A problem with school is that you often bee what you study。 So if you study； say； cooking； you bee a chef。 If you study the law； you bee an attorney； and a study of auto mechanics makes you a mechanic。 The mistake in being what you study is that too many people forget to mind their own business。 They spend their lives minding someone else's business and making that person rich。
To bee financially secure； a person needs to mind their own business。 Your business revolves around your asset column； as opposed to your ine column。 As stated earlier； the No。 1 rule is to know the difference between an asset and a liability； and to buy assets。 The rich focus on their asset columns while everyone else focuses on their ine statements。
That is why we hear so often： 〃I need a raise。〃 〃If only I had a promotion。〃 〃I am going to go back to school to get more training so I can get a better job。〃 〃I am going to work overtime。〃 〃Maybe I can get a second job。〃 〃I'm quitting in two weeks。 I found a job that pays more。〃
In some circles； these are sensible ideas。 Yet； if you listen to Ray Kroc； you are still not minding your own business。 These ideas all still focus on the ine column and will only help a person bee more financially secure if the additional money is used to purchase ine…generating assets。
The primary reason the majority of the poor and middle class are fiscally conservative…which means。 〃I can't afford to take risks〃…is that they have no financial foundation。 They have to cling to their jobs。 They have to play it safe。
When downsizing became the 〃in〃 thing lo do； millions of workers ｜ found out their largest so…called asset； their home； was eating them alive； j Their asset； called a house； still cost them money every month。 Their car； another 〃asset；〃 was eating them alive。 The golf clubs in the garage that cost 1；000 were not worth 51；000 anymore。 Without job security； they had nothing to fall back on。 What they thought were assets could not help them survive in a time of financial crisis。
1 assume most of us have filled out a credit application for a banker to buy a house or to buy a car。 It is always interesting to look at the 〃net worth'1 section。 It is interesting because of what accepted banking and accounting practices allow a person to count as assets。
One day； to get a loan； my financial position did not look too good。 So I added my new golf clubs； my art collection； books； stereo； television； Armani suits； wristwatches； shoes and other personal effects to boost the number in the asset column。
But I was turned down for the loan because I had too much investment real estate。 The loan mittee did not like that 1 made so much money off of apartment houses。 They wanted to know why I did not have a normal job； with a salary。 They did not question the Armani suits； golf clubs or art collection。 Life is sometimes tough when you do not fit the 〃standard〃 profile。
I cringe every time I hear someone say to me that their net worth is a million dollars or 100；000 dollars or whatever。 One of the main reasons net worth is not accurate is simply because the moment you begin selling your assets； you are taxed for any gains。
So many people have put themselves in deep financial trouble when they run short of ine。 To raise cash； they sell their assets。 First； their personal assets can generally be sold for only a fraction of the value that is listed in their personal balance sheet。 Or if there is a gain on the sale of the assets； they are taxed on the gain。 So again； the government takes its share of the gain； thus reducing the amount available to help them out
Of debt。 That is why I say someone's net worth is often 〃worth less〃 than they think。
Start minding your own business。 Keep your daytime job； but start buying real assets； not liabilities or personal effects that have no real value once you get them home。 A new car loses nearly 25 percent of the price you pay for it the moment you drive it off the lot。 It is not a true asset even if your banker lets you list it as one。 My 400 new titanium driver was worth S150 the moment I teed off。
For adults； keep your expenses low； reduce your liabilities and diligently build a base of solid assets。 For young people who have not yet left home； it is important for parents to teach them the difference between an asset and a liability。 Get them to start building a solid asset column before they leave home； get married； buy a house； have kids and get stuck in a risky financial position； clinging to a job and buying everything on credit。 I see so many young couples who get married and trap themselves into a lifestyle that will not let them get out of debt for most of their working years。
For most people； just as the last child leaves home； the parents realize they have not adequately prepared for retirement and they begin to scramble to put some money away。 Then； their own parents bee ill and they find themselves with new responsibilities。
So what kind of assets am I suggesting that you or your children acquire？ In my world； real assets fall into several different categories：
