5 Ways to Manage Your MONEY Like the RICH

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 the rich and be the first to learn from
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26 thoughts on “5 Ways to Manage Your MONEY Like the RICH

  1. Ken, Why do you have a car loan? I'm assuming that you can afford any car by paying cash. Do you have a car loan because you want to have more small business expenses? Please explain. Thanks!

  2. 2:08 – You Have a car loan??? What on earth! I thought you were really successful and managed your money wisely? Isn't a car loan one of the worst wastes of money there is? Not trying to be critical, but I thought you were a wealthy investor?

  3. I always appreciate how insightful and informative yet simple your explanations are. They really make the concepts easier to understand, reflect upon, and apply. Thanks Ken!

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