be a big business owner, which means you’ll have E—employees. You
are interacting with two quadrants, although you only belong to one.
In order to make your money work for you efficiently, you’ll need to understand what
it means to be an employee, specialist or be self-employed. You’ll be interacting with
these people, and you need to understand both what they do, and how they are valu-
able.
For instance, if you own a business that produces Velcro wallets like I used to, you
know how important it is to have employees to make those wallets, and to keep them
happy so they don’t go to the warehouse across the street.
I’m also sure that you understand the value of certain kinds of specialists, like doctors
and lawyers. I love doctors, because they keep me healthy. I like my lawyers, because
they keep me financially protected.
Just because you want to be in the B and/or I column, that doesn’t mean that you
shouldn’t strive to be better educated about people in the E and S column.
Most importantly, though, is continuing to grow your knowledge in the B and I col-
umns, because this is where you are going to make your money. These don’t have to
be mutually exclusive, either. You can both be a big business owner and an investor at
the same time. It’s actually smart to have multiple business ventures at once, in case
one starts to tank.
Even with a high financial IQ, risks are still risky. If you have a few different invest-
ments, a few different businesses or both, though, you’ll be more secure if one starts
to take on water.
Now, don’t get me wrong, I’m not saying that you need to diversify in the way that the
average stock broker tells you that you need to diversify…you still want to have control
and leverage with these investments and businesses.
I also want you to better understand the word “investor,” because it is different than
being a “trader.” Investors buy stocks and property with the expectation that they will
grow in value, and often the commitment to make them more valuable. Traders, on
the other hand, buy and sell to “flip” their stocks or real estate.
For instance, I own quite a bit of real estate, but I invest in this real estate. Let’s look at
an example from a previous book of mine, called Increase Your Financial IQ…
My wife Kim and I decided to invest $17 million into purchasing a 300-unit apartment
building, and when we did this, we knew it was for the long haul. We didn’t just want
to buy it, fix it up a bit and sell it. Instead, we bought it, fixed it up a lot, and then raised
the rent. The small changes that we made both attracted higher-end clients, as well as
justified the raise in rent.
We gave the tenants value, and because of this, we were able to keep and even attract
tenants for the long-run. We were able to justify raising the rent by keeping the prop-
erty well-kept, and we have made a large profit off of this property.
A trader, on the other hand, would have bought that property for $17 million, fixed it
up, and then sold it at a markup.
While you can make a lot of money as a trader, in the end, you still aren’t really invest-
ing. Because of this, as a trader, you’ll never be able to make your money work for you
the way that an investor would.
Continue to grow your financial IQ with all four quadrants, and you’ll continue to see
your wealth grow.
Taxes
I don’t want to delve too far into this topic, as we’ll be discussing it more in depth in
coming chapters, but I want you to understand that in order to continue to strengthen
your financial education, you need to learn as much about taxes as possible.
Even with this knowledge, you’ll still want to have a good accountant ready to make
sure that you are paying the least amount of taxes necessary…if any at all. For most of
my business ventures I don’t pay taxes, and you know what? That’s part of how I stay
rich.
I don’t want to sound smug about this, I understand the purpose of taxes and I pay
my taxes in other ways, but I’d rather not have the government steal my profits for
whatever they see fit…especially to put that money into a bankrupt program like Social
Security.
Instead, I’d like to hold on to my money, and use it to better the lives of those around
me and my own life the way that I see fit.
Assets Versus Liabilities

One of the things that my rich dad stressed the most was the difference between as-
sets and liabilities. He taught my best friend and I that the simple misunderstanding
between what an asset and a liability is has made many people rich, and a whole lot
more people poor.
He told me that it was simple, but how could that make sense? If it was simple, why
wouldn’t everyone be rich?
What it comes down to is that most people are misinformed as to what an asset and a
liability are. They are taught by experts in the field like accountants and bankers what
an asset is supposed to be, but they are more often than not taught incorrectly. Re-
learning what an asset and a liability are is difficult for most adults, because they are
so set in their beliefs.
As children, though, my friend and I were able to listen with an open mind. We learned
that assets are all about numbers, and about making money instead of losing it. Es-
sentially:
An asset puts money in my pocket, a liability takes money out.
I told you it was simple.
Assets should increase your income, while liabilities will essentially just become ex-
penses. If you understand this, you are already a step further than most other people.
One of the biggest things that people don’t understand when it comes to the difference
between an asset and a liability is housing. They believe that owning a house, by itself,
is an asset. My poor dad believed that our home was our greatest asset. It is this idea
that leads to people treating their home like a bank, and then going broke because of
it.
While real estate can earn you money, simply owning a home does not. As we saw
after the major financial and housing crash in 2007, the value of your home can drop
suddenly and unexpectedly. Your mortgage is a liability, and that’s an important dis-
tinction. Home ownership also comes with the liabilities of property taxes and repairs.
This doesn’t mean you shouldn’t own a home…you just shouldn’t treat it as an asset.
To become financially successful, you need to learn more about what is and what isn’t
a liability in your life. Once you can distinguish the different between an asset and a
liability, you can start building up your assets, while diminishing any unnecessary
liabilities.
Rich or Poor…It’s Up to You

I want to tell you a story that will illustrate the difference between having a rich per-
son’s mentality, and a poor person’s mentality. I told this story in full in my book Rich
Dad, Poor Dad, and I think it’s worth repeating here.
When I was young, I wanted to learn how to make money. Mike, my best friend and
the son of my rich dad had suggested his father teach us. I wasn’t sure what to expect
and what an education on making money would look like, but I was ready to learn.
Rich dad offered me a job right off the bat, without really giving me any details on
what it would entail. He wanted me to start immediately, with no information, and
he wanted to pay me ten cents an hour. Even back then, that wasn’t a lot. I told him I
had a baseball game that day, and he said, “Take it, or leave it.” So I took it. After a few
days, I knew I had made a mistake.
I busted my rear for a month, all for very little pay. I finally had enough. I was ready to
quit. My poor dad told me to go in and demand at least twenty-five cents an hour, and
that was my plan—to get a raise or quit.
My rich dad found the whole thing entertaining. I accused him of being greedy and a
crook, and I whined about missing my baseball games for him. I was supposed to learn
about money, and instead he was exploiting me…
This was all part of his lesson, though. He was amused that I had quit so early, as many
of his workers waited years to have this conversation. He also told me that in all of that
time, no one had asked him to teach them how to make money. They came looking for
money, and then they asked for more of it…but none of them wanted to learn how to
actually make money.
He also explained to me that even if I got the raise, that wouldn’t make me rich. The
lesson here was about working for money, or letting money work for you. You see,
most people take a job at a low pay and either stay silent and continue to be poor, or
eventually get fed up and ask for a raise. Either way, these people stay poor.
Instead of looking at themselves and their decisions, most people blame their employ-
er, the minimum wage, the economy, the government, the education system and ev-
eryone else they can point their fingers at. In reality, it is often because of their choices.
They stay at low paying jobs because they are afraid of not being able to pay their bills,
and because they were told that if they worked hard enough that they’d get rich.
Sadly, this isn’t how the new rules of money work.
To continue the lesson, my rich dad offered me a new deal…to work for free. I was
dumbstruck. Why would I work for free? Begrudgingly, I agreed, but I didn’t tell my
poor dad about it. He wouldn’t understand. I still wanted to learn, even if I had to work
for free to learn it.
After a little while of working for free, rich dad bought us some ice cream and took us
for a walk. He explained that most people work their entire lives very hard, looking
forward to maybe two or three weeks of vacation a year and always hoping that they
can keep their job and not get fired of laid off. He said that if that excited us, he would
give us the raise to twenty-five cents. We weren’t sure what to say. Then, he offered us
a dollar an hour. All I could think was “Take it!”
Still, I said nothing.
Then, he offered us two dollars an hour. Keep in mind, this was 1956. Back then, two
dollars an hour would have been an absurd amount of money for a kid to make. Still,
I kept my mouth shut. Then, he upped it…to five dollars an hour.
This was too high. Most adults back then didn’t make that kind of money, but I knew
that there was more than money at stake here. My rich dad was happy with our choice
to stay silent.
He said, “Good. 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 of the wonderful things money can buy. The pattern is then set…The pattern
of get up, go to work, pay bills; get up, go to work, pay bills…People’s lives are forever
controlled by two emotions: fear and greed. Offer them more money, and they contin-
ue the cycle by increasing their spending. That is what is called the ‘Rat Race’.”
Then he told us that there was another way. We didn’t have to let the fear of money
control us, and force us to settle on poor decisions that felt safe. Instead, we could
learn to master our money, instead of becoming a slave to it. I learned that money
wasn’t really what was important…in fact, rich dad called it “an illusion.”
If you work for money, that’s all you’ll think about. Instead, you need to stop thinking
about money, and instead start looking for opportunities. You can’t let the fear of be-
ing broke drive you, otherwise you’ll never be able to see the opportunities in front of
you, and you’ll never be rich.
I never thought that working for free would make me so wealthy, but here I am. More
importantly, though, it taught me how to be rich.
It wasn’t long after that Mike and I saw a business opportunity and took advantage of
it. We hired Mike’s sister, and we started making money. Not hourly money, either…
we started a business. Long story short, we were charging other kids ten cents to rent
out comics that were going to be thrown away. The distributor said that he would let
us keep them if we didn’t sell them, and we didn’t! We made quite a bit of money doing
all of this, but more importantly, we learned a lesson about business and about money.
Being rich or being poor is a choice, and that choice is usually driven by fear. If you can
put that fear aside, and you can push aside greed as well, then you can open yourself
up to opportunities. These opportunities can make you wealthy, but more important-
ly, this decision will make you rich.
This was my first real financial lesson, and it was the foundation for my financial intel-
ligence. I hope that you can learn a lot from this story too.
T h e C o n s p i r a c y O f T h e Ric h
It can be very easy to point your finger at the rich and say everything is their fault. This
is especially so if you are poor, and you feel like you don’t have the same advantages
that they do. When poor people see that the rich keep getting richer and that they stay
rich from generation to generation, they often become resentful. The rich must be
doing something wrong, or they must be conspiring together to keep themselves and
each other rich, right?
The reality is that most rich people don’t actively try to hold poor people down—actu-
ally, in my experience, it’s quite the opposite. Not just myself, but a lot of rich people
that I’ve met mentor people that are looking to become rich, and give to charity.
So, why is it that some people are rich, while others are poor? What is keeping people
poor, and is it systemic? Are there people out there that want to hoard the money, and
get rich off of poor people?
In this chapter, we are going to go through and answer these questions, and I can al-
most guarantee that some of the answers to these questions and other questions that
you may have will surprise you.
First, though, I want to start by discussing the real root of all evil—the ignorance of
money.
The Economy and Why You Are Poor

I often talk about the “new rules” of money, versus the “old rules,” and that is an ex-
tremely important distinction to understand. In order to understand this distinction,
though, you need to understand what happened in 1971 and in 1974 that changed the
way that money in the United States, and even around the world, works.
T h e C o n s p i r a c y O f T h e Ric h 40
Currency Versus Money—Off the Gold Standard
As crazy as it sounds, there is a defining moment that we can trace back to in order to
see what went wrong with the United States dollar. That moment took place in 1971,
over a two-day meeting in which President Richard Nixon decided to change the rules
of money in the United States forever. This decision came in the form of removing the
United States from the gold standard, and instead transforming it into a fiat currency.
Where before the U.S. dollar was backed by something tangible (gold), after this de-
cision it became theoretical. The U.S. dollar became a form of I.O.U. that is backed by
the United States taxpayer.
Currency, as the name implies, is based off of a flow. Instead of staying static, it fluc-
tuates and changes, dipping and raising. This made the U.S. dollar a risk instead of
something that could be counted on.
This change led to a major economic boom, but also a huge amount of inflation. Credit
spread across the country, and more and more families began relying on credit cards,
and borrowing against their mortgages. It all seemed fine, what could go wrong?
The Crash
With the big boom came an even bigger bust. In 2008 the housing bubble popped, the
economy took a dive and our financial system began to collapse. People were losing
their homes, losing their jobs and even jumping off of buildings. How could this have
happened?
One of the major issues was subprime mortgages, where greedy brokers and bankers
sold homes to people who couldn’t possibly afford them. Once these chickens came
home to roost, many people were evicted from their homes and left in crippling debt.
In the mid-2000s the writing was on the wall, but only a few people could see it. Bonds
were going into default at alarming numbers. Not just the “lower quality,” B bonds,
either, but the A and AAA bonds that were supposed to be the lowest risk. The banks
got greedy, though, and decided to lump the higher risk bonds in with the lower risk
bonds, but still called them AAA. This made even the AAA bonds risky, which put the
banks in the red.
The banks didn’t want to admit to their mistakes, though, and continued to assure
people that their bonds were good…even when the market started falling apart.
Eventually, the government decided to bail out our banks, using—you guessed it—tax-
payer dollars. The banks that were “too big to fail” failed, and the U.S. taxpayer footed
the bill.
Even with all of the illegal dealings that helped lead to our economy to disaster, almost
no one went to jail. I guess it’s no surprise that people are so wary about the rich…the
greedy and wealthy have the power to literally destroy our economy with no conse-
quences. How could this happen?
Most People are Financially Illiterate

What the banks, brokers and other people in the industry relied on was investors’
and homeowners’ inability to understand how the market worked. Part of this was by
using overly-complex terms to discuss simple concepts in order to keep the average
person in the dark when it came to what they were getting themselves into.
They wanted then and they still now want to make loads of money…and the best way
to do that is to take advantage of your ignorance of money.
If you haven’t seen it, watch the film The Big Short. This movie brilliantly explains
complex banking terminology in simple ways, and explains the crash that led to so
much devastation to our economy.
You may be wondering how and why it is that most people don’t understand money,
and what it really comes down to is that most people are uninformed or not at all in-
formed as to how money and finances actually work.
The school system has failed you, and millions of other Americans. You may have
been taught at some point how to balance a checkbook and even how to start a savings
account, but you were most likely never taught how to actually use money to your ad-
vantage and grow it.
You were taught to save, and saving money is a losing strategy. When you invest in
bonds, mutual funds and even savings accounts, you are giving your money to the rich
in hopes that you’ll somehow become richer. In reality, you will most likely end up
breaking even or (even worse) losing money.
You probably believe in these forms of “investments” because of who taught you—
which were either uniformed people who also had a low financial IQ, or people with a
vested interest. For instance, you may have had a banker or financial planner explain
to you at some point the nature of money and how to properly invest it, but you need
to keep in mind where these people’s interests lie. They want you to give them your
money, so of course they are going to tell you what you need to hear in order for you
to do it.
One of the biggest misnomers that we are taught is what an asset and what liability is.
I’ve said this before, and I’ll keep saying it…an asset makes you money, while a liability
costs you money. For instance, you may have been taught that your home is an asset.
This couldn’t be further from the truth! It is this idea that led people to borrow money
from their homes and treat it as an ATM, putting them further in debt.
When the real estate bubble burst, many people learned firsthand the value of their
homes, due to the fluctuation in the market. Homes that were growing in value sud-
denly became worth significantly less, and many homeowners found themselves up-
side-down on their mortgage. They suddenly owed more money than the house was
worth!
Throw in a raise in unemployment, massive debt and a crippled housing market, and
it’s no surprise that people went broke and lost their homes!
I can’t explain how upsetting I find it that people aren’t properly educated when it
comes to finances, which is why I want to teach you about how money actually works.
I want you to be rich, and I want you to be able to remove the wool from your eyes so
you can see how wrong most of the financial advice that you’ve received throughout
the years is.
This means that you are going to learn a lot of new concepts that will be directly in
opposition to what you may know, and what is “common knowledge.” Pay attention
throughout this book to what you’ve heard before about finances, and be willing to
and open to relearning. I don’t want you to end up in the same situation from 2008 if
(more likely when) the market crashes again.
STOP Saving
In 1974, a new type of retirement plan emerged, called a DC or “defined contribution.”
You may know the most popular one, which is the 401 (k).
Where before, companies provided DB or “defined benefit” plans where you continued
to get a paycheck after you were retired, after 1974 most switched over to DC plans,
which rely on you putting money into what is essentially a savings account…hoping
that you’ll have enough money saved up to survive when you retire.
This went hand in hand with what was conventional knowledge—to save your mon-
ey—but this also put a lot of faith in the banks to take care of your money in an account
that will barely grow, and that you’ll be taxed on either when you put your money in,
or when you take your money out.
Stop listening to the advice that your teacher, banker and poor dad have been telling
you for years—to save your money and diversify. I want you to start thinking about the
opposite—spending your money and learning to control your money instead of diver-
sifying and trusting the market to never fail again.
I plan on teaching you how to spend your money wisely in order to invest, and how
to make sure that you have the most control over those investments possible. Before
that, though, I really want to drill into your head the importance of changing your
ideas about trusting the bank to keep your money safe.
When your money is in the bank, it is currency and as we know, currency isn’t backed
by anything. It is funny money, and it will flow with the market…which can fail. Even
worse, the world currency may eventually be taken off the U.S. dollar, and we’ll lose
our ability to simply print money. Our dollar will become useless, and all of your sav-
ings will mean nothing.
As risky as it may seem, it is actually safer to invest and spend your money…if you
know how to spend it. I plan on teaching you that in this book. You will then be able to
safeguard yourself from a fluctuating economy, and you’ll be able to build real assets
that will grow over time and make you money!
Biggest Myths About the Rich

Since we’ve discussed the fact that most people are misinformed about money, I also
want to discuss the feelings that many poor people have towards the rich. There are a
lot of myths about rich people that simply aren’t true, or that aren’t unilaterally true.
In order to become rich, you need to put these myths aside, and start looking at what
“rich” means from a difference lens.
Growing up, my poor dad used to complain about how the rich were greedy. He was
envious of the rich, though, and he never understood, after all of his hard work, why
he wasn’t rich. I’m glad I had my rich dad around to balance this sentiment out, oth-
erwise I may have grown up thinking the same thing.
My rich dad was a very kind man. He was giving and he was a good mentor…but he
also understood the value of money. He understood that in order to truly give, you
needed to learn how to keep the money that you earned. Then, you could give it to a
cause that you believe in.
Many people think that because I don’t support social security and because of my
thoughts about Medicare being a financial disaster (it is), that I don’t care about those
that are less fortunate. This is simply not true. 10% of my income goes to tithing, and I
make sure to support charitable causes that I know help to improve the world, instead
of blindly giving my money to the government and hoping that they spend it well.
Just because the rich think differently, it doesn’t mean that they are heartless, cold,
greedy or extravagant. People believe that, though, because that’s how the rich are
often portrayed in the media.
Here are some myths that you may have heard about the rich, or that you may have
grown up believing, that aren’t universal truths…
Rich People are All Mean and Greedy

One of the first things that comes to people’s minds when they think about a rich
person, especially around the holidays, is Ebenezer Scrooge. They think of an over-
the-top, money hungry tycoon that employs people at such a low wage that they can’t
afford food on Christmas.
In reality, most employers want to pay their employees fair and livable wages, and are
willing to promote hard workers to higher positions. It doesn’t help anybody to have
employees that are starving to death, and that’s why I make sure that the people work-
ing for me are properly compensated.
Now, this doesn’t mean that I believe that everyone should be making the same amount
of money, nor do I believe that people would benefit from making the same amount
of money that I do. My rich dad taught me that poor people, even with a lot of mon-
ey, stay poor. It’s because of their mentality that they are poor—not because of the
amount of money in their bank account. We’ll get into this more in a little bit.
Beyond that, I find that most of my rich friends give to charity, help out their churches,
mentor people and create jobs. That last part I think is extremely misunderstood.
When people hear “job creators” they roll their eyes. They think of trickle-down eco-
nomics, and then they lament the rise of capitalism. What they don’t realize is that
the job they are clocking in to only exists because one of those “job creators” made it
possible for them to make the money that they are currently making. Without the “job
creators,” many people wouldn’t be able to pay their car insurance, pay their rent or
even pay for food.
Just because someone has enough money to create a job for you, doesn’t mean that
they look to take advantage of you. It also doesn’t mean that you are entitled to a large
share of the profits. The “job creator” took all the risk, and if they fail, they are more
than just out of a job…they lose everything.
With this course and all of my books, I encourage my readers to stop trading your time
for money, and make the transition to becoming a businessperson and/or an investor.
Even if you are an employee now, working for another job creator, that doesn’t mean
that you won’t be creating jobs one day yourself. When that day comes, I want you to
ask yourself if you are a mean or greedy person. If you grew a business and created
jobs in an ethical way, the answer will be, “No.” I can guarantee that.
Not handing out the money that you earned to everyone else in the world doesn’t make
you a mean or greedy person. If anything, that would likely end up with them being
slightly less broke for a little while, and you being just as broke!
My poor dad made plenty of money. More than enough to one day become rich. How-
ever, there was a problem. He didn’t know how to handle it properly, and that led to
him staying poor. It wasn’t about how much money he had in the bank…because for a
while, he had quite a lot. It was about his relationship with money, how he spent it and
how he let it slip through his fingers.
Don’t believe the media, books and films when they portray a snooty, upturned nose
on a rich person. Rich people are just like everyone else…some are kind and loving,
others are rude and obnoxious. That doesn’t mean that everyone is one way or the
other.
Before I move on to the next myth, I want to mention that I wasn’t rich
growing up, but in elementary school I was surrounded by rich people.
I happened to be on the right side of the street to go to the same school that all of the
kids with rich parents did. I made friends with these rich kids, and they never treated
me any different. They invited me to their houses, their birthday parties and every-
where else. Their parents were kind, and they never acted stuck up or better than me.
I know firsthand what it’s like to be a poor kid in a rich world…and I am thankful that
I have that perspective.
Rich People Have a High Salary

