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Rich Dad Radio Show: In-Your-Face Advice on Investing, Personal Finance, & Starting a Business
The One Word That Builds Wealth — And the Three Moves That Unlock It
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This episode is brought to you by Progressive Insurance. Do you ever find yourself playing the budgeting game? Well, with the name your price tool from Progressive, you can find options that fit your budget and potentially lower your bills. Try it@progressive.com Progressive Casualty Insurance Company and affiliates Price and coverage match Limited by state law not available in all states.
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You've worked hard, you've saved, and you're still not free. That's not an accident. There's one word that separates the rich from everyone else. And it's a word you're already using just in the wrong direction. I'm going to show you what that word is. Why your savings are making someone else rich. Why most people have a plan and it's a plan to stay poor. And the three moves that change everything. Watch. This is the Rich Dad Radio show. The good news and bad news about money. Here's Robert Kiyosaki. Welcome to the Rich Dad Radio show. The good and bad about money. This is Robert Kiyosaki and today is just you and me. And we're talking about what the rich are teaching their kids about money. We are going to talk about your money. You've worked hard. You've done what they told you to do, and you're still not free. That's not a coincidence. I. Most people believe they're not rich because they didn't work hard enough, so they work harder. They believe they're not rich because they didn't save enough, so they cut back. They skip the vacation. They drive the older car. They do everything right. And the gap between them and genuine financial freedom doesn't close. It may have even gotten wider. I'm going to tell you the real reason that gap exists. It's not your work ethic. It's not your education. It's not your luck. It's one word. One word separates the rich from everyone else. And this word isn't what school taught you. It's not saving. It's not discipline. It's not hard work. The word is leverage. And once I explain what leverage actually is and why you are already using it right now, just in the wrong direction, you are never going to see your financial life the same way again. That's a promise. Let me tell you something about hard work. Hard work is not wrong. I am not telling you to stop working hard. But here is what nobody at your school, at your job, at your bank ever explained to you. Hard work has a ceiling. Think about it. You have 24 hours in a day. You trade some of those hours for money. And when you stop trading, when you get sick, when you retire, when you physically can't show up anymore, the money stops. One hour, one unit of income. That's the deal. Most people spend 40 years on that deal. They get raises, they get promotions. They climb higher and higher on the same ladder. And when they finally look around, the ladder is leaning against the wrong wall. My poor dad was one of the hardest working men I've ever known. A PhD, a government official, A man who never missed a day of work. He died with bills. My rich dad worked less as he got older. More vacations, more time, more freedom. And his wealth kept growing whether he showed up or not. Same economy, same island, same era. Two completely different financial realities. For years I thought the difference was luck or connections or some advantage my rich dad had been handed early in life. I was wrong. The difference was one word. And most people are already using that word every single day. I against themselves. Here is what rich dad said. People who only work hard have limited leverage. If you're working hard physically and not getting ahead financially, then you're probably someone else's leverage. Let that land. If you have savings sitting in a bank account, someone else is using your money as their leverage. The bank takes your deposits and lend them out at a profit. Not to you, to the rich. If you're putting in 60 hour weeks at a job, someone else is using your time and your labor to build their asset. Not yours, theirs. You're not falling behind because the system isn't working. You're falling behind because the system is working perfectly. Just not for you. That is not an accident. That is the design. Now here's where most people get this wrong. They hear the word leverage and they think debt, borrowed money, risk. The thing that blows people up when the market turns rich. Dad's definition was bigger than that. Leverage is the ability to do more and more with less and less. Your mind is leverage. The questions you ask yourself shape your entire financial reality before a single dollar moves. Your plan is leverage. The strategy you are executing right now is either moving you toward freedom or away from it. Your actions are leverage. Taking educated steps in the real world builds compounding knowledge that school could never give you. And debt, used correctly, is one of the most powerful tools ever invented for building wealth. 