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Additional thought of Graham White in highlights.

Find ways to make distinctions quickly and you will learn quickly.  The moment we split a subject into two, we have increased our intelligence.  If we then split the two into two, we get four and our intelligence is now multiplying.  That is called quantum learning, not linear learning (Linear learning: Rote memorization that is most often how schools teach.)

Educators punish people for making mistakes and if you are afraid of making mistakes you will not want to do anything.  It is the fear of making a mistake and then looking foolish that prevents us from taking action.

The Problem with the "Entitlement Mentality"

Today you hear people say, "I deserve a raise because I've been at this job for five years now."  That is an Industrial Age idea.  In today's world of cheaper technology and greater global competition, to make more money, each of us needs to produce more to be paid the same wage as we made last year.  The good news is - inexpensive technology allows more of us to do just that.  The bad news begins when people subscribe to the obsolete economic theory of scarcity, and think they should be paid more for doing less.


Everyone should have a score cared that keeps their self-esteem high.  I'm not saying it has to be a financial scorecard.  It could be a scorecard on how may times you hug your kids or how many hours you spent with your kids.  The most important thing is that once school is over, a person should find a scoring system that keeps their self-confidence high, because what is life without self-confidence?

Before we consider your child's Financial IQ, let's consider how high your Parenting IQ is:

1.  How many times per week do you ask your child, "Did you do your homework?" and then check on it and go over it with them.  Or ask your child, "How is school going and take the time to actually find out? ____________   (Many parents simply ask the questions, but are not really interested in the answers.) 

2.  How many hours a week do you spend actually giving your child a hand with their homework? ___________ (It's not about giving them the answers, but more about supporting them in the process of learning.)

3.  How many hours a week do you spend actually playing with your child? ___________ (Physically playing, practicing a sport together and most importantly having fun together.)

4.  How many hours a week do you spend entertaining your child? __________ (Watching TV together, going to the movies, sporting events, family vacations.)

5.  How many hours a week do you spend educating your child on subjects you think are important for their life-long development? _________ (Subjects such as spirituality, morality, finances, civic responsibility, helping the less fortunate and leadership activities like scouting.)

6.  How many hours a week do you, the parent, spend on your own personal education? ___________ (Reading non-fiction books, attending classes at local community colleges, reading professional publications etc.  You can't talk about how important education is to your children and not be involved in your own.)

7.  How well do you know your child's teachers?  ________ Do you respect them as professionals?   Are they the kind of role models you want for your children? _______ (It's not about criticizing, it is about being interested in the people who actually raise your children together with you.)

8.  How well do you know your child's friends and the parents of their friends?  Do you respect them as people and as parents?  Are they the kind of role models you want for your children?  _______

9.  Are you a role model of who you want your child to grow up to become? _____________

10.  How many times this week have you hugged your child? ______

11.  How many times this week have you told your child you loved him or her? _________

12.  How many times this week have you told your child that you were proud of him or her? _________

 The National Council on Economic Education tested 1010 adults and 1085 high school students on their knowledge of basic economic principles.  The results were:

Among Adults      69% scored a D or F           

Among High School Students  79% scored a D or F

The shocking part about the article was the simplicity of the questions that were failed.

Many baby boomers are struggling financially because they are still following their parent's advice of "Get a safe, secure job," not realizing that times have changed.

Watch What You Say

Most people use fewer than 5000 words on a regular basis.  You have the choice of what words you use.  The more carefully you choose, the more you will benefit.  Change begins with changing our words.  If you don't like what you think, choose to ignore those thoughts and tell yourself, "I choose to think this instead."

You cannot always control what you think, but you can control what you say.  If you persist, those thoughts will eventually change into what you want instead.  They will have less and less power over your life.  So choose and speak only the words you want.  Maintain a positive yet realistic attitude and begin speaking the words of commerce, the words of wealth, the words of the rich.  Because words affect our thoughts and our thoughts affect our actions and our actions affect our lives and our fortunes.  And the good news is that words are free.

Although we all speak English, we do not speak the same language.  If we don't speak the same language, then we tend not to understand each other.  That is true for anything.  For example, if you like cars and someone else doesn't, you will tend not to spend as much time together.

Your children can leave school with excellent grades but know nothing about the language of the rich, which is the language of commerce.  Rich kids learn those words at home.  They learn it simply because their parents used those words so often.

