RICH VS POOR MINDSET | An Eye Opening Interview with Robert Kiyosaki

Summary

The speaker challenges conventional financial wisdom, advocating an entrepreneurial mindset over traditional employment. They argue that saving money is outdated in an era of money printing and that the wealthy leverage debt and taxes to increase their wealth. The script emphasizes the importance of understanding financial systems and having an internal drive to succeed, regardless of external economic conditions. It also touches on the obsolescence of standard education and the need to adapt to a rapidly changing world.

Takeaways

• 📚 The traditional path of education, employment, and saving is considered obsolete due to economic shifts and monetary policies.
• 💵 The wealth gap is widening, and traditional financial advice does not address the realities of modern economics.
• 🧠 The mindset of an entrepreneur is distinct from that of an employee or a small business owner, focusing on creating wealth rather than earning a salary.
• 🚫 Relying on a paycheck can limit financial growth and independence; the rich teach to create wealth, not just earn money.
• 💼 Entrepreneurship is about mindset and skill sets that allow for flexibility and resilience in various economic conditions.
• 🌐 Geographical mobility is a strategy for entrepreneurs to find opportunities and avoid unfavorable political or economic climates.
• 💰 Learning to use debt wisely can be a path to wealth, contrary to the conventional advice of getting out of debt.
• 🏦 Banks can be leveraged for wealth creation, especially when monetary policy favors debtors over savers.
• 🏠 The belief that a house is an asset is challenged; instead, it's seen as a liability for many due to the associated costs and taxes.
• 📈 The rich get richer by using debt and taxes strategically, while the poor and middle class suffer from the same financial tools.
• 🌱 The concept of an 'obsolete idea' is applied to education and financial planning, suggesting the need for new models to adapt to current economic realities.

Q & A

What is considered an obsolete idea according to the speaker?

The obsolete idea mentioned is the traditional path of going to school, getting a job, working hard, saving money, getting out of debt, and investing in the stock market.

Why does the speaker argue that saving money is not a good idea when trillions of dollars are being printed?

The speaker suggests that when money is being printed in such large quantities, it leads to inflation, which devalues the currency, thus saving money loses its value over time.

What does the speaker mean by saying there's a poor person, a middle-class person, and a rich person inside all of us?

The speaker is referring to the different mindsets and attitudes towards money and wealth that reside within individuals, affecting their financial behaviors and outcomes.

How does the speaker's rich dad view the paycheck?

The speaker's rich dad considers the paycheck as one of the most damaging things one can take in life because it fosters a mindset of dependency and employment rather than entrepreneurship.

What is the significance of the last paycheck the speaker received from Xerox?

The last paycheck from Xerox was significant because it was a bonus check that made the speaker realize the limitations of relying on a paycheck and the need to venture into entrepreneurship.

What mindset does the speaker believe is necessary for an entrepreneur?

The speaker believes that an entrepreneur needs a mindset that is not dependent on a steady paycheck, is willing to take risks, and is focused on creating wealth through business and investment rather than working for money.

Why does the speaker emphasize the importance of learning how to use debt?

The speaker emphasizes learning how to use debt because he believes that debt can be a tool for wealth creation when used wisely, especially in the context of investing in assets like real estate.

What is the role of taxes in the wealth gap between the rich and the poor/middle class according to the speaker?

The speaker suggests that taxes play a significant role in the wealth gap because the rich know how to use debt and taxes to their advantage, while the poor and middle class often end up paying more in taxes and not leveraging debt effectively.

How does the speaker view the traditional educational system in relation to wealth creation?

The speaker views the traditional educational system as obsolete for wealth creation because it does not teach students how to become wealthy or how to think like an entrepreneur.

What does the speaker mean by an 'internal economy' and how does it relate to entrepreneurship?

The 'internal economy' refers to an individual's personal financial situation and mindset. The speaker relates it to entrepreneurship by suggesting that a strong internal economy allows an entrepreneur to see opportunities in any external economic condition.