I would be willing to bet that most people in your life have given you the same advice
about making money…work hard, get a degree and either work your way up the lad-
der, or go into a specialized career like being a doctor or lawyer. To most poor people,
this is the equation that leads to being rich.
Rich people know that this is not the case.
While having a higher salary means that you have more money, it doesn’t necessarily
mean that you’re rich. My poor dad had a very high salary, but this didn’t stop him
from constantly struggling and worrying about money.
The difference between having a high salary and being rich is that the rich don’t work
for an hourly rate, or even a yearly rate. In fact, many rich people take years to make
any money at all! You may be wondering how that is possible, and the answer will
come later in this chapter when we look at the CASHFLOW® Quadrant.
The essential thing to consider is that the rich aren’t worried about salaries, because
they don’t view the money as a time + work = money sort of equation. Doing this will
only lead to you working hard your entire life to make more money, instead of allow-
ing your money to work for you.
Can you enter a high-paying career and become rich? Sure. But being rich won’t come
from your actual career…it will come from what you do with the money that you’ve
earned.
This all isn’t to say that specialized, high salary jobs aren’t important…we need doc-
tors and lawyers. What I am saying is, though, that you’ll need more than a Ph. D or a
degree in law to become rich.
Rich People Buy Expensive Things

This is one of the biggest misnomers that poor people have about the rich, and it makes
sense…
When most poor people think about being rich, they don’t think about what it means
for their future, and they don’t think about how they will spend their money to make
more money. Instead, they think about all of the stuff they can buy that they never
bought before.
When I speak to most poor people about money, I like to ask them questions, like
“What would you do with your money if you won the lottery?” This is a fun thought
experiment for poor people, because suddenly it gives them a lot of options that they
never had before. The answers I usually get are:
• Buy a mansion.
• Buy a boat.
• Buy a bunch of nice cars.
• Buy expensive clothing and jewelry.
• Pay down all my loans and debts at once.
What I listed above may sound like a dream life to many poor people, but in reality
it is a whole lot of liabilities. These things generally depreciate over time…some even
instantly. For instance, the moment you drive a car off the lot, it drops significantly in
value. The moment you put clothes on, they are considered “used.”
Sure, a mansion and a lot of property can appreciate, but as we learned before, it can
also become less valuable, and can be a major burden to maintain. As a friend once
joked, “Buying a mansion seems like a great idea, until you get the first electric bill!”
Throwing your money into mansions, cars and boats sounds like living the dream, but
as many lottery winners have found, that dream quickly becomes a nightmare.
Even the idea of getting out of debt isn’t all it’s cracked up to be. There are certain
forms of debts that are considered “good debts,” and when you approach lenders, they
want to see that you are able to manage this debt. They also want to see a high credit
score that comes from paying off your debt on time, over a long time period.
So, if that’s what it is to be have a lot of money, but be poor at the same time, what does
it look like being rich?
Most of the rich people that I know that stay rich and successful don’t blow all of their
money on liabilities. Instead, they live relatively modest lives (considering how much
all of their assets are worth), and instead find ways to invest their money that will
lead to them both keeping their money safe, and earning more money. And no, I don’t
mean a savings account.
Sports stars, pop stars, movie stars, rappers, lottery winners and people who find
themselves inheriting lots of money often fall into the same trap…they have a lot of
cash, but they don’t know what to do with it. Within a few years, when the money has
dried up, they have to sell all of their liabilities for whatever they can get for them, and
then pray that they don’t end up with more debt than they had going in.
Think about how many Football players have been forced to retire early due to inju-
ries, and have gone broke within a few years. Think about pop stars and movie stars
that gamble their money away or spend it on drugs, and then end up with nothing.
Many poor people see their meteoric rise, but ignore their fall.
The rich don’t just think about what will make them happy in the short-term, they
think about what will keep them content for the long-term. They think about the fu-
ture, and they understand that their money, in itself, doesn’t make them rich. This is
how they are able to stay rich, even when they take a major financial hit.
My rich dad wasn’t always rich, but he knew the difference between “broke” and
“poor.” I have lost almost all of my money before, but I didn’t let that stop me. I stayed
rich, and I rebuilt my wealth, because I knew a lot more about money than simply how
to spend it. I knew how to control my investments, and get my money to work for me.
If you want to be rich, you need to let these misconceptions about money and about
the rich go. You need to clean the slate, and think about a more mature version of the
“hitting it rich” fantasy. You need to understand that having money isn’t enough…you
need to know how to spend it.
You’ll also need to let the thought of all rich people being greedy misers go. The rich
are just like everybody else…except when it comes to their ideas of success and financ-
es. They care about their community, they love their family and friends, and they want
others to succeed. Just like with poor people, there are bad eggs, but I personally be-
lieve that most people are inherently good. Even the rich!
How the Rich Look at Money

One of the biggest differences between the rich and poor is the way that they look at
money. For the rich, money is a concept that can be manipulated to create positive
outcomes. For the poor, money is a burden that they need to spend their entire lives
working hard for.
The rich can also spot the difference between an asset and a liability. This is extremely
important for both building your wealth, and staying rich. My poor dad didn’t under-
stand that certain things, like his house, were actually liabilities instead of assets. That
kept him poor.
I want to show you what my poor dad and my rich dad’s income statements look like
to better illustrate my point:
As you can see, while my rich dad made a slightly higher income, his expenses were
much lower. Just as important, if not more important, my rich dad had many assets
and few liabilities. My poor dad, on the other hand, had a massive amount of liabili-
ties, with very few actual assets.
I now want you to take a closer look at my poor dad’s income statement. This will help
to explain just why it is that his statement looks so drastically different from my rich
dad’s:
This was what my poor dad’s finances looked like, and it’s probably not that different
from yours. That’s because most people work very hard for a company to earn a sala-
ry, then pay a large portion of their earnings in taxes. After they’ve already taken that
hit, they take another one in the form of their liabilities…often their homes. With no
assets to balance those liabilities out, they end up having to work harder to make more
money, pay more in taxes and pay down their liabilities.
And that’s assuming they don’t add more liabilities!
Poor people make a lot of different excuses for their income statement looking like
this, saying things like…
“Money isn’t important to me.”
My poor dad used to say this, but it couldn’t be further from the truth. All he ever
thought about was money!
My poor dad was always worried about bills, debt and savings. This was especially so
with medical debt, which our family had a lot of. These worries led to him making poor
financial decisions. They also led to him never living the life he wanted to, as whenever
something came up that he wanted, or anyone in the family wanted, he would brush it
aside by saying, “We can’t afford it.”
Instead of realizing that he needed to learn more about money, my poor dad decided
to not only stay ignorant, but be proud of that ignorance. He wanted others to know
he didn’t care about money…even though this lack of knowledge was causing him ma-
jor hardship. A lot of people think this way; they want to be victorious over money by
simply saying that it doesn’t matter. In reality, all this does is lead to less wealth, and
more money problems.
I don’t believe that money should be all you think about, and what all of your decisions
are based on…that leads to greed. Instead, I want you to understand the power that
money can hold over you—especially if you don’t know how to properly control it. One
way or another, money is going to be part of your life. Because of this, you need to stop
pretending that money doesn’t matter, and start showing your finances the respect
that they deserve.
Rich People Respect Money

Rich people, on the other hand, give money the respect that it deserves. This doesn’t
necessarily mean they worship money—this is another myth about the rich. Instead,
they understand that without a good financial education, they won’t be able to live the
types of lives that they want to live, and they won’t be able to provide for their family
the way that they feel they should.
I want to tell you something that I know won’t shock you, but that you need to hear…
Money is important.
Should it be the cornerstone of your life? No. Are there things that are more important
than money? Yes. To me, my family, friends and spirituality are much more important
than money. My lovely wife, Kim, is much more important than money. With that be-
ing said, in order for Kim and me to be happier, we treat money with respect, and we
constantly improve our financial IQ.
Job Security Versus Financial Freedom

Something I hear from poor people all of the time is that they are afraid of taking any
risks, because they have a good job that pays the bills. While job security may seem
like the safe route, in reality it can end just as—if not more—catastrophically as taking
a financial risk like investing or starting a business.
Jobs aren’t recession-proof, downsize-proof or fire-proof. At any moment, your boss
could walk in and tell you that because of last quarter’s earnings, they have to let you
go. Then you are out on your rear, with whatever you have in savings and a whole lot
of fear about the future.
Poor people cling to job security because they think that their jobs are the only thing
that will pay the bills—and they often don’t. With inflation, rising rent and rising food
costs, many employees find that they simply can’t afford to keep doing what they are
doing, but they are too afraid to quit.
Some will go in and ask for a raise, staving off the inevitable until costs catch up again.
Others will suffer quietly, getting a part-time job on the side and complaining to their
friends that life isn’t fair, and that their company doesn’t pay enough.
This is where “job security” gets you.
The rich, on the other hand, strive for financial freedom. They want the burden of
money to be lifted, and in order to do this, they learn ways to make their money work
for them. The rich create systems that allow them to make money, even when they
aren’t working. This allows them to spend their time building their businesses or in-
vestments, instead of slaving away trying to make a buck.
Rich people know that there is no such thing as “job security,” and so they strive for
something greater. They look at money as a tool that helps them to build financial
freedom, and they look at “jobs” as something that they provide for others in order to
achieve their dreams.
If you want to be rich, you need to stop looking for job security, and you need to start
focusing on building financial freedom.
Understanding the CASHFLOW® Quadrants
Something that the rich understand that allows them to get rich and stay rich is that
there are four main ways to earn money—and if you aren’t earning money in the right
way, you’ll never be rich.
TM
Pictured above is what I call the CASHFLOW® Quadrants. To understand how people
make money, and their potential earnings, you need to have a working understand of
each section of the quadrants. You may already be aware of the CASHFLOW® Quad-
rants from my previous books, but if you aren’t, don’t worry. I am going to go over
each section with you now.
If you already know about the quadrants, make sure you read through this section
anyway. It’s always good to get a refresher on important concepts.
I’ll let you know ahead of time—none of the four quadrants will shock you. They are
forms of making money that you are already aware of. What you may not be aware of,
though, is their advantages and pitfalls…including the opportunity that they will pres-
ent you with becoming rich (or the lack of opportunity).
Let’s start with what I consider the most basic form of earning money, employment.
E is for Employment
Most people, and I mean an large percentage, fall into the E category of the Quadrants.
There’s no surprise here…the E quadrant is where most people are taught to go in or-
der to make enough money to live modestly and retire with a little bit of money in the
bank.
Being an employee has some benefits—you don’t need to worry about running a busi-
ness, for instance—but it also has a lot of negatives. When you are an employee, you
don’t get the final say with most business decisions, and ultimately you don’t get to
decide how much money you are going to make.
This cap usually stops somewhere around $500,000 a year, which may seem like a lot
of money, but it still limits you. You can only get so far in the E quadrant.
The E quadrant also means that you have someone to report to. You always have to
worry about your boss, even if they are pretty hands-off. You also have to worry about
what happens if you slip up, because this can lead to you being out of a job.
If you want to be rich, you need to realize that at some point, you need to make the
jump from the employee quadrant into another quadrant. This doesn’t have to be all
at once—for instance, you can be an employee and start investing. Still, it’s highly un-
likely that you’ll stay on as an employee once the money starts coming in. Being rich
means taking care of your money, and that’s a job in and of itself.
Since you are going through this course, I’m already assuming that you want to leave
the E quadrant, if you haven’t already. Some people are okay with being an employee,
and that’s okay—for them. Somebody needs to make sure the trains run on time.
If you want to truly become rich though, you will need to say, “Goodbye,” to being just
an employee.
S is for Specialist/Self-Employed
This category is a little more interesting, as specialists and people that are self-em-
ployed are often far enough removed from being an employee that they are at least
somewhat content with the way things are going. Still, if you stay in this quadrant,
you’ll still find that you hit a ceiling, and it can be easy to maintain the mentality of a
poor person.
The interesting thing about the S quadrant, though, is that it is much easier to enter
the I quadrant (investor) and stay in the S than it is to enter the I quadrant and stay in
the E quadrant. Because you are making your own money, you have more opportunity
to make extra and use that for investing.
Being in the S quadrant also allows you to scale up to the B quadrant. For instance, if
you are a freelance graphic artist, you can scale that up to an entire agency of artists
and designers where you bring in substantial amounts of passive income.
Still, staying in the S quadrant means certain limitations, because like with the E quad-
rant, you are still trading hours for money. Sure, you may set your own hours, and sure
you may be making more money, but you are still limited by the amount of hours that
you have and/or want to work.
When it comes to the specialist part of the S quadrant, I have a little more under-
standing of why you would want to stay there. For instance, you may have spent years
becoming a doctor, and the world definitely needs doctors. You can also make quite a
bit of money as a doctor, but again, you are still limited by the hours that you are able
to work, and what you are able to charge for your services.
If you are a doctor, lawyer or another form of specialist, though, you can always take
some of the money that you are making and invest it. From there, you can go from
limited earnings to unlimited earnings, while still practicing your craft.
B is for Big Business Owner

This quadrant is where things change. Instead of working hourly or yearly for money,
you detach yourself from the connection between time and money. That’s right—you
get yourself off of the hamster wheel.
This is a hard concept for a lot of people to understand, because most people are
trained to think of money as something that you earn actively, as opposed to some-
thing that comes in passively.
Now, this doesn’t mean that you won’t be putting in a lot of work upfront…you will.
Actually, when people say that they want to start a business, I ask them if they are
ready to go a few years without getting paid. This is often what it takes. Once the mon-
ey does come in, though, you have a lot more freedom of what to do with it, and the
potential for earnings goes sky high!
When I say big business, I want you to think of about a substantial number of employ-
ees. That is part of what separates the B quadrant from the S quadrant. While you may
have a few employees in the S quadrant, at a certain point your growth will become
limited. With enough employees, though, you can make sure that each area of your
business is automated, and you can have enough people actively selling your product
or service, as well as fulfilling it. If you ever hit the ceiling, you can always hire more
employees.
This by itself can be enough to make you rich, but if you combine this with the final
quadrant, you can make more money that you ever thought possible.
I is for Investor
The final quadrant is an investor. Investors are able to take money, and over time cre-
ate even more money out of it, all without having a real product or service that they
are selling (or at least immediately selling). Sure, they may decide to sell their stocks
or their property at some point, but the way that they are making money is not based
around building a business. Instead, it’s based around gathering assets, and making
those assets work for them to make more money.
This is different from a trader or flipper, in that an investor wants to watch the asset
grow, while a trader or flipper buys a property or stock, and then sell it immediately
once the value has gone up.
While you don’t need to be a big business owner to be an investor, it definitely helps.
Having a big business helps to give you the capital that you need to make certain big-
ger investments, without having to go through the process of building up your invest-
ment portfolio to the point where you can start to make bigger investments.
People in real estate find this out pretty quickly. They may have decided to jump into
real estate to make a lot of money, but they may not have had a lot of capital to start
with. This begins a long and arduous process of investing in smaller properties and
scaling over time. That doesn’t mean it isn’t possible, but just like with a big business,
you need to be prepared to go a few years without making any money.
The Rich Get Richer

There is a reason that the rich get richer, and it’s not always because they are greedy.
The rich know how to create their own money, and they know how to automate their
income so their working hours don’t equal their salary.
The rich also understand the importance of money, and they show it the respect that
it deserves. They also understand the importance of financial freedom, and they don’t
worry about job security.
So, is there a conspiracy? Maybe. The terminology of bankers, the way the rich work
with politicians to benefit their corporations, old money…these all lead to conspiracies
about the rich, and some may even be true. The real question is, who cares? Whether
there is a conspiracy or not doesn’t get in the way of you being rich.
Focus on becoming rich, and learn the secrets that the rich know that got them there.
Leave the conspiracies to those that will never become rich.
R u l e # 1 : P r o t e ct
The first money rule that you need to learn is how to protect your money. This is a
major part of how the rich continue to get richer. Rich people are happy holding on to
their money, and growing their money. They safeguard it in different ways that allow
them to grow it without the government getting their hands on it.
If you are like most of the people in the United States, you are paying a lot in taxes. You
may not feel like it, because you are probably used to it, but once you learn about how
the rich handle taxes, you’ll see the mistake that you are making. You are giving way
too much money to the government, and what are they spending it on?
If you look at it, most of what the government spends tax money on benefits the rich…
• Wars? Weapons manufacturers and private security are making a fortune.
• Bailouts? Remember the crisis in 2008? Where do you think they got the mon-
ey to bail the banks out from?
• Healthcare? Where do you think the money for the government subsidies for
Obamacare comes from? And who is making money on healthcare?
I personally believe in small government, and I believe that I know where my money
should go much better than the government does. I don’t pay a lot in taxes (in fact, I
pay zero taxes with some of my business endeavors), but that doesn’t mean that I blow
all of my money on extravagant gifts for myself. I allocate 10% to tithing, and I make
sure that I donate a good amount of my money to worthy causes.
I don’t need the government to tell me to help the less fortunate, and I definitely don’t
need them to tell me how to help the less fortunate. Instead, I like to keep most or all
of my money, and spend it where I think it will benefit the most amount of people.
Think about it this way—if you tax the rich too high, what happens to the jobs? After
R u l e # 1 : P r o t e ct 63
all, the job creators need money to pay their employees…
Without this money, there is less room for growth, which means less job positions to
fill. Where a business could have taken their money to expand and create new jobs,
if the government had their way, they would instead be paying the government that
money.
Then, the government turns around and spends it frivolously, padding their own in-
come and paying extravagant amounts of money for basic things. Look up how much
the government spends on a hammer. It will shock you.
In order to get rich and stay rich, you need to learn how the rich protect their money.
Moreover, you need to get in the mindset of holding on to your money, instead of giv-
ing it all away. I know this is a brand new mindset, and I know it may take a little bit
of time to sink in, but it is how you will keep the money that you’ve earned instead of
handing it over to Uncle Sam.
Before we get into how to spend less in taxes, though, I want to answer a question that
you may be asking yourself…
Is it fair?
The answer is an outstanding, “Yes!”
You’ve been robbed for years of your hard-earned money. I know this is true, because the
middle-class get hit the hardest by taxes—especially tax increases. You may hear from
people that it would be fairer to tax higher-income earners more and distribute the
wealth, but who does this actually help?
When you tax higher-income earners, you trust that the government will take that
money, turn around, and give it to the poor. This is laughable. Why would you trust
greedy politicians to give you money? They already have lots of money coming in from
R u l e # 1 : P r o t e ct 64
taxes, and we are trillions of dollars in debt! Most of that debt is unnecessary spending
already, so guess what they are going to do with even more money…
When you allow the higher-income individuals to keep their money, you allow them
to spend it. This spending boosts the economy, and helps with overall growth. The
crash wasn’t caused by the rich paying less in taxes, it was caused by the banks getting
greedy. And who paid for their greed? You did! With your tax money!
Enough is enough. It’s time to stand up to the government and let them know that you
are sick of handing over your hard-earned money for them to waste. Instead, learn
about the tax system, and use it to keep your money instead of giving it to people that
have no interest in giving it back.
Why You Need to Understand Taxes

The amount of money that you make can depend on a variety of different factors, as
there are tons of different ways to make money. The amount of money you hold onto,
though, comes down to one factor—how much you pay in taxes.
As I’ve mentioned, you are used to taxes being taken out of your check, and because
of that, you accept it as a fact of life. Rich people, though, don’t accept big portions of
their hard-earned money being taken from them. That’s why they learn how to work
around the systems that are in place by understanding what loopholes are available to
them.
If you are ignorant on how taxes work and how to protect your money, it’s likely that
you’ll stay poor. Even if you don’t stay poor, you’ll end up losing access to a hefty por-
tion of the money that you’ve rightfully earned.
There are a couple of different reasons that I want to go over with you that explain
exactly why you need to understand how taxes work. The first one I have already been
discussing…
R u l e # 1 : P r o t e ct 65
Losing Income to the Government
The more money you make, the more money the government has to take from you. At
a certain point, having a higher income becomes a risk, and if you don’t learn how to
work around the tax system, you’ll end up losing a large percentage of your earnings.
This means that you are paying the government for nearly a third of your time.
Think of it that way. Imagine that every day that you work, a third of that day you are
working to pay the government. That thought experiment will get exhausting after a
few days of hard work.
I firmly believe that the money that you earn is your money, and you deserve it. Does
this mean that taxes are evil? Not necessarily. The government does provide some es-
sential services, like maintaining the roads and paying police officers. These are small
parts of what the government does with your money, though, as you can see with our
country’s crumbling infrastructure.
Stop paying the government first! Instead, you need to learn how taxes work and let
the government work with the money that they have.
It Guides Your Money Strategy

