so welcome back it’s robert kiyosaki

with my dear friend’s daughter here

alexa and we’re talking about

millennials and money and we’ve gone

through some lessons i don’t know how

many anymore

but um let’s continue on with another

lesson here

and so you were talking about your you

know assets and liabilities right

yeah and when you had rich dad poor dad

i said your house is not an

asset what did you think well i think

that’s a conception that many people


but as you demonstrated at the last

seminar that we went to in argentina

it my mom had her properties and she

converted them into assets

correct i think it just depends on what

you do with it and it would be great if

you could show us how to turn your house

into an asset

it’s a very it’s really fundamental so i

could go back i probably covered it



it’s a crucial question

and this is what financial education and

financial literacy really is

again it starts with a financial

statement and i would say

probably 95 percent of all college

graduates don’t know what a financial

statement is

you took an accounting course right yeah

i did and i did parts of this

but i said young people like you there’s

six basic words

to financial literacy and financial


and the six words again are

income expense


liability see i don’t really care about

my fico score

a fico score just basically registers

are you trustworthy with borrowing money

but a bank will never accept i borrow in

the hundreds

of millions of dollars a fico store that


get me there okay and so it’s kind of a

ruse i mean i don’t

it’s important but not for me so these

are the four words income expense asset


and the last two words are the words


flow and that’s why the game is called

cash flow

and the secret to being rich is not a

college education

but can you control cash flow

and this is what cash flowing looks like

so this here i need this

income says asset liability again this

is you get a job and this was my poor

dad go to school get a job get your phd

and so this here is cash flow so the

income comes in

and it goes out this way first line of

expense is tax

so this is a poor person’s cash flow


it’s not how much money you make

most people you know they i don’t care

if you have a phd or no school at all

but they can’t control the cash flowing

out through their expenses

and so that’s why people like suzy orman

say cut up your credit cards live below

your means

because you’re a spendaholic so that’s a

poor person

this is a middle-class person’s cash

flow pattern

and this is where the house comes in


first thing you know most kids do when

they get

pay raise or that they buy themselves

a bigger house oh my house is an asset

now who tells you that your real estate

agent of course

yeah right because they they want to

give you this false sense of security

while you’re getting screwed

exactly yeah but when you look at what

happens with a house a personal

i mean a personal resident something i

live in the money comes in it goes out

and this is middle class but it also

goes out through a mortgage

mortgage payments oh but i don’t have a

mortgage you still have

taxes you still you know hawaii just

raised the property taxes on me which is

probably i’m going to sell i’m going to

get out of hawaii

but you have taxes and you have upkeep

so money is always flowing out

so that’s why your house is not an asset

it’s because it’s taking money from your


so very simply said assets

put money in my pocket liabilities take

money from my pocket

and then this here is so i’m not saying

don’t buy a house

but here is a house

and i started when i was

25 bought my first house

it was an apartment it was an investment


i didn’t live in it i rented it out and

it put money in my pocket

so very simple the definition of asset

and liability

is not the house of this it’s cash flow

where is the cash flowing

so as a young person and to all

millennials or if you’re old

financial intelligence is the ability

to control cash flow

and that’s what they don’t teach you at

school they tell you to go to school get

a job

first thing is tax

you know you’ll pay most of your money

will go out through taxes

in your lifetime and then they tell you

to buy a house

and a car a car is an asset no the car’s

a liability got insurance gas

upkeep and all this now if you buy a

a taxi car it could be an asset it’s

cash flow

and that’s very simply it so this is a

poor person

money goes out there’s a lot we just

interviewed some national football

league players who make millions of

dollars in their 20s

and most of them are broke in two years

because they can’t control

cash flow intelligence iq

is can you control cash flow not your

college degree

college degrees are important but

they’re not going to teach you this so

the cash flow game

trains you over and over and over and

over again to get your money in here to

get cash flow

this way so i started with this

it cost me eighteen thousand 000

i paid for the credit card and i put 25

in my pocket

okay it’s an infinite return because the

cash flow paid for the mortgage it paid

the expenses pays the operating cost and

i still made 25 dollars

kim’s first deal was the same shares was

an 18 000. it was fifty thousand

forty five thousand and they put twenty

five dollars in a pocket

but kim now owns six thousand five


rental properties and she pays no tax

because the income comes from here

if you have a job you pay tax but income

the rich get richer

because when you have asset income

taxes are less you can get it down to

zero if you want but that’s financial

intelligence but can you can control

cash flow

okay so say it again asks us what assets

put money

into your pocket liabilities take money

out of your pocket

and so as a young person just focus on

that so when you’re buying a new house

you got to say

