If you have read this far, arrogance is not one of your problems. Arrogant people rarely read or buy tapes. Why should they? They are the center of the universe.

There are so many "intelligent" people who argue or defend when a new idea clashes with the way they think. In this case, their so-called "intelligence" combined with "arrogance" equals "ignorance". Each of us knows people who are highly educated, or believe they are smart, but their balance sheet paints a different picture. A truly intelligent person welcomes new ideas, for new ideas can add to the synergy of other accumulated ideas. Listening is more important than talking. If that was not true, God would not have given us two ears and only one mouth. Too many people think with their mouth instead of listening to absorb new ideas and possibilities. They argue instead of asking questions.

I take a long view on my wealth. I do not subscribe to the "Get rich quick" mentality most lottery players or casino gamblers have. I may go in and out of stocks, but I am long on education. If you want to fly an airplane, I advise taking lessons first. I am always shocked at people who buy stocks or real estate, but never invest in their greatest asset, their mind. Just because you bought a house or two does not make you an expert at real estate.

3. CHOOSE FRIENDS CAREFULLY: The power of association. First of all, I do not choose my friends by their financial statements. I have friends who have actually taken the vow of poverty as well as friends who earn millions every year. The point is I learn from all of them, and I consciously make the effort to learn from them.

Now I will admit that there are people I have actually sought out because they had money. But I was not after their money; I was seeking their knowledge. In some cases, these people who had money have become dear friends, but not all.

But there is one distinction that I would like to point out. I've noticed that my friends with money talk about money. And I do not mean brag. They're interested in the subject. So I learn from them, and they learn from me. My friends, whom I know are in dire straits financially, do not like talking about money, business or investing. They often think it rude or unintellectual. So I also learn from my friends who struggle financially. I find out what not to do.

I have several friends who have generated over a billion dollars in their short lifetimes. The three of them report the same phenomenon: Their friends who have no money have never come to them to ask them how they did it. But they do come asking for one of two things, or both: 1. a loan, or 2. a job.

A WARNING: Don't listen to poor or frightened people. I have such friends, and I love them dearly, but they are the "Chicken Littles" of life. When it comes to money, especially investments, "The sky is always falling." They can always tell you why something won't work. The problem is, people listen to them, but people who blindly accept doom-and-gloom information are also "Chicken Littles." As that old saying goes, "Chickens of a feather agree together."

If you watch CNBC, which is a goldmine of investment information, they often have a panel of so-called "experts." One expert will say the market is going to crash, and the other will say it's going to boom. If you're smart, you listen to both. Keep your mind open because both have valid points. Unfortunately, most poor people listen to "Chicken Little."

I have had more close friends try to talk me out of a deal or an investment. A few years ago, a friend told me he was excited because he found a 6 percent certificate of deposit. I told him I earn 16 percent from the state government. The next day he sent me an article about why my investment was dangerous. I have received 16 percent for years now, and he still receives 6 percent.

I would say that one of the hardest things about wealth building is to be true to yourself and be willing to not go along with the crowd. For in the market, it is usually the crowd that shows up late and is slaughtered. If a great deal is on the front page, it's too late in most instances. Look for a new deal. As we used to say as surfers: "There is always another wave." People who hurry and catch a wave late usually are the ones who wipe out.

Smart investors don't time markets. If they miss a wave, they search

for the next one and get themselves in position. Why this is hard for most investors is because buying what is not popular is frightening to them. Timid investors are like sheep going along with the crowd. Or their greed gets them in when wise investors have already taken their profits and moved on. Wise investors buy an investment when it's not popular. They know their profits are made when they buy, not when they sell. They wait patiently. As I said, they do not time the market. Just like a surfer, they get in position for the next big swell.

It's all "insider trading." There are forms of insider trading that are illegal, and there are forms of insider trading that are legal. But either way, it's insider trading. The only distinction is how far away from the inside are you? The reason you want to have rich friends who are close to the inside is because that is where the money is made. It's made on information. You want to hear about the next boom, get in and get out before the next bust. I'm not saying do it illegally, but the sooner you know, the better your chances are for profits with minimal risk. That is what friends are for. And that is financial intelligence.

4. MASTER A FORMULA AND THEN LEARN A NEW ONE: The power of learning quickly. In order to make bread, every baker follows a recipe, even if it's only held in their head. The same is true for making money. That's why money is often called "dough."

Most of us have heard the saying "You are what you eat." I have a different slant on the same saying. I say, "You become what you study." In other words, be careful what you study and learn, because your mind is so powerful that you become what you put in your head. For example, if you study cooking, you then tend to cook. You become a cook. If you don't want to be a cook anymore, then you need to study something else. Let's say, a schoolteacher. After studying teaching, you often become a teacher. And so on. Choose what you study carefully.

When it comes to money, the masses generally have one basic formula they learned in school. And that is, work for money. The formula I see that is predominant in the world is that every day millions of people get up and go to work, earn money, pay bills, balance checkbooks, buy some mutual funds and go back to work. That is the basic formula, or recipe.

If you're tired of what you're doing, or you're not making enough, it's simply a case of changing the formula via which you make money.

