***Don't Let Your Financial Blind Spots Make You Poor

Radical learning from The Wealth Builder's Blueprint

Faculty, Trump University

Finance has its own vocabulary. The more you understand it, the more you control your financial future.

This story illustrates the point. Early in my career as a CPA, I had two clients who were pretty similar. They both owned construction companies. They each earned about $50,000 a year, and when they came to me so I could do their taxes, they both brought shoeboxes stuffed with financial records.

After I was done sorting through the first guy's financial records (let's call him John), he only got mad. He was angry about my fee. He was angry about the tax he would owe. The only lesson he took away was that he had to work harder to make more money so he could pay more bills.

The second guy (let's call him Bob) also got mad at me, and at the government for the excessive taxes he had to pay. But then he asked me a question that changed the rest of his life:

"What do I have to do so this never happens again?"

It was a great question. We talked about it. We decided that he needed to get a bookkeeper to keep good records for him. Then we decided that he should start meeting with me through the year to review his finances. In those sessions, he started out by simply asking questions. He wanted to learn. We covered all the basics, like these:

What is an asset? - An asset is something you own that is going to put money in your pocket. A lot of people think that a great set of clothes or some nice piece of jewelry is an asset. But that is not so. Even though you spent money on them, they do not earn more money for you. A true asset is something that is going to support you and pay you back repeatedly, like a computer or a piece of equipment that pays for itself many times.

What is a liability? - A liability is something you owe. Over time, you are going to have to keep paying back money on it. A good example is the debt on the credit card that you used to pay for that set of great clothes. The value of those clothes is decreasing, but the dollar liability is growing because of the interest on your unpaid balance. Like a lot of liabilities, it continues to grow until you eliminate it.

Ten years later I saw John, the guy who only got angry. He was driving around in a beat-up old pickup truck, in exactly the same place where he had been a decade earlier. But I already knew all about Bob. After those same 10 years, Bob was making more than $1 million a year in his business, simply because he had decided to learn. He had learned how to work on his business and not just in his business. That's a big difference.

Over the next 90 days, I encourage you to take a look a what's been happening in your life. Look at the things that might not have happened for you, as the result of holes in your financial literacy. What deals have you not been in? What real estate markets have you missed out on? Is it possible that what you don't know is hurting you?

Sure, it's a little painful to ask those questions. But if you feel the pain of confronting those assumptions now, you will save yourself a lot more pain later on. Trump University is a great place to let that learning process begin.

Trump University Faculty Member Diane Kennedy, CPA, is the author of The Wall Street Journal bestseller Loopholes of the Rich and other books. Her Money Mastery curriculum is a centerpiece of Trump University's The Wealth Builder's Blueprint.