In a seminar, I was instructing with the following story, "Instead of telling a child to go look for a good company to work for, advise them to learn how to build a good company."

"But not everyone can build a business." said a middle-aged man in the back of the room.  "Not everyone can be rich."

I stood there in silence, letting the words echo in the room.  As the seconds ticked by, the silence became chilling as the words continued to echo through the room.

"Change my words," said the same middle aged man.  "Why should I change my words?  Look, I came here because I've been laid off twice.  I have bills to pay, kids to feed, and the best advice you can give me is to change my words.  I need a job that pays me a decent wage so I can support my family.  I don't want to be rich.  I just want enough money to live on and all you can say is "Change my words?"  You're full of it!"  And with that he stood and stormed out of the room.

As he was leaving three other people stood.  One of the three, a  woman about my age turned and said, "I've listened to rich con men like you most of my life and I'm not going to listen any longer.  It's you rich people that exploit us honest hard working people.  My daddy wasn't rich like yours (mine never was), an so I'll never be rich.  And all you can say is watch my words.  What a waste of time!"  She then turned and joined the group heading out the door.

Time seemed to stand still for the next few seconds.  Finally, a young mother stood and said, "So that is what you mean by watch your words."  "That is what you mean by our words reflect back on to us in the lives we lead.  I don't want my baby growing up around people who speak like that."

Watch what you say.  If you believe you can't be rich, so will your children.  If you believe the rich are crooks, so will your children.  If you believe that working within a corporation you create is cheating, so will your children.  All of these attitudes will keep you exactly where you're at.  If you don't change your thinking, you can't change your situation.

Watch What You Think

When it comes to money, the people with the biggest money problems work hard for money and fail to change their thinking about money.  They work instead of think.  We do what we think, so to change what you do you first need to change what you think.

That same young mother continued, "What we are doing is what we are thinking.  "What we have been thinking is go to school, get a good job, buy a house, buy a car, spend money on the good life and work harder to pay the bills."

"I won't get rich thinking that way.  All I'll do is work hard and pay bills.  Then I get angry and frustrated because I'm not rich and guys like you are making millions of dollars and all I'm doing is what the words in my head are telling me to do.  If I don't change my words I will keep doing the same thing.  So I work hard, buy a nice house, pay bills, enjoy life, have kids, and live for today because that is what I decided to do."

"My life won't change until I change the formula.  Until I change the cassette tape in my head.  Whenever I needed more money, I simply went out and worked harder.  I would go and get a part-time job or work some overtime for the boss.  What you are saying is that those are the words of the working-class."

"I work as an engineer for the city.  The problem is, I have less and less time with my children as I work harder to provide for them.  They'll be gone in a few years and all I'll have done is work instead of spending quality time with them.  On top of that, I'm telling them to do the same thing I'm doing."

Positive thinking is important because attitude is very important, but attitude without a change in vocabulary does not change much.

The reason giving poor people money doesn't work is because the poor don't know what to do with the money.

Too often today our children study , sit in front of a computer or TV alone.  A vital part of learning is to be involved, giving, taking, and sharing with a real person.

-There are different intelligences and hence different forms of genius.

-The family's attitude about money is a very powerful influence on a child's attitude about money beginning at an early age.

-Subjects are best learned at an early age.

-Making learning fun enhances the learning process.

-Children learn best by involving multiple learning modalities.

-Repetition enforces the learning process.


Financial intelligence must be measured by the freedom it provides you, not the things it provides you.  Financial intelligence is not about being "rich", it's about being "free".

Making more money without doing it in a way that really makes you happier is not financial intelligence.  Why work for money and be unhappy?  If you must work for money, find a way to work and be happy.  That is financial intelligence.

If you don't have an accurate financial grading system, how will you know where you are really at?  How can you know for sure how well you're really doing?

Work towards having the freedom to work or not to work.  Work towards having the financial means to support the people and causes that are important to you.  Work towards having the means to change things rather than simply complain about them.  Work towards having the time to be a great parent.  Work towards a life of retirement where you're busy finding ways to give away what you've accumulated in ways that make you and others happy.

Too many people work too hard for money and slowly kill themselves in the process.  Their is no such thing a sudden heart attack.  They are caused by lack of exercise, a poor diet and not enough joy in ones life over extended periods of time.  Of the three, I think the lack of joy is the biggest culprit.  Too many people think about working harder rather than thinking about how to have more fun and enjoy this great gift of life.

