Last Updated on

“Don’t work for money, let your money work for you” is the most popular term used in the finance world. All of us know that nobody can become rich and stay wealthy by just working for money, but still, we don’t let our money to work for us.

The reason is very simple; most of us lack financial education. From our childhood, we were taught that we have to study hard, earn a degree, and get a good job to earn money. But unfortunately, we were never taught how to make more money from our money.

According to Robert Kiyosaki, the author of Rich Dad & Poor Dad, “Most people go to school and never learn how money works. As a result, they spend their lives working for money. The poor and the middle-class work for money, but the rich make money work for them.”

If you don’t find a way to make money while you sleep, you will have to work until you die.

Warren buffett

Robert Kiyosaki the author of Rich Dad & Poor Dad

Rich Dad & Poor Dad is about personal finance. The book tells Robert Kiyosaki’s story of growing up with his two dads- his father and his friend’s father. One dad was rich, and the other was poor.

Robert Kiyosaki observed that both dads have different opinion on money. Poor dad says that “Money doesn’t matter and Rich Dad, say that “Money is Power.”

Poor dad, who was well-educated taught him to study hard, get good grades so that you can find a safe and secure job, but the Rich Dad who was college dropout recommended that study hard so that you can find a good company to buy and create job.

After observing the opinion of these two dads, Robert Kiyosaki understands about money, spending and investment. He realised that “working for money and having money work for you” are two different terms.

Rich dad taught him that most people work for money because of fear, the fear of not paying bills, the fear of being fired, the fear of being without money.

Financial Literacy

Most schools teach how to study hard and get a good job. They are designed to produce employees not employers. This type of education is not provided only in developing or under-developed country. Even in America, schools and colleges are producing employees. As a result, people spend their entire life working for money, working for someone else.

Financial literacy is the only way to change the thinking. Money comes and go but if you learn how money works, how money can generate more money, then you can build wealth no matter where you belong, rich family or middle- class family.

If you want to make your money work for you then you have to change the way you think about money. You can start investing your money and make your money work for you. Most people think that it is impossible to make any investment with little money. According to a popular survey, 55% of people don’t invest just because they think that don’t have much money to invest.

You can start your investment with little money and this small investment can bring substantial wealth over time.

Related Article: 6 Reasons to start investing early.

Difference between Assets & Liabilities

To learn “how money can work for you”, you have to understand the difference between Assets & Liabilities.

An asset is anything that puts money in your pocket even you are not working. A liability is anything that takes money out of your pocket. Rich people acquire assets, Poor only have expenses and Middle class acquire liabilities but they think they are assets. If you want to become rich, acquire assets and if you want to remain poor or middle class then buy liabilities.

“You must know the difference between an asset and a liability, and buy assets…Rich people acquire assets. Poor only have expense. The middle class acquire liabilities, but they think they are assets.”

Robert kiyosaki

House: Asset or Liability

Poor Dad thought that his house is an asset, but Rich Dad thought it was a liability. According to Rich Dad if you buy a house then your hard-earned money is locked in your house, in addition to that, you have to pay expenses, your monthly EMI. Your house is not going to give you any cash flow until and unless you rent it out and earn rental income. Your house is an asset for Banks and Financial Institutions; they get monthly cash flow from you in the form of EMI.

No one is saying that you don’t buy a house, but you should understand the difference between assets and liabilities. If you want a bigger house, you first acquire assets that will generate additional cash flow to pay for that house.

What is an Asset?

An asset is something that puts money in your pocket. Your assets should generate enough income to cover your expenses. If you continue to re-invest the balance of your assets, they continue to grow.

Examples of assets include income-generating real estate, dividend-paying stocks, interest-paying bonds etc. All these assets bring money in your pocket.

Cash Flow Pattern

There are three types of people

a) Poor People

b) Middle Class

c) Rich Class

Cash flow pattern of poor people.

Poor people always struggle for money. They hardly make enough money to meet their basic needs. Forget about any investment, they can’t save enough money to face any uncertainty in their life.

They work hard to earn money and expend all their hard-earned money to meet their basics needs.

Cash flow pattern of middle-class people.

