In this video we're gonna talk about how to manage your money like the rich. So I
believe that there's five things that the rich and the wealthy do differently
than the poor. So Ken what's the biggest difference between the rich and the poor?
The biggest difference is their - mindset So I can see this from experience
because I grew up with a poor mindset my my parents had poor mindsets they always
said we can't afford something and only later in life did I realize you know how
can we afford something and so that's the biggest differentiation in my
opinion that I think what happens is the the poor they spend whatever they make
and then they invest afterwards where the rich they actually invest first and
then they look for the cash flow from those investments to spend so the rich
they invest and then spend and the poor they spend and then they invest that's
probably one of the bigger things that I see as the difference how do the rich
view assets and liabilities versus how do the poor view assets and liabilities
really what the what the rich do is they focus on building their asset column and
that's probably the biggest thing in other words you know a lot of people
think their equity in their home as an asset or what's maybe what's in their
bank account or their 401k and those are real assets but the rich actually take
it to a whole new level they're trying to build their asset column on income
producing real estate income producing businesses and things like that and
they're really growing that asset column the other thing is I found that the poor
often look at liabilities as bad and and I think that in a lot of cases they can
be you know they can be like there's what I call good debt and there's bad
debt you know good debt is debt that's used to buy assets bad debt would be
let's say a car loan you know and I have I have a car loan so I'm not just saying
that you need to just know the difference credit card debt is
and so those are liabilities and so what happens at a lot of times is people they
the poor grow the liability column so that they can barely make it and so
right now we're seeing that in student loan debt for example and I'm not saying
that education is a good investment what I'm saying is that it's a tough
liability to get out from you know as you're barely making money so so knowing
the difference between asset growth and and liabilities is a huge huge factor I
think in your overall game plan Ken what are some of the tax and legal strategies
that the rich do that the poor don't do the first thing that I learned on the
legal side is that if you put your things into an LLC or a limited
liability company or a C Corp or an S corp those are different kinds of legal
entities those are considered businesses or entities you have a great deal of
asset protection inside of there so for example let's say like Ken Mack or calm
that's an entity well if somebody Sue's me on something on Ken Mack or calm they
actually sue a corporation or a company and so they have to what to call pierce
the corporate veil so so things that you're doing inside of a company can be
very very important even if it's a small business so let's say you have a small
consulting business and you're running across town and you run a red light and
you hit somebody and they sue you well and you're out on business so if your
assets are inside of a corporation they're gonna it's gonna be a lot harder
to penetrate that corporation to get at your personal assets that's number one
people use entities for protecting their homes and protecting their businesses
and protecting all kinds of things very very very common and legal and so that's
the first thing the other thing that I found is when I started my own
businesses there are certain things like my car that I use like I probably use my
car seventy to eighty percent for business driving around looking at
properties you know I'm all over the state
driving around going to the meeting with all kinds of people well you can take a
lot of expenses even a home office and you know it all has to be legit you have
to be actually doing things from your home to you know which I do I work from
home a lot and so those are things that you can actually write off so they're
real expenses and so you take what would normally be just normal day-to-day
living and you can start running things through like like let's say if I have a
business lunch then I can actually write that business lunch off and there's
there are things that you can do for entertaining okay now the laws have
changed a lot so you have to be really crystal clear on what what you know what
you can and can't do and I'm certainly not the expert for that but there's a
lot of things that you can do inside of an entity for asset protection and for
be able to write things off to lower your personal expenses on things that
you're doing to grow on the tax side this is probably the part that's blown
me away the most and if you haven't had a chance to see Tom wheelwrights videos
you know he's a master at this stuff he understands tax like nobody and the tax
laws are really set up for people to use they say you know these are the things
that you can legally do in order to reduce your taxes and so those are the
things that I've learned over time is there are certain things that the
government gives you like a lot of people remember when the alternative
fuel cars for example right that was a tax incentive people went out and bought
all those cars you know they all alternative fuel license plate that's
what I'm talking about and so that's those are things like that are available
in business too you know like we provide housing and so
the government gives us tax benefits to provide housing and they do it in mining
you know they want oil and gas and so they label there's tax incentives if you
invest in oil and gas I'm not saying that those are all great investments
what I'm saying is that there are tax there are tax pieces inside of there
that can reduce your overall income so there's a lot of people invest looking
for tax strata as well and so those are the kinds of
things that I've learned that the difference between the rich and the poor
do because the poor kept typically the poor mindset they usually put their
money in savings so around managing money what's the
difference between the way the rich manage their money in the way the poor
manage their money well I think this has a lot to do with being passive or active
and so I fell into this category as a young man when I first got out of
