A financial statement is not rocket science.

At school on Monday I recruited ten classmates to begin work immediately.After school on Monday, only six showed up at the field.By Tuesday, not much had been accomplished.My ’employees’ were having too much fun playing and not working.They were rolling in the weeds, not pulling them.By Wednesday, none of them showed up to work, even though they promised they would.On Wednesday night, I talked to rich dad, who said, ’You had better keep your word and get the job done.’I did the job by myself on Thursday and Friday.On Monday, my ’workers’ wanted their share of the money.At the age of 15, I was handling my first labor dispute, which I lost.In the long run, it was an experience I couldn’t put a price on.At 15, and entering my second window of learning, I knew that if I wanted to be an entrepreneur, I had to learn a lot more than people who wanted to be employees.My intelligence was increasing.My mind was opening.I was beginning to see both sides of the coin.It used to be that instead of going to college you worked as an apprentice.Unlike college, an apprenticeship allowed you to be wrong, to make mistakes, and to take the time to really learn how to do something well.It is no wonder that Donald Trump’s television show, The Apprentice, is so popular.The idea of an apprenticeship, of gaining real mastery over your area of interest, appeals to all of us.Looking back, I know why rich dad never paid me in dollars.Action Step for ParentsExplain the concept of three sides to every coin.Select any coin and use it as a teaching tool.Explain to your child that schools and the traditional classroom environment are often focused on right answers.Think of a few examples in which there could be several answers to a question or problem as an example of how to look at things from several different vantage points.Use the coin to illustrate heads on one side, as one point of view, and tails on the other.Also discuss the edge of coin, and how intelligence is the ability to use the edge as a vantage point to see and appreciate multiple points of view.Intelligence is the ability to see both sides of the coin, from the edge.My report cards were never very impressive.So when I realized that a banker was more interested in the cash flow of a property than the grades on my report card, I knew I had a shot in life.And I learned that our report card, in real life, is our financial statement.A banker can tell a lot about a person from their financial statement and in the real world financial intelligence is more prized than As and Bs in school.Making the CaseSchools have students believe that good grades are important.The reason a banker does not ask you for your report card is because your banker is not interested in your academic intelligence.Your banker is interested in your financial intelligence.Your financial statement is your report card after you leave school.It’s your report card as an adult.The problem is, most students leave school living in the past.A few bask in the glory of having been ’A’ students in school.Many fail to focus on the report card for their future, their personal financial statements.This is why many ’A’ students who may have had good grades in school have failing financial report cards as adults.And, on the flip side, why many students who struggle in school become financial geniuses once they leave that academic environment and enter the real world.Your choices and your actions are determined by which report card is important to you.What Is a Financial Statement?Both the income statement and balance sheet work hand in hand.Financial intelligence involves the ability to know and understand the relationship between them.When most students leave school, their primary focus is on the income statement.They are looking for a job and a paycheck.They need income to pay for living expenses.The graphic shows the cycle.For many young people in America, their first expenses are rent, food, transportation, and entertainment.If they do not have the money, some moms and dads give them the money they need.This does little to increase their financial intelligence.As they enter the third window of learning, from ages 24 to 36, many get married and start a family.When the first child arrives, so do more expenses.And as most parents know, children become more expensive with age.When children arrive, many parents are forced to grow up.In the third window of learning, people begin to think about earning more money.Many take their work more seriously.Some go back to school.By the time they are 36, the end of their third window of learning, most young couples are trapped in the Rat Race of life.Life becomes a scramble to earn enough money to cover increasing expenses, with most people living paycheck to paycheck.They could use and abuse their credit cards, because the value of their homes continued to go up in value.They would then apply for a home equity loan to pay off their credit card debt.Then the housing market crashed.Since the housing market is one of the key drivers of the economy, when housing crashed, jobs began disappearing.Life became harder for many adults and their kids.Without financial education, most people do not know about the power of the balance sheet.Without financial education, most people use the power of the balance sheet against them.It takes financial education to use your balance sheet to make it work in your favor.Without financial education, many people abuse the balance sheet.The financially educated know how to use the power of their balance sheet to make themselves richer.My StoryAt nine years old, I knew I was going to be rich.Playing Monopoly® with my rich dad, I knew I would someday use the power of the balance sheet to become a rich man.At the same time, my poor dad, then in his thirties, was focused on his income statement.He was in school to make more money, a bigger paycheck.When I was 14, my dad finally worked hard enough, saved enough money, and bought his first house.Although I was just a kid, I would cringe every time my poor dad proudly said, ’Our house is an asset and our biggest investment.’ Even at 14, I knew our house was not an asset.I also knew there were better investments than a personal residence.I already knew that four green houses or a red hotel, producing income, were much better investments.My rich dad was teaching me to focus on the balance sheet.From playing Monopoly with rich dad, I knew the power of little green houses and red hotels.You do not have to be a college graduate to know the difference between assets and liabilities.You don’t have to be a college graduate to know that a personal residence is a liability, or that green houses and red hotels are assets.If you read Rich Dad Poor Dad, you already know rich dad’s simple definitions for assets and liabilities.Assets put money in your pocket, even when you’re not working.Liabilities take money out of your pocket, often requiring you to work harder.The following simple line drawings explain the differences between assets and liabilities.This relationship is very important.It is the other side of the coin.It takes both documents to determine which are assets and which are liabilities.If you do not understand the relationship between the income statement and balance sheet, please review it again or ask someone to assist you in understanding it.You may recall that, in the Cone of Learning, discussion is a higher level of learning.If you do not understand the relationship between the income statement and balance sheet, don’t feel that you’re alone.Simply stated, ’You cannot tell assets from liabilities without first checking the income and expenses on the income statement.’