What The Rich Teach Their Kids About Money | Cashflow For Kids
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so the story of rich dad poor dad is um i grew up a little sugar plantation town on the island of hawaii in the town of hilo and so i’m saying this class full of rich kids and i’m going que pasa when are we going to learn about money and the teacher was kind of like church lady you know she goes the love of money is the mean of all evil and i said well it may be evil to you but i’d like to have some so i go home to my poor dad and i said hey dad why don’t we learn about money at school he says i can only teach what the government allows me to teach and the government does not allow me to teach the subject of money so finally he suggested i go talk to my best friend’s father about money and so i asked my poor dad i said what’s an entrepreneur and an employee he says entrepreneurs must know about money what separated my rich dad and my poor dad was just two pieces of paper so my poor dad’s side the most important piece of paper in his life was his diploma that to him was everything whereas my rich dad his pieces of paper were different rich dad’s pieces of paper was called the financial statement and so when people say what was rich dad poor dad about it it’s very simply a book on accounting and especially the financial statement and in the real world there’s three different types of financial statement this is income and expense asset liability income expenses call it p l and the asset liability is called a balance sheet and there’s one more it’s a statement of cash flow so that was the biggest difference between mines between my poor dad and employee and my rich dad and entrepreneur so here to explain why financial statements are important is my personal tax authority my cpa tom wheelwright tom will explain why a financial statement is crucially important to somebody like me as an entrepreneur but it may not be as important to somebody who is a an employee so tom through the magic of zoom we’re social distancing in 2020 could you give us a quick uh snapshot of your background and what qualifies you to talk about taxes yeah of course so i have a bachelor degree in accounting from the university of utah a masters of professional accounting with especially in tax from the university of texas i spent seven years with ernst young one of the largest tax firms in the world including three years in their national tax department in washington dc years as an adjunct professor in the masters of tax program at arizona state university and 25 years building running selling buying cpa firms and with clients all over the world where we specialize in showing people how to permanently reduce their taxes legally ethically and morally correct and that’s a big point there because we don’t do it illegally or unethically or immorally so quickly explain tom on taxes taxes are really incentives not to pay tax right i mean isn’t that really what it is well most of the tax law the tax law obviously raises money for the government but it also is a way for the government to guide investment and so the government says look if you’ll take a risk here and invest in natural resources or you invest in a business or you invest in real estate then we’ll help you with that investment by reducing your taxes so we’re really doing what we want to do is what the government wants us to do we want to help the economy we want to help create jobs and when we do that the government reduces our taxes so tom i know you weren’t you weren’t born in 1773 but is the boston tea party alive and well today oh yeah of course there’s uh there’s there’s plenty of tax revolt interestingly enough you know the way we look at taxes here in the u.s the way we use it as incentives it’s the same all over the world so every country developed country has similar tax laws and gives similar incentives okay anything you want to say about that or no i just i just want to reiterate that it’s legal it’s ethical it’s moral and people get very upset when you say um i don’t pay taxes or i pay very little in taxes but to your point when we invest in apartment houses we’re providing housing that the government can’t provide or doesn’t want to provide when we’re when we’re investing in oil companies the government doesn’t want to be drilling for oil so to thomas point that’s why we get tax incentives we’re doing what the government doesn’t want to do and we’re employers not employees and you’re going to find out that the people that pay the highest taxes are employees has tom made us a lot of money by not paying yes he has yes he has thank you tom you know we’ll send you a christmas card this year anyway so let tom explain that this is a basic financial statement it’s income expense asset liability so this is called in your world in the world of accounting what do you call this that’s the the profit and loss statement or the income statement okay good and this is a balance sheet assets and liabilities so these are two different financial statements is that correct they are they’re two different financial statements that work together to create your basically report card for your investing in your business so where tom supported us here you have this financial statement the income statement or the p l and the balance sheet but there is one more financial statement is called statement of what term cash flow and that’s probably the most important one so literacy financial literacy starts with you’ve got no income statement balance sheet statement of cash flow so there’s three different financial statements any comments on that tom well the statement of cash flow is the one people tend to ignore the most and where your cash is coming from and where it’s going is the most important what i love about the cash flow game for adults is that it shows all three of these financial statements and makes it simple to follow them and understand what they mean so for adults you can look here this is the actual the game board here you know i’m holding up here income statement the balance sheet but off to the right here is a statement of cash flow so there’s three financial statements in the cash flow game right is that correct tom that is correct and how does that how is how does the statement of cash flow empower the income statement and balance sheet so basically what the statement of cash flow does is it actually tells you what’s happening to your cash where did it come from and where to go did it come from the income statement or did it come from the