3. Mind plan action. Every person who ever retired young and retired rich got all three right before the money ever moved. Most people miss all three. I'm going to walk you through each one coming up. I'm going to show you the one sentence that changed everything. For me, not a strategy, not a tactic, not a stock tip. A sentence about the words coming out of your mouth right now, today, and how those words are already deciding your financial future before you ever make a single investment. And then I'm going to show you the plan. Most people are already running a plan they never chose. A plan for voluntary poverty. Don't go anywhere. Welcome back. We've been talking about leverage. And I told you before the break, there are three pillars. Three things every person who ever retired young got right before the money ever moved. The first one starts before you ever open a bank account, before you ever make an offer on a property, before you ever do anything with money at all. It starts with the words coming out of your mouth. Rich dad said it plainly. He said most people take the most powerful leverage in the world, their brain, and use that power to make them poor. Two sentences. Two completely different financial realities. I can't afford it. How can I afford it? One is a full stop. One is a question. I can't afford it shuts the brain down. It lets you off the hook. The mind accepts the limitation, files it away and moves on. Done thinking, how can I afford it? Does the opposite. It keeps the brain working. It forces the mind to search for answers. It opens the door instead of locking it. Rich dad never allowed those two words in his house. Not I can't. Not because we could always afford things we often couldn't. But a closed statement produces closed thinking. And a closed mind never builds wealth. My poor dad looked at a piece of beachfront property once. He said, I can't afford it. Rich dad looked at the same piece of land. He said, how can I afford that? One man died with bills. The other built an empire. Same land, different words, different reality. Your brain is either your most powerful asset or your most powerful liability. There is no neutral. If the voice in your head says, I could never do that, that's too risky. I'm not good with money. Your brain is working against you every single day. Change the question. That's the entry point. And it costs absolutely nothing. That's pillar one. But there is a second pillar, and this one is where most people get exposed. Because most people do have a plan. It's just a plan to stay poor. Here is a question most people never seriously ask themselves. What plan am I actually following right now? Not the plan they intend to follow someday. Not the vague idea about saving more or investing eventually. The actual plan. The one their daily financial behaviors are executing right now. Whether they chose it consciously or not, Rich dad had a name for it. Most people have a plan to be poor. He didn't say that to be cruel. He said it because it is accurate. When someone says, when I retire, my income will go down, and most people say that without even blanking, they are describing their plan. A plan where decades of hard work ends in voluntary poverty. A plan where you hand your financial future to a stock market you can't control, a government program you didn't design, and a financial advisor who gets paid whether you win or lose. That's a plan. It's just not a good one. Can Kim and I were genuinely broke in 1985. No money, no obvious path. A friend sat us down and told us to stop surviving and start planning. So I wrote down a specific financial freedom, not someday with a date. It felt absurd. We had nothing. We wrote it down anyway. Three elements. A starting point, which was nothing, a specific exit, passive income, exceeding expenses, and a deadline, 10 years or less. Nine years later, in 1994, Kim and I were financially free. Not because we had it all figured out. We didn't. But every financial decision we made for nine years was filtered through one does this move me toward the plan or away from it? That question, applied consistently, is itself a form of leverage. A plan doesn't eliminate uncertainty. It gives uncertainty somewhere to go. Now the plan is in place. The goal is written down. And here is what I've watched happen over and over. People write the plan and then nothing happens. Why does 95% of the population, people who want to be rich, who know something has to change, why do they never take the step? That answer is going to make you uncomfortable. Coming up, I'm going to tell you about three birds sitting on a fence. Two of them decide to fly away, and I'm going to ask you how many birds are left? The answer is going to explain exactly why most people never get ahead, no matter how much they want to. And then I'm going to show you the three assets that actually build freedom. Not hope, not paper promises. Real assets that put money in your pocket. Don't go anywhere. Welcome back. Before the break, I asked you a question. Three birds on a fence. Two of them decide to fly away. How many birds are left? 3. Because deciding to fly and actually flying are not the same thing. That gap between deciding and doing is where most people's financial lives stall permanently. Not because they don't want it. They do not because they don't know something has to change. They know the gap is action, and here's why. The gap Exists. Think about how you actually learn things as a child. You learn to walk by falling. You learn to ride a bike by. By falling, you got back up, you tried again. Eventually you walked. Eventually you rode. That is how human beings actually learn. Then we sent you to school, and from day one, the message flipped. Making mistakes is failure. Smart people don't fall. Smart people sit still, memorize the right answers, and get graded on how well they avoid errors. Rich dad saw this clearly. He said it was no small wonder that only 5% of the population becomes rich. School, whatever else it does, trains people out of the one behavior most essential to building wealth. The willingness to act, fail, learn, act again. This is why highly educated people are so often paralyzed around investing. It isn't stupidity, it is the opposite. They have been trained thoroughly over years to fear the wrong answer. But in real investing, there is no way to guarantee the right answer. Before you move, you have to act. See what happens, adjust, move again. Kim and I made mistakes. Real ones. Deals that cost us. Numbers that didn't work out on paper. Every single one of those mistakes taught us something no book