The way most people approach money simply isn’t the right approach. Most people
think about how they are simply going to make money, instead of how they are going
to make it and keep it. This leads to an artificially inflated income that sounds good on
paper, but doesn’t really hold up.
Let’s say that you make $70,000 a year, but you pay 20% in taxes. Let’s say your neigh-
bor makes $60,000 a year, but he is able to avoid most of his taxes and only ends up
paying around 5%. Who ended up making the higher net income? That’s right, while
making $10,000 less a year than you, your neighbor still kept more money.
R u l e # 1 : P r o t e ct 66
People in the E and S quadrants get taxed more…that’s just the way it works. People
in the B and I pay much less in taxes, if they are smart with their money. Because of
this, you’ll want to be in the B and/or I quadrants if you want to not only make more
money, but keep more of it.
The more you understand taxes, the more that you can create a tax strategy that allows
you to hold on to your earnings—legally.
Moving From Earn-Tax-Spend to Earn-Spend-Tax

The way that you most likely look at taxes goes something like this: you earn your
money, the government taxes you, then you spend what is left. What if I told you it
wasn’t always like this, though? That’s right, there was a time that the government
didn’t get paid first.
It was back in 1943 that a change happened, where money started coming out of peo-
ple’s paychecks before they even got paid. Congress passed the “Current Tax Payment
Act of 1943” to help pay for the world war the United States was engaged in, and that
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change stuck. This act allowed the government to not only take the money directly
from people’s paychecks, but actually forced companies to pay the government first. It
was then that employees lost control of their money.
Like I said, you probably haven’t noticed this, because it’s been like this all of your life.
You have gotten used to money missing from your paycheck, and you’ve even learned
to budget around this. You may have gotten a higher paying job, because you knew that
you weren’t going to actually get paid what you were supposed to get paid, or you may
have even started working more hours (which were also taxed by the government).
The rich don’t adhere to this set of rules. Instead, they have learned to switch the steps
around, so it becomes earn-spend-tax. So, before the government gets their hands
on the rich’s money, they have already taken that money and spent it. This includes
spending OPM, which stands for “Other People’s Money.” By spending Other People’s
Money, the rich deflect the taxes onto someone else, lowering or even eliminating
their taxes.
The rich also take their earnings in as businesses and corporations, then turn around
and spend that on business expenses that don’t get taxed. Remember, it’s only your
income that is getting taxed.
By switching up the order of who gets paid first, the rich have discovered how to avoid
most, if not all of their taxes. This means that they are able to not only keep their mon-
ey, but use it to invest so they can make even more money.
Smart business owners also know how to write off a variety of different expenses as
“business expenses” to avoid the taxes on those items. For instance, a business owner
may go out to dinner and discuss their business with someone they are dining with.
This is now a business meeting, and the dinner can be written off.
If they own a car and use it for “work purposes,” a business owner can also write their
car off as a business expense. The list can continue until most of the business owners
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expenses are accounted for.
Now, this isn’t to say that business owners cheat the government or do anything ille-
gal. Instead, they take advantage of tax loopholes that allow them to live the lifestyle
that they want to live, while paying little to no taxes. What is left over, the business
owner can pay themselves in salary, which is taxed. This salary is for anything that
they can’t (or don’t wish to) write off as a business expense.
Employees, on the other hand, aren’t given this choice. Instead, the government takes
its share out, and the employee is left footing the bill for all of their expenses.
This isn’t to say business owners and investors don’t pay taxes on anything. For in-
stance, I pay taxes on royalties for my books, games and other trademarks. I also pay
taxes on real estate. I am able to keep these low, though, by taking advantage of loop-
holes and by leveraging OPM. For instance, with real estate I leverage my debt to low-
er my taxes and increase my cash flow.
When it comes to your income, I want you to think of the three different types of tax-
able income in the United States. This will help you to better understand where you
are, where the rich are and where you want to be. These three different incomes are
earned, portfolio and passive.
• Earned. Earned income is what you are likely making right now. It is the
money that is taxed on labor, and it is the highest amount of taxes of all three
of the different taxable incomes.
• Portfolio. Portfolio income is the second highest income in taxes. This in-
cludes income from capital gains, which comes from flipping, or buying low
and selling high on the stock market.
• Passive. Of the three, passive income is taxed the lowest. It is income that
comes from cashflow, and it’s the income that you’ll want to make if you want
to keep the most money possible.
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All employees make money through earned income. This means that they pay the
most in taxes, and end up with the least amount of money at the end of the day. Sadly,
these include a lot of people that really need the money, but have a large portion of
their check garnished by the government.
While portfolio income can make you quite a bit of cash, you are still paying more
than you should because of capital gains taxes. That’s why you should shoot for most
of your income to come through passive sources. This both allows you to have control
over your business and/or investments, while also putting the most money in your
pocket.
Start focusing on how you can move from earn-tax-spend to earn-spend-tax so you
can keep more of your money, and spend it the way that you see fit.
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How Taxes Penalize the E and S Quadrants
The brunt of taxes, and I really do mean most, fall on the E and S quadrants…and they
have for a long time. Because of lobbyists and corporations’ connections with govern-
ment officials, the tax laws have been written to favor the rich, and to take money from
the E and S quadrants to pay for war, social safety nets and a variety of other services
that you may or may not agree with.
Because most of their money is being taken in the form of taxes, people in the E and S
quadrants are taught to horde every last dime that they can, and to live within or below
their means. They are promised social security and a 401(k) once they retire, and that
sounds fine, until you realize the risks.
By not keeping their money, it makes it hard for people in the E and S quadrants to
invest, which means that they simply have to trust that their money will be valuable in
the future. This also assumed that social security will still be around. Either once the
money goes in, or once it comes out it is, of course, taxed. This means even less money.
For the E and S quadrants, the government takes your money and tells you what they
think is important to you. They promise to save your money, while spending it faster
than they are taking it in and getting further and further into debt. If you or I were to
do this, we’d be in prison!
I’d like to say that you get to spend what is leftover, but what money do you have left
to spend? The poor need to keep a roof over their head and food in their stomachs,
and the middle-income need to pay their mortgage, car payments, student loans and
more. All of this leaves people in the middle and lower-income with very little money
to spend, and very few options.
It’s all pretty much the exact opposite for the B and I quadrants.
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How Taxes Favor People in the B and I Quadrants
Remember, those with enough money can influence the government to leave their
money alone, and even to save them if something should go wrong. Consider the bail-
out of the auto industry… Who’s money do you think really went into paying to bail
those companies out? Well, the government is broke, and the rich didn’t pay for it…
Instead, it came down to the poor and middle-income to pay for the bailout with their
tax dollars, while the rich continued to pay little in taxes and were able to continue to
build their wealth (if they weren’t hit by the crash in 2008). Even in times of crisis, the
tax code generally favors the rich, whether the poor agree with it or not.
This isn’t to say the rich are bad people. What I am trying to say is that they are able
to safeguard their money, even in the worst of times. When the banks failed (and they
may again), the truly rich didn’t. They were smart enough to invest that money, and
not just rely on the banks to safeguard it.
Don’t get me wrong—a lot of rich people lost a lot of money during the crash. Still,
it was the middle-income earners that were hit the hardest, and the middle-income
earners that were forced to take the brunt of the blow. When the middle class paid for
the bailout, some of the greedier bankers actually made money from the whole ordeal.
That’s neither here nor there, though.
What is important is to realize that not only do the rich pay less in taxes, but often
the poor end up cleaning up the messes that incompetent, greedy people with money
make.
I’m not asking you to go out and fight to change the system. Instead, I want you to
learn about the way that taxes work in the United States, so you can take advantage of
them. I want you to be able to spend your money tax-free, so you aren’t left footing the
bill to clean up corporation’s and the government’s messes.
R u l e # 1 : P r o t e ct 72
Big business owners and investors pay taxes last, after they’ve spent a good portion of
their money—no matter what the economy looks like. As long as money is coming in,
they are still getting paid.
The rich also know that the best way to avoid paying taxes is to keep their money in
circulation, which allows them to continue to build wealth—often tax-free. They also
leverage OPM, so they are able to create even more distance between themselves and
the greedy hands of the government.
Honestly, it’s no secret that tax laws benefit the rich. I’m sure you’ve heard friends,
family or acquaintances complain about how unfair it is that the rich don’t pay taxes,
while poor have to pick up the slack. The rich are also busy building wealth for not
only themselves, but those around them. They need to safeguard this wealth so they
are able to continue to grow, otherwise the government will take their money as well.
Taxing the rich less money allows the economy to grow, while also keeping the rich
wealthy. If you want to get rich and stay rich, you need to get out of the E and S quad-
rants and stop giving all of your money to the government. Instead, you need to be in
the B and/or I quadrants, where you can both help the economy to grow, and keep
most of the money you earn.
The History of Income Tax

To better understand why money is taken from the poor, it’s important to understand
where the income tax came from—and why this antiquated idea has led to so much
hardship for so many Americans.
In the early days of the United States, the country was relatively tax-free. People earned
their income, and they were able to hold onto it before giving any away to the govern-
ment. That was until 1862, when the nature of taxes in the United States changed.
To help pay for the civil war, the first income tax was created, but by 1895 the Supreme
R u l e # 1 : P r o t e ct 73
Court decided that this tax was unconstitutional. As you know by looking at your pay-
check, this ruling didn’t last very long.
In 1913 the Federal Reserve System was created, and what better a time to pass the
16th amendment…making the income tax permanent. This allowed the government to
start taking money from the people permanently.
It didn’t stop there, though. Fast forward to 1943, when the “Current Tax Payment Act
of 1943” was passed (we went over this one earlier). Now the government could not
only take your money, but they could force your employer to give it to them. You didn’t
even get to see your money before it was gone!
Finally, there was a tax reform…but not in the way that you would hope. In 1986, con-
gress passed a new law called the “Tax Reform Act of 1986.” With this law in place,
people in the S quadrant would no longer be able to take advantage of many of the
loopholes that they were enjoying, and instead had to turn their money over to the
government in the same way that people in the E quadrant had to.
That brings us to today, where the government takes your wages before you even get to
see them, and you have been taught that this is normal. Looking back at the history of
the income tax, we can see that the government mainly passed the laws to fund wars,
and to line their own pockets.
Taxes, Businesses and Corporations

Part of avoiding paying taxes in the B quadrant is looking at what type of business that
you want to start, and how you can utilize loopholes built for those types of business
to avoid paying more in taxes. One example is a corporation.
While the United States has one of the highest corporate tax rates in the world (around
35%), we all know that a lot of corporations don’t pay taxes. But how can this happen?
R u l e # 1 : P r o t e ct 74
Some companies, like Verizon and Apple, have found ways to send their profits over-
seas, or store their money in other countries. This has allowed them to not only avoid
taxes, but in the case of Verizon, to get a refund!
If this isn’t as accessible to you, don’t worry. You have other options.
As a business, you are allowed to get quite a lot of different tax credits, including cred-
its for hiring employees, investing in green technology, business expenses and more.
This will help you to get your taxes down significantly. As we discussed earlier, you can
also write off a variety of different personal expenses that you use for business, such as
meals, cars, insurance and more.
Whatever business you decide to get into, make sure that you have a strong under-
standing of the tax codes that will govern you. Sit down with an accountant and a
lawyer, and have an in-depth discussion about what you are trying to accomplish, and
how you can legally write these things off. You’d be surprised how much you can get
written off, tax-free.
What the Rich Know About Taxes?

You now have a much better understanding of where income tax came from, who gets
taxed the most, why different quadrants are taxed the way they are, and how you can
make moves to avoid paying a whole lot in taxes, if any taxes at all! It’s all about being
smart with your money, and allowing yourself to earn and spend your money before
the government gets their hands on it.
The rich know how to use the tax system to their advantage, and it’s really not as hard
as it sounds. Remember, the rich help to get the tax laws written the way they want
them to be so they can make more money. As long as you stick to doing what the rich
do, and you pay your taxes accordingly, you’ll be able to hold on to your money much
more effectively, and you’ll be able to leverage that money to create even more wealth!
R u l e # 1 : P r o t e ct 75
Rule #2: Leverage
Leverage is a simple concept to grasp, but it’s a difficult one to master. It’s only through
leverage that you’ll become rich, and it’s only by learning how to utilize leverage that
you’ll be able to grow exponentially and with no limits.
Now, I’ve often said that you should “make your money work for you.” In this chap-
ter, I really want to clarify that. I want to show you not only how to make your money
work for you, but also how to make other people’s money work for you. Actually, a lot
of the business deals that my wife and I made to get rich involved very little, if any, of
our own money.
I also want to explain to you the importance of leveraging OPT, or Other People’s
Time. More than pretty much any resource out there, the one that is the most limited
is time. You can always find more money, you can always find more business deals, but
there will always be twenty-four hours in a day. You need to use that time wisely, and
you can’t be wasting it doing things that other people can do for you.
First, though, let’s define leverage.
What Is Leverage?
Leverage, put simply, is doing more with less of you involved. I know, that may not
make a lot of sense, so I’ll get into more detail.
You only have so many resources at any given time. You only have so much money, so
many skills, so much energy, so much focus, so much time and so on, and if you want
to grow exponentially, you need to start learning how to grow beyond your capacity.
In order to do this, you’ll need to leverage both OPM and OPT.
Once you learn how to leverage OPM and OPT, you can grow beyond your natural

capacity, and you can start making more money than would have ever been possible if
you were to try to do it on your own.
Leverage is a major marker between the S quadrant and the B quadrant. People in the
S quadrant generally do everything themselves, or have a very limited support system.
This limits them to the amount of hours that they can work, which limits their income.
People in the B quadrant, on the other hand, hire people to do things for them so
they don’t have these same limitations. Where someone in the S quadrant has to do
their own sales, someone in the B quadrant will hire a salesperson. Where someone
in the S quadrant will keep their own books, someone in the B quadrant will have an
accountant. Even when it comes to the day-to-day operations, where someone in the S
quadrant would be required to do their own work, someone in the B quadrant would
have to do very little—if any—of their own work.
Actually, with the right kind of leverage, it’s possible for a business owner to step away
from the business completely and continue to make money 100% passively. This al-
lows them to focus on other things—like starting or acquiring a new business.
I want you to get the idea out of your head that in order to be successful, it takes your
own time, your own money, your own manpower and your own resources. Instead, I
want you to think beyond your own capacity, and to think about what could be accom-
plished by a team of people with a likeminded goal that you have set.
When you are able to make this switch, and you are able to start utilizing other peo-
ple’s resources as your own, you’ll be a master of leverage.
So, let’s get a better understanding of one of the keys to leverage…Other People’s Mon-
ey.

Other People’s Money
If you want to grow your business, or if you want to become a real estate investor, you
need to learn how to solicit, handle and leverage Other People’s Money. This is key to
growing beyond your natural capacity, and to growing exponentially.
When I first started with real estate, I did so using 100% OPM. This was back in the
1970s in Hawaii, where I found an amazing piece of real estate that I knew was going
to make me money. I didn’t have any of my own money to put in at the time, so I end-
ed up getting a loan from the bank, and putting the down payment on my credit card.
While I don’t suggest doing this these days, it just goes to show that you can actually
leverage OPM to get what you want with little or no skin in the game.
These days, I am able to take out loans or utilize investors to purchase companies or
real estate, and I am able to expand essentially tax-free (we’ll get into this more a little
later).
When you are using your own money, you are taking all of the risk. When you are using
OPM, though, you dilute the risk, and you allow yourself to take purchase beyond your
normal capacity by leveraging debt. If you are able to do this properly, you’ll make a
ton of money. If not, though, you’ll end up with a lot of bills. That’s why it’s important
to grow your financial intelligence before you start dealing with debt.
Before we get into that, though, I want to outline the two different types of OPM that
you will be dealing with when it comes time to grow and/or purchase your businesses
or investments…
Loans
This is the most common and most accessible form of OPM. Loans are available
through banks, and if you are able to maintain good credit and you are able to show
that you are good with money, you can work with a bank to secure a loan with very

little interest.
This will require you to have a strong understanding of what you are going to do with
the money, though, as banks aren’t in a rush to throw money at anyone that walks in
the door.
Before the financial crash in the mid 2000s, sure, you may have been able to walk in
and snatch up a low-interest loan with relative ease. These days, though, banks are a
little pickier. Because of this, when you first start with investing or building a business,
you’ll have to have some of your own money to put in to show that you are serious.
This is pretty standard practice.
Once you start paying down your loan, the banks will begin to trust you more and
more. At a certain point, they will trust you enough to give you another loan (for more
money too). From there, you can take some of the money from the business you built
or the investments that you made and use that as capital for your new business, and
you can use that money as a down payment to secure another loan.
As the bank sees your growth, they’ll be more willing to trust you with more money,
with lower interest and less of a down payment.
I know this all sounds great, and it sounds like it’s a piece of cake, but you need to be
prepared for the fact that your business or investment may fail, and the bank may be
less inclined to trust you the next time through. That’s okay, though…they understand
that businesses and investments don’t always succeed. This doesn’t mean that they’ll
forgive your debt, but if you can continue making payments, then you’ll be more likely
to get another loan once you are back on your feet.
No matter how much the bank loans you, and no matter how much the bank grows to
trust you, you need to make sure that you are always paying down that loan. When you
make a deal with a bank, you are giving them your word that you will return the money
that they are lending you. Don’t go back on your word. A good businessperson, and a

good person in general, is only as good as their word and their actions. Plus, there are
usually legal consequences here as well.
If you are having trouble securing a loan, or if you decide to work around the banks
moving forward, there is another way to utilize OPM in order to secure funds and grow
your business and/or investments. That is through investors.
Investors
With the right kind of financial intelligence, you can raise funds using OPM in the
form of investors. Investors lend you money for your project with an expectation of a
return, but unlike banks, they are not looking for a down payment. The bargain you
are striking with investors is that you will take their money and make a profit with it.
How you use the money, though, is generally up to you.
When you secure finances from investors, you can actually use that to pay the down
payment on a loan, as well as putting the money towards your business or investment.
How to Treat OPM

Because it’s not your own money, you’ll want to be extra careful to spend the money
that you have raised wisely, and to do everything in your power to return a profit to the
investors, and to repay the banks (within legal and ethical limits). Make sure before
you borrow a dime that you know exactly how much you need, and you know exactly
where each penny will go. This will allow you to limit the loans that you need to take
out, and the amount of investors that you will need to split your profit with.
Now that you have a better understanding of how to handle Other People’s Money,
let’s take a look at another aspect of money that many potential businesses owners and
investors must know about in order to succeed.

The Importance of Debt
When most people hear the word “debt,” they cringe. They think about their unpaid
student loans and credit card bills, and they think of collection agencies harassing
them. This is because most people, especially poor people, only have experience with
bad debt. This experience both leads them to shy away from debt, and to tell their
loved ones to do the same.
Most poor people fall into two categories with their beliefs about debt, and a lot of that
comes down to how they were raised. Some poor people were raised to think debt is
something that you can just rack up without consequences. This leads to catastrophic
results. Other poor people are taught that debt is bad, and to stay as far away from it as
possible. While this doesn’t put them in the same danger as abusing debt, it does ruin
their chances of using leverage to become rich and successful.
To properly use debt, you need to understand the different between good debt and
bad debt, and you need to understand the difference between how poor people look at
debt, and how the rich look at debt. Once you understand debt in these ways, you’ll be
able to leverage debt properly, and you’ll be able to use OPM to reach your financial,
business and investment goals.
Let’s first look at the poor, and consequently, bad debt.
The Poor and Bad Debt

The poor have a misunderstanding of debt that not only keeps them poor, but actually
makes them even poorer. This is because they not only misunderstand debt, but they
also use credit to purchase liabilities, like cars, clothing, phones and more.
Many poor people are suckered into getting credit cards with the idea that they will
be able to purchase whatever they want, and they can simply take their time to pay it
down. With “cashback” rewards and other incentives, poor people are suckered into

thinking that they are actually earning money by using their credit cards, and this
encourages them to take out more and higher lines of credit. They are also pressured
by stores to get credit cards to purchase items that they can’t afford, and these stores
often give out credit cards with some of the highest interest rates around. Still, they
sell the poor on the idea that they need that big screen TV, couch or new dress today,
and that the only way to get it is to apply for a store credit card.
Then the bill comes, and most poor people don’t know what to do. They freeze up or
ignore the bill, which destroys their credit and causes the credit card companies to
send collectors after them. After daily phone calls at all hours, bills piling up and the
threat of repossession, poor people realize that they are misusing credit, which causes
them to fear it.
When you use credit to purchase liabilities, you are only racking up bad debt. Most
poor people don’t understand this and when they learn it, they learn it the hard way.
Once poor people finally pay down their loans from the bad debt that they accrued,
most of them give up on debt altogether. They avoid OPM, and they teach their kids to
avoid it as well. This is sad, because their fear of bad debt also keeps them away from
good debt, and good debt is part of how the rich get richer.
The Rich and Good Debt

Unlike the poor that become trapped by their debt, the rich use their debt to liberate
them. Good debt allows the rich to grow richer, because good debt leverages OPM in a
way that benefits both the debtor and the investor or business owner.
Also unlike the poor, the rich use debt to purchase assets, instead of liabilities. Where
the purchases of the poor continue to make them poorer because they depreciate in
value, the purchases of the rich allow them to become richer. They spend their money
purchasing real estate, businesses and other investments that will turn a profit, and
then they use some of that profit to put a down payment on more good debt.