balance sheet did it go to pay expenses or did it go to build assets any comments you want to say about that well i want to say so so here’s the here’s the financial statement for the cash flow game for the adults here’s the financial statement for cash flow for kids so here we have income statement you have income you have expenses and then you have cash flow over here we have a balance sheet assets liabilities so again we’ve just taken the same concepts and just simplified it to win the game if your cash flow is greater than your expenses you are out of the rat race and you win exact same way to win cash flow for kids so let me explain one more couple more things here so there’s one two and the three is a statement of cash flow and this is the the biggest sex distinction this is my poor debt and all he cared about was how much money he made and how lowers expenses and that’s where the 99.99 of the world’s population is they want to make money and keep expenses low but also what they don’t realize the number one expense is tax and so anybody who works for income here this is what cash flow looks like you make money here but it flows out that way to the government am i correct tom that’s exactly the way it works yes and can you do anything for this person right now if that if that’s all they know very very little the government does not incentivize individuals correct now what my rich dad taught me and this is the difference here he didn’t want me to get a job and the reason they want me to get a job is because i’d pay taxes so instead my rich dad taught me to focus on assets here so there’s four basic assets there’s businesses there’s real estate there’s paper which is stocks bonds mutual funds and etfs and uh commodities gold silver oil water things like this so one of the differences for me is that i just focused here when when i left you know when i grew up i focused on assets is that what the rich do tom that’s exactly what the rich do yes and our schools teacher people focus on job security right that’s true so kim when you and i met we met in 84 and i told your father i didn’t have a job i told your mother didn’t have a job because i’m an entrepreneur yes what did they say they they got a little bit nervous they got very nervous and they were even more nervous when i called them a couple months later and said hey guess what i just quit my job and we’re gonna go start this business and i’m all excited i’m telling them all about it and all i hear is my dad said you quit your job because that was the that was the mindset that he grew up with as a kid and that’s the mindset that he lived as an adult you have a job you work your way up the corporate ladder um i didn’t i didn’t want that i wanted freedom i wanted my freedom so when i met her she was building a network marketing business i was i was because i wanted to well it taught me number one it gave me the freedom but i i thought i made the funny assumption that i wouldn’t have to work so hard well of course in any business that you’re doing yourself you work way harder 24 7 but i learned how to sell i learned how to market um i learned all kinds of business confidence self-confidence was huge creativity originality it was it was huge so i i think being an entrepreneur is actually one of the best ways to build confidence but also one of the best paths to freedom and then so she like she loved business i said oh my gosh she’s beautiful she’s got brains and she likes business you know and she loved real estate so i did i did i understood why you love real estate so much well i under i understood the game you started to explain to me what your rich dad had taught you about real estate especially real estate investing and once i started looking and underst i understood it and it was fun and it was creative and talking to tom you know it’s all about the numbers i mean there’s many facets to it but the numbers tell the story and numbers can actually be very very creative so when you’re talking about income statement balance sheet i don’t see numbers i see a story that’s evolving and i know you see that too tom so how big was your first deal my first deal was a little two-bedroom one-bath house in a place called portland oregon and it was forty-five thousand dollars so what she did was she took out forty thousand in debt so tom you know we have she’s got 40 000 in debt she put up 5 000 and the cash flowed this way so it flew and flowed from her house and it flowed into her income so so what does that call tom what how what was it say she did well she she created cash flow by turning her asset of cash into an asset of real estate and now she gets perpetual cash flow every single month right but the 40 000 in debt is a liability right that’s right so the bank contributed most of the money to produce the cash flow and there’s one more thing because tom is a tax expert how much tax did she pay on that 40 000 zero and you see the reason the middle class like my dad and most people get in trouble is they use liability let’s say their house or credit card debt and the cash flows this way out the expense column so they have a mortgage and the cash flows out and that goes to the bank and what kim does she just took the government’s forty thousand dollars use it to acquire an asset and it put uh twenty five dollars five bucks a month now the question is tom how much tax did she pay does she pay on that 25 zero now you’re understanding capitalism so this is how kim started she started small mine was eighteen thousand dollars i put nothing down on it and made twenty five bucks infinite returns are called so kim how many properties do you have now oh thousands thousands of properties and thousands are going this way and this way and this right yes yes and how much tax are we paying on them probably tom zero and how much does that uh we’re probably 500 million in debt so we’re half a billion in debt so when you borrow money 500 million half a billion how much tax that we pay on that zero so that’s really what you and your child can begin to learn [Music] hello robert kiyosaki i’m kim kiyosaki and we’re going to talk to you about the cash flow for kids board game kids are very very interested at money at an early age you started at what age nine right so we wanted to create a game for kids for younger kids where there wasn’t a lot of jargon a lot of terms there wasn’t a lot of numbers and there’s no addition subtraction all of that it’s it’s basically colors and concepts so they get the concept of the same principles of the cash flow game