Sometimes you hear something that seems so inspiring that gives you a feeling of “Aha!” When this happens, you find that many people quote it and many others come up with their own version. One example is Robert Kiyosaki’s quote, “Don’t work for money, let money work for you.”

This single quote has spawned countless articles and books on the topic of “Make Your Money Work for You!” topic. A quick search on Amazon for “make your money work for you” turns up over 5,000 results, including (not confirming any of them):

  1. Make Your Money Work for You: What They Don’t Teach You in School
  2. Make Money Work for You: Finding Financial Freedom Without a Day Job
  3. The Power of Passive Income: Making Your Money Work for You
  4. Money Hacks: 275+ Ways to Reduce Spending, Increase Savings, and Make Money Work for You!
  5. MONEY – HOW TO MAKE YOUR MONEY WORK FOR YOU: Financial Radiance Volume #2
  6. Make your money work for you: think big, start small
  7. 10 Strategies for Managing Your Money: Don’t be a slave to your money, make your money work for you
  8. Make Your Money Work for You: “Money Heals Money”
  9. Make your money work for you
  10. MONEY HACK$: 50 Ways to Take Control of Your Money, Increase Your Savings, Reduce Spending, and Make Money Work for You

What’s wrong with this advice from Robert Kiyosaki?

What’s not to like about your money working for you instead of you working for the money? (See videos of glamorous people sipping fruity cocktails while lounging on a gorgeous beach or sunbathing on the deck of a gorgeous yacht.) The truth is, there’s a lot to like as a result. The problem is, as the advice goes, it’s useless, privileged gibberish.

Kiyosaki’s quote sounds like an either/or proposition. Either you have money working for you or you have to keep working for it. Of course, if you already have a lot of money, you can invest it, so it works for you. Once you have invested enough funds relative to your annual budget, you can stop working for money. How many of us can claim this status? Not too much.

Depending on your age, you may need more than $80,000 a year if you want to stop working. When we use the “4 percent rule,” that means more than $2 million invested. The problem is that less than 10 percent of Americans to have such a high price. To make matters worse, many of those with a few million also have higher expenses, so they need maybe $5 million (little ones have less than 3 percent) or even $10 million (so many have less than 2 percent).

From “Working for your money” to “Your money working for you”

It’s not that making money work for you is wrong. It’s just not an either/or job for money. It’s both/and. The way to achieve financial freedom is to gradually go from working for money with no money working for you when you start, to working for money while the money you put in is working for you, to eventually have enough invested that you can actually stop working because your money now can do all the work without you working for extra money.

There are many things you can do to speed up the transition, but unless you were born extremely wealthy, you can’t just stop working and expect your money to do everything you need it to do without your work.

  • Avoid overspending (using a budget or whatever tool works for you)
  • Increase your income (for example, by acquiring skills that lead to a promotion or higher paying job, starting a side business, starting your own business, etc.)
  • Invest, not just save (for example, in stocks, real estateetc.)
  • Control lifestyle inflation devoting at least half of any income increase or bonus to investment
  • Minimize your ongoing expenses so you can afford to earn a higher percentage of your portfolio each year

Bottom line

So-called financial “gurus,” “experts,” or “influencers” tend to offer big-sounding tidbits that sound profound and revolutionary. The unfortunate truth is that they are almost always old wisdom in a shiny new package, or worse, misleading or downright wrong. Don’t fall for either. The first can make you pay for the course or a Book on pension planning it won’t make any difference (other than wasting money and time). The latter can lead you to make stupid mistakes that cost you much more.

Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Before making important financial decisions, you should consult a financial professional.

About the author

Ofer Ganel

My career has taken many unpredictable turns. MSc in Theoretical Physics, PhD in High Energy Experimental Physics, PhD in Particle Detector Research and Development, Research Position in Experimental Cosmic Ray Physics (including several visits to Antarctica), brief stint at a small engineering company , which supports NASA, after which he started his own small consulting practice in support of NASA projects and programs. Along the way, I started other micro-businesses and helped my wife start and grow her own marriage and family therapy practice. I now use all of this experience to also offer financial strategy services to help independent professionals achieve their personal and business financial goals.

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