Why does the speaker suggest that the idea of getting a high-paying job is obsolete?

The speaker suggests that the idea of getting a high-paying job is obsolete because in the current economic climate, focusing solely on a high salary does not necessarily lead to wealth or financial security; instead, learning to create wealth through entrepreneurship and investment is more valuable.

Outlines

00:00

💼 The Entrepreneurial Mindset

The speaker challenges the traditional financial advice of saving money, getting out of debt, and investing in the stock market. They argue that the wealth gap is significant and that conventional methods are outdated. The speaker emphasizes the importance of adopting an entrepreneurial mindset, which includes understanding how to use debt and taxes to one's advantage. They share their own experience of leaving a stable job at Xerox for the uncertain world of entrepreneurship, driven by the desire to be free from the constraints of a paycheck. The narrative highlights the different mindsets within each person, from poor to rich, and how one's approach to money and work can either limit or expand their financial potential.

05:04

📚 The Obsolescence of Traditional Financial Advice

This paragraph discusses how the traditional path of education, job security, and saving money is no longer effective in the current economic climate. The speaker points out that the rich get richer through the use of debt and taxes, while the poor and middle class suffer due to the same mechanisms. They argue that the current financial system is designed to benefit those who understand how to leverage debt and minimize taxes. The speaker also touches on the obsolescence of the educational system, suggesting that it no longer prepares individuals for the rapidly changing world. They advocate for learning how to use debt strategically and understanding the impact of inflation and taxes on wealth accumulation.

10:06

🌟 The Power of Internal Focus

The final paragraph emphasizes the importance of having an internal focus and a strong mindset as an entrepreneur. It contrasts the internal economy, which one can control, with the external economy, which is beyond one's control. The speaker highlights the resilience and adaptability of true entrepreneurs, who view setbacks as opportunities for growth rather than reasons for despair. They stress that success comes from within and that external circumstances, such as job loss or economic downturns, are less impactful on those with a strong internal economy. The speaker concludes by encouraging individuals to develop their internal economy and mindset to achieve financial success regardless of external conditions.

Keywords

💡Obsolete

Obsolete refers to something that is no longer useful or has been replaced by something newer. In the video, the speaker argues that the traditional idea of going to school, getting a job, and investing in the stock market is obsolete in the current economic climate. The example given is the speaker's rich dad not paying him, which was a way to avoid becoming an employee and thus not being tied to an obsolete mindset.

💡Wealth Gap

The wealth gap is the disparity between the rich and the poor. The video script mentions the 'gap between the 1% and 99%' to emphasize the significant difference in wealth and opportunities between these two groups. The speaker suggests that the traditional financial advice is not addressing this gap and that a different approach is needed to bridge it.

💡Mindset

Mindset refers to a set of attitudes or beliefs that shape how someone thinks, feels, or acts. The video emphasizes the importance of having an entrepreneurial mindset, which is about being self-reliant and not dependent on a steady paycheck. The speaker contrasts this with the mindset of an employee, which is seen as limiting.

💡Entrepreneur

An entrepreneur is someone who starts and runs their own business, taking on financial risks to do so. The video script discusses the entrepreneurial mindset as a key to wealth creation, rather than relying on a traditional job. The speaker shares his experience of leaving a job at Xerox to become an entrepreneur, highlighting the risks and rewards of this path.

💡Debt

Debt is an amount of money that is owed. In the context of the video, the speaker discusses debt as a tool that can be used to accumulate wealth, especially when interest rates are low. He contrasts this with the conventional advice of getting out of debt, arguing that learning to use debt strategically can be beneficial.

💡Invest

To invest means to put money into financial schemes with the expectation of achieving an additional income or profit. The video script suggests that investing in real estate and businesses, rather than just the stock market, can provide more control over one's income and tax situation.