Money does not make you happy. Don't think that you will be happy once you're rich.  If you aren't happy while getting rich, you probably won't be happy once you are.  So regardless if you're rich or poor, make sure you're happy.

A financial statement is really a reflection of the core beliefs of the person or the company.  In other words, people afraid that there is not enough money manage their money from that frame of reference.  People terrified of losing money manage their money differently than people who come from a winning point of view on money.  There are charitable poor people and charitable rich people.  There are also stingy rich people and stingy poor people.  Intelligence is a measure of the number of differences you are aware of on any one subject.  The more detail you understand about the subject, the more intelligence you have in it.


You don't get rich at work.  Work is where you earn your money.  It is at home where you decide what you are going to do with your money.  It is what you do with your money after you earn it that makes you rich or poor.

A paycheck does not make you rich.  It's what you do with that paycheck that makes a person rich, poor or middle class.  Buying real estate is what makes you rich, not your paycheck.

Most people think that a bigger raise or a bigger paycheck is what will make them rich.  The reality is that the more money people make, the further in debt they get themselves, so they have to work even harder.  This isn't freedom, therefore, it isn't financial intelligence.  They have a good plan of how to make money, but a poor plan of what to do with it after they earn it.

Most people have a plan on how to make their money but they don't have a plan on what to do with it after they make it.  If you have a good plan for your money before you make it, then your problem will be having too much money. 

As you grow you will set up corporations to hold your assets.  The bigger your corporations grow, the more salary you will have to take as expenses against your business.  The greater the salary from your businesses, the more you will need to invest and give away to charities in order to avoid paying 50% taxes.  The more of that you do, the more your businesses will grow.  (So don't think that the rich don't have problems, they just have different kinds of problems.  You might define them as desirable problems, but they still require time and effort to solve, just like your current problems.)


The primary difference between the rich, the poor and the middle class is what they do in their spare time.  The rich were willing to sacrifice at least part of their spare time in pursuit of greater financial intelligence.  Once they had developed some financial intelligence, they began applying that knowledge by using some of their spare time to invest a little time, money and expertise into opportunities (what you might call "risks".)  

Because they had the background, then applied hands-on experience, they were able to develop a return on their investment and minimize the risk.

The rich take their money and buy real estate, then enjoy the income their rental properties make for them.  This is not the only formula for wealth, but it is the one that has been used by hundreds of years by kings and queens and still works today.  The difference today is that you don't have to be nobility to own real estate.

An astute real estate investor purchases a large tract of land with row after row of low-rent houses on the land.  He recognizes that in a few years, the town will be growing in this direction.  A new airport is going up on the other side of the properties and those rental houses will soon be converted into a light industrial park area.  It will then be one of the most valuable pieces of land in town.  The only way he knows this and does this and you don't is through the education he's given himself.  The only difference between the two of you is what you do in your spare time.

You can also invest in stocks and bonds, but the bank will give you more money to buy real estate because the bank is more comfortable leveraging its money against property than stocks.

Simply stated, poor people, regardless of how much money they make, spend everything they make.  The middle class tend to spend more than they make by going deeper into debt with each pay raise.  The rich focus on being good stewards of money, keeping as much as they can, protecting it, and having it grow for future generations.

It's OK to work for a big corporation, but it is also important to own your own corporation for tax purposes.  Think carefully about starting your own home based business.  Always seek advice from people who have already done what you want to do and have done it successfully.


The saying that a journey of 1000 miles begins with a single step needs to be updated.  The journey of a 1000 miles should begin with first an idea of where you want to go, before you travel 1000 miles in the wrong direction.

Just because someone says "You can't do something." doesn't mean you can't.  It just means that they can't.


Be an investor first and you can choose to do what you want because you love doing it, rather than because of how much it pays.

Rich parents often physically have their children invest their own money.  Many of their children have sizeable investment portfolios that they personally manage, even before they leave high school.

Poor and Middle Class Priorities:

  1. Employment security
  2. Consumption for life's comfort
  3. Savings
  4. Investing (If there is anything left)

A Rich Person's Priorities:

  1. Investment portfolio
  2. Professional satisfaction
  3. Savings
  4. Consumption for life's comfort

Rich People                   Other People

1.  Earn                         1. Earn

2.  Tithe                         2. Spend

3.  Invest                       3.  Tithe

4.  Save                         4. Save (but usually there's nothing left)

5.  Spend                             

"Other People" always work for the "Rich People"

The rich are not necessarily smarter, they just have different priorities.

