Rich Dad's Robert Kiyosaki: Sacred Cow of Money (2) - Get A Job

Summary

The speaker challenges the conventional wisdom of seeking job security through education and employment, highlighting the tax implications for different income groups. They contrast the perspectives of 'poor dad' who advocated for traditional employment with 'rich dad's' encouragement to become a business owner or investor. The speaker emphasizes the higher tax burden on self-employed professionals like doctors and lawyers, while business owners and investors often pay less. They argue that job security is a myth in the current global job market and advocate for financial education to understand alternatives to traditional employment, such as entrepreneurship, which can lead to creating jobs and financial independence.

Takeaways

• 💼 The speaker challenges the conventional wisdom of seeking job security by suggesting that being a business owner or investor can lead to paying less in taxes.
• 💰 Employees and self-employed individuals, such as doctors and lawyers, are noted to pay the highest taxes, including income, Social Security, and Medicare taxes.
• 🏢 The script introduces the ESBI cash flow quadrant model, where E stands for Employee, S for Self-employed, B for Business owner, and I for Investor, each with different tax implications.
• 📚 The speaker's 'poor dad' advocated for traditional education and employment, while the 'rich dad' encouraged entrepreneurship and investment for wealth creation.
• 🌐 There's a critique of the notion that higher education directly leads to higher tax payments, especially for professionals like doctors and lawyers.
• 🔄 The script suggests that tax laws are designed to reward those who create jobs and stimulate the economy, such as entrepreneurs and real estate developers.
• 🌱 The idea of a 'safe and secure job' is questioned, with the speaker arguing that job security is a myth in the current global economic landscape.
• 🌐 The speaker reflects on the changing nature of work, noting increased competition for jobs from international markets like India and Asia.
• 🎓 The script points out that schools typically do not educate students about entrepreneurship as a career path, focusing instead on traditional employment.
• 🚀 Entrepreneurship is presented as a means to create jobs and contribute to economic growth, in contrast to relying solely on government for job creation.
• 💡 The speaker shares a personal anecdote about starting a business and the shift in perspective from being an employee to having multiple clients, reducing risk.

Q & A

Who typically pays the most taxes according to the speaker?

The speaker suggests that employees, particularly those who are self-employed or specialists like doctors and lawyers, pay the most taxes.

What does the acronym ESBI stand for in the context of the cash flow quadrant?

ESBI stands for Employee, Self-employed, Business owner, and Investor, representing different categories of individuals based on their relationship to income and work.

Why does the speaker argue that being a business owner or an investor can lead to paying less taxes?

The speaker argues that business owners and investors often pay less taxes because the tax laws are structured to reward those who create jobs and contribute to economic growth.

What is the speaker's perspective on the traditional advice to 'go to school and get a job'?

The speaker challenges the traditional advice by suggesting that it often leads individuals to become employees or specialists, who tend to pay the highest taxes and have fewer options for reducing them.

Why does the speaker consider self-employment in the 'S' quadrant to be a high tax burden?

Self-employed individuals in the 'S' quadrant not only pay high income taxes but also have to pay Social Security and Medicare taxes on all their earnings, leading to a higher overall tax burden.

What is the speaker's view on the security of traditional jobs?

The speaker views traditional jobs as insecure, citing the myth of job security and the reality of job losses, including competition from global markets.

How does the speaker's experience of starting a business influence his perspective on job security?

The speaker's experience of starting a business after being fired from a job led him to recognize the lack of control over one's life when relying on a single employer, thus valuing the control and reduced risk that comes with being a business owner.

What does the speaker imply about the role of entrepreneurs in job creation?

The speaker implies that entrepreneurs play a crucial role in job creation, suggesting that the government does not create jobs but rather needs more entrepreneurs to stimulate the economy.

Why does the speaker believe that financial education is important for understanding career options?

The speaker believes financial education is important because it opens up the understanding that there are options beyond traditional employment, such as entrepreneurship, which can offer different financial and career paths.

What is the speaker's opinion on the risk associated with being an employee?

The speaker considers being an employee to be a high-risk profession because it involves relying on a single client (employer) for income, whereas being a business owner or investor can distribute risk across multiple clients or investments.

How does the speaker differentiate between the financial security of employees and entrepreneurs?

The speaker differentiates by stating that employees are punished for mistakes and can lose their jobs, while entrepreneurs and investors can learn from mistakes and become richer, suggesting that financial security is more important than job security.

Outlines

00:00

💼 The Tax Burden and Job Security Myth

The speaker discusses the misconception that getting a job is the best way to financial stability. They highlight the tax burden, explaining that employees and self-employed individuals, particularly professionals like doctors and lawyers, pay the highest taxes. The speaker contrasts the advice from their 'poor dad' who advocated for traditional employment with the advice from their 'rich dad' who encouraged entrepreneurship. The narrative emphasizes the idea that being a business owner or investor, rather than an employee or self-employed professional, can lead to paying less in taxes and having more financial options. The speaker also critiques the notion of job security, pointing out that relying on a single job is risky and that the job market is becoming increasingly competitive with globalization. They advocate for financial education and the importance of understanding the tax system to make informed decisions about one's financial future.

05:00

🚀 Entrepreneurship Over Employment

In this paragraph, the speaker emphasizes the benefits of entrepreneurship over traditional employment. They argue that having a job is the riskiest profession because it relies on a single client, the employer. The speaker shares their personal experience of starting a business after being fired, which led to a realization of the lack of control over one's life when dependent on a single employer. They contrast this with the situation of business owners who have multiple clients, reducing risk and increasing financial security. The speaker also touches on the idea that entrepreneurs can learn from their mistakes and become richer, unlike employees who may be punished for errors or lose their jobs. The paragraph concludes with the assertion that financial security is more valuable than job security, and that the traditional path of education and employment does not always lead to the desired outcomes of stability and wealth.

Keywords

💡Taxes

Taxes refer to the mandatory financial charge levied by a government on workers and businesses to fund public expenditures. In the video, the speaker highlights that employees, particularly those who are self-employed or specialists like doctors and lawyers, tend to pay the highest taxes. This is exemplified when the speaker mentions that even after starting their own business, they continued to pay more taxes, suggesting that tax structures often favor certain types of economic activities, such as entrepreneurship and investment.

💡Employee

An employee is an individual who works for a company or business and receives a regular salary or wage in return for their labor. The video script discusses the financial implications of being an employee, emphasizing that employees often pay a significant amount in taxes. The speaker contrasts this with business owners and investors, who are suggested to have more opportunities to reduce their tax burden.

💡Self-employed

Self-employed individuals are those who work for themselves, often running their own businesses or providing services independently. The script points out that self-employed individuals, such as doctors and lawyers, not only pay high income taxes but also Social Security and Medicare taxes on their entire earnings, making them a group that bears a heavy tax burden.

💡Entrepreneur

An entrepreneur is a person who organizes and operates a business, taking on financial risks to do so, with the goal of making a profit. The video suggests that entrepreneurs, particularly those who scale their businesses, can pay less in taxes due to various tax incentives and structures that encourage business growth and job creation.

💡Investor

An investor is someone who commits money or capital to an endeavor with the expectation of obtaining an additional amount of money back in the form of profit or income. The script implies that investors, like entrepreneurs, often have more tax advantages because they are seen as contributing to the economy through their financial activities.

💡Cash Flow Quadrant

The Cash Flow Quadrant is a model introduced by Robert Kiyosaki in his book 'Rich Dad Poor Dad', which categorizes people based on their sources of income. The quadrants are Employees (E), Self-employed or Small Business Owners (S), Business Owners (B), and Investors (I). The video uses this model to explain how different quadrants have different tax implications and financial risks.

💡Job Security

Job security refers to the stability and continuity of a job, with a low risk of being laid off or losing one's employment. The video challenges the conventional belief in job security, arguing that the industrial age idea of a 'safe secure job' is outdated, especially with the current global competition and economic shifts.

💡Financial Education

Financial education involves acquiring knowledge and understanding of financial matters, including personal finance, investing, and economic principles. The speaker in the video underscores the importance of financial education, suggesting that without it, individuals are often limited to the traditional path of seeking employment rather than exploring entrepreneurial or investment opportunities.

💡Risk

Risk, in the context of the video, refers to the potential of loss or the uncertainty of returns on investments or business ventures. The speaker contrasts the risks associated with being an employee, where one's livelihood depends on a single employer, with the risks of entrepreneurship, where multiple clients or revenue streams can distribute the risk.

💡Tax Laws

Tax laws are the legal rules and regulations that govern taxation. The video discusses how tax laws can be seen as a system of rewards for individuals and businesses that engage in activities that align with government objectives, such as job creation and economic development.

💡Financial Security

Financial security refers to the confidence and peace of mind that comes from having enough money to cover current and future needs without significant financial stress. The video suggests that financial security is more important than job security, highlighting the benefits of being an entrepreneur or investor who can learn from mistakes and potentially become wealthier as a result.

Highlights

The speaker challenges the conventional wisdom of getting a job as the primary means of financial stability.

A comparison is made between the tax burdens of business owners and employees, with a focus on who contributes more to taxes.

The speaker's personal journey from being an employee to a self-employed CPA firm owner and the tax implications of each.

Introduction of the ESBI cash flow quadrant model, explaining the different tax burdens and financial strategies of Employees, Self-employed, Business owners, and Investors.

The speaker's 'poor dad' advised him to become an employee or a specialist, while the 'rich dad' encouraged business ownership or investing.

Specialists like doctors and lawyers are highlighted as paying the highest taxes due to both income and self-employment taxes.

The myth of job security is debunked with references to job losses and global competition.

The idea that getting a job is the only option presented by the education system is critiqued.

The speaker shares his experience of starting a business and the perception of risk compared to being an employee.

The importance of financial education in understanding alternative paths to employment is emphasized.

The concept of job security as an outdated industrial age idea is presented.

The speaker discusses the risks of being an employee with only one client (the employer).

Entrepreneurs are positioned as job creators, contrasting with the government's limited role in job creation.

The speaker argues that being an entrepreneur offers more control and a way to mitigate risk.

The value of learning from mistakes in business is contrasted with the punishment for mistakes in traditional employment.

The conclusion that financial security is more important than job security for entrepreneurs is stated.

Transcripts

[Applause]