1。 Businesses that do not require my presence。 I own them； but they are managed or run by other people。 If I have to work there； it's not a business。 It bees my job。
2。 Stocks。
3。 Bonds。
4。 Mutual funds。
5。 Ine…generating real estate。
6。 Notes （lOUs）。
7。 Royalties from intellectual property such as music； scripts； patents。
8。 And anything else that has value； produces ine or appreciates and has a ready market。
As a young boy； my educated dad encouraged me to find a safe job。 My rich dad； on the other hand； encouraged me to begin acquiring assets that I loved。 〃If you don't love it； you won't take care of it。〃 I collect real estate simply because I love buildings and land。 I love shopping for them。 1 could look at them all day long。 When problems arise； the problems are not so bad that it changes my love for real estate。 For people who hate real estate； they shouldn't buy it。
I love stocks of small panies； especially startups。 The reason is that I am an entrepreneur； not a corporate person。 In my early years。 I worked in large organizations； such as Standard Oil of California； the U。S。 Marine Corps； and Xerox Corp。 I enjoyed my time with those organizations and have fond memories； but I know deep down I am not a pany man。 I like starting panies； not running them。 So my slock buys are usually of small panies； and sometimes I even start the pany and take it public。 Fortunes are made in new…stock issues； and I love the game。 Many people are afraid of small…cap panies and call them risky； and they are。 But risk is always diminished if you love what the investment is； understand it and know the game。 With small panies； my investment strategy is to be out of the stock in a year。 My real estate strategy； on the other hand； is to start small and keep trading the properties up for bigger properties and； therefore； delaying paying taxes on the gain。 This allows the value to increase dramatically。 I generally hold real estate less than seven years。
For years； even while I was with the Marine Corps and Xerox； I did what my rich dad remended。 I kept my daytime job； but I still minded my own business。 I was active in my asset column。 I traded real estate and small stocks。 Rich dad always stressed the importance of financial literacy。 The better I was at understanding the accounting and cash management； the better I would be at analyzing investments and eventually starting and building my own pany。
I would not encourage anyone to start a pany unless they really want to。 Knowing what I know about running a pany； I would not wish that task on anyone。 There are times when people cannot find employment； where starting a pany is a solution for them。 The odds are against success： Nine out of 10 panies fail in five years。 Of those that survive the first five years； nine out of every 10 of those eventually fail； as well。 So only if you really have the desire to own your own pany do I remend it。 Otherwise； keep your daytime job and mind your own business。 When I say mind your own business； 1 mean to build and keep your asset column strong。 Once a dollar goes into it； never let it e out。 Think of it this way； once a dollar goes into your asset column； it bees your employee。 The best thing about money is that it works 24 hours a day and can work for generations。 Keep your daytime job； be a great hard…working employee； but keep building that asset column。
As your cash flow grows； you can buy some luxuries。 An important distinction is that rich people buy luxuries last； while the poor and middle class tend to buy luxuries first。 The poor and the middle class often buy luxury items such as big houses； diamonds； furs； jewelry or boats because they want to look rich。 They look rich； but in reality they just get deeper in debt on credit。 The old…money people； the long…term rich； built their asset column first。 Then； the ine generated from the asset column bought their luxuries。 The poor and middle class buy luxuries with their own sweat； blood and children's inheritance。
A true luxury is a reward for investing in and developing a real asset。 For example； when my wife and I had extra money ing from our apartment houses； she went out and bought her Mercedes。 It did not take any extra work or risk on her part because the apartment house bought the car。 She did； however； have to wait for it for four years while the real estate investment portfolio grew and finally began throwing off enough extra cash flow to pay for the car。 But the luxury； the Mercedes； was a true reward because she had proved she knew how to grow her asset column。 That car now means a lot more to her than simply another pretty car。 It means she used her financial intelligence to afford it。
What most people do is they impulsively go out and buy a new car； or some other luxury； on credit。 They may feel bored and just want a new toy。 Buying a luxury on credit often causes a person to sooner or later actually resent that luxury because the debt on the luxury bees a financial burden。
After you've taken the time and invested in and built your own business； you are now ready to add the magic touch…the biggest secret of the rich。 The secre