One of the problems with people young and old is that they spend their money on things that lose value the moment you buy them.  Kids today spend much of their time learning about money management from retailers.

In real life, the reason most people suffer financially is not because they do not earn enough money, they suffer because they spend their money foolishly.  They do what accountants call, "Turning cash into trash."

The fundamental difference between the rich and everyone else is that the rich buy assets first and luxuries second.  The poor and middle class try to buy luxuries first and never have money to buy assets.  By focusing on buying more and more assets, the rich are able to have their assets buy their luxuries.

Whenever my wife and I want to buy a major luxury, we first acquire an asset.  That asset will provide the cash flow to buy the luxury item.  For example, when I wanted a new Porches, we went out and bought a property that provided the cash flow to make the payments for the Porsche.  Once the car was paid off, we still had the asset and the cash flow with which to either reinvest or buy a new luxury.

You need to have two plans for money:  One plan is how you work so you can acquire earned income.  Plan two is how to convert that earned income to passive and portfolio income.

I would recommend that once you graduate from college and begin earning money, instead of focusing on earning more earned income that you focus on how to have more passive income and portfolio income before you're forty.  To be rich and financially free by age forty would be a great goal.  And to do that, you will need passive income and portfolio income.


The average life expectancy for an inheritance is about 18 months.  Keeping one's assets safe and growing is a technical science and an art in itself and should be taken seriously.  

Individuals who attain great wealth must put in place trustees or train their heirs to protect and grow the wealth.  Parents who do not train their children well may find their children anxious for them to die, so their life can begin.  Too many parents put provisions in their will that say, "My children will receive this money once they turn 25 (or some other age)." but fail to teach them what to do with it after they receive it.  That is why most great wealth is gone by the third generation.


Those that are only word literate will work for those who are financially literate.  In other words, it's the golden rule, which is, "He who has the gold makes the rules."  And having gold begins with financial literacy.

Having a high paying job is not as important as having personal control over your cash flow.  Too many people seem to be obsessed with how big their paycheck is.  To be successful financially, we all need more financial education.  Financial education begins with the basics of financial literacy.  The fact is a young man working in a hamburger stand, earning a minimum wage, can become a millionaire while providing financial security for his family.  All he needs is a little training that begins with education in financial literacy.



Facts are not better than opinions, yet problems arise when opinions are used as facts.  If a salesman says to you, "The value of this house will go up." ask, "Will you guarantee that in writing?"  That will usually end that opinion being presented as fact.  (Notice that we all have a tendency to present our opinion as fact when it serves us to do so.)

Attitude is Everything

A young man recalled an experience he had.  He was delivering a television set to one of the richest men in his town and was surprised to find him sitting all alone in his big house.  The young man realized that many rich people are rich because they have stepped on so many people's feet on the way up that no one wants to be around them once they arrive.

The young man's perception became, "You will be miserable and lonely if you are rich."  "The rich are snobs and greedy."  "Rich people don't care about poor people."

Do you have similaropinions about being rich?


One of the main reasons the rich have more money is that they take the time to know if something is a fact or if it is just an opinion.

You may believe that your house is your biggest asset.  The fact is, your house is probably your biggest liability.  Every month your house is one of your biggest expenses.  Even if you have your house paid off, you must still pay the taxes and utilities.

For there to be an asset, there must be a liability.  Something is an asset for one party and a liability to another.  Your house is an asset, but it is not yours, it is the banks.  If you look on the balance sheet at the bank, it is listed as a liability for you and an asset for them!

If you think your property belongs to you, just stop paying your property tax and you will soon find out who really owns your real estate, with or without a mortgage.

Too many people simply take the word of someone they think is an authority and accept an opinion as a fact.  Think of the long-term consequences of that type of misunderstanding.  That is why so many people all over the world struggle financially.  They do not know the difference between an asset and a liability so they buy liabilities they think are assets.  If they simply bought assets before they bought liabilities they would get richer and richer, but instead they buy liabilities they think are assets.  Then they struggle financially and have to work harder and harder.

Your house would be an asset if it were bringing in more money than it was costing you each month.  While you may believe this is the case because of the appreciation of the property, if you took the time to look at the numbers and investment over time, you would realize that you lose money investing in your residential property.

If you buy a house for $100 000 today, you will need to sell it for $200 000 in 7 years to get back your original purchase price (plus the costs of owning the home).  Will the market increase that much?  Maybe, but no one can predict the market with certainty. 

Does that mean that you shouldn't own a home?  No, it may still be better than renting, but it is important to understand the difference between an asset and a convenience.  Owning two homes and renting one out would mean that you have one house as an asset. 

Owning your home and renting out the basement suite, the garage and a room upstairs for more than your monthly payments would make your house an asset as well.  "Who would want to do that?" you might ask?  How about your single children?  Why not train them on the difference between an asset and a liability and get them set up owning an investment while they're young?

Is you car an asset or a liability?

Unless you're a taxi driver, your car is a liability.  The rich own the same thing as you and I, they simply design the purpose of them to reflect better financial decisions.  They do own liabilities, but they purchase them after they have assets that create cash flow to pay for their liabilities.  That's the difference between the rich and those who aren't.  The rich borrow money to buy assets, the middle class borrow money to buy liabilities.

If a rich person is looking at buying a warehouse, the bank doesn't only evaluate the person, the bank primarily evaluates the warehouse.  The warehouse with a tenant is an asset.  It makes a lot of money so the bank's risk is low.  A house used as a personal residence does not make money, so the person buying it is the asset.  That is why a person with a job can borrow money and the person who is unemployed cannot.  The job is the asset, not the person.

The middle class borrow up to the limit of what their paycheck can afford.  They borrow to the "red line."  The red line is the point where income and expenses are the same.  They get a raise and they rush out to borrow up to the new red line.  That is why they don't get ahead.  They borrow to buy liabilities they think are assets, never realizing that they are the asset, not the things they are buying.

Here we see the importance of understanding the difference between fact and opinion.  The bank knows what the real asset is.  You may believe what you're buying is the asset, but that is an opinion.  To the bank, the fact is that your job is the asset.

The bank will lend you a lot of money for a warehouse, much more than you make because you are not the asset.  The warehouse is the asset.  It's the asset because it makes money with or without you!

When you can begin to make these finer distinctions, you know that you have begun to raise your financial IQ.  The rich get richer because they know the difference between facts and opinions, assets and liabilities and they borrow money to buy assets.



Prove that you can manage what you have before you get wound up about managing what you want to have.  If you are in debt, if you have more than one credit card with a balance, if the balance you carry is more than 10% of what you earn annually, if you have a habit of purchasing on credit, if you don't have any savings, then begin to get a hold of your current situation.  Cut up your credit cards.  Spend cash only.  Save 10% of everything you make, then save 10% of your gross (pay before deductions).  When you are out of personal debt and when you have consistently saved 10% of your gross for 6 months, you are ready to begin looking at a business where you invest.

Wealth is created using time.  You don't get wealthy in a year, or two or even three.  Wealth is built using the principle of compound interest.  If you are in debt, you may remember how long it took to get so far into trouble.  It may take you just as long to get out.  Only then can you begin to build wealth.  Patience is one of the most important qualities you will need in order to be successful at becoming wealthy.  

It's not about ripping people off.  It's about managing your own resources wisely over time.

You want to start small because you don't want to risk too much money.  Understand that you will probably make a few mistakes.  Losing money is part of the learning process.  If you lose money it means that you don't know something.  So if you take losing money as a good sign that you are going to learn something you do not know, then the price of your education was small.

Losing money is good as long as the price is small and you are humble enough to learn from the mistake.  If you think the mistake was just a mistake and your arrogance doesn't allow you to learn from it, then the nest time the price of that same mistake will go up.  Mistakes are valuable learning tools.  Don't waste them because in the world of business, the mistakes get more expensive each time you make them.  Learn from the mistake the first time and the lesson will be cheap.  Don't learn from it and the price of the lesson goes up.

Why start building a business instead of going straight into real estate?  If you build a business, you have a better chance of being a better businessperson.  If you're a good businessperson, you'll make better decisions when it comes to buying property.  It's like going out and self-educating yourself before you start throwing your money around.

Start small and work your way up.  Most people want to make a big killing in the market and that is what happens...their fortune gets slaughtered.

They lack experience and education and take advice from people who simply have an "opinion" and don't know all the facts.

We live in a free country. we all have the choice of being rich, poor or middle class.  That is a choice only the individual can make.   Everyone has the potential to be rich, but not everyone has the desire to do the work involved.


Buy This Book (It Comes With "Cashflow For Kids")