Middle-class people enjoy a much better lifestyle in comparison to poor people. Their earning is much higher and some of them have a high-paying job. Their earning is more than enough to meet their necessities. After meeting all their basic needs, they spend their money on purchasing luxury items like big houses, diamonds, jewellery or expensive mobile-phones because they want to look rich.

Due to the lack of financial awareness most of the people especially youngster hardly save any money for their future. Nowadays, due to the advancement of technology and a lot of advertisements by various financial institutions many people started saving money and putting them in Mutual Fund and other investment options. But their portion of investment is much lower in comparison to their earnings.

Related Post: Mutual Fund- A complete guide for beginners

Cash flow pattern of Rich People.

Rich people buy luxuries at last, while the middle class tend to buy luxuries first. Rich people invest and meet their expenses from the return of these investments. They know how to make money work for themselves.

Rich people spend their money in acquiring assets which bring more money in their pocket and the return from these assets is further re-invested to acquire more assets.

How can you make your money work for you?

Most of us belong from a middle-class family and all of us are facing financial problems somewhere in our life. At the month-end, most of us face financial crisis. In this situation how can we invest our money? Fortunately, some of us started investing in Mutual Fund through SIP.

I am not going to tell how to create wealth, if your income is low, as I already mentioned it in one of my post. If you want to create wealth over a long period then Mutual Fund is the best suitable option for you.

Related Post: How to build wealth with low income

There are multiple ways that you can make your money work for you. Almost everyone can find at least one way to put their money to work and earn additional income. With the right system, you can save and invest for your future.

There are 4 things you can do to start making your money work for you.


Budget is the most important way to handle your money. But, unfortunately, most people ignore it. When you are budgeting, you are making your money to do what you want it to do.

Your budget is the best tool to next to your income to build wealth. It gives you to control your finance and make financial decision at the beginning of the month. It will help you to know how much money you can save by cutting all the unnecessary expenses.

Do not save what is left after spending, but spend what is left after saving

warren buffett

As soon as you receive your salary, transfer a portion that you can afford into another saving account or any investment options like Recurring Deposit or SIP. Spend only the remaining portion and don’t touch that portion which you saved for your future. In the initial months, you will face some difficulty but in the long run, your small saving will bring you a lot of money.

Eliminate your Debt

No one can become financially secure by having a debt burden. The cost of debt is much higher than the return from any investment. So, if you have debt, your priority should be getting out of it.

Just think how much extra money you would have each month if you are completely out of debt. Your money will work for you only if you are out of debt.

Don’t keep too much in saving account

No one can become rich just by keeping his money in a saving account. Saving account in India offer a return of 3.5% – 4% annually, which is much lower than the average inflation rate in India for the past 10 years (year 2008-2018) which is 7.67% p.a. This shows that you are losing your money in savings account. Leaving your money in savings account is a waste of your money’s potential.

Related Post: Alternative of Saving Account

Save and Invest your money

No one can become rich just by saving money and not investing them. Only saving of money is not enough, you have to invest them also. But before starting any investment you need to secure some money for the emergency needs. Save your money for the emergency need for 3-6 months and then start investing. You can adopt a systematic investing approach or SIP approach. First, you don’t have to bother about investment. Second, due to their very nature, SIP gives you the benefit of rupee cost averaging.

Never put all your eggs in one basket. As you begin your investment it is necessary to diversify your portfolio. You can invest in Fixed Deposit, Share Market, and Mutual Fund etc, to diversify your investment. By diversifying your investment, the risk will be reduced.

Related: How to find the Best Mutual Fund?


Next time when you purchase something think of assets and liabilities. Put your hard-earned money to work instead of down payment. Some of the areas where you can put your money to work are:

  • Start SIP
  • Start Recurring Deposit
  • Buy High Paying Dividend Stock
  • Buy Interest-Paying Bonds
  • Learn New Skill

Soon your liability will shrink and your assets will grow and you will build wealth on the road of financial freedom.

Anyone can make money by using financial intelligence. A small amount of money can grow if you understand financial strategies, investment strategies, and a sense of the market.

I hope you liked the post. If you have any suggestions then you can comment below. I will be eagerly waiting for your comments.