As a child I was lucky to have my father as a business mentor. When the time came and I entered the business world, I couldn’t lean on him because he passed away young. The Rich Dad/Poor Dad books were my saving grace when it came to financial education. A lot of the concepts I knew about from my dad, but the advanced strategies and how-to’s actually came from Rich Dad’s books. Tom is a Rich Dad advisor.

Why is this important to me?

I am not doing this summary to waste your time. My vision is to provide concise action steps you can take right now to improve your financial life and career. If you want to continually improve, you have to be committed to continuous learning. Take advantage of continuous learning with the right partnerships and you will be successful in your career.

The Cash Flow Quadrant really sums up the essence of financial success. If you focus on the left side of the quadrant, then you can earn a good income, but if you focus on the right side, you can become rich. Robert Kiyosaki points out in Rich Dad/Poor Dad that people on the left side of the quadrant make money, pay taxes, and then spend it. On the right side of the quadrant, people earn money, spend it, and then pay their taxes. This is a big difference and can be the biggest lever for success in your financial arsenal.

Tax-Free Wealth points out 24 tax strategies you can use on your path to Tax-Free Wealth. In the interest of time, I’ll point out a few along with some comments on each.

1. Rule #1 – It’s your money, not governments. People tend to freak out when it comes to taxes. Remember that you are the one who creates the value and makes the business work, be smart and use tax strategies to minimize taxes and maximize your investment. The key here is tax evasion, NOT tax evasion. Every concept in this book is fully legal and encouraged by the IRS.

2. Rule #2 – The Tax Law is written to permanently reduce your taxes. All financial plans need a solid foundation. This is why you can simply NOT focus only on the rate of return. You can get a great rate of return, but if you can lose it to a lawsuit or if 50% is consumed in taxes, you will lose in the long run. 99% of the tax code is written as incentives to encourage people to start businesses. The reason the government does this is because businesses create jobs and that is the most important economic engine.

3. Rule #3 – The fastest way to put money in your pocket is to reduce your taxes. Businesses require investment. That investment is a business expense along with R&D, travel, and other business-related expenses. You can legitimately combine vacation and work and write it off as a business expense. If you travel and sell items, go on sales calls in the vacation area. If you are a real estate investor, then travel where you can invest.

4. 4. Rule #24 – Generate massive passive income through your tax savings. This is the strongest wealth builder in the book because it increases compound interest, velocity of money, and leverage. By using these three vehicles along with investment stacking, you will be rich. The goal is to build your business and make money there and turn it into passive income and then park the extra money in cash flow investments like real estate. You want your money to work harder than you do. You don’t want to trade hours for dollars. Let me give you an example.

In our software company there are two ways to generate wealth and that is through intellectual property and maintenance agreements. These two things together will create a business that can be sold for 2-4 times the revenue. Now, to encourage that leveraged investment, I use the “Infinite Banking Concept” to lend money to the business through “my own bank.” Now the money the company returns to me as investment income, which means lower taxes. New revenue from additional maintenance contracts encourages new contracts. The next step is to use the “good debt” to take advantage of our coverage and acquire more income from maintenance contracts with our software platform.

In short, you make money in your business and keep it in passive income generating assets using good leverage, velocity of money, and compound interest.

Tax-Free Wealth is a great resource that I encourage you to read. If you immerse yourself in these concepts, financial security and true wealth can be yours.

I hope you found this short summary useful. The key to any new idea is to work it into your daily routine until it becomes a habit. Habits are formed in as little as 21 days. One thing you can take away from this book is to improve your financial education. If you take control of your education and schedule 30 minutes a day dedicated to it, you will get results. You cannot put your financial future in someone else’s hands. Take responsibility and good things will happen.

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