college I remember putting two grand with somebody and then opening the
statement every quarter and seeing if it grew or not and generally it didn't grow
at all you know I didn't understand all the fees and all the financial planning
and all the stuff behind all that at the time but I was doing what everybody did
has taken some money and sticking it with somebody and then working hard and
I think a lot of times people never ever sway from that so they work their butts
off and then they put all our money into whatever it is usually it's some kind of
a vehicle with some company I'm not saying those are bad things to do it is
a way to invest but I think that that's a very very passive way to invest that I
think it's horrible that people can go 20 30 years and not really understand
how their portfolio is doing without actively managing it and I think it
happens a lot and I certainly fell into this category and only after a while
that I realized that the rich actually don't do that you know most of the
people I know do not invest in 401ks most of them are not in the stock market
because it's those are very very hard things to invest in and do very very
well now I'm not saying you can't make money in those things but what I'm
saying is that the what I found is that the rich are much more active so I'll
just give you an example this weekend I was meeting with a friend of mine and
we're actually going to set up a little board
it's called rogue capital and we're all going to invest in tech deals and
businesses and real estate all through a collective group
people that you know that are all smart in a lot of different ways and so we're
all learning together because the deal flows as deal flows come we can all
discuss them openly and actively we can look at different things and everybody
has different expertise and different skill sets and so that I think is the
difference is that I'm actually I'm actively yes I'm the real estate guy but
I also invest in a lot of businesses and gold and silver ore and you know I've
done plenty of stock trading and things like that as well and I've invested in
gold mines and silver mines and things like that and so but I'm actively doing
it and I'm I'm actually investing directly where I think a lot of times
people hand their money over to somebody and they just don't know or they meet
with them once a year or once a quarter and I just think that's horrible
I think you should be really really really understand with so much on the
line I think you should really understand who is managing your money
what kind of fees they're there they're taking and why you know that's the
biggest question is why when it comes to money and what it actually is the rich
think about it a certain way and the poor think about it a certain way what
is money to the rich money changed in the early 70s when Nixon took the united
states off of the gold standard and I think a lot of people certainly I was a
young man or young boy actually I don't recall that I don't remember what it was
like before that but my parents did and so what that meant before the early 70s
was that a dollar was tied to the gold standard so I remember as a kid Fort
Knox and thinking about that how cool that is and all the money and all the
gold in Fort Knox all that that's actually what it was it was it was tied
to the dollar well when the dollar became what's
called free floating or a guy like mike maloney would call it fiat currency what
a fiat currency means is that it's now not tied to anything and so the u.s. or
the Federal Reserve can can actually they can actually grow the
money supply they can actually grow it to pay for dads and things like that
they can actually add a dad out at and so all that does is it takes what would
be considered you know something that was a little more stable to something
that was less stable it can be devalued so if you really want to take a look
just take a look at how much the dollars to valued in the last 15 years just
google it and you'll see you'll freak you out so now here's the interesting
thing as a dollars of dollars a dollar so if I had a dollar let's say you know
back in early 2000s it's still the same dollar it just buys less that's the only
difference and so if your bank account was 10 grand in night in 2000 it's and
it's still 10 grand today all it means is that it buys a lot less and so I
think what happens is the poor they save save save save save this is why Robert
Kiyosaki says saver they're losers you know because they don't understand
that inflation czar roading their purchasing power of their own money and
so let's just say inflation has been you know 2% over the last 10 years well that
means that there's been a 20 percent devaluation in your currency now you
know it actually buys a lot less right and and so that's all it means and so as
a kid I don't know about you but I never saw a hundred dollar bill now I see so
many of them they're like 20s used to be and that's a result of that and and so
what the rich do is they look for investments that hedge currency so they
look for things like real estate that goes up as the dollar to values because
this is why this is the interesting discussion around debt so people say get
out of debt get out of debt get out of that get out of that and there's lots of
gurus as they get out of debt and for some people they probably should but for
me if I have a just look at like your
parents house for example if your parents bought a house 20 years ago and
it's a $200,000 house and they have $150,000 in debt the chances that house
being worth a lot more is pretty high and the debt has now gone down because
the dollars to value so it's the valuing debt at the same time it's the valuing
your equity that might be in your bank and so you know money is just
interesting because that as it becomes devalued over time through this fiat
currency and and through the growing of the money supply then you can just hedge
it you know you just want to invest in things that go up along along the same
of the same lines and I think a lot of times people invest in things that go
down so that's one of the primary differences in the way that people look
at currency versus wealth is it you know some some people try to put all their
money in cash and some people try to invest as much as they can and ride
along and let the economy and let you know the inflation everything not erode
your hard-earned money so if you're ready to start manage your money like
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