and the next sacred cow is get a job or

go to school and get a job now the

problem with getting a job is who do you

think pays the most taxes the owner of

the business or the worker to that I'll

turn to my accountant here Tom well it's

it's clearly the the employee who's

paying the most taxes and you know I I

started as an employee right out of

school and I was paying high taxes even

though my my job is to taxes I was

paying high taxes and then I started I

know ironic isn't it and then and then

about 15 years ago I started my own uh

business I was started my own CPA firm

and I was now self-employed and I was

even paying more taxes so it wasn't

until I started acting like a bigger

business and was really a a significant

Siz business that I started paying less

taxes and it's because it's the business

owners and it's the ENT it's

entrepreneurs and it's the investors the

active investors that really pay the

least amount of taxes time out during

this program you'll hear a lot about

esbn also known as a cash flow quadrant

e stands for employee employees have a

job s stands for a self-employed small

business or specialist like a doctor or

lawyer these people own a job b stands

for big business 500 employees or more

and these people have other people

working for them and I stands for an

investor and investors have their money

work for them now my poor dad always

said to me go to school and get a job

and he wanted to me become an employee

or a specialist like a doctor or lawyer

my rich dad said if you want to be rich

you have to be on the business owner or

the eyesight and that's the difference

with my rich dad and my poor Dad if you

look at the uh cash flow quadrant you

have the esbn the people that go to

school on the and the S site the S

stands with specialist like a doctor or

lawyer an e are employees but doctors

and lawyers pay the highest taxes right

oh by far it's it's those people that

are self-employed because not only are

they paying the highest income taxes

they also get the privilege of paying

Social Security taxes and Medicare taxes

on everything they earn so they're

paying extra taxes just to be in that s

quadrant right so when you go to school

and there academic and professional go

to school and my mother wanted me be a

doctor if I had followed in that

footsteps I'd be paying the highest tax

possible and they make the they make a

lot of money but they pay the highest

percentage in taxes so that's why this

relates back to go to school that's

right and they actually have the fewest

options of reducing their taxes that the

tax laws are really geared towards those

people who are creating jobs you know

and those are the entrepreneurs those

people who are uh creating housing and

you know building real estate because

that's the government understands that's

what we need you know we want the

private sector to do that and so we're

rewarded for doing what the government

wants us to do and that's really all the

tax law is it's a it's a system of

rewards for people doing what the

government wants you to do plus you know

the other part of it too is this whole

idea of getting a job there was some

kind of a myth out there that goes with

get the job get a safe secure job and so

that by getting a job somehow you're

going to be taken care of for the rest

of your life and all you got to do is

pick up any paper to see how many tens

of thousands of people are losing their

jobs there are no safe secure jobs and

now we're competing with India and Asia

for jobs that were sacred to to America

at one point in time so this whole idea

of having a job is that was Secure is

probably most insecure thing you could

be doing right now the idea of a secure

job is an industrial age idea exactly

the only option is put into your head is

go get a job and I wasn't around yeah I

wasn't around entrepreneurs I wasn't

around business owners growing up I was

around employees when I um first started

my company 15 years ago I I went back to

my class reunion which is always an

interesting thing and I remember saying

to them yeah you know I I started a

company about 5 years ago and they

looked at me like oh and and some of

them even said it they go you're so

brave and I'm thinking you know I've had

this company for 5 years now that the

longest I had ever worked anywhere see

without Financial education you have to

get a job what's tragic today was so

many people losing their jobs they go

back to school to get another job but

they're now competing with their kids

kids you know that's Insanity so we're

not saying jobs are bad we're just

saying as entrepreneurs our job is to

create jobs the government doesn't

really create jobs they need more

entrepreneurs I didn't even know there

was another option growing up I didn't

know there was another option I didn't

know I thought all you could do was get

a job so again it's not right or wrong

to be an employee but I'd like to know

what my what my options are right

because were you when you were in school

do they say uh go to school get your

diploma so you become an entrepreneur no

I mean you'll never hear that the school

system um no they said work your way up

the ladder get the bigger paycheck get a

better jober job but you're right job is

the only option that you'll hear in

school as a rule and job stands for just

over broke you know to me the real issue

with the job is it's the highest risk

profession you can have because you only

have one client now I you know when I

started my business 15 years ago was

after being fired from a job and what

and what I recognized was that you know

I had no control over my life because I

had one client that was my employer

whereas now now I have hundreds and

thousands of clients one client fires me

it's not the end of the world you know

now my risk has gone down con

considerably almost to nothing where

when when you have a job I mean it's

just a highrisk play plus the other

thing is you're in complete control

that's the piece that I like I like

being able to if I lose a client or

you're an entrepreneur because nobody

would hire

you I'm an employer

[Laughter]

theuth but it's nice like like you know

like if you're going to lose some

business or or you do lose some business

you can go out and you can go out and

generate business and and and fill that

Gap Financial Security is more important

than job security time out e and ess's

get punished for making mistakes or they

lose their job B's and I's get richer

from the mistakes because they learn

from their mistakes