Years ago, when I was 26,1 took a weekend class called "How to Buy Real Estate Foreclosures." I learned a formula. The next trick was to have the discipline to actually put into action what I had learned. That is where most people stop. For three years, while working for Xerox, I spent my spare time learning to master the art of buying foreclosures. I've made several million dollars using that formula, but today, it's too slow and too many other people are doing it.

So after I mastered that formula, I went in search of other formulas. For many of the classes, I did not use the information I learned directly, 'i| but I always learned something new.

I have attended classes designed for only derivative traders, also a class for commodity option traders and a class for Chaologists. I was way out of my league, being in a room full of people with doctorates in nuclear physics and space science. Yet, I learned a lot that made my stock and real estate investing more meaningful and lucrative. Most junior colleges and community colleges have classes on financial planning and buying of traditional investments. They are great places to start.

So I always search for a faster formula. That is why, on a fairly regular basis, I make more in a day than many people will make in their lifetime.

Another side note. In today's fast-changing world, it's not so much what you know anymore that counts, because often what you know is old. It is how fast you learn. That skill is priceless. It's priceless in finding faster formulas-recipes, if you will, for making dough. Working hard for money is an old formula born in the day of cave men.

5. PAY YOURSELF FIRST: The power of self-discipline. If you cannot get control of yourself, do not try to get rich. You might first want to join the Marine Corps or some religious order so you can get control of yourself. It makes no sense to invest, make money and blow it. It is the lack of self-discipline that causes most lottery winners to go broke soon after winning millions. It is the lack of self-discipline that causes people who get a raise to immediately go out and buy a new car or take a cruise.

It is difficult to say which of the ten steps is the most important. But of all the steps, this step is probably the most difficult to master if it is not already a part of your makeup. I would venture to say that it is the lack of personal self-discipline that is the No. 1 delineating factor between the rich, the poor and the middle class.

Simply put, people who have low self-esteem and low tolerance for financial pressure can never, and I mean never, be rich. As I have said, a lesson learned from my rich dad was that "the world will push you around." The world pushes people around not because other people are bullies, but because the individual lacks internal control and discipline. People who lack internal fortitude often become victims of those who have self-discipline.

In the entrepreneur classes I teach, I constantly remind people to not focus on their product, service or widget, but to focus on developing management skills. The three most important management skills necessary to start your own business are:

1. Management of cash flow.

2. Management of people.

3. Management of personal time.

I would say, the skills to manage these three apply to anything, not just entrepreneurs. The three matter in the way you live your life as an individual, or as part of a family, a business, a charitable organization, a city or a nation.

Each of these skills is enhanced by the mastery of self discipline. I do not take the saying "pay yourself first" lightly.

The Richest Man in Babylon, by George Classen, is where the statement "pay yourself first" comes from. Millions of copies have been sold. But while millions of people freely repeat that powerful statement, few follow the advice. As I said, financial literacy allows one to read numbers, and numbers tell the story. By looking at a person's income statement and balance sheet, I can readily see if people who spout the words "pay yourself first" actually practice what they preach.

A picture is worth a thousand words. So let's again compare the financial statements of people who pay themselves first against someone who doesn't.

People who pay themselves first

| | Expense | |

| Assets | Liabilities |

| | |

|_________|____________|

Someone who pays everyone else first- Often there is nothing left

| Expense | ----> Nothing left!

| Assets | Liabilities |

| | |

|_________|____________|

Study the diagrams and notice if you can pick up some distinctions. Again, it has to do with understanding cash flow, which tells the story. Most people look at the numbers and miss the story. If you can truly begin to understand the power of cash flow, you will soon realize what is wrong with the picture on the next page, or why 90 percent of most people work hard all their lives and need government support like Social Security when they are no longer able to work.

Do you see it? The diagram above reflects the actions of an individual who chooses to pay himself first. Each month, they allocate money to their asset column before they pay their monthly expenses. Although millions of people have read Classen's book and understand the words "pay yourself first," in reality they pay themselves last.

Now I can hear the howls from those of you who sincerely believe in paying your bills first. And I can hear all the "responsible" people who pay their bills on time. I am not saying be irresponsible and not pay your bills. All I am saying is do what the book says, which is "pay yourself first." And the diagram above is the correct accounting picture of that action. Not the one that follows.

My wife and I have had many bookkeepers and accountants and bankers who have had a major problem with this way of looking at "pay yourself first." The reason is that these financial professionals actually do what the masses do, which is pay themselves last. They pay everyone else first.

There have been months in my life, when for whatever reason, cash flow was far less than my bills. I still paid myself first. My accountant and bookkeeper screamed in panic. "They're going to come after you. The IRS is going to put you in jail." "You're going to ruin your credit rating." "They'll cut off the electricity." I still paid myself first.

"Why?" you ask. Because that's what the story The Richest Man In Babylon was all about. The power of self-discipline and the power of internal fortitude. "Guts," in less elegant terms. As my rich dad taught me the first month I worked for him, most people allow the world to push them around. A bill collector calls and you "pay or else." So you pay and not pay yourself. A sales clerk says, "Oh, just put it on your charge card." Your real estate agent tells you to "go ahead-the government allows you a tax deduction on your home." That is what the book is really about. Having the guts to go against the tide and get rich. You may not be weak, but when it comes to money, many people get wimpy.