When my wife Kim purchased her first piece of real estate, she put down $5,000 and
she borrowed $40,000. Since then, we have borrowed and invested millions of dol-
lars, and guess what? We’ve become even richer.
The rich also know that the debt that they take on isn’t for them to repay. What I mean
by this is that the rich will borrow money and will pay the money back with OPM.
That’s right—they use OPM to make money, then they take the money that they made
from people and pay back the money they borrowed.
Let’s take real estate as a simple example. Let’s say you bought a piece of real estate
using the bank’s money. Then, you rented the real estate out. You charged your rent-
er enough to cover expenses, insurance, the mortgage and a healthy profit. You have
now used OPM to pay back the money that you borrowed from a different set of other
people.
The poor and middle class, on the other hand, take on debt and pay it out of their own

pocket. They may take a loan from a bank to buy a car or a home, then they are forced
to pay it back with their own income. Doing this will not make you rich.
Debt and Income Tax

Here is the other thing that the rich realize about debt—it is income tax-free. Now, this
isn’t to say that it is tax-free, you still have to pay taxes on whatever you are purchasing
with OPM. Still, you don’t have to use your own money, which has been taxed, in order
to make a purchase.
Let’s say that you made $20,000, and for simplicity, you had to pay 25% of that in tax-
es. That leaves you with $5,000 less, so you actually only have $15,000. If you wanted
to invest your $20,000, you’d only be able to invest $15,000 max.
Now, let’s say that you borrowed $20,000. You can invest 100% of this $20,000, be-
cause it isn’t your money. You can’t be taxed on it.
Again, this doesn’t mean that your investment will have no taxes attached to it. If you
took out a car loan for $8,000, and you went to buy a car, you couldn’t buy an $8,000
car with that loan…you still have to pay sales tax. But, you have access to $8,000,
whereas if you were to use your own money with a 25% tax rate, you’d only have access
to $6,000.
This is another major reason that the rich use OPM, and how they avoid paying taxes
on a lot of their purchases.
Be Careful with Debt

Whether you are taking on good debt or bad debt, you are still taking on debt. Because
of this, I want to warn you to be careful when taking on debt. Even if you’d convinced
the banks that you know what you’re doing with the money, you still need to know
deep down that you actually know what you are doing, and that you aren’t taking a

huge risk without thinking it through.
I believe in using debt to make myself richer, but I don’t encourage people to use debt
just for the sake of using it. Think things through first, and see how you can leverage
debt to make yourself richer, instead of putting yourself in major danger. Also, make
sure you understand the different between an asset and a liability before you take out
any loans.
To become richer, learn to leverage OPM properly, and to spend it wisely.
Other People’s Time

As I’ve mentioned before, time is a limited resource…a very limited resource. If I were
to try and accomplish everything that I’ve accomplished by myself, it would probably
take multiple lifetimes. Luckily, that isn’t the case. This is because I am able to lever-
age OPT—or Other People’s Time.
I’d be willing to bet that every company you’ve ever worked for leverages OPT…be-

cause you were the “other people.” Unless you are self-employed, you are either part
of Other People’s Time, or you are utilizing it. Actually, even people in the S quadrant
find themselves working as freelancers so other people can work on other matters.
In order to make the most money possible, and in order to become rich, you need to
learn how to utilize OPT effectively. You don’t want to spend all of your money paying
for OPT, but at the same time, you can’t continue to grow if you are limited by the
hours in the day.
Let’s discuss the two different forms of OPT, and how you can best utilize them to
grow your wealth.
Employees
When most people decide to utilize OPT, they hire employees. This allows them to
monopolize OPT to whatever extent that they see fit—including setting up scheduled
workdays so they know when their employees will be there. Traditionally, of course,
this is 9 AM to 5 PM, Monday through Friday.
Once a business grows big enough, though, the employer doesn’t even need to keep an
eye on their employees, because they hire a manager to do this. Then, when the busi-
ness gets too big for one manager, they hire multiple managers. When the business
owner wants to expand from there, they hire managers to watch the managers and so
on.
This is how corporate structures are essentially built. You have the workers, the su-
pervisors, managers, district or regional managers, vice presidents, presidents and so
on. This structure can be repeated in different sectors of the business, allowing the
business to eventually run itself completely.
In order to get this system set up, you need to do one of two things: purchase a busi-
ness with this structure already in place, or build a business from the ground up, add-

ing to it as the need introduces itself.
If you are purchasing a company, there is a good chance that the company is failing or
has gone stagnant. If this is the case, you’ll need to look over the employee structure
and see where the weaknesses are. There may be a few managers that are slacking off
that is slowing down production, or there may be members of the sales team that ar-
en’t doing their job.
If it does turn out to be a personnel problem, once you’ve corrected it and seen prog-
ress, you can step away from the business. Actually, you may even be able to hire
someone to do this for you, depending on how involved you want to get into the busi-
ness.
If you are building the company from the ground up, you may need to spend some of
your time overseeing the interview process until you put the perfect team together.
Unless you have an HR expert that you can trust with your new business, you’ll want
to be hands on for at least a little while.
Once you begin to trust your initial team, you can start expanding, and eventually get
to the point where you are only involved with hiring and firing when the people that
you are hiring or firing are higher-ups in the company.
The goal here is to set up a structure in which you are leveraging other people that are
higher-up in the company’s time who are leveraging OPT beneath them to run your
business for you. It sounds a bit complicated, but when you think about it, just about
all corporations are run this way.
While sometimes it makes sense to rely on employees to get the job done, other times
it is more cost effective to utilize specialists that only work when you need them to.

Subcontractors
Subcontractors (or freelancers) are amazing for when you need work done, but you
don’t need it done all the time. Where with an employee you generally have to pay
them a regular amount and keep them on payroll, a subcontractor you can use only
when you need them, and you don’t ever have to use them again moving forward un-
less you have a contract for additional service.
Subcontractors are also great because, since they aren’t employees, you don’t have to
give them benefits. This saves you a lot of money in overhead, and you don’t have to
worry about disgruntled employees complaining about their paid time off, insurance
coverage and so on.
Freelancers and subcontractors still utilize the same principle of OPT, though. You are
still paying someone to work for you—you just aren’t keeping them on staff.
The only real downside to subcontractors is that, since they are “as needed,” they don’t
need to drop everything that they are doing when you need something done. Also, it
often makes more sense to keep certain people on staff fulltime when they have a full
workload.
Save Your Time for Making More

Save your time for making more money. Even if you have salespeople for your busi-
nesses that are bringing in new clients and customers, you’ll still want to keep looking
for the next great investment. This is one of the only things that you don’t want to hire
someone else for.
The more time you have, the more opportunity you have to be researching new busi-
ness deals, acquiring more assets and making more money.

Leverage Can Make You Rich or Poor
While leverage has the ability to make you significantly richer, it can also make you
pretty poor if you aren’t utilizing it correctly. When you are handling Other People’s
Money, you need to be careful with how you spend it. When you are handling Other
People’s Time, you need to make sure that they are busy, and that you can warrant
paying them for their time.
Because of this, to utilize leverage, you need to have a pretty high level of financial in-
telligence. It takes more than knowing what leverage is to understand how to properly
use it. You’ll want to do quite a bit more research on the subject, including reading
some of my other books, like Unfair Advantage.
Study Every Deal

When you do decide to start using leverage to make more money, you’ll want to make
sure that you are studying each and every deal very closely. As little should be left up
to chance as possible, and you’ll want to make sure that you aren’t getting taken ad-
vantage of.
I’ve met quite a few people that signed on to a deal that was “too good to be true,” and
guess what? It was too good to be true. Even people with a lot of money can be swin-
dled, and this is due to a low financial intelligence.
Look at star athletes. A lot of famous sports stars have been approached with shady
business deals, and they’ve sunk their fortune into what their buddies assured them
was a “sure thing.” Without consulting someone with a high financial IQ, they’ve
signed on…and lost everything.
Not only should you look over your deal, but so should an attorney. You’ll want to
make sure everything is legal, and that you understand every single part of the con-
tract in depth. One small clause in the contract could mean the difference between you

making lots of money, and someone taking you for everything that you’ve got.
This goes for each and every business deal that you strike. Can this be time consum-
ing? Sure. Can you trust that everyone is looking out for your best interest? Don’t be
foolish…
Be careful with your money, and be careful whom you spend your money with.
Go Study
Go study some more about leverage, and how to take advantage of both OPM and OPT
to become rich. Read a few books on the topic, and if you can, go to a seminar. Learn
as much as you can about leverage before you start getting yourself into debt, or before
you start paying employees for their time.
Remember: investing in yourself via education will pay off HUGE dividends over the
course of your life. Discovering new ways to leverage OPM and OPT is an important
area to get a continual education in.
Once you’re ready, make smart deals, and be prepared to hit a few bumps in the road.
After some research and after taking a few risks, you’ll start growing your wealth by
using other people’s time and money.

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The American Dream has changed. Where there used to be an idea of going to college,
settling down, starting a family, working a well-paying job with a pension and then
retiring at sixty-five, there is now a reality that shows this antiquated idea is no longer
viable. Sure, in the old rules of money this wasn’t a bad plan, and it really was a dream
for many people. It still is today.
The problem is that the system isn’t built to fulfill this dream anymore. Where before
a single income household could support an entire family and a nice house in the sub-
urbs, these days both parents have to slave away all day, missing time with their fam-
ilies as they try to pay down a mortgage and hope to put away enough money for their
kids’ college. When they fail, their kids have to take out student loans that are tens or
even hundreds of thousands of dollars, leaving them in debt for years and years.
From this stark reality, though, what I call the “New American Dream” was born. This
new dream takes focus off of going to work for someone else, and instead changes the
focus to building a business that would not only pay the mortgage, but run itself. The
goal changes to building something (or buying something) that allows people to both
become rich, and have more time to spend with their families.
This is the version of the American Dream that I not only believe in, but believe is
the only one left. While some (very few) companies still offer pensions and retire-
ment plans for their employees, the majority only offer 401(k)s. This puts the onus of
preparing for retirement on the employee, as well as blind faith in an ever-changing
market.
There is one good thing that came out of this—it’s forced many people to think of new
ways to live and earn money. Entrepreneurship has become the new gold standard
(pun intended), and the now obsolete notion of working for promotions until you hit
your salary cap and retire is becoming more and more of an idea that needs to be re-
R u l e # 3 : C r e at e 91
tired itself.
Even college diplomas have become less important than they used to be. Where before
a diploma was mandatory, with the focus changing away from STEM careers and to-
wards Liberal Arts, more people than ever before are graduating with a college degree.
Some with Master’s degrees are even finding themselves unemployed or underem-
ployed.
People without degrees and college dropouts, though, have gone on to start great busi-
nesses and some of them are even worth billions of dollars! Sure, not everyone is going
to be Mark Zuckerberg, but the point still stands—in this new world with new rules, it
has become possible to become rich without a college degree. The emerging opportu-
nities are just waiting to be capitalized upon.
What I am getting at with all of this is that entrepreneurship has become more popular
for a reason—it’s one of the fastest ways to create wealth. This is because of a variety
of factors, all of which we will go over in this chapter.
You can strive for the New American Dream, and you can become rich through the B
quadrant, but first you need to understand the art of entrepreneurship. Being an en-
trepreneur isn’t just coming up with an idea. It’s not even finding funding or signing
permits. Entrepreneurship is a skill in and of itself, and in order to succeed in busi-
ness, you need to learn how to be the best that you can be at this skill.
The first thing I want you to understand with owning a business is the type of income
that you are looking to create. In order to make money as an entrepreneur you are go-
ing to have to put the idea of trading your time for money away, and you are going to
need to shift to a new form of income generation.
Earned, Passive, Portfolio

Part of the first rule was understanding the difference between earned, passive and
R u l e # 3 : C r e at e 92
portfolio income. In order to be successful in business, you’ll need to have a strong
understanding of how to build passive and portfolio income, and just as importantly,
you’ll need to let go of earned income.
I know that you’ve probably spent your entire life working for earned income, and
even when you are planning your new business, you may still be thinking of money
through this perspective. This is what separates the B and S quadrants. We’ll get to
that more in a little bit.
As a reminder, earned income is based on hours worked, or a yearly salary, while pas-
sive income is based on cash flow and portfolio income is built around capital gains.
Though passive and portfolio income come from very different types of businesses,
they both involve looking at the way you make money through a new lens. Instead
of thinking about how many hours you’ll need to work to make X amount, you’ll be
thinking about how you can get your money to work for you to increase your wealth.
I want you to change your sights from the old ideas of earning income, to the New
American Dream. I want you to start thinking about big business, instead of working
under someone else’s rule to put money into your 401(k).
Before we get to becoming an entrepreneur, though, I want to take a moment to dispel

some myths that you may have about entrepreneurship. This will help you to get on
the right path from the get-go, and will help you to avoid the pitfalls of being self-em-
ployed, instead of truly running a business.
Big Business Versus Self-Employment: Myths About

Entrepreneurship
Something that I hear quite often is people conflating being a business owner with
being self-employed. The truth is that these belong to two very separate quadrants,
which leaves a lot of budding entrepreneurs very confused. If you aren’t working for a
boss, you’re a business owner…right?
R u l e # 3 : C r e at e 93
In reality, owning a business is more than having clients and creating your own job.
While this is a step up from the E quadrant, it still leaves one very important distinc-
tion—when you are in the S quadrant, time still equals money.
Creating a Job for Yourself

To better understand the different between the S and B quadrant, I want to discuss
how S is not B. The key distinction is that when you are self-employed or a special-
ist, you have created a job—but it is still a job. Instead of showing up to an office and
clocking in, and instead of being overseen by a series of bosses, you are working from
home, or out of your own office…which is nice. Don’t get me wrong, I’d rather be in the
S quadrant than the E quadrant.
Still, you are limited to the hours that you are able to work, as when you are self-em-
ployed you only make money while you are working. So, you are separated from being
a cog in someone else’s corporate structure, which is nice, but you still aren’t com-
pletely free.
For instance, let’s say that you are self-employed and you want to take a vacation.
Sure, you may be able to take your work with you, but you are still working while you
are on “vacation.” Your other option is to take the time off completely, but this means
that you won’t be making any money while you are away having fun.
When you are in the S quadrant, you still have limitations. No matter how much you
decide to charge your clients, you will always hit a wall. There are only so many hours
in the week, and you need to sleep and eat here and there. Even if you charged ten
thousand dollars an hour, you are still limited to twenty-four hours. Granted, that is
a lot of money in twenty-four hours, but the point I am illustrating is that there is a
calculable amount that you can make.
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The Difference of a Business
A business, on the other hand, means that there are no limitations or caps on the
amount of money that you can make. This is because when you own a business, time
no longer equals money. This is extremely important, so I’ll say it again…
When you own a business, time no longer equals money.
With the example I used before, if you made ten thousand dollars an hour, you would
be limited to two hundred and forty thousand dollars in a day. I know, that’s still a lot
of money. When you own a business, though, there are no hourly caps. This means
in the same twenty-four hour period, you could be making the same amount or more
with the same amount of work. You may work for eight hours, or you may work for
twelve hours, and you’ll still make two hundred and forty thousand dollars that day.
That’s because with a big business, money and time are no longer connected.
Now, this doesn’t mean you should put in two hours and call it a day. It does mean
that there will be times that you are barely working and you are making a ton of mon-
ey, and there will be times that you are busting your butt and you will be making no
money at all.
When people say that they want to start a business, the first question I ask them is,
“Are you willing to work for two years without getting paid?” The automatic response
I get, nine times out of ten, is a very emphatic, “No!” Well, to start a business, this is
often what it takes.
When you are self-employed, you are making money out of the gate. That’s because
you are charging a certain rate, and once the invoice goes out, that money is due. With
a business, though, you are reliant on cash flow, and you are relying on a team of em-
ployees to help you to not only make money, but turn a profit.
Businesses create automation. What I mean by this is that once you step away from a
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business, it should continue to run itself. Being self-employed doesn’t work this way.
Let’s look at taking a vacation, again.
If you own a business and you decide to take a vacation, you should (hopefully) con-
tinue earning money—even while you are on vacation! This isn’t because you have
paid time off or a yearly salary, either. It’s because the money you are making isn’t
necessarily dependent on the hours that you work. In fact, I know quite a few business
owners that don’t work on those businesses at all! They’ll step in if profits start to de-
cline, but otherwise they allow everyone working there to do their job.
This is impossible for someone that is self-employed or a specialist, because if they

step away, there is no job!
So, now that you understand the difference between the S and B quadrants, and why
they are often misidentified, let’s discuss some different types of entrepreneurs, and
what it means to scale a self-employed job up to a business.
Scaling Your Business

When people want to start a business, they often ask me about how to simply jump
into owning one. While some people have enough money to simply start or buy a busi-
ness (we’ll get into that later), others are still in the E quadrant, and they don’t have
the resources to jump into big business or investing.
That’s okay, though. Just because you are an employee right now, doesn’t mean that
you are trapped in that quadrant forever. If you aren’t being paid highly and/or you
don’t have great credit, though, buying a business or starting one from the ground up
is probably off the table. So, how do you get started?
The answer is that you start small, and scale the business up. What starts in the S
quadrant can easily move into the B quadrant, if you know how to properly scale it and
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if you have goals in mind for what scaling that business would mean to you.
I’m going to get into a few examples of how you can scale different types of self-em-
ployed jobs into businesses, but first, let me define the term “scale.” When I say that
you are going to “scale your business,” I mean that you are going to start with a very
basic product or service, then you are going to slowly automate it over time. The goal
is to go from hours worked to cash flow by building a team, and expanding your clien-
tele. If you are able to properly scale your job, it will become a business, and you’ll go
from making money for time to making money through passive streams.
This is a pretty big leap, and it’s going to take quite a bit of work upfront. You’ll need
to go through a phase of overloading yourself until you are able to pay to automate
certain areas, and then you’ll grow from there. We’ll discuss that later in the chapter.
Right now, let’s discuss a few different self-employed jobs that you can create for little
or no overhead, that you can begin to scale over time. With the right work ethic and a
proper game plan, you’ll be able to start any of these businesses from the ground up
in little to no time!
Freelance Writing to Copy Agency

Let’s say that you decide to become a freelance writer. This is an awesome job for the S
quadrant, if you have the skillset. There is always a need for copy writers, and even for
bulk content. There are also ghost writers that write everything from reports to books.
This gives you many possibilities when it comes to generating income.
The problem is that you can only charge a certain amount per project. This limits you
to the time equals money paradigm.
In order to scale a freelancing job into a business, you may want to consider creating
a Copy Writing Agency, or even a full Marketing Agency. To do this, you would need
to overload yourself to the point where you can justify hiring another writer. Then,
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you can offload some of your work and keep looking for new business until you can
justify another writer. Then an editor. Eventually an accountant. Once you are making
enough money, you can hire a salesperson.
At that point, you have a salesperson getting new work in, writers working on the new
projects, editors cleaning up the writing and an accountant making sure everyone gets
paid. You can even hire a project manager, so you don’t even have to deal with assign-
ing projects or making sure they are turned in on time!
At this point, you’ve built a small business. You’ve created an ability to scale with a
salesperson, and you have a staff that is able to take on the workload. If they get over-
loaded, you can always hire more people.
This creates a passive stream of income for you. If everyone is doing their job and do-
ing it correctly, you just need to oversee the operation and collect your income.
Store Owner to Franchise Owner