💡Rich Dad Poor Dad

Rich Dad Poor Dad is a reference to the book by Robert Kiyosaki, which is mentioned in the video. The book contrasts the financial advice given by the author's亲生父亲 (poor dad) with that of his friend's father (rich dad). The video script uses this reference to illustrate the different financial philosophies that can lead to wealth or poverty.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. The video discusses how inflation, along with taxes, affects the wealth of different economic classes, with the rich often benefiting while the poor and middle class suffer.

💡Internal Economy

The internal economy, as mentioned in the video, refers to an individual's personal financial situation and mindset. The speaker argues that one's internal economy can be controlled and improved, regardless of external economic conditions. This concept is used to encourage viewers to take personal responsibility for their financial well-being.

💡Moore's Law

Moore's Law is the observation that the number of transistors on a microchip doubles about every two years, leading to rapid advancements in technology. The video uses Moore's Law as an analogy to explain how quickly information and skills can become obsolete, emphasizing the need for continuous learning and adaptation.

💡Financial Education

Financial education refers to the knowledge and skills needed to manage one's finances effectively. The video script criticizes the lack of financial education in traditional schooling, suggesting that learning about money management, debt, and taxes is crucial for financial success.

Highlights

The traditional path of education, employment, and saving is becoming obsolete.

The wealth gap between the 1% and 99% is widening significantly.

The concept of saving money is questioned due to the trillions of dollars being printed.

The importance of stepping back and viewing the bigger financial picture.

The internal struggle between the poor, middle-class, and rich person within each of us.

The lack of education on how to get rich, not just how to get a job.

The damaging effects of relying on a paycheck according to 'Rich Dad Poor Dad'.

The entrepreneurial mindset is more important than the business itself.

Different rules apply to small businesses compared to big businesses.

The mindset and skill sets differ between employees and entrepreneurs.

The story of receiving a large bonus and the decision to become an entrepreneur.

The importance of having the right attitude when becoming an entrepreneur.

The necessity of being hungry and smart without a steady paycheck.

The idea that being an entrepreneur is a test of character.

The concept that the next 20 years will not be like the last 20 years financially.

The strategy of getting into debt at a lower interest rate to increase cash flow.

The advice to learn how to use debt, not just get out of it.

The impact of the gold standard's removal on the concept of money and debt.

The idea that education has become obsolete due to the rapid pace of information.

The current financial climate where savers are at a disadvantage.

The importance of having an internal focus and control as an entrepreneur.

The difference between an external and internal economy and their impact on perception.

The power of an entrepreneur's mindset to overcome economic challenges.

Transcripts

The most obsolete idea

is go to school, get a job, work hard, save money,

get out of debt and invest for the long-term in the stock market

See, why would you save money

when they're printing trillions of dollars?

The gap between the 1% and 99% is massive.

You see it's not just money,

you have to step back and look at the bigger picture.

So what do you do?

In every one of us there's a poor person,

there's still a poor person inside me.

There's also a middle-class person

and the middle-class person wants security

they want that steady paycheck.

And there's a rich person

And they're all inside of us except that...

It's not taught.

It's- you're taught to go to school, get a job and get a paycheck.

Not taught how to get rich.

If you've read Rich Dad Poor Dad, my rich dad refused to pay me.

He said the paycheck

was one of the most damaging things you can take in your life.

He says the moment you take a paycheck you're an employee

and that's the mindset.

So my rich dad never paid me.

It drove my poor dad, you know, a government employee nuts.

"You got to pay people, you got to pay people"

And rich dad was not saying that the paycheck was bad,

he says he didn't want to be a slave to money.

So as an entrepreneur,

you know, if rich dad folded

I just try another company.

I don't need a paycheck.

I don't need anybody to take care of me.

If my government doesn't like me I move to another country

because they need entrepreneurs there.

So the entrepreneur is not so much the business,

the entrepreneur is really the mindset and the skill sets

and the different set of rules.

You see, I don't operate small business

does not not operate in the same rules as big business.

Entrepreneur is a mindset first,

a skill set and rules.

And depending upon whether you're an employee or small business

the rules are different,

the mindsets are different, the skill sets are different.

