Ready to Make Your Money Work for You? This Approach Makes More Sense

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Sometimes, you hear something that seems inspiring, giving you a sense of “aha!” When that happens, you find that many people quote it, and many others come up with their own version. One example is a quote from Robert Kiyosaki: “Don’t work for the money, let the money work for you.”

That single quote generated tons of articles and books on the “Make your money work for you!” theme. A quick Amazon search for “make your money work for you” brings up over 5000 results, including (not an endorsement of any of these):

What’s Wrong with this Tip from Robert Kiyosaki?

What’s not to like about having your money work for you rather than you working for money? (Cue in video clips of glamorous people sipping fruity cocktails while relaxing on a gorgeous beach or sunning on the deck of a magnificent yacht.) The truth is, there’s much to like about this as an outcome. The problem is that, as advice goes, it’s useless, privileged drivel.

The Kiyosaki quote makes it sound like an either/or proposition. Either you have your money to work for you, or you have to keep working for it. Sure, if you already have a lot of money, you can invest it, so it works for you. Once you have enough invested relative to your annual budget, you can stop working for money. How many of us can claim that status? