Blog | Personal Finance

Watch Your Mouth..and Your Heroes

The power of the words we use and the people we emulate

“If you want to see a person’s past, present, and future, just listen to his or her words.” – Rich dad

Many people like to say, “It takes money to make money.” Rich dad believed nothing was further from the truth.

“The idea that it takes money to make money is one of the worst ideas there is, especially if a person wants more money,” he said.

Rather, rich dad believed that what it took to make money was something everyone had access to—something completely free but very valuable: Rich dad believed it took words.

Listen carefully

The power of words to make one successful is one of the more counterintuitive things my rich dad taught me. To drive it home, he gave me an assignment to go to dinner with my poor dad and listen to what he said, the words he used, and the message behind them.

After the dinner, rich dad asked what I heard. The basic premise that I heard from my poor dad was, “I’ll never be rich.” I explained how I realized I’d heard him say this nearly my whole life.

Words have power

Other things my poor dad used to say were things like:

• “Do you think money grows on trees?”

• “Do you think I’m made of money?”

• “The rich don’t care about people like I do.”

• “Money is hard to get.”

• “I’d rather die happy than rich.”

My poor dad talked like a schoolteacher. He used words like:

• Test scores

• Grants

• Grammar

• Literature

• Government appropriations

• Tenure

• Security

• Safe

Conversely, my rich dad talked like a businessman. He used words like:

• Cap rate

• Financial leverage

• EBITDA

• Producer price index

• Profits

• Cash flow

“It doesn’t take money to make money,” said rich dad. “It takes words. The difference between those who are rich and those who are poor is their financial vocabulary. And the best news is words are free.”

Increase your vocabulary

During the 1980’s, I spent a lot of time teaching entrepreneurship and investing. Rich dad’s lesson on the power of words became evident to me. I was acutely aware of people’s vocabulary and how their words related to their financial well-being.

Words represent knowledge. Success in a certain investment begins with increasing your financial vocabulary in that subject.

In school, lawyers learn the vocabulary of law, medical doctors learn the vocabulary of medicine, and teachers learn the vocabulary of education.

Most people, however, are not taught or do not learn the financial vocabulary of investing, finance, money, accounting, corporate law, and taxation. Given that it’s an absolute certainty that these things will impact a person’s entire life, that borders on criminal.

If you want to change your words, change who you follow

If I’d followed in my poor dad’s footsteps, I’d talk like my poor dad today. If I went to law school, I’d talk like a lawyer. If I went to medical school, I’d talk like a doctor. If I went to a school of education, I’d talk like a teacher.

Thankfully, I didn’t do any of those things. I followed my rich dad. I emulated him. And in the process, I learned to talk like him.

But I didn’t stop there. I also found new heroes and new people to emulate. And emulation, I’ve discovered, is one of the most powerful ways to grow…both yourself and your vocabulary.

If you want to change your words, change who you follow

When I was a child in Sunday School, I learned that Jesus had a high opinion of children. “You need to change and become like little children,” he said. Jesus understood that children see the world in different and valuable ways. He understood that there was actually a lot to learn from children. For one thing, children can teach us how to idolize great people and dream to be like them.

When I was a kid, I idolized Willie Mays, Hank Aaron, and Yogi Berra. They were my heroes. I wanted to be just like them. I collected their baseball cards, and I knew all their stats—the RBI's, the ERA's, and the batting averages. I knew how much they got paid and their story coming up from the minors.

As a young child, when I stepped up to the plate or played in the field, I wasn't me. Rather, I pretended I was one of my heroes. As adults, we often lose the ability to pretend, even to dream, but the truth is that emulating our heroes is one of the best ways we learn. As adults, we lose our heroes, and that's to our disadvantage.

Modern day heroes

Today, I watch young kids playing basketball by my house. On the court, they're not little Johnny. They're pretending to be someone else, someone better than they are. They understand what most of us forget: copying and emulating our heroes is one of the best ways we learn.

