The sophisticated investor knows that sometimes eggs get eaten or stepped on and sometimes the ship people are waiting for is the Titanic. I meet many investors who are new to the world of invest- ing. They have been investing for less than 20 years. Most have never been through a market crash or owned real estate worth much less than they paid for it where they still must make the monthly payments.' These new investors come up to me and spout off industry averages such as, "The market on average has been going up since 1974." Or "Real estate over time has averaged over 4% per year for the last 20 years." As rich dad said, 'Averages are for average investors. A pro- Financial Literacy Made Simple 279 fessional investor wants control. And that control begins with yourself, your financial education, your sources of informa- tion, and your own cash flow." That is why rich dad's advice to the average investor was, "Don't be average." To him being an average investor was being a risky investor. Why People Don't Have Control Over Their Personal Finances People leave school not even knowing how to balance a checkbook much less how to prepare a financial statement. They never learned how to control their finances. And the only way you can tell if people are in control of themselves is by looking at their financial statements. Just because people have high-paying jobs, big houses, and nice cars does not nec- essarily mean they are in control financially. If people knew how a financial statement worked, they would be more finan- cially literate and more in control of their money. By under- standing financial statements, people can better see how their cash is flowing. For example, this is the cash flow pattern of writing a check: 180 Rich Dad's Guide to Investing This is the cash flow pattern of using a credit card: When people write checks, they are depleting an asset. And when people use their credit cards, they are increasing their liabilities. In other words, credit cards make it so much easier to get deeper and deeper into debt. Most people can- not see it happening to them simply because they have not been trained to fill out and analyze a personal financial state- ment. Today, many individuals' financial statements look like this: Financial Literacy Made Simple 181 Unless something changes inside this person, chances are that this person will live a life of financial servitude. Why do I say financial servitude? Because each payment this person makes is making a rich person richer. AUTHOR'S NOTE: Many people ask me: "What is my first step to financial freedom?" My response is, "Take con- trol of your financial statement." I asked my tax strategist and accountant, Diane Kennedy, to put together an audio- tape program and workbook to: 1. Learn how a personal financial statement works 2. Take control of your own financial statement 3. Get on track to become financially free 4.