Every major franchise that I can think of started with a dream, and one location. From
there, they built more and more stores, and eventually began to franchise the rights to
their name and products out.
I’m sure you’ve heard of a few of them…
• McDonald’s
• Jimmy Johns
• 7-Eleven
• Subway
• …the list goes on
With the ability to franchise, you are able to continue to build your company by allow-
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ing others to use your products and brand to make their own money. But, in order to
do this, you need to establish a name.
A problem I see with a lot of store and restaurant owners is their mindset. Instead of
starting with the idea of owning a chain or franchising, they simply think about own-
ing a restaurant. This is very limiting, and to me, it puts you in the S quadrant. You are
self-employed, and your earnings are always going to be limited because you only have
one location, so you only have so much space.
Once you create a chain or a franchise, you are able to expand further and further.
Especially with a franchise, where you allow others to put up the money for a location,
and all you need to supply them with is the product and the brand name (which they
pay you for).
As you can see, a franchise is unlimited…it can grow indefinitely. A restaurant, on the
other hand, is limited by the size of the location.
From A Piece of Property to a Management Company

Real estate is an amazing business to get into, and it can make you a lot of money. The
thing is, though, many people think too small. They want to buy a building to rent out,
or even an apartment complex. This limits your income to that one location. Sure, this
is a fine investment, but you shouldn’t stop there.
Instead of being a landlord at one location, you can scale up to a full management
company that handles multiple locations. You can expand to both residential and
commercial real estate, and you can continue to build your real estate portfolio by
hiring people to acquire new real estate, and handle renting out and management of
your current properties.
As you can see with these three examples, there is a major difference between being
in the S quadrant and being in the B quadrant. You can easily move from one to the
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other, though, if you are smart and consider how you can scale your business.
While it’s good to think about how you are going to scale before you even start in the S
quadrant, it’s never too late to switch gears and start thinking about how you can take
your self-employed job and turn it into a full business.
TM
Traits of Successful Entrepreneurs

While there are many different types of businesses and many different ways to be an
entrepreneur, there are a few traits that successful entrepreneurs share that have al-
lowed them to be as successful as they are. The majority of prosperous entrepreneurs
that you meet, when you ask them for advice, will give you at least one—if not all—of
the pieces of advice that I’m going to give you.
If you want to be successful at anything, it’s important to think a lot about what other
successful people in your field are doing. This is the same for starting a business. If you
want to start a business, you need to look at what other successful business owners did
to get to where they are.
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I want to start off by saying that starting your own business isn’t easy. It’s going to take
dedication, bravery and the ability to pick yourself back up after you fail. Not everyone
has what it takes to be a business owner. If you are able to push past these and other
problems that may come up, though, you’ll find an unlimited way of building wealth,
and you’ll finally be able to think like a rich person.
Let’s start with something that all budding entrepreneurs have to battle, and what gets
them through it.
Bravery
Fear is going to be your biggest opposition when starting your business. Before fund-
ing, before scaling, before tax codes…the first hurdle that you will have to jump is the
one in your mind.
You have most likely been conditioned since you were young to think that the world
works a certain way. In order to start a business, you need to cast these notions aside…
and this is terrifying. Most people are afraid of change, and one of the biggest changes
that you can make is changing your mindset from that of a poor person, to that of a
rich person.
When I was a kid and I learned about entrepreneurship from my rich dad, I didn’t
have a lot on the line. I didn’t really have much to lose, besides some baseball games
and leisure time. You, on the other hand, probably have a lot to lose. You may have a
steady job, a family, a mortgage and other responsibilities.
Still, that doesn’t mean that I don’t have a lot to lose right now. Trust me, I’ve lost it!
It simply means that my mind was formed back when there wasn’t a lot of pressure on
it. You have a lot of different forms of pressure facing you, and this may make it a little
more difficult to open yourself up to this mindset. But don’t let that deter you.
Once again, I want to remind you that I didn’t just take the lessons I learned from my
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rich dad and become the wealthiest person in the world. I’ve built up businesses, only
to watch them fail. I’ve gone from being on top, to being right back at the bottom.
As far as risk and income goes, I’ve most likely been where you are. The difference is
that I am rich, so I know that being broke isn’t the same as being poor. If you have
the mindset of being poor, you need to learn to get past your fear of being broke and
embrace the changes that will lead to you becoming rich.
I don’t know anyone (and trust me, I know a lot of entrepreneurs) who wasn’t afraid
when they first started a business. Even now, buying a new business can be a major
risk, and that can induce some anxiety. I don’t let that anxiety control me, though. I
understand that risk comes with a little bit of sweat, but it also comes with the possi-
bility of major rewards!
I’ve also learned to have fun with the process, which has helped me to overcome fear.
If you are having a good time, win or lose, you enjoy the game. If you are dreading and
worrying every moment, though, you’ll miss out on enjoying the process, and you’ll be
less likely to repeat the process and become even more wealthy.
Part of being rich is putting your fear of being broke aside. You may lose money, but
as long as you aren’t poor, you’ll make it to the other side.
Automation
The difference between successful entrepreneurs and failed “business owners” often
comes down to the inability to let go of control. Some people are control freaks, and
this leads to them wanting to run every aspect of their “business.” There are only so
many hours in the day, though, and eventually these people get worn out. This leads
to making mistakes, getting sloppy and losing customers.
It also means a lack of scalability. If you need to be intimately involved in every as-
pect of your business, there is no way that you’ll be able to handle an expansion. This
will require you to trust your team, and to step back from at least one portion of the
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business. Many people have lost everything because they try to expand, and then they
spread themselves too thin.
Successful entrepreneurs know that they need to automate their businesses if they
want to succeed. The end goal should be the business being able to run itself if you
decide to step back, or if you decide to do something else.
I often have a few different business enterprises going on at a time, and let me tell
you, I don’t have time in my day to be checking up on all of them all the time. Instead,
I make sure that I put a good team in place that I can trust to get the job done, and I
allow the business to make money.
The only time you should need to step in (unless you feel like being more involved) is
if there are some major issues that are arising. I’m not talking about a less-than-stellar
quarter, either. I mean if you are hemorrhaging money, if something shady is going on
or if something else comes up that can cause you to lose a bunch of money, lose your
business or go to jail. Other than that, you should be able to sit back and keep an eye
on your business from a distance.
Remember the vacation example from earlier? That’s what I am talking about here. If
you have a successful business, you should be able to take time off and never have to
worry about what’s going on with the business.
To automate, though, you need to give up some of that control, and you need to put
faith in the people that you hired. Then you should let them do their job.
Taking Advantage of Free Time

My rich dad once told me, “The primary difference between the rich, the poor and the
middle class is what they do with their spare time.”
My rich dad was always working on a new business enterprise—even when he wasn’t.
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He never allowed a minute of his day to be wasted, and this allowed him to not only
grow his current businesses, but start new ones.
Instead of lying around watching TV, rich people use their free time to look for oppor-
tunities, and to continue to learn and grow. They keep their eye out for businesses that
are going under that they can purchase, new markets that are opening up and ways
that they can scale their current business.
Rich people also read, study and learn. They are always trying to be at the forefront of
their industry, and they never allow the world to pass them by. Rich people are con-
tinuously figuring out trends and learning different strategies that they can implement
to further grow their wealth.
I am an avid proponent of reading, listening to podcasts (like mine – The Rich Dad
Radio Show) and watching informational videos to learn more about different prin-
ciples, strategies, techniques and markets. If you don’t have time to read, listen to
audiobooks when you are in your car. There is always time to learn more and to grow.
Now that you know what traits it takes to be a successful entrepreneur, let’s discuss
how you can become one.
How to Become an Entrepreneur

Becoming an entrepreneur is more than picking a location and taking out a business
loan. There is a lot that goes into the thought process of how you are going to acquire,
grow and scale your business, as well what wants or needs your business serves. To be
a successful entrepreneur, you need to understand all of these things and more. This
is on top of having a passion for the type of business that you either want to start or
purchase. If you jump in with no awareness of the market, or how that business turns
a profit, there’s a good chance that your business will go belly-up.
I could write an entire book on the topic of how to become an entrepreneur, but since
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this book isn’t about that, I instead want to give you an overview of the things that
you’ll want to consider once you’ve made the decision to start or purchase a business.
This should at least get the gears turning in your head, so when the time comes you
know where to start.
Let’s first discuss the easiest, but most expensive way to become an entrepreneur.
Purchasing a Business
Buying a business is a lot like real estate: you are looking for potential, and something
you can improve. Also like buying real estate, you’ll need some money upfront. That’s
why, for most people in the E and S quadrants, this is not an option. There are some,
though, that make a high enough salary to put money away and then take out a loan
with the bank. This is pretty much the only way to jump from E or S to B by purchasing
a business.
For people in the B and I quadrants, acquiring businesses is generally a lot easier, and
the risk is lower. Because they already have a good source of income, buying a failing
business may be a lower risk. It’s still a risk, but when you have something to fall back
on, it’s not as bad. When you are in the E or S, though, you are most likely all-in, so you
need to be even more careful with your purchase. The last thing you want to do is buy
a fundamentally broken business, and then let it take you down with it!
When you are buying a business, just like with real estate, you want to make sure the
fundamentals are good, and that it’s worth fixing up. You wouldn’t buy a home in a
bad area that costs hundreds of thousands to repair, for instance. The same goes for a
business. You don’t want to buy a business that is in a bad location, is falling apart or
is obsolete. Instead, you want to purchase a business that has the potential to do well
with a fresh coat of paint, and better management.
There are a lot of businesses that go under due to poor management. A lot of people
get it in their head that they want to start a business, so they take money out of their
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savings and get a loan, then purchase a business without doing much research on what
it will take to run the business. This is usually people in the E and S, as I mentioned
earlier.
Then, they get in over their head and they start owing more money than they are mak-
ing. This leads to them selling their business, and a great opportunity for a business-
person to purchase a business with potential, but with lousy previous owners.
Make sure you do plenty of research when you are purchasing a business, so you don’t
throw your money on a sinking ship. If you take a thorough look at it and see that it is
a great opportunity, though, this saves you a lot of time and money that would have
come with starting a business from scratch.
Starting a Business
Your other option, of course, is to start your own business. There are just as many,
if not more, risks involved with this process. This is because the infrastructure isn’t
there yet, and you have no idea what you are stepping into. Sure, you can do research
and sure, you can see how other businesses like your potential business are doing, but
you are still taking a huge risk.
Now, this isn’t exactly a bad thing. Big risks can mean big rewards. When Uber start-
ed, they took a huge risk. They were going up against the taxi industry, which had been
established for about a hundred years! They also had a lot of legal issues that they had
to work through, as well as safety concerns. Uber is now one of the biggest companies
in the world, and is a major threat to the taxi industry.
On the flipside, though, you’ve probably seen a lot of local restaurants go under. Even
major companies like K-Mart have been forced to close up most of their shops, and
other companies have gone under completely.
I don’t want to dissuade you from starting a business…actually quite the opposite. If
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you don’t have the capital to buy a business outright, your best option may be the start
your own business. This may just mean scaling up your current self-employed job,
which we have discussed before.
Whatever business you decide to start, just make sure that you are thorough when do-
ing your research, and that you are able to be less expensive, more efficient or higher
quality than your competitors.
Find a Problem and Solve It

If you are able to find a problem that hasn’t been solved or a gap in the market, you
have a major opportunity. For instance, some neighborhoods don’t have a specific
kind of store…like a grocery store. If you are able to put an affordable grocery store in
that neighborhood, you’ll be making good money without any competition.
YouTube is another great example of a company that saw a gap, and filled it. There was
a need for a website to stream a whole host of different videos—for “free.” YouTube
stepped in, and is now not only one of the biggest websites, but also one of the largest
search engines on the internet.
When you are looking to start or purchase a business, ask yourself what problem it is
solving, and/or what gap it is filling. This will help you to decide whether you are mak-
ing a profitable investment, or if you are throwing your money away.
Essential Information to Have Before Starting Your Business

While every business is different, there are common factors that every business would
benefit to know before getting off the ground. These will help you to make sure that
your business is competitive, effective and legal. Make sure you read through each
of these when you come up with a business idea, and put them into practice for your
potential new business…
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Taxes and Laws
The first thing that you want to check is that your business is above board. If it is a
physical location, you’ll need to see what the laws for that city, county and state are,
along with national laws. If you are expanding, you’ll have to check most of those again
for your new location.
You’ll also need to have a strong comprehension of tax laws in relation to your busi-
ness to both save money on taxes, and to make sure your taxes are properly paid. You
don’t want your business shut down because you did not properly handle your taxes.
Sit with lawyers and accountants that handle taxes to make sure that everything that
you are planning on doing is above board, before you waste your time and money.
Market Research
The next thing you’ll want to do is some market research. As I’ve mentioned before, it’s
good to know if there is a need for your product in the first place, and who your target
consumer would be for that product.
Once you find out the types of people that buy your product or service, you then have
a better understanding of where to find them.
Study the Competition

Studying your competition can help you out in a variety of ways.
• First, it gives you a better idea of how much competition there is for the field
that you are about to step into.
• Second, it gives you an idea of what their target audience is.
• Third, it gives you a better idea of what you can do to stand out.
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• Fourth, it allows for you to learn from their mistakes, and improve on their
ideas.
Once you know who and what you are up against, you can design your product or ser-
vice in a way that you fill the gaps that they’ve left, and you’ll have a jumpstart on your
market research.
Envision Your Brand

One of the major things that will set you apart from your competition is your brand.
Two companies that have similar products or services can make as much money off of
their brand as they can their products or services.
Take cellphone companies. Verizon, AT&T, T-Mobile…they all have similar levels of
coverage, and the difference in prices have become smaller as well. The main thing at
this point that separates them is their brand, and their target audience.
Another good example is bookstores. Two bookstores will likely sell the same exact
products, but one may get the competitive advantage with the way that they position
themselves.
Take some time to really think through your brand, and come up with an understand-
ing of how you will separate your brand from the competition.
You Don’t Have to Reinvent the Wheel

Like with the previous example, starting a bookstore isn’t anything new. Neither is
starting a coffee shop. In fact, you could be selling the same coffee as someone up the
street, but it’s likely your brand and the audience that you are shooting for that will
make the difference.
Some companies do great the way they are. If you purchase a company, or even if you
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start a new company, you don’t need to do something revolutionary. Sometimes all it
takes is putting your own personal spin on top of an idea that already works.
If It Can’t Generate Passive Income…

If it can’t generate passive income, it’s not worth your time. The whole point is to grow
a business that you can eventually step away from, if you want to. If the business you
start is unable to do this, it’s not a business that you want to start.
Entrepreneurship Isn’t for Everyone

Being a business owner isn’t for everyone. Some people don’t have the nerves for it,
and that’s understandable. Those same people probably don’t have the nerves for in-
vestment either, and that’s okay. Somebody needs to be the employee in these busi-
nesses.
If you are reading this book, and if you have read any of my other books, the odds are
that you are the type of person that wants to take the risks involved with being an
entrepreneur.
Don’t scare easy, and don’t run away from the challenge. It will be tough, but if you
follow the advice I’ve given you, you’ll be able to not only set up a shop, but build a
business empire.
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R u l e # 4 : M u lti p ly
One of the biggest problems that I see new investors run into is that they don’t know
where to invest their money. They generally choose conventional wisdom, like mutual
funds, and then they wonder where all their money went when they go to cash out.
Others will take their money and invest in homes to flip, or will short a market. While
this can make you money, it’s not investing. This is trading, and this will keep you in
the S quadrant.
In this chapter, I will show you how to take the money that you have, and invest it
in different ways that will make you money. I don’t simply want to teach you about
flipping a house, or making a few hundred dollars on stocks. I want you to learn how
to invest your money in practical ways that will give you multiple streams of passive
income.
We’ve discussed leveraging OPM (Other People’s Money) and, in order to multiply
your own money, you’ll find that this is a very useful tool. We’ll also be discussing how
to leverage your own money by tapping into the wealth that you built from a business.
The goal is to make sure that you have a constant cashflow, and that overall it is going
in the right direction. You will make mistakes, and we’ll discuss ways to minimize
those mistakes. Still, there is always risk when it comes to investing. If you take the
time to learn more about it and treat it like a business, though, you’ll have a much
higher chance of success. If you do all of this and stick to it, even when times are tough,
you’ll be unstoppable.
Making Your Money Work for You

Before we get into leveraging OPM, I want to discuss how your own money is a valu-
able resource…if you have the money to spare.
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While Kim and I have purchased real estate entirely on credit, we’ve also used money
that we make from our own businesses to invest in different companies. While this
may dig into our own pockets a bit, it also leaves us open to leverage larger sums of
money for bigger investments.
When you are first becoming rich, you may take one of two paths…one may take you
down the road of investing, while the other may take you down the path of entre-
preneurship. My rich dad taught me an important lesson about this. As it turns out,
building a business may be an easier way to work your way into real estate, instead of
jumping right in. Sure, it’s not the only way, but it can make it quite a bit easier. Here
is how that conversation went…
My rich dad and I were discussing real estate, and how you should start small and
build big. He was telling me that some people want to start to big, and throw all of
their money into a decision—especially when they are first starting out. As it turns out,
this is financial suicide!
My rich dad explained to me that in order to become successful in real estate (or in-
vesting in general), you needed to start small. This way, you can use your mistakes as
learning tools, instead of giant blunders that will sink your ship. I still didn’t under-
stand how this connected to building a business, though, so I asked him, “So, why start
a business? Why not go straight to real estate?”
“Because it’s easier to buy real estate if you have a lot of money and experience,” he
replied. He then continued, “People are more willing to deal with you if you have mon-
ey. They tend to avoid you if you’re broke…If you build a business, you have a better
chance of being a better businessperson. If you’re a bad businessperson, you won’t
have money anyway. So, if you’re good, you will have the cashflow to buy all the real
estate or stocks and bonds you want. Always remember that your business buys your
assets—you don’t.”
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Even when you make the move to start dealing with OPM, they will be much more
likely to deal with you if you can prove that you have money of your own to invest-
ment. That’s why most major purchases require a down payment. Before they risk
their own money, they want to know that you have your own cashflow. This allows
them to be comfortable with loaning you the money, which is turn means that you can
borrow more money, more often.
Why Real Estate Is a Business

What a lot of people don’t realize is that real estate, in and of itself, is a business. My
rich dad explained it using the example of a Monopoly game, in a way that I will never
forget. He said:
“It is a business…That little green house is a business. The dirt under the house is re-
ally the real estate. The person who rents it from you is your customer. The banker is
your money partner. That is why I recommend you start with building businesses and
buying real estate. Not only are you converting earned income into passive income,
you are gaining powerful financial education and experience while you’re young. As
you get older and begin building bigger businesses and buying bigger pieces of real es-
tate, your education and experience will be awesome! You’ll be earning more, working
less and paying less in taxes. That is financial intelligence.”
A lot of people don’t respect real estate like an investment, and instead they treat it as
a commodity. They treat it like shoes at a shoe store, instead of the stream of passive
income that it has the potential to be. They keep themselves in a state of mind that will
always keep them buying and selling (essentially gambling), which will also keep them
in the S quadrant.
In order to treat real estate like a business, you need to see it as a source of passive
income. You need to see your different properties as investments that add to your
business, and make you richer.
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Now, I don’t want to confuse you…real estate is a different kind of business, built
around investing. When you are first getting into real estate, though, it’s good to have
an established big business that is separate from your real estate. This will allow you
to learn how to be a better business owner, and it will give you the option of spending
a little bit of your own money as you learn, instead of taking a huge leap of faith.
This isn’t to say it’s impossible to start with OPM. Actually, when I first got into real
estate, that’s what I did.
With hindsight and with experience, I can now see that the safer route is to leverage
some of your own money when you are entering real estate. Still, there are many dif-
ferent ways to start building your real estate portfolio. We’ll get into that in a little bit,
though.
For now, I want to discussing growing your wealth, and keeping it safe.
How to Grow Your Wealth While Keeping It Safe

Building wealth simply isn’t enough. Ask any former athlete that is now broke. Once
you’ve built wealth, you need to start looking at ways to keep it safe. This is the only
way that you can ensure that it continues to grow.
I hear a lot of people discussing money and real estate in ways that appall me. Their
focus is in the wrong place, and because of this, they end up broke. This was a major
issue during the real estate crash a decade ago. So many people were focused on flip-
ping houses and making money that they didn’t think about what would happen in the
long run. This led to an economic collapse that we hadn’t seen in a lifetime.
If you want to be rich instead of just having a lot of money, you need to learn how to
grow your wealth, while at the same time keeping it safe. This is the only way that
you’ll maintain your wealth, and that you’ll be protected if anything major happens—
whether it be with the economy or your assets.
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There are three things that I feel that you need in order to continue to grow your
wealth while also keeping you safe…and we are going to go over those right now.
1. You Need to Invest