is this going to take money or put money

you buy an apartment house

is it going to take money or put money

that’s it it’s cash flow

66 most important words for

financial intelligence and iq is income


asset liability but it’s really cash

flow now if i could bring up a more

horrible subject

is do you think people can be assets or


i think they could be both to be honest

so for most young people they

fall in love they get married they have

kids it’s a child and asset a liability

a child is definitely a liability i’m

not saying don’t have kids

but you got to think the kid is


and they don’t get cheaper they get more

expensive every year

you know then they go to college and

then it gets even more expensive

so a human being and that sounds

horrible to all the socialists and

communists out there

but the fact is kids cost money but as

an old guy i want you to think about


as i get older

as people get older family members

become liabilities

so i have a friend whose mother

thank god she had long term i don’t know

what they call it but they just

cancelled it on her

she can go to a old age home

and i think the price is 18 000 a month

most so that as a young person as your

parents get older the question is can i


to spend thousand dollars a month on my

mom or my dad’s

long-term health care yes or no

no not right now no so and this is going

to happen to my generation

many people don’t realize but their

brothers or sisters or sisters kids and

all this become liabilities for them

so as a person is fairly well off

i’m and kim and my friends

are thinking about

two-legged liabilities so i know today

that if my sisters become ill

i’m the one with the money and it’s my

responsibility to pay for them

same as my brothers and their kids so

these are things that people don’t think

about a lot of times

is what happens not only as they grow up

but what happens as they age

statistics show the average person like

my generation

let’s have a million dollars eighty

percent of that million dollars will be


the last two years of life because

medical expenses go through the roof

and today insurance companies are

canceling i forget the name of it

but my friend’s mother it was just

cancelled so he doesn’t have 18 000 a


so he had to bring his mother into his

house and you know

create another room and all this is well

i love her what she does

but she’s a big liability and all he had

was savings so the savings are being

depleted going out this way

okay so but your question about houses

and people but people are house assets

and liabilities

for most people with our favorite


a 401k is an asset a liability from what

i’ve learned from you it’s definitely a


or an irra or a pension because it’s

always going out this way

there’s no guarantee it’ll be there so

this is the basic of financial

intelligence financial literacy

stuff like this another thing about


is you have a bad advisor like a bad

financial planner or a crook or a

business partner as a crook

a wife that’s a crook and all that there

could be human liabilities

i have two friends right now who just

joined a million dollar club

they married beautiful women

got divorced and the women is now


a million dollars a year in alimony so

their beautiful wife and the child

support it’s a million dollars going

and she’s only 40 years old so she has a

whole pile of boyfriends

but it’s costing him a million dollars a

year for her boyfriend’s i said i want

to be her boyfriend

not really you know that makes sense to


yeah it makes sense financial iq is can


control cash flow iq means

how big a problem can you solve so if

like my friend whose

mother is now costing him 18 000 a month

well thank god he has about a hundred

thousand in savings

but in one year it’s gone yeah that’s


high iq but with for myself

eighteen thousand dollars a month i can

go make that much cash flow pretty


yeah okay so when you’re like in your

twenties per second well how am i going

to make let’s say

by the time you have probably a hundred

thousand a month to take care of my


because like it or not it’s cash flow

and they become liabilities and it’s the

problem is getting worse

i won’t because the bond markets are not

providing income

so many insurance companies have to

renege on their promises to provide the

cash flow to take care of our loved ones

the same as medical and so that’s why

when people say i’m going to go out on

my own and do all these things

they’re kind of doing what they love

which is good but they’ve really got to

think about

how many liabilities do they have it’s

not just your rent

you know it’s your family and so for me

and for kim we have family members

but they’re liabilities so that’s why we

stay over here

hopefully nothing will go wrong but if

one of my sisters got ill and she needs

a hundred thousand a month at least i

can provide it

yeah otherwise [ __ ] they go they go in

indigent whatever they call it okay yeah

and the comments or questions

no thank you for sharing so much about

this content and all this information

that’s going to be super valuable for

all my friends and all the millennials

out there just like me

i said i have two friends from now on

the million dollar a year club it

doesn’t mean they’re making a million

dollars is their wives

are taking a million dollars a year out

of their pocket and their kids and all


and i go you should have thought about

that 20 years ago but you don’t because

you’re in love and you’re going to have

kids and

you’re going to make it together but

your parents are

great role models so once again the six

words you have to know and be masters of

income expense asset liability cash

flow you can control cash flow that’s

financial intelligence financial iq

and financial literacy okay okay thank



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