could teach us. The feedback from reality is the fastest financial education available. Get the mind right, get the plan right. The actions become obvious. Every action, every plan, every question you ask yourself. All three pillars point to one destination, one movement. Acquire income producing assets using leverage. That is the whole strategy. Everything else is preparation for executing that one instruction clearly, intelligently and repeatedly. Now, most people use the word asset wrong. So let me be exact. Rich Dad's definition. Simple, non negotiable. An asset puts money in your pocket. A liability takes money out. That's it. Not the accounting definition. Not what your financial advisor calls an asset. Cash flow direction, in or out. Under that definition, the house most people call their biggest asset is actually a liability. It takes money out every single month. Mortgage, taxes, insurance, maintenance. Think about it. Most of what people spend their lives accumulating under this definition is working against them. The assets that actually bill freedom fall into three Real estate, business and paper assets. Income producing property generates cash flow every month. The tenants pay the mortgage. The bank's money acquires the asset. Done correctly, your own capital in the deal moves toward zero while the income stream grows. Kim bought her first investment property with $5,000 down. The rest was borrowed. The property paid for itself every month. That is leverage working exactly the way it is supposed to work. A real business, one that runs without you, is an asset. It multiplies your time. Through opt other people's time, you build something larger Than any one person could build alone. The rich don't trade time for money. They build systems that generate income while they sleep. Paper assets as options or stocks with dividends that generate cash flow every month. Three asset classes. One direction. Money in, not money out. Here's the math. Most people never see two people. Same $20,000. Person one puts it in a mutual fund. 5% annual return after seven years, roughly $28,000. Person two uses that $20,000 as a down payment on a $200,000 rental property. Borrows the rest from the bank. Same 5% appreciation after seven years, that property is worth $281,000. The equity is now over $100,000. Same rate of return, completely different outcome. Because one person used leverage and the other didn't. That is what rich dad meant when he said the rich use debt to get rich. The poor use debt to get poor. The debt itself is neutral. Direction is everything. Debt pointed at an asset that generates income is a wealth building engine. Debt pointed at a liability, a car, a vacation, A consumer purchase is a wealth destroying one. Good debt is paid by others. The tenants pay your mortgage. The customers pay your business loan. The asset covers the cost. Bad debt is paid by you out of your earned income after tax, month after month for something losing value while you pay. Now people get angry when I say this next part. Savers are losers. Not as an insult, as a mathematical fact. In 1971, Nixon took the dollar off the gold standard. Money became debt. From that moment, governments could print currency at will. And they have. When governments print money, the purchasing power of your saved dollars erodes constantly. A dollar in the bank earning 4% interest while inflation runs at 4% is standing still at best after taxes on that interest. You are moving backward. Saving money used to be smart. That was before 1971. The old rules work hard, save money. Invest in a diversified portfolio of stocks and bonds are not just outdated, they will make you poor. That is not an opinion. That is what 50 years of data looks like. When you follow the money, the game changed. Most people are still playing by the old rules. So let me strip away everything. Let me say it as plainly as I know how. You are not behind because you didn't try hard enough. You are not behind because you aren't smart enough. You are behind because you were taught to be someone else's. Leverage, your savings, someone else's tool, your labor, someone else's asset, your time, someone else's life. Leverage. That is not an accident. That is the design and the only way out the only way out is to stop being the leverage and start using it. Mind plan action. Change the question from I can't afford it to how can I afford it? Write a real plan with a real exit and a real deadline. Take educated action. Make mistakes on a small scale. Let the feedback from reality teach you what no classroom ever could. And then put all three to work on the one thing that changes everything. Acquire income producing assets using leverage. Not net worth, not appreciation, not hope. Cash flow. Money that comes in whether you show up or not. That is how the rich do it. Thank you for your time. Thank you for caring about your future. Thank you for understanding that you are the only one who cares about taking care of you. Take care. It.
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This podcast is a presentation of Rich Dad Media Network. And Doug. There's nowhere I wouldn't go to help someone customize and save on car insurance with Liberty Mutual. Even if it means sitting front row at a comedy show.
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Hey, everyone. Check out this guy and his bird. What is this, your first date?
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Oh, no. We help people customize and save on car insurance with Liberty Mutual together. We're married. Me to a human, him to a bird.
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Yeah, the bird looks out of your league.
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Anyways, get a quote@libertymutual.com or with your local agent.
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Liberty. Liberty. Liberty. Liberty.