One of the best ways to keep your money safe—while also growing your money—is
investing. I know this is counterintuitive, and it probably goes against most of what
you’ve been told throughout your life. Instead, you’ve probably been told that the safe
way to handle your money is to save your money. This is far from the truth.
The only real way to keep your money safe is to put it somewhere that you are confi-
dent that it will grow, and somewhere that is not affected by the change in the value of
U.S. currency.
When you put your money into savings, you are the most at risk when it comes to
inflation, the value of the dollar dropping and the market crashing. You are trusting
the banks to keep your money safe and to make the right decisions with your money.
We’ve seen what happens when you put too much trust in big banks…
Instead, you should be investing your money in assets that you know will continue
to have value…regardless of the state of the economy. That’s why I am a huge fan of
investing in real estate, as well as resources like oil. When I invest in resources like
oil, though, I don’t invest in oil company stocks. I invest directly in the oil wells them-
selves.
Having your money invested in actual assets will keep it safe, regardless of changes in
the value of currency. Even if the U.S. dollar fails, I’ll still own my land, my silver and
anything else that has real value.
Another way that I’ll invest my money is purchasing companies. And no, I don’t just
mean buying stocks. I will purchase companies that I see have value, but that the value
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that they have isn’t properly being leveraged. I’ll then turn the business around, make
sure it’s being managed properly, and turn it into a moneymaker. If the companies
that I acquire own the land that they are on, even better. Then I’ve both made an in-
vestment in a business and in real estate.
Sure, there are still risks involved in these sorts of investments, especially if you need
to leverage OPM to acquire them. Still, if you put the risk against the rewards of pur-
chasing mutual funds versus land and property that you can rent and make money on
for the rest of your life, I think you can see which will keep your money safe, and which
will be a better investment.
Don’t be tricked into giving all of your money to the banks with a 401(k), and don’t
let the government garnish your wages to put into an invisible social security account
that you have no actual guarantee will last until it is time to retire. Instead, save your
money the way that rich people do—with money making investments into assets that
will not just babysit your money, but will actually produce real wealth.
I can guarantee that pretty much every rich person that you can think of has their
money invested in businesses, real estate or other commodities. Do what the rich do…
invest.
2. You Need to Purchase Insurance

Let me tell you a quick, hypothetical story.
Let’s say that Jim decides to purchase real estate. Good idea! He purchases a nice plot
of land, gets his permits together and builds a house. When it’s ready, he rents it out
to a nice family.
To save a few dollars, Jim used budget contractors, and to save even more money, he
purchased an insurance plan for the house that gave just barely enough coverage to
be legal. He figures that since it was a brand new house, he doesn’t need to worry too
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much about spending money on higher priced insurance with more coverage.
What he didn’t know was that the contractors cut a few corners while building, and a
leak sprouts that floods the basement. Repairing the leak and repairing the damage to
the basement is going to be an enormous cost, so Jim turns to his “insurance” compa-
ny, who does everything but laugh in his face. He has to borrow more money to fix the
place, and the family moves out in the meantime. Now Jim is even more in debt, and
he has no renters to bring money in.
Jim had made a terrible mistake. He had underestimated the importance of proper
insurance coverage, and this cost him dearly.
Look, I’m just as much a fan of insurance as the next person—not a huge fan. But, I
understand the need and importance of insurance. Sure, it feels like you are throwing
thousands of dollars away, but if something goes wrong—and it often does—insurance
can mean the difference between a bump in the road and going completely broke.
When you have an extremely valuable asset, like real estate, you want to make sure
that it is covered—no matter what happens. This means buying good quality insurance
that properly reflects the area that you are in.
For instance, if you are in Florida, you’ll want to make sure that your insurance covers
flooding and hurricane damage. If you are in the woods, you’ll want to make sure that
you purchase insurance that covers forest fires.
Don’t wait until disaster strikes and then curse yourself for not spending the extra
money on insurance. Instead, factor in the cost of insurance. So, if you own real estate
and you are renting it, make sure that the renters are covering the cost of insurance
with their rent.
Insurance protects your assets, and gives you peace of mind when storms hit, when
natural disasters strike and when accidents happen.
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3. You Need to Continue Your Education
A financial education is one of the best tools that you can have to safeguard your wealth.
If you don’t understand finances, or if your financial education is limited, you’ll never
master money and you won’t be able to grow it as safely and efficiently as you could.
I highly recommend, as was recommended to me, that you learn about whatever in-
vestments that you plan on making, and that you stay at the forefront of that market.
When people ask me about real estate investment, I roll my eyes. Usually they’ll want
me to explain everything in one sitting, and then they want to turn around and get rich
off of the advice that I give them. While I can give you tips about real estate investing—
which I am currently—in order to become a real investor, you need to take courses and
learn about the business of real estate investment inside and out.
My rich dad was the one that encouraged me to look into investment courses, and I
took a big risk when I did. It was $385 for a three day course…but this was back in
the 70s, when I was making around $900 a month. I was extremely nervous, and I
thought I had made a huge mistake. Now I realize that this was the best investment in
my future that I have ever made.
Education is key to your success, whether it is in business or in investing. And I don’t

necessarily mean a college education either…I mean specialized training, mentorships
and hands-on experience all geared towards teaching you how money works in the
real world.
Once you learn the basics and you get started, you need to keep learning if you want to
succeed. The world of money changes fast, and you’ll want to stay on top of different
laws, changes in the market and new markets that are opening. This requires you to
pay attention, and to spend your free time looking for new opportunities. When you
get good at this, you’ll start seeing opportunities that others around you would have
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missed, and a lot of these opportunities can make you rich.
Now, I know I’ve mentioned real estate a lot as being a good investment, and you may
be wondering just why it is. Let’s discuss just that.
Why Real Estate Is a Great Investment

I’ve made a large percentage of my fortune off of real estate, as have many other rich
people. That’s because the rich know the value of real estate, and they understand
that it is one of the oldest and most valuable commodities. This has lead developers to
build all sorts of buildings that allow for them to maximize the value of their land, and
make millions of dollars in passive income.
When you think about something like a hotel, you may think of it as a business invest-
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ment…but it is actually a real estate investment as well. This again parallels the game
Monopoly.
Let’s say that you own a piece of land in monopoly, so you decide to build on it. The
last piece is a hotel, which makes you lots of money. This is because you are maximiz-
ing your land, by making money off what are essentially miniature rentals. Instead of
renting an apartment by the year, though, you are renting rooms for days or weeks at
a time, but you have a large collection of rooms that you can turn over almost imme-
diately.
So, the land itself isn’t necessarily making you a lot of money, but owning the land
allows you to build the hotel, and the hotel allows you to create passive income.
Whether it be renting a room or renting a house, the income that comes from owning
land is an amazing investment because it fills a need that has always and will always
be there…
People Always Need Real Estate

From warehouses to condos, people will always need land to build their lives on. They
will need land to raise their family, land to manufacture their goods and land to build
a store and sell their goods out of. While owning these businesses is profitable, owning
the land can be just as, if not more, profitable.
This is because even when there is no need for a particular business, and even when
families can’t afford their own homes, there will always be a need for land for a differ-
ent business, and there will always be a need for land for families to live on—even if
they have to rent.
Real estate is a lasting and intelligent investment because without it, people literally
have nowhere to live! Because most people can’t afford to own their own land, they
decide to rent, and this is where real estate investors really make their money.
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I want you to think about any business. Literally, any business. Even an online busi-
ness! What do they all need? Land. Even if you run a business online, you need some-
where to warehouse your goods, you need an office to work out of, you need some-
where to store your servers…this all requires land. Most businesses either can’t afford
to purchase the land that their building is on outright, though, or they want to save
money by renting out space. This opens up a business opportunity for those investors
intelligent enough to buy up good real estate, and use it to its full potential.
Investors Versus Traders

What keeps traders in the S quadrant is the way that they look at a plot of land. Instead
of seeing a goldmine of long-term wealth, traders see property as something that is
underutilized that can be fixed up and flipped. They purchase land because they see
value in the short-term, and because they think that they can make a good profit by
bringing out the potential in good real estate.
This isn’t necessarily wrong—you can make good money flipping real estate. When
you do this, though, you are still working for money, instead of having money work
for you. Your income isn’t passive, but instead you are actively seeking out property,
fixing it up, and then selling it. All of this takes work, and when it’s all over, you make
a certain amount of money (if you’re lucky). No more, no less.
Investors, on the other hand, see the same plot of land and also see the same potential,
but they don’t decide to stop at fixing it up. Instead of selling it once it looks market-
able, they decide to hold on to that land, and rent it out.
While investors generally don’t make the same amount of cash right out the gate that
traders do, the income for an investor keeps rolling in throughout the years. As the
value of the property goes up, and as the value of the surrounding area goes up, rent-
ers can raise the rent. With enough time, renters will end up making more than the
traders, and they’ll end up making that money passively. Instead of only getting paid
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when a sale is made, renters get paid monthly, when the rent is due.
Renters also have the opportunity to scale up, and create even more value. What was
once a motel may be torn down and rebuilt as a small apartment complex, allowing the
investor to make even more passive income, for years to come.
Because people will always need places to live, the investor will continue to have mon-
ey coming in…even during a bad economy.
Real Estate and the Crash

I can understand why, especially these days, people are afraid of real estate. After the
crash in 2007, people started seeing real estate as more of a risk than an investment,
and they saw thousands of people lose money, lose their jobs and lose everything.
Sure, the real estate market took a hit during the crash…but my wife and I actually
made money.
The reason for this is that we aren’t real estate agents or traders. We are investors.
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Whether the price of real estate is high or low, our real estate isn’t affected, because
we aren’t in the business of selling real estate. Instead, we own property and we rent it.
And do you know what people need when they lose their homes? That’s right…they
need somewhere that they can rent. No matter what, people need somewhere to live.
If they can’t afford it themselves, they rent. This is during any kind of economy—good
or bad.
If anything, a bad economy gives real estate investors an opportunity. Because prop-
erty values are so low, investors can buy up real estate at large discounts, then turn
around and rent that property out.
When you think of real estate, I want you to consider the crash, and I want you to con-
sider the way I just reframed it. Understand that even during a financial crisis, peo-
ple need somewhere to live. Actually, especially during a bad economy, people need
somewhere to live. If you own property, you own something that people need, and that
people will pay you to borrow (or rent).
Getting Into Real Estate

At this point, I hope you are excited about the idea of investing in real estate. Not only
is it a great investment, but it’s also a lot of fun. My wife Kim and I really enjoy buying
property, improving it and renting it out. We also enjoy the passive income it brings
us, and the standard of living that it allows us.
If you’ve been paying attention in this chapter, it’s probably a no-brainer… I would bet
you want to get into real estate! Well, while it isn’t something that happens overnight,
it’s something that you can begin working on starting today. I’m going to walk you
through how to get into real estate, so you can start taking the steps that you need to
take to become a real estate investor.
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Take Courses
The first thing I want to do is reiterate what I’ve told you before—take courses on real
estate investment! Sure, they may cost you some money, but it’s a worthwhile invest-
ment.
Don’t just throw your money at anybody and ask them to teach you, though. Make
sure that the teacher of the course has a good track record, and is a successful real
estate investor themselves. They should be able to show you their real estate portfolio,
and they should be transparent about the kind of money that they are making at it…
and how they are doing it.
On top of that, you’ll want to make sure that the course that you are taking is extensive.
The real estate investment course I initially took was a three day course. Don’t settle
for an hour or two lesson. Enroll in a seminar, and take full advantage of it. Be there
all day, every day until the seminar is over.
Also, make sure that you are taking investment courses and not broker courses. You
are trying to learn to invest in real estate—not sell it.
Put Your Own Money Away

When I started with real estate, I used a credit card to put a down payment on a piece
of property, then funded the rest with a loan. While this worked out for me, it may not
be the best method anymore—and it may not even be legal anymore. Keep in mind,
when I first became a property owner it was the 70s. Times have changed, and banks
are most likely going to expect you to have some skin in the game when you are initial-
ly getting into real estate.
You can either put money away from your current job, or you can do what we dis-
cussed earlier—start a business and use money from your current business as capital
for your real estate business. Either way you’ll want to put a good budget together, and
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make sure that you have put enough away that you can either purchase the property
outright, or attract a lender.
Other People’s Money

My favorite way to invest in real estate is with OPM. Actually, the less of my own mon-
ey that has to be involved in the process, the better.
I’m able to do this at this point, though, because I have a good track record, and in-
vestors trust me to take their money and build it. When you are first dealing with
OPM, you’ll probably have to put some of your own money forward as well. That’s fair
enough, though. They don’t know how successful you will be, and honestly, you don’t
really know either.
After a while, though, you start to build relationships with lenders and investors. The
better you do and the more you continue to nurture these relationships, the less of
your own money that you’ll be expected to provide up front.
Be prepared when you first get into real estate, though, that other people aren’t going
to want to simply hand over their money. You’ll need to show that you are trustworthy
by building your credit, putting your own money away to invest and showing them
how well prepared you are to effectively and efficiently spend their money in order to
make them a profit. Even then, you may need to shop around for the right lenders or
investors.
Making Money Work

Whether you are using your own money or OPM, you need to learn how to effectively
invest and grow your money through real estate, or other assets that will protect your
money. The best way to do this is by investing in your financial education, includ-
ing taking courses in real estate investing and spending your free time learning more
about whatever investment opportunities that you want to take advantage of. From
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there, you can start to build a new business around your investments, and you can
continue to acquire money through a passive cashflow stream.
Remember, though, that real estate investment isn’t about buying low and selling high.
That’s what traders do and traders are not investors. To get out of the S quadrants,
you need to treat your investments as a business, and you need to make sure that your
investments are able to secure your money, and also make you money. Stop trusting
the banks to keep your money safe. Instead, keep your wealth safe by investing it in
reliable assets that will give you the best possible return.
If you are able to properly invest your money, you’ll see it not only grow, but multiply!
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Rule #5: Building Your Team
One thing that every great businessperson has in common is that they have a strong
team of intelligent people around them. These people take on a variety of different
roles, all of which are extremely important in the success of the business. Without
the right team, no matter how intelligent or dedicated the entrepreneur may be, their
business will fail.
I learned from early on to pick only the best people for my team. I have excellent bro-
kers, lawyers, financial planners, accountants and I had the best mentor possible. All
of these people fulfill different roles, and take the stress off of me so I can focus on
other things.
Honestly, I know my limits. I’m not the best accountant in the world, and I wouldn’t
know how to defend myself in court against a lawsuit. What I do know, though, is how
to put together an excellent team that can do the heavy lifting for me.
In this chapter, we are going to discuss why you need a team, how to build a team and
what your team should look like. I want you to be able to assemble a team that will not
only lead to your success, but also keep you successful.
First, though, let’s discuss why you need a team in the first place…
Why You Need a Team

As I mentioned, your team will help to fill in a lot of the gaps when it comes to things
that you either don’t know how to do, or don’t have time to do. Saving you this time
allows you to focus on what you are good at…which is growing your businesses and
investments.
Think about it this way—if you own a line of grocery stores, could you run a cash reg-

ister? Probably. Could you sweep and mop? Sure. Could you do all of these jobs in one
store? No way. Could you do this in all of your stores? Of course you couldn’t, that’s
impossible. You simply don’t have the time.
So what do you do? You hire people to do the work for you. You hire people to run the
registers, stock the shelves, sweep the floors and so on. But what about managing the
employees and running the stores? Well, that’s why you hire managers. These people
help to oversee the employees and the day-to-day operations.
It doesn’t stop there, though. Let’s continue with the grocery store example. Let’s say
that someone is shopping at your grocery store, and they slip on a puddle from a re-
frigerator that stopped working suddenly. Then, let’s say that person decides to sue.
Are you a lawyer? Probably not. So, you’ll need a lawyer to handle these sorts of law-
suits. You’ll also need lawyers to handle other matters, as different lawyers specialize
in different things.
As you are making money with the grocery stores, you’ll need someone to make sure
that your money is being managed properly. This is where an accountant comes in.
You’ll also want to expand, and to do this you’ll want a great real estate broker to find
you good plots of land, or existing grocery stores to buy and add to your empire.
You’ll need financial planners, secretaries, clerks, lawyers, brokers, accountants, law-
yers…you’ll need a full team of people working under you!
Outside of your employees, though, you’ll also want someone that’s been there who
can point you in the right direction. This is your mentor. Let’s say your uncle ran a
chain of grocery stores, so you can to him with an idea for your own chain. Not just
your own store, either—your own chain of stores (you need to always think BIG).
He may say, “Yes,” he may say, “No.” If he says, “Yes,” though, you’ve found yourself a
mentor! If you listen to him and take his advice, your grocery store chain is much more
likely to be successful. Even if it isn’t, he can help to talk you through your failure, so

you can start again with a higher level of financial and business intelligence.
The right team will help you with everything from handling frivolous lawsuits to han-
dling other people’s money. This is why it’s extremely important that you pick the
right people for each job.
Finding a Great Mentor

The right mentor can mean the difference between your success and failure in busi-
ness and investing. Can you succeed without a mentor? Sure. But, you’re missing out
on the wisdom of someone that has been there, and has probably made the mistakes
that you are likely to make.
A good mentor can save you hours of time, and thousands of dollars in lost profits by
simply instilling certain lessons and giving you certain tips that you would have other-
wise had to discover the hard way.
But how do you go out finding a good mentor?
While you know about my rich dad, I’ve had other mentors before throughout the
years in different areas, and I’ve found that there are certain ways to go about finding
a mentor, finding the right mentor and asking them for their guidance.
Let me mentor you in finding a mentor!
Here are some things that you’ll need to know in order to find the perfect mentor for
your business or investment ventures…
Be Willing to Ask for Help

If you are already bucking the idea of finding a mentor, you are starting off on the
wrong foot. You need to be open to the idea of someone guiding you, and you need to
be willing to ask for help if you want to find a great mentor to guide you.

Mentor’s generally don’t go out of their way to find you, and even if you have a poten-
tial mentor around you, they probably won’t unless you ask. They may even see you
struggling, but they know that they can’t teach you if you aren’t willing to listen.
In order to ask for help, you’ll need to…
Swallow Your Pride

If you are the kind of person that thinks that you know all of the answers, close this
book! There is no reason to read it if you already know how to be successful, and if you
already know the rules of money. I don’t want to waste your time.
Otherwise, you are here to learn, and in order to learn, you need to learn to swallow
your pride. There are people out there that know how to get to where you want to go,
and you need to be willing to swallow your pride and ask for their help.
Don’t try to make it on your own because you want to show that you have grit or that
you are smarter than everyone else. It’s okay to take the easier route, and it’s encour-
aged to understand that you aren’t the wisest person in your field.
Sure, someday you may know how to be successful in business and/or investing, but
that day is not today!
Find an Expert
Imagine that you were trying to learn how to drive, and your teacher was a fourteen-
year-old that had never driven a car before in his life. Having unqualified people giving
you advice is similar to that.
While there may be conventional wisdom about how to grow wealth, as we’ve dis-
cussed, this conventional wisdom is wrong. If it was right, everyone would be rich!

In order to become rich and excel in whatever venture you decide to move forward
with, you need to make sure that the person you are asking for advice has already
been there…and been successful. If you get your advice from someone that hasn’t been
successful yet, or doesn’t know anything about what you are looking to accomplish, all
you are getting is a series of guesses and generic advice.
The most common mistake most people make is taking financial advice from poor
people.
Instead, you’ll want to find someone that is well-established in the field of big business
or investing that can show you how to succeed, how to make money and how to hold
on to that money.
Where to Find an Expert

Now, these people aren’t always the easiest people to find, or to get ahold of. A lot of
them are busy with their own ventures, and they’re probably not be actively looking to
be a mentor. If you know someone that is successful, though, great! You can ask them.
If not, here are some ideas of where to find a mentor:
Ask Around
You may not directly know anyone who would make a great mentor, but someone that
you know may. Ask other successful people in your social circle if they have a friend or
relative that is successful with business and/or investing. Then, see if they are willing
to connect the two of you.
Reach Out Directly

If you are looking for the people that are the absolute pinnacle of their respective field,
you probably won’t get through to them. For instance, Donald Trump probably won’t
take a cold call about a mentorship. But, there are people in your community who are
very successful, and to whom you can learn a lot from.