but it’s simplified down so that we say you could probably play this game a four-year-old to a 12-year-old could play this game but it’s because parents wanted to teach their young kids early about money and about investing but we have two words two caution points right let’s caution number one for parents caution number one is there’s a thing in here called doodads and doodads are something that we just spend our money on day to day my wife should be a watch it could be just every day yes that new computer all of that a boat so when you’re shopping with your child who has played cash flow for kids they might say hey mom isn’t that a doo dad do you really need that today so all of a sudden your kids are going to start thinking differently they’re going to see the world differently which is great because they’re now thinking about money and how they spend it so it’s uh there’s that’s warning number one is you might be called out on the carpet on your doodad purchases and the second the second caution a friend said to me i’ll never teach my kid that game again because their kids were playing the casual for kids game and the kid turned to his father and said dad do you do this in real life and the father had to say no i don’t so they had those are two cautions if you don’t want your kids knowing more than you about money don’t get the cash off a kids game but also you know i’ve also talked to parents who have played the cash flow for kids game with their kids they’re teaching their kids but they’re also teaching themselves so it’s not a bad place for anybody to start to understand the concepts and to understand the philosophy of money and investing and then move on to the cash flow game but this is a great place to start to understand to just to make a small shift in your mindset about the world of money so before we go any further i’d like to introduce you to some people who have used the game so kim and i don’t have kids but who have used the cash flow for kids game on their children well one thing i’d like to say is the kids just have fun playing the game they just like to play the game so that gives us us the opportunity to talk about money which you know most families don’t get the opportunity to talk about that and so that’s what’s fun you know is that we can talk about money in a fun and a fun way to learn about it too and another thing that i like about the game is it teaches the kids that they don’t like doodads they don’t want to have doodads you know because in the game do dads are bad so it teaches them you know they think about things differently than most kids so i think it’s completely transformed my life and we wouldn’t be here today without it because the cash flow for kids was a really fun way to learn the language of money and i think because it was so much fun i wasn’t so worried about excelling in school like everybody else i was more worried i mean it’s the truth but i was learning kind of how to create money in such a fun and in a family way too so i think that was very pivotal and i think that’s been the transformation of everything because once you learn the language of money when you’re very very young you start having an unfair advantage and you start seeing opportunities that other people don’t see let me explain as now a teacher in the rich dad company the four intelligences but why games are the best teachers so what i was learning playing the game monopoly it engaged what i call the four intelligences and the four intelligences are one is mental the brain the second intelligence is the most powerful is called emotional intelligence and the other one is physical intelligence but the most important intelligence is called spiritual intelligence so when you play a cash flow board game it’s engaging your mind you have to start thinking and figuring out strategies it gets your emotions especially if you’re losing or you actually do lose make a mistake on the game your emotions will kick up or somebody’s kicking your butt on the game or your kids are winning your emotion comes up but the physical part is you actually have to do the numbers the reason we like the board game better than the electronic version is the physical part you actually have to put in the numbers and you see how the money flows you see how it flows from the income column into the and the expense column how assets flow from the asset column into the income column you see all of you actually physically make those movements happen so the reason this is called the for intelligence is why the cash flow game has a better gives you a better opportunity inspired to learn more is mental emotional physical and spiritual learning it’s really about this word here metamorphosis the definition of metamorphosis is the transition or the transformation from an immature form to an adult form immature to adult transformation and that’s the power of engaging all for intelligence mental emotional physical and spiritual that’s what the casual games the kids and the adult version will assist you in doing absolutely and and the world economy is looks disastrous but your personal economy that you have control over and that you can change and so final word to women especially mothers about their role yeah i think today more than ever we need more women role models women leaders especially when it comes to money especially when it comes to finances and for me personally i’ve taught a lot of women about money about entrepreneurship and when when a woman understands that she can take charge of her own financial life oh my goodness her the lights go on she her self-confidence goes up and most importantly and this is what i love about the cash flow for kids game she then wants to teach her kids once she understands it then she wants to teach her kids because that’s something that nobody is teaching at all so i say to the women out there to the moms out there please educate your kids about money about investing and the cash flow for kids game is a great great great place to start not just having them play it but you play it with them and you learn together and after the cash flow for kids game you move on to the cash flow game but it’s a great place to start it’s a great place to start the conversation because most people are not most families are not talking about money and we all know kids are interested in money in a very early age so women and mothers teach your kids [Music] wellWelcome to Big Money Investing – Your Ultimate Destination for In The Money Facts!
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