If you could say one thing to somebody whose never been an entrepreneur

and they're thinking about making the leap of faith

into becoming an entrepreneur,

what could you tell them?

Well, I'll just tell them the same thing that happened to me.

You know, my last paycheck, I still remember it clearly

it was one of the worst and the best days of my life

and I was in Puerto Rico,

I was in, I was working for Xerox

and my boss gave me my last, it wasn't a paycheck it was a bonus check

I think it was about 30,000 bucks

taxable, that's the only problem with that.

So I get this check and I went, "Holly mackerel."

You know, I mean, so I was excited

but I was also disturbed.

And so this other guy comes up to me, his name was John

and John says to me says to me this,

"you're going to be back." I said "Why?"

he says, "because you're going to fail."

I looked at him and I said, "look...

few expletive words

Because that's what he did, he left Xerox, failed and he came back.

I said, "look...

You fail and you came back

but I'm going to fail and I'm never coming back."

and that's the attitude.

- Do you know what I mean, - yeah

If you say, "Well, if I fail I'll go back to mommy and daddy"

then that's what you'll do.

So if you fail, that's when I became an entrepreneur because I had no money.

I had no money for years

Yeah, I didn't have a paycheck

But that's what my rich dad encouraged me to do.

He says when, when you don't have this paycheck

you get hungrier, smarter and it's a test of your character

will you become a crook? Will you become dishonest?

Will you cheat and steal?

Or will you become a better human being?

So really that's the benefit of becoming an entrepreneur

you really find out who you are

when you don't have anything.

So you always have to look at the big picture.

Too many people look at, "well, what's, what's going to happen to me?"

When you look at the big picture, you're also going to know

that when something bad happens something good is going to happen.

But you gotta prepare for whatever is coming

If you think the next 20 years will be like the last 20 years

you're going to get creamed.

You know, when you and I go to the supermarket

and we buy a carton of milk

We always check for the expiration date.

But most people do not check for the expiration date on their brains

Instead of getting out of debt I get into debt.

I just refinanced 300 million in debt

I went from 5% to 2.5% interest

I made a fortune.

Every month more money comes in because my cost of money has gone down.

So while some financial experts are saying get out of debt,

I'm saying learn how to use debt.

See when I came back from serving in Vietnam

in January of 73

and the first thing my rich dad said to me was,

"Go to school to learn how to invest in real estate."

It wasn't real estate, it was how to use debt and taxes

debt and taxes make the rich richer.

Debt and taxes make the poor and middle class poorer.

So all the rich guys who are doctors and lawyers or...

you know, those guys, they're getting creamed

- and they don't know why - doctors are getting creamed?

Oh, yeah, they're making more money but the take-home is less

You know, my doctor just yelled at me

he's happy, he says, "Oh, guess what I finally made a million dollars."

And I said, "Yeah", this is just three weeks ago.

And so I said, "Yeah, well how much you pay in tax?"

He says, "$750,000 in taxes."

So his net was about $400,000

That's not bad

but when I make a million bucks, I keep a million bucks.

And the reason is because I don't make it by working for money.

See if you work for money your taxed.

So that's why lesson number one in Rich Dad Poor Dad

is the rich don't work for money.

What we do instead is we create businesses as entrepreneurs.

We acquire real estate.

I don't invest in the stock market

So the reason is because as entrepreneurs

I have more control over my income,

how much I make and how much I pay in taxes.

And because I'm an entrepreneur as well as an investor in real estate

I pay zero tax.

So every time I make let's say a million dollars as an entrepreneur

I immediately invest it in real estate, and I have a 4 to 1 step up.

So I put a million dollars in real estate, I get four million from the bank.

That's why I love banks.

But the banks are screwing everybody else

you know, terrible but it's good for me.

I thought you said when you print it's good for you

but when you print it's bad for people that work for money.

Because when you print savers get creamed

and people who work for money get creamed.

When they print debtors get rich.