Pick up your phone and call them. If you don’t get through, leave a voicemail, or a not
with their secretary. If you still don’t hear back from them, send a follow-up email.
Add something about providing value and not just asking for a favor.
If after a week or two they don’t get back to you, move on. Keep at it, though. Don’t let
one rejection stop you!
Your Chamber of Commerce

Your local Chamber of Commerce may be a great place to find your mentor! They
generally hold events that you can attend, seminars or even classes on business. When
you are mingling with the best business people in your area that are also willing to
give back to their community, you’ll be much more likely to find a mentor that wants
to help you to succeed.
Local Community College

While your local college may be a mess of red tape and bureaucracy, your local com-
munity college is an accessible resource that can be tapped to find an excellent mentor.
Speak with their business department and see if they offer mentorship programs with
local businesses professionals.
Prepare for Rejection

Let’s say that you find a potential mentor that you feel would be the perfect fit. You
reach out to them, and they either don’t respond or say, “No.” Then what? Well, just
like in sales, you won’t always hear the word, “Yes.” You can’t let this rejection stop
you, though. Successful people don’t stop at failure, they keep working at whatever
they are trying to accomplish until they get the job done.
You may even find that someone is willing to take on a mentee, just not you in partic-
ular. This is okay too. Maybe they don’t feel like your goals are in the same place, or

they just don’t click with you personally. Whatever the reason may be, let it slide off
you like water on a duck’s back.
If you keep at it, you’ll find an excellent mentor that is a good fit, who will say, “Yes.”
Give Value, Take Value

Mentors find mentorships valuable—just like students do. Mentorship allows them to
pass along their wisdom, question their current beliefs and even get a helping hand
on some projects that they are working on. Students shake things up a bit, ask ques-
tions and force them mentor to better understand the logic behind their actions. While
sometimes this can be annoying, other times in can be enlightening. Often, the men-
tor will end up learning something from the student by the time the mentorship is
through.
In order to take value from your mentor, you need to be willing to give it back in re-
turn. Mentorship shouldn’t be a one-way street. Make sure that you help your mentor
out in whatever way you can…even if that simply means listening and taking notes.
Use What You Are Learning

There is no greater slap in the face to a mentor than not taking any of their advice.
They are taking time out of their day to help you to learn and excel, so they expect to
see some form of progress. If you aren’t planning on taking anything that they are say-
ing and putting it into action, don’t waste their time.
If you do utilize the advice they are sharing with you, you’ll find that they’ll want to
continue the mentorship. The goal is to find a long-term mentor, not just someone
that you interview for an evening.
A Great Place to Start

Mentors are a great place to start, and should be one of the first members of your
team. They will help you to learn, grow and put together the right team of individuals
that will propel you towards success.
I was lucky enough to have my rich dad to show me the ropes, but I know that if you
follow the tips I’ve given you, you’ll find the perfect mentor as well.
Finding a Great Financial Planner

A good financial planner is an essential part of your team, as they will help you to
properly care for your money. While they aren’t the same as your accountant that is
helping you to keep the books, they will help you with achieving your financial goals
by helping you out with budgeting, estate planning, investing, tax planning and more.
In order to make sure that you find the perfect financial planner, you’ll want to know
how to shop for the perfect person to fill the position.
Here are some things to consider…
What to Ask Your Potential Planner

Most financial planners will give you the option of a free consultation, and it’s ex-
tremely important that you take full advantage of it. You don’t want to simply walk
in, listen to what they have to say and then trust your gut. Instead, you’ll want to have
some questions prepared to make sure that this financial planner is right for you.
Here are some things that you’ll want to consider asking them:
• Do you have a specific area of expertise, or type of business that you work with?
• May I see a copy of your ADV form, part II? (This will show a basic background
of the financial planner, including whether they have gotten in trouble with

regards to regulations or the law).
• How often do you provide statements?
• May I see an anonymous sample of the work that you’ve done for other clients?
• What qualifies you above other financial planners?
• Are you a CFP? What about a CFA? (We’ll go over these in a moment)
•
These questions will help you to make a more informed decision as to whether or not
this person is a good fit to handle your money.
Credentials
What most people don’t realize is that you don’t have to be certified to be a financial
planner. When you are looking for a financial planner, though, you’ll want someone
that is certified. This shows that they have extra experience, and that they’ve at least
undergone some form of training.
There are two different types of credentials that you’ll want to consider…
CFP Training – CFP stands for certified financial planner. In order to get this certi-
fication, you need to have completed a course and passed a two day exam that covers
a variety of topics, including taxes, estate planning, insurance and investments. You
also need at least three years of experience to get this certification.
CFA Training – CFA stands for chartered financial analyst. This differs from a CFP in
that you need more experience to get this certification, and you need to be able to pass
an exam that goes over everything from accounting and economics to ethics.
Make sure that you find a financial planner that has at least one of these two certifica-
tions to help ensure that your money stays safe.

Payment
While you may think that hiring a financial planner is as simple as paying them an
hourly rate, this isn’t always the case. Sure, some planners charge hourly, but others
will charge a flat fee, commission or even a mix of these. For instance, some will charge
a flat fee for one specific service (like a consultation fee), while taking a commission on
other services (like investments that you worked with them to purchase).
While there isn’t anything necessarily wrong with the different ways that a financial
planner may charge, it’s better to have this information ahead of time so there are no
surprises.
Reputation
If you are able to find a good financial planner that has been recommended by a busi-
nessperson that you trust, that’s even better!
It’s good to ask around and see if you can find a reputable financial planner, or ask
around if you’ve found a prospect to make sure other people have not had negative
dealings with them. The last thing that you want is to have someone handling your
money that has a bad reputation with other people’s finances!
What Are THEY Doing with Their Finances?

Asking someone about their finances is a personal question, but it is something that
you should consider when hiring a financial planner. Before you allow someone to
handle your money, you should take how they handle their money into consideration.
If they are upfront with you and are happy with the way that they are handling their
own money, this is a good sign. If they are going broke, though, you may want to look
elsewhere.

Find Someone You Can Trust
At the end of the day, you are trusting someone with your money, so you’ll want to find
someone that you can trust. If you look at the different areas that I’ve just outlined,
you’re sure to find a qualified financial planner that will work wonders with your mon-
ey!
Finding a Great Broker

In order to find a good broker, you must first start with an understanding of what a
broker is. Essentially, brokers are salespeople for real estate, stocks, bonds, insurance
and so on. These are all important financial decisions, and because of that, you’ll want
to make sure that you have a good broker.
My rich dad once told me that they are called brokers because they are often broker
than you. While this is true for discount brokers, if you can find high-end brokers that
practice what they preach, you can make a lot of money using their services.
Discount Brokers
First and foremost, before we get into what a good broker should look like, I’d like to
discuss with you what a bad broker looks like.
Some people decide to go through discount brokers because they are less expensive.
Like the old saying goes, though, you get what you pay for. Discount brokers aren’t
interested in you, and they don’t care about your financial strategy. Actually, many
discount brokerages don’t even offer you the same broker from one transaction to the
next!
Don’t waste your time and money with someone that doesn’t care about your financial
success.

Why Good Brokers Are Hard to Find
The trouble, though, is that most good brokers won’t even speak with you unless you
have enough money in the bank. They want to be successful as well, and in order to do
so, they need to work with clients that will give them a good commission.
Kim and I needed to find a broker early on, and we knew that it would be tough be-
cause we didn’t have a whole lot of money. That’s when we decided that we wanted to
look for a younger stockbroker that wanted to grow with us as clients. We knew that
if we could find a stockbroker that was first breaking into the business, they would
charge less and be more likely to spend time working with us instead of just trying to
sell us stuff.
Tom and John

It was through a friend of a friend that we found Tom, and we were glad we did! He
was willing to take us on as clients with only $25,000 to spend, and within fifteen
years he turned that into millions of dollars.
Tom was our stockbroker, and we trusted him with our stocks, but we also knew that
we wanted to get into real estate. Enter John. With just $5,000, he grew our real es-
tate portfolio to $250,000 in just three years, and this was in a time and place that
real estate wasn’t doing too well. We now have tens of millions of dollars in real estate
holdings.
The Difference Between Good and Bad Brokers

Something I often repeat is that good brokers will make you rich, while bad brokers
will make excuses. In order to find the right brokers, you need to be informed about
stocks and real state, and you need to be able to see through the schemes of a bad
broker.

You should also look for brokers who actually care about their field. Tom and John
both are studious and continue to learn about their respective fields. Beyond that,
though, they actually put their money where their mouth is. If they are willing to put
their own money towards what they are selling you, that’s a good sign.
If you find a stockbroker that doesn’t have any stocks or a real estate broker that has
no stake in any real estate, then you should avoid these brokers! They are too afraid to
take their own advice, so you shouldn’t take it either!
Finally, you want to find brokers that actually want to see you succeed, and want to
build a relationship. As I discussed a moment ago, discount brokers don’t care about
your goals or your finances. They want to make a buck. You’ll want to look for brokers
that want to help you to grow your business, and make some money along the way.
As with financial advisors, make sure your potential broker has their credentials.
Finding a Great Accountant

Accountants are necessary to handle your finances and make sure they are going to the
right place. They can keep track of what is coming in and what is going out so that you
don’t need to spend all of your time bookkeeping and worrying about who and what
has been paid and who and what hasn’t.
For instance, a great tax accountant will help you to pay the taxes that you need to pay,
while avoiding pitfalls you may have otherwise fallen in. This is particularly import-
ant, as tax evasion—whether on purpose or by accident—is a serious crime. Not paying
your taxes can lead to an audit, which at the minimum is an inconvenience, and at the
most can end with you serving jail time.
The Difference Between an Accountant and a Financial

Planner

While it may be difficult to see the difference between an accountant and a financial
planner on the surface, they actual fulfill two very different services. Your financial
planner will help you to put your money in the right place, while your accountant will
let you know if you have enough money to make the decisions the financial planner
suggests.
The two should work together to help you to figure out what investments are feasible,
what form of growth is possible and so on. You’ll want to have both of them on your
team, but you need to understand the two different services that they provide, so you
don’t waste their time with questions that the other should be answering.
Other Services Provided by an Accountant

A good accountant doesn’t just help you during tax time and with bookkeeping. They
have a variety of other services that they can provide, and you should be prepared to
reach out to them if these different services are needed. They include:
• Helping you to find tax deductions.
• Walking you through an audit, should one occur.
• Separating your business and personal finances.
• Walking you through your financial statement.
• Making sure you send out W2 and 1099 forms at the right time.
Make sure when you hire an accountant that they are able to fulfill these different
services. You want to make sure that your accountant can help you with a variety of
different financial issues, if and when they occur.
Finding Great Lawyers

Lawyers here is plural because it’s very likely that you’ll need different types of lawyers
for different jobs. No matter what legal counsel they give you, though, you’ll want to

make sure that they are proficient at their job, and will be able to save the day when
the time comes.
Some of the different types of lawyers that you’ll want on your team are:
• Business Lawyers. They help you with legal documents related to your busi-
ness, as well as the legal end of other business matters.
• Real Estate Lawyers. These lawyers help you to navigate real estate contracts.
• Tax Lawyer. Tax codes can be pretty complicated, and this type of lawyer can
work with your accountant to make sure everything that you are doing is legal.
• Intellectual Property Lawyers. The last thing that you want to do is step on
another business’ toes and get sued. Intellectual property lawyers help you to
navigate copyright, trademark and patent law.
• Premise and Product Liability Lawyers. If your business has a physical loca-
tion with customers, or if you produce a physical product, these types of law-
yers will keep you safe from frivolous lawsuits due to claimed injury.
Now that you have an understanding of what different types of lawyers do, let’s look at
how you can go about finding the perfect lawyers for your team.
Searching for the Right Lawyers

There are a few different ways that you may end up finding your attorney, such as
through a referral, looking them up online or networking. Even if you have been re-
ferred to a particular attorney, though, you’ll want to do a little research into them to
make sure that they are the right fit for you.
If you are looking for referrals you may want to speak with other business owners,
investors or even members of your own team. For instance, your mentor may have a
team of excellent lawyers that they can introduce you to. You can also ask other mem-
bers of your team for lawyers that they are already working with.

As an example, your accountant may have a buddy that is a tax attorney, and they may
have experience working together on corporate taxes for different businesses. Since
they already have a rapport and have worked together successfully in the past, this
may be a natural fit.
Take referrals into consideration, but ultimately go with who you think would be best
for the job. You won’t hurt anyone’s feelings if you don’t go with the particular lawyer
that they suggested.
Also, have a few backup choices ready, because even though you may feel like they are
the perfect attorney, they may not feel like you are the perfect client. They may not
have any openings for new clients, or they may charge an amount for their services
that is out of your price range. Having an extra option will help you to feel more com-
fortable and confident when speaking with a potential lawyer, and will soften the blow
if your first pick doesn’t work out.
Another important thing to check is their record. You want to make sure that you are
on the winning team, and that you are spending your money wisely. You may save a
few extra dollars on a lawyer, for instance, but then find out that they have lost more
cases than they’ve won.
Don’t be cheap when it comes to hiring a lawyer. Sure, you may have a budget, but
you don’t want to hire someone that is going to lose in order to save a few bucks. Keep
in mind lawsuits can be expensive, and losing them can be even more expensive. Be
preemptive and spend a little extra on your lawyer to save you money on paying out
on lawsuits.
Synchronicity In Your Team

When combined together, your team should flow in an excellent harmony. Each el-
ement should complement the other, and they should all have similar goals when it

comes to your business.
Certain members of your team will be interacting with each other, sometimes fre-
quently, so you’ll want to make sure that they get along—or can at least work together
well. While you may have two separate individuals who are great at their respective
jobs, if they can’t come together when you need them to, this can spell trouble for your
business.
You will also want to make sure that your team and you are on the same page, and that
they understand your wants, needs, goals and values. The last thing you want is for a
team member to make a decision that doesn’t reflect well on your company, or that
you are morally opposed to.
There are varying degrees with this, of course, and certain members of your team may
have little influence over the way your business is perceived, while others can really do
damage to both your business and your brand.
By picking the right team and putting your trust in the right people, you’ll find that
your business and investments will continue to run smoothly in the background as you
work on new ventures.
TRUST Your Team

The last thing I want to mention is the need for trust in your team. Once you have
picked the right people, and you are sure that they understand your goals, values,
needs, etc., you need to actually step back and let them do their job.
Micromanaging your team will only exhaust you, cause your team to be resentful
and waste valuable time that could have been spent building your business. Let them
have the autonomy that they deserve, and unless they are doing something way out
of bounds, let them make the day-to-day decisions that you are paying them to make.
If you can pick the right team and put your trust in them, you’ll be set up for success.

H o w T h e R u l e s A r e I m pa ct e d B y
A G l o b a l Ec o n o m y
Over the years, the world has grown significantly smaller. Communication that once
took weeks is now instant, trade deals that took long trips overseas are now possible
on video chat and currency has become easily exchangeable. Global commerce has
overtaken domestic commerce, and most companies now rely on some form of global
product or service.
With these changes have come new competitors, new markets and new ways of doing
business. While these changes do need to be accounted for, the rules of money—at
their core—have not changed. Instead, they had evolved, growing in scale and com-
plexity.
This isn’t necessarily a bad thing. In fact, it’s a good thing. Sure, you may need to open
yourself up to new types of commerce that twenty or thirty years ago you wouldn’t have
H o w T h e R u l e s A r e I m p a ct e d B y A G l o b a l Ec o n o m y 145
had to worry about, but at the same time, it also opens up opportunity. With overseas
countries growing in technology and going through their own economic booms, op-
portunities have opened everywhere for new business deals, as well as cheaper labor.
Overseas business has also allowed for overseas banking and incorporating of busi-
nesses, which has attracted a lot of different companies to move to different countries.
The first thing I want you to understand about the global economy, though, is that you
will still need to grow your financial intelligence…just in a different way.
Global Intelligence
Where before you could get away with domestic financial intelligence, these days you
need to be aware of the world market, international trade deals and utilizing offshore
laws to protect your money. It’s not enough to grow your financial intelligence any-
more. Now, you have to grow your global financial intelligence.
What I mean by this is that you need to learn the five rules that we’ve been discussing
throughout this book, and then you need to learn how to expand those rules so that
they fit into a global economy.
Yes, this is going to be more difficult. But, at the same time, you’re going to be able
to make so much more money than was previously possible, and you’ll have so many
different global resources available to you.
Because of this global economy, though, other countries have joined the party, and are
growing at incredible rates. This is creating extra competition, which means both an
opportunity to join forces and make a good profit, as well as another competitor that
may come into play.
One of these countries that has entered a boom is China.
The China Boom
In the book Why We Want You to Be Rich that I wrote with Donald Trump, Donald
discusses China’s emerging and booming economy in a way that is both interesting
and a bit threatening. Not in a combative sort of way, but in a business sense. China
was already becoming an economic world power when that book was written, and it’s
not showing any signs of slowing.
What started as one Starbucks in China became a boom of more Starbucks than there
are in America in two years. One skyscraper in Shanghai became a skyline. Small in-
dustry became big business, and now that the Chinese have had a taste of capitalism,
they want more.
They aren’t the only country, though. Many developing countries have discovered
what the western world has known for years—that capitalism is the superior economic
system.
While for consumers this means lower prices, for businesspeople this means more
competitors, but also more opportunities to strike deals and make money. Instead of
fighting other economies, many smart businesspeople have begun joining forces to
outsource labor, join resources and make a killing.
While Donald Trump has always been about America first, even before he was the
president, he like any other businessman understands the importance of trade, com-
merce and good business relationships with foreign companies and powers.
If you want to grow your financial intelligence, you need to boost your global finan-
cial intelligence as well. This is the only way that you’ll survive in this evolving global
market.
Connected Economies
Another byproduct of a global economy is the merger of multiple economies into one
major economy. While this is helpful in a variety of ways (like using a universal cur-
rency), it can also be disastrous.
After the housing and market crash in the mid-2000s, the global economy took a mas-
sive hit, and even today countries are affected by that hit. There was a massive, world-
wide crisis, and it was the fault of a global economy that relied on one of the major
superpowers, America, to stay afloat.
A hit to the U.S. economy can mean a hit to the rest of the world, but unlike the rest of
the world, we have the ability to bail ourselves out. This is because currently the U.S.
dollar is the worldwide currency, allowing us to print more money and save ourselves
if need be. This is also extremely dangerous, because if the world economy ever goes
off of the U.S. dollar, we can go into massive debt and hyper-inflation.
This is a large part of the reason that I invest in assets, and don’t rely on currency. I
know that at any point in the near future, the U.S. dollar may become obsolete. When
this happens, our money becomes essentially worthless, and we are left with only our
assets to survive off of.
Keep in mind that the Pound Sterling was the primary reserve currency for a long
time. Then it took a hit, and the U.S. dollar took over.
Things change, and no matter how powerful the U.S. is today, you never know what
is going to happen tomorrow. That’s why it’s important to keep your eye on domestic
and foreign economics, and not trust savings, 401(k), bonds or anything else tied up
directly in the U.S. dollar.
Prepare to Go Global
Unless your business is tied down domestically, prepare yourself to go global at some
point. You’ll want to take advantage of foreign tax laws, banking laws and debt if you
want to continue to both make money, and hold on to the money that you make.
Almost every major company that you know has gone global, and even the ones that
seem like they are domestic are often subsidiaries of a larger, global entity. Take Bud-
weiser for instance. Anheuser Busch was bought out by InBev in 2008, which is a for-
eign company, but they continued to sell themselves as an American, domestic beer.
Most beer drinkers were none the wiser.
Globalization isn’t something to be feared—it should be embraced. That is, as long as

a free market reigns, and the market is limited to legal products and services. Many
companies have made billions of dollars from going international, and it with this
mindset that you should enter the modern market.
Money in an International Market

In a five year period, cell service provider Verizon received a total of $732 million in
tax refunds from the IRS. That wasn’t a mistake or a grammatical error. I said a re-
fund. That means that not only did they not pay taxes, but the U.S. Government actu-
ally ended up paying them.
Citigroup (you may know them from the 2008 collapse) also avoids paying billions—
yes billions—of dollars in taxes, even after the financial crisis when they were bailed
out by the U.S. taxpayer.
I’m sure you’ve heard of a long list of companies that have gotten flack for being tax
dodgers, but how do they get away with it? How do companies like Apple, one of the
biggest companies in the world, avoid billions of dollars in taxes?
The answer comes in a few different parts, but a large portion of it comes down to
leveraging a global market to move money around in a way that keeps it safe from
the gigantic U.S. corporate tax rate, as well as other laws that would tax companies’
earnings.
If you haven’t owned a corporation, then you may not know that in the United States,
the corporate tax is 35%. That’s right…35%! This has actively dissuaded some of the
biggest corporations in the United States (and the world in general) from parking their
business in the U.S.. Because of this, the IRS isn’t entitled to their tax dollars. We’ll get
to that in a second.
Before we get into how corporations save money internationally, let’s talk about some-
thing that you may already be taking advantage of—tax write-offs.
Exemptions and Credits

Just like individuals, corporations are able to take advantage of tax credits and exemp-
tions. Because they work with the government to write the laws, though, they are able
to write off more than you’d think, and take advantage of a series of loopholes that
were built for the rich to pay less in taxes.
Companies will work with their accountants and tax lawyers to make sure that every
dime possible is written off, and from there they will see how they can avoid taxes on
what is leftover.
Is this fair? Well, does it matter?
If you want to make more money and be successful in business, do you want to be
weighed down by additional taxes, when you can legally write off a lot of your ex-
penses? Furthermore, if you have the ability to take that money and create jobs, make
money for your shareholders and grow your company, wouldn’t you want to take it?
Big business and corporations aren’t the enemy because they know how to play the
game better than the average poor person. This ability to navigate the tax code (or at
least pay people who know how to) is part of what keeps the rich wealthy, and allows
them to grow their wealth.
As you grow your own business and investments, don’t be afraid to take advantage of
the exemptions and credits that are due to you. Just make sure that you are working
with a good accountant so that you don’t end up in the doghouse for not paying a cou-
ple of hundred dollars that you owed.
Overseas Banks
Overseas banks are a longstanding tradition for the rich—so much so that it’s become
a cliché. You’ve probably heard people talk about “Swiss bank accounts” and saving
money in the Cayman Islands. The rich don’t do this just to have a laugh, though. Stor-
ing your money overseas has a few different, but very important benefits.
The first thing that you’ll want to consider is the lower levels of income and estate tax-
es that certain countries offer. Storing your money for these reasons, though, can lead
to inquiry from the government for tax evasion, so if you decide to go this route, you’ll
want to work closely with your tax attorneys and accountants.
Another reason to store your money overseas is the fragility of the banks in any partic-
ular country—including the United States. As we’ve seen before, the banking system
can fail, and the last thing that you want is all of your money trapped in one bank when
they go under. This diversity gives you peace of mind, and helps to keep your money
safe.
Finally there is asset protection. While storing your money overseas doesn’t fully pro-
tect you from lawsuits, it does make you less of a target. It also helps to keep your
assets from being frozen by the U.S. Government.
Keep Your Money Safe

Overall, keeping your money overseas and keeping the government away from your
money is a good business decision, which is why the biggest countries in the world do
it. It’s no coincidence that competitors like Apple, Google and Microsoft all have the
same ideas about what they want to do with their money.
Once your businesses or investments become large enough that they need to be pro-
tected, start shopping around internationally for the right banks that you can save
your money at, and the right countries to keep your corporate tax rates low.
International Debt
Those two words together sound terrifying to poor people. To people that don’t under-
stand debt, the only thing worse that having debt in the United States is having even
more debt overseas. To the rich, though, international debt is a part of business.
When your company goes global, you allow yourself to both have even more access to
lenders, but also investors. Instead of looking for people and companies in the U.S.
alone, you can take money from overseas investors. This allows you to significantly
increase the amount of money that you are able to raise for your businesses or invest-
ments.
Banks are also lending money to non-natives these days, which allows you to access
additional lines of credit. This has allowed companies to expand not only in the U.S.,
but also in other countries, with a lot more ease.
How to Treat International Debt

International debt should be treated the same way as any other form of debt—with
care and respect. Even if the money that you are taking out is in another form of cur-
rency, it’s still money and it still leaves you open to recourse. If you think you can’t get
sued over international borders, you’re in for a rude surprise.
You are just as accountable to your international investors and lenders as you are to
your domestic investors and lenders, and your loans with foreign banks are just as
serious as your loans here at home. Because of this, you don’t want to take advantage
of international debt if you don’t have the resources to pay it back.
Why International Debt?