Now that I'm older, I have new heroes. I have golf heroes, and I copy their swings and do my best to read everything I can about them. I also have business and investing heroes such as Donald Trump, Warren Buffett, Steve Jobs, Peter Lynch, George Soros, and Jim Rogers. I know their stats just like I knew the stats of my favorite baseball players as a kid. I follow what they invest in and how they build their businesses. I read everything I can about them and by them. I want to emulate how they invest and how they negotiate deals.

Just as I wasn't me when I was up to bat as a child, when I'm investing in the market or negotiating a deal, I subconsciously act with the bravado of Trump. When I analyze a trend, I look at it as though I were Warren Buffett. By having heroes, we tap into a tremendous source of raw genius—and we make it our own.

The Power of Emulation

One of the most powerful phrases in human history is, "If they can do it, so can I."

Rather than think something is too hard to accomplish, the rich understand that it's important to find those who make it look easy and to follow their lead.

The rich have heroes, and they emulate them. The funny thing is, when you do that, you often become someone else's hero in the process. That is the power of emulation.

Emulating the words of your heroes

One of the great things about studying the lives of those we wish to emulate is that we will also intuitively pick up their vocabulary. We will begin to talk like them.

Some of the words of those I emulate have changed my life and the way I look at the world.

For instance, Warren Buffett said:

• “Rule No. 1 is never lose money. Rule No. 2 is never forget Rule No. 1.”

• “Price is what you pay, value is what you get.”

• “Risk comes from not knowing what you are doing.”

• “Never invest in a business you cannot understand.”

• “When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients.”

Donald Trump said:

• "Sometimes your best investments are the ones you don't make."

• "As long as you are going to be thinking anyway, think big."

• "When you are wronged repeatedly, the worst thing you can do is continue taking it--fight back!"

• "I only work with the best."

• "Money was never a big motivation for me, except as a way to keep score. The real excitement is playing the game."

And Jim Rogers said:

• “If everyone thinks one way, it is likely to be wrong. If you can figure out that it is wrong, you are likely to make a lot of money.”

• “I cannot invest the way I want the world to be; I have to invest the way the world is.”

• “The biggest public fallacy is that the market is always right. The market is nearly always wrong. I can assure you of that.”

• “Following what everyone else is doing is rarely a way to get rich.”

• “If anybody laughs at your idea, view it as a sign of potential success!”

Who are your heroes? Who does what you want to do and makes it look easy? Who talks the way you want to talk? Get to know everything about them and begin copying what they do and say. That's an integral part of financial education.

Today, your heroes may be different than mine. Perhaps you admire Mark Zuckerberg, Jeff Bezos, or Marissa Mayer. Each generation has its own heroes. The point is not who they are but what they do. And if they can do it, so can you. Eventually, you'll find your own style, but no one starts ready for the majors. The good news is that you can and will get where you want to be. We all just need a little help—and a little hope—along the way.

Start your financial education

Kim and I started The Rich Dad Company to help people increase their financial vocabulary through financial education.

One reason I created my tabletop game, CASHFLOW, was to familiarize people with a financial vocabulary. Kim and I could only reach so many people with our seminars. It’s not just a game; it’s a seminar in a box (well, now an app too).

In all our games and apps, people quickly learn the relationships behind the words of accounting, business, and investing. By repeatedly playing the games and using the apps, the players learn the true definition of misused words such as asset and liability.

Other ways you can increase your financial education is through books, seminars, classes, and coaches. All of which are a modest cost for the value they can return.

Sometimes, I get blasted for pushing my own products and services. That’s fine. My ultimate goal is to spread financial education. If a person gets it through a local class or coach and not my own products and services, I whole-heartedly encourage you to check them out.

Ultimately, the world is better served with financially educated people – no matter where they received their education.

Change your vocabulary. Change your life. I encourage you to start now.