You see, debt and taxes make the rich richer

and debt and taxes make the poor and middle class poorer.

When we have obsolete ideas we get obsolete results.

So what's happening for most people

the idea of going to school,

getting a job, working hard, saving money, getting out of debt,

buying your house because it's an asset and investing for a long term.

It's obsolete.

The world has changed, the world changed in 1971

when President Nixon took us off the gold standard

and money became debt.

What if we get rid of school then what would happen?

Would it be better if we had no educational system at all?

No, I'm saying education was more important before, it's just obsolete.

You know, there's Moore's law that...

Moore's law which states information doubles every 18 months.

In other words, everything is obsolete, 18 months.

So, and this is a recent phenomenon.

So when you come out of school, you're already obsolete,

and that's why I'm the old guy,

you know, I meet my friends, I went to Harvard.

Yeah, I went to Harvard. I said,

"Yeah, that was how long 50 years ago?"

Today the banks are charging you interest to save money.

In other words, the banks don't want your money

because they've printed too much of it.

And that's why there's bubbles and stocks and bubbles in real estate and all this.

People are dumping the cash.

Because as I said in here, "Savers are losers and cash is trash"

And yet people are, "Well, I want a high-paying job."

Well, that's an obsolete idea.

Get out of debt, it's an obsolete idea.

You should learn how to get into debt How to you use debt to get rich

And they'll never teach you about taxes.

The reason the 1% is way up here and the 99% are going this way

is because when you print money two things happen

inflation and taxes.

It's crushing them.

And any entrepreneur that thinks "I'm just going to make money

and start a business and make a lot of money because that what we talk about

They really have got to smell the roses man.

You know, that's not what the real entrepreneurs are doing.

Most entrepreneurs, there's 28 million small business owners in America

24 million are, are one person entrepreneurs.

They're called non-employee entrepreneurs.

So that because, and that's what happens

is when people don't really understand what an entrepreneur does.

So most people are self-employed, but they're not really entrepreneurs.

The self-employed pay the highest taxes of all

and nobody tells them that.

Yeah, it's also called the entrepreneurial spirit

but what we're actually talking about

was there's no such thing as a bad economy.

You know those externally, you and I, we all have an external economy.

But we also have an internal economy

and the will power is to change our internal economy.

So for me, I can see the good, I can see the bad

I don't really give a damn.

Because I'm going to be rich anyway.

But a poor person with a poor personal economy

All they're going to see is a bad economy.

Because they don't know how to make money in any economy.

And a middle-class person, they have a middle-class economy

you know what they want is a nice house, a steady paycheck

and the job and the car.

And so when you take their job away to them that's disaster.

Well since an entrepreneur doesn't have a job anyway, it's no big deal.

So all I'm saying to people is what Bucky Fuller taught me.

There's always two sides, you know what I mean,

you know to use plural at minimum two.

So if you think the economy is bad, it's because your economy is bad.

If you think that steady, you know, employment is important

- then you'll see an economy without jobs. - Your economy

Your economy versus the external economy.

Where you control VS where you can't control

I can control yes, it's called, it's called an internal focus

versus an external focus.

So the real entrepreneur has an internal focus

but if they fall down they say, "Oh, this is good

because I'm going to go up higher."

You know, the average person will fall down and

say "Oh, I'm going to take some Prozac"

Or, or the- or somebody has the mistakes, all the mistakes don't matter well

Mistakes, mistakes matter, it means you didn't know something.

But a real entrepreneur whether they fall down

or they go, they always can go up

They can stand back up and go higher.

That no matter what happens to them

they got stronger and better and smarter and happier.

But a person with a weak internal mindset

Is that they're so afraid of what happens, it generally happens.

Like, you know, people who are afraid of losing their jobs

they generally lose their jobs.

- You know what I mean, - yeah,

no doubt, so everything comes through you

Yeah, so the entrepreneur first job is control inside here

not outside there.

The moment you take that paycheck you're an employee

You've got to be stronger than that.

It's about inside control.