There are a couple of reasons why international debt is appealing to companies and
investors.
The first reason is that international investors mean more access to money. Instead of
being limited to around 320 million people in the U.S., international investing opens
you up to the whole world. Obviously billions of people won’t be able or willing to in-
vest in your company, but the point still stands—you’ll be able to access many more
investors that can help you to grow your business or investments exponentially.
The other reason is for additional lines of credit, but do keep in mind that internation-
al banks will be weary of giving you money if they don’t see a reason for you to take
out the loan internationally. Usually this will mean some sort of investment into their
country, and spending within their borders. Different countries have different laws, of
course, and you’ll want to do your research into the laws of each individual country,
and why you may or may not want to take out bank loans there.
Going International
Going international is easier these days than it has ever been. Whereas before you
needed to network overseas or with overseas clients, because of new social media plat-
forms and online businesses, it’s easier than ever for international investors to con-
nect with companies all over the world to invest their money.
If your company would benefit from international investors, make sure you study the
laws involved, and you go through credible companies to broker the deal and handle
the transfer of money. From there, you can start building, and your investors can start
seeing a return.
Foreign People’s Time
The last thing that I would like to discuss in this chapter is a form of OPT that compa-
nies big and small have started utilizing—foreign people’s time. When utilizing foreign
people’s time, you have access to many talented people from all over the globe, a lot of
which that will work for a fraction of what Americans will work for.
While for years companies have gotten in trouble for exploiting cheap labor, others
have found that there are ethical ways to produce their products and services for a
lower cost, without having to build sweatshops.
There is a belief—an incorrect belief—that all foreign labor is unskilled labor. In real-
ity, there are overseas markets for everything from accounting to graphic design and
more that can be accessed online, easily. This has led smart businesspeople to hire
freelancers from overseas to get the job done for a lower price.
While for some of my employees and subcontractors I hire Americans, others I hire
overseas. I don’t think there is anything inherently wrong with this, as business has
gone global, so it makes sense that employment should go global as well.
Here are some things to consider…
More for Less

As we just discussed, hiring overseas means getting more work done for less money.
The only other reason you would hire overseas is to get the work of a specialist that is
the top in their field.
Back when I was producing wallets, I had workshops overseas, and I paid my employ-
ees fair wages for their countries. Sure, they weren’t American wages, but they didn’t
need or ask for American wages to get the job done.
The same goes for everything from freelance writing to designing a logo. Many foreign
workers will do an excellent job for you at a lower price, because their cost of living is
lower. They also know that they can compete better on the global scale with great work
and lower prices.
What you need to keep in mind is that no one is forcing these people to go online and
find work doing graphic design for lower-than-American wages. They possess a valu-
able skill, and they are able to work for wages that they find equitable.
Especially when you are starting out, you’ll want to consider foreign subcontractors
for projects that would cost you a fortune if you hired American.
This probably leaves you wondering where to find these people…
Hiring Online
Because of the boom of overseas talent with the advancement and accessibility of tech-
nology, companies have arisen to meet the needs of employers looking for low-cost,
high-quality labor. Freelance websites popped up and filled a gap in the market, allow-
ing employers to connect with foreign freelancers like never before. This connection
has led to companies saving thousands of dollars on labor, and freelancers supporting
themselves and their families with skilled labor.
When you are looking for high-quality labor at great prices, you can become a member
of one of these freelancing websites, and post about projects that you need done. You’ll
then receive quotes, and you’ll be able to review the freelancer’s portfolio before you
make a decision.
Instead of having to seek out subcontractors, you have subcontractors looking for you.
Better yet, they actively try and underbid each other, allowing you to get amazing work
done at unbelievable prices.
Sure, you may have to deal with time zone differences, and there may be a few lan-
guage barriers, but if you can move beyond those issues you can find access to great
labor at low prices.
The Future is Global

The future of business and investing is global. It no longer makes sense for companies
to be isolationistic, and more and more companies have found the advantages of the
global market, global banking, global tax laws and global labor.
In order to compete with the changing economic landscape, you need to learn to nav-
igate online resources for hiring, as well as handle money and business overseas. This
will open you up to new opportunities that will make you richer than you could ever be
if you tried to keep your business domestic.
Don’t be afraid of taking your business to our neighbors (like Canada and Mexico),
and don’t be afraid of taking it overseas. You’ll find that global commerce has become
accepting to companies from all over the world, because no matter what country inves-
tors or businesspeople are from, they all want the same thing—to attain more wealth.
T h e 5 R u l e s T h at Wi l l C h a n g e
Y o u r Li f e
The rich have built their wealth and stayed rich using a certain set of rules that poor
people have never really had direct access to. Sure, a poor person could read a bunch
of books and piece the rules together, or if they were lucky enough they could find a
rich mentor and learn the rules from them, but otherwise the rules have remained a
carefully guarded secret to keep competition out, and keep the rich shrouded in mys-
tery.
I believe that people should have the tools to make their lives better, which is why I
have gone over the 5 money rules the rich have mastered with you. I want you to be
able to build your own wealth, and keep it, by becoming rich.
Here’s the catch, though:
I believe in you having the ability to become rich, but I don’t believe that you automat-
ically deserve to be rich. I am giving you these tools knowing very well that many of
you will never actually put them into practice. I know it’s a bit late in the book to tell
you this, but this book wasn’t written for those people. Instead, it was written for the
people that believe in their own ability to succeed, and that will take these rules and
use them to create a better life for their family, the next generation and themselves.
Let’s take a moment to review the five rules so they are fresh in your head when you
finish reading this book…
Rule #1: Protect

With the first rule, you learned how to protect your money. In order to stay rich, you
need to learn how to hold on to as much of your money as possible, and that’s what
this rule is all about.
T h e 5 R u l e s T h a t Wi l l C h a n g e Y o u r Li f e 157
In order to protect your money, you need to have a good understanding of taxes, and
how to leverage the tax code to keep your money, instead of giving it all to the govern-
ment. A lot of this is done through spending, which keeps your money in circulation
and away from the government.
You also learned about the difference between earn-tax-spend and earn-spend-tax.
The poor end up giving a large portion of their money to the government before they
even get to see it. What seemed like a good salary when they took the job ends up not
being enough, because most poor people don’t really account for the large chunk of
money that the government plans to take out of their paycheck before they even get to
look at it.
The rich, on the other hand, are able to earn that money and spend it before the gov-
ernment gets their greedy hands on it. This keeps their taxes low, and it allows them to
spend their money on what they consider worthwhile—instead of leaving the decision
to the government.
You now understand the difference between earned portfolio and passive income,
which is a distinction that will keep you rich or poor, depending on what income you
decide to make. Remember, with earned and portfolio you’ll be spending a lot more
money in taxes. Passive income is your best way to make as much money as possible,
and to keep that money safe.
One of the biggest takeaways from this chapter should be that taxes punish those in
the E and S quadrant. Staying in the B or I quadrant will help you to avoid the govern-
ment bleeding you dry, and will give you the access to your money that you deserve.
Rule #2: Leverage

Leverage is something that will really take you to the next level, and that you must un-
derstand if you want to be rich. This is because without leverage, you’ll never be able
to take advantage of OPM and OPT. This means that you’ll be spending all of your own
time and money, which will never land you in the B and/or I quadrants.
Remember that you only have so much time, money, energy and other resources. Be-
cause of this, you want to utilize OPM and OPT to expand your capacity further than
it ever would have been able to go on your own.
You learned that Other People’s Money comes in the form of bank loans and investors,
and that while this is good debt, it is still debt and needs to be treated with respect.
You also learned about how to properly leverage Other People’s Time, by hiring em-
ployees and subcontractors to get the job done for you. This frees up your time to work
on other matters, like acquiring more assets and continuing to grow your wealth.
The big takeaway here is that your resources will only take you so far. In order to get
and stay rich, you’ll need to learn to leverage other people’s resources, such as their
time and money. This will allow you to expand beyond whatever your natural capacity
would have been.
Rule #3: Create

The third rule is all about creating your own wealth, by becoming an entrepreneur.
The B quadrant is one of the most accessible forms of wealth building for most people,
as a lot of people don’t have the initial capital to make investments. Businesses, on the
other hand, allow for you to start small, and scale up.
You learned about how the S and B quadrant aren’t the same, and you learned why.
The S quadrant allows you to create a job, which is a great first step. It removes you
from the rat race, and it gives you the ability to set your own schedule and step away
when you need to.
The problem with the S quadrant, though, is that you are still locked into the time-
equals-money paradigm. As long as you are trading time for money, you’ll never be
rich. Because of this, if you are in the S quadrant, you need to find a way to move to
the B or I quadrant.
If you are self-employed, this may be as simple as scaling up. I said simple, not easy.
Scaling a job to a business can be quite the task, but it is well worth it.
The goal is to get to a point in which you can make passive income, and continue to
make money, even if you choose to step away from the business.
The big takeaway from this section is that you need to create your own business, and
you need to get it to a point where it is fully automated so you can step away and con-
tinue to make money. If you are able to do this, you can use these resources to purchase
businesses, build more businesses or invest in real estate. Once those are solid, you
can step away from them, and continue to dramatically increase your income without
actually working at the businesses that you own. You will no longer rely on your own
time to earn you money…you’ll rely on Other People’s Time.
Rule #4: Multiply

For the forth rule, we discussed how to multiply your money, primarily using real
estate to do so. This included how to grow your wealth while keeping it safe, why real
estate is a great investment, how to get started and more.
One of the biggest takeaways from this rule was that you need to hold on to and grow
your wealth by investing it, getting proper insurance and increasing your financial ed-
ucation. These three things are key to protecting and growing your money.
You also learned about how to get into real estate by taking courses, by using your own
money and also by leveraging OPM. This was all geared towards you becoming an in-
vestor instead of a trader. Remember, investors grow their assets, while traders make
money on deals. One involves passive income, the other does not.
Becoming a real estate investor is an amazing way to make passive income, and save
your money by investing in assets instead of giving it to the bank, hoping the U.S. dol-
lar won’t slip in value.
Rule #5: Build Your Team

No matter how amazing you are at what you do, you will always need a team behind
you to help you to achieve your goals. I know that throughout all of my success, I have
relied on more people than I can count, including my wife Kim.
One of the most important members of your team is a coach or mentor. You’ll want
to have someone that can guide you along the path, and help you to reach your goals.
For me, it was my rich dad. Without him, I don’t know where I’d be today. I’d like to
think that I’d be successful anyway, but with my poor dad as my only role model, I’m
not entirely sure.
Your mentor will help you to avoid a lot of the pitfalls that come with rising to success,
and they will pass down wisdom that will save you months—if not years—of learning
the hard way.
You’ll also need a team of skilled workers to help you to build and protect your money,
including:
• A financial planner
• Brokers
• A great accountant
• Lawyers
• Hard-working employees
You’ll also want to make sure that there is synchronicity in your team. It’s great to have
a bunch of amazing employees and subcontractors to help you to build your business
and grow your investments, but if they don’t work well together, it will cause a lot of
unnecessary headaches.
Put together the best team possible, and make sure to put trust in your team. If you
hire the right people, you should be able to step back and let them do their jobs.
The Importance of Money

My poor dad used to always tell me that he didn’t care about money, and that how
much money he had didn’t define him. This simply wasn’t the case. He let money (and
lack of money) control his life, and this decision kept him poor until the day he died.
My rich dad understood the importance of money, though, and he gave it the respect it
deserved. He always believed it was better to have too much money than not enough,
although even that had its challenges.
The thing is, money itself won’t make you rich, but it will give you more options and
opportunities. To go beyond making money and to truly become rich, though, you
need to learn the rules that I’ve taught you in this book—then you need to put them
into practice.
Through my rich and poor dad, I learned why money is important, and I’ve carried
those lessons throughout my entire life. I don’t fear money, or lack of money, but I
know that having money is required to be wealthy. The right mindset is needed to be
rich.
Choose to Be Rich
At the end of the day, being rich or being poor is a choice. If you want to be successful,
and if you want to stop worrying about money, you need to make the right choice—to
be rich. If you don’t, you will stress out about money your whole life, you will miss tons
of golden opportunities and you will miss out on a fantastic life full of possibilities.
Wealth shouldn’t be your entire world, but you also shouldn’t avoid it. It is through
wealth that you will unlock opportunities, and it is through being rich that you’ll un-
lock the life that you’ve always wanted.
The only true way to freedom is by adopting a rich person’s mindset. From my rich
dad before me, I learned the secrets to being rich, and now I’ve passed them on to you.
It’s your turn to make the decision…to be rich or to be poor.
Which do YOU choose?

5 Money Rules The Rich Have Mastered

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5 Money Rules The Rich Have Mastered

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5 MONEY RULES

THE RICH HAVE

Why My Poor Dad Was Never Rich 13

The Way the Rich and Poor See Money 13

How I Came to Know the Difference Between Rich and Poor 15

The Importance Of Learning And Mastering Financial

Rule #2: Leverage Your Money 20

Rule #3: Create Money 21

Rule #4: Multiply Your Money 22

Rule #5: Build the Perfect Team 22

What Is Financial Intelligence?  23

Developing Your Financial Intelligence 26

2. Studying the Success of Others 28

4. Trial and Error 29

Critical Topics to Study and Master for Financial Intelligence  31

The CASHFLOW® Quadrant 31

Assets Versus Liabilities 35

The Conspiracy Of The Rich 40

Currency Versus Money—Off the Gold Standard 41

Most People are Financially Illiterate 42

Biggest Myths About the Rich 45

Rich People are All Mean and Greedy 46

Rich People Have a High Salary 48

Rich People Buy Expensive Things 49

How the Rich Look at Money 52

Rich People Respect Money 55

Job Security Versus Financial Freedom 55

Understanding the CASHFLOW® Quadrants 57

B is for Big Business Owner 60

The Rich Get Richer 61

Rule #1: Protect 63

Why You Need to Understand Taxes 65

Losing Income to the Government 66

Moving From Earn-Tax-Spend to Earn-Spend-Tax 67

How Taxes Penalize the E and S Quadrants 71

How Taxes Favor People in the B and I Quadrants 72

The History of Income Tax 73

Taxes, Businesses and Corporations 74

What the Rich Know About Taxes? 75

Rule #2: Leverage  76

Other People’s Money 78

How to Treat OPM 80

The Importance of Debt 81

The Poor and Bad Debt 81

The Rich and Good Debt 82

Debt and Income Tax 84

Be Careful with Debt 84

Other People’s Time 85

Save Your Time for Making More 88

Leverage Can Make You Rich or Poor 89

Study Every Deal 89

Big Business Versus Self-Employment: Myths About Entrepreneurship  93

Creating a Job for Yourself 94

The Difference of a Business 95

Scaling Your Business 96

Freelance Writing to Copy Agency 97

Store Owner to Franchise Owner 98

From A Piece of Property to a Management Company 99

Traits of Successful Entrepreneurs 100

Taking Advantage of Free Time 103

How to Become an Entrepreneur 104

Purchasing a Business 105

Starting a Business 106

Why My Poor Dad Was Never Rich 13

The Way the Rich and Poor See Money 13

How I Came to Know the Difference Between Rich and Poor 15

Rule #2: Leverage Your Money 20

Rule #3: Create Money 21

Rule #4: Multiply Your Money 22

Rule #5: Build the Perfect Team 22

What Is Financial Intelligence? 23

Developing Your Financial Intelligence 26

2. Studying the Success of Others 28

4. Trial and Error 29

Critical Topics to Study and Master for Financial Intelligence 31

The CASHFLOW® Quadrant 31

Assets Versus Liabilities 35

The Conspiracy Of The Rich 40

Currency Versus Money—Off the Gold Standard 41

Most People are Financially Illiterate 42

Biggest Myths About the Rich 45

Rich People are All Mean and Greedy 46

Rich People Have a High Salary 48

Rich People Buy Expensive Things 49

How the Rich Look at Money 52

Rich People Respect Money 55

Job Security Versus Financial Freedom 55

Understanding the CASHFLOW® Quadrants 57

B is for Big Business Owner 60

The Rich Get Richer 61

Rule #1: Protect 63

Why You Need to Understand Taxes 65

Losing Income to the Government 66

Moving From Earn-Tax-Spend to Earn-Spend-Tax 67

How Taxes Penalize the E and S Quadrants 71

How Taxes Favor People in the B and I Quadrants 72

The History of Income Tax 73

Taxes, Businesses and Corporations 74

What the Rich Know About Taxes? 75

Rule #2: Leverage 76

Other People’s Money 78

How to Treat OPM 80

The Importance of Debt 81

The Poor and Bad Debt 81

The Rich and Good Debt 82

Debt and Income Tax 84

Be Careful with Debt 84

Other People’s Time 85

Save Your Time for Making More 88

Leverage Can Make You Rich or Poor 89

Study Every Deal 89

Big Business Versus Self-Employment: Myths About Entrepreneurship 93

Creating a Job for Yourself 94

The Difference of a Business 95

Scaling Your Business 96

Freelance Writing to Copy Agency 97

Store Owner to Franchise Owner 98

From A Piece of Property to a Management Company 99

Traits of Successful Entrepreneurs 100

Taking Advantage of Free Time 103

How to Become an Entrepreneur 104

Purchasing a Business 105

Starting a Business 106

Find a Problem and Solve It 107

Essential Information to Have Before Starting Your Business 107

Taxes and Laws 108

Market Research 108

Study the Competition 108

Envision Your Brand 109

You Don’t Have to Reinvent the Wheel 109

If It Can’t Generate Passive Income… 110

Entrepreneurship Isn’t for Everyone 110

Why Real Estate Is a Business 113

How to Grow Your Wealth While Keeping It Safe 114

1. You Need to Invest 115

2. You Need to Purchase Insurance 116

3. You Need to Continue Your Education 118

Why Real Estate Is a Great Investment 119

People Always Need Real Estate 120

Investors Versus Traders 121

Real Estate and the Crash 122

Getting Into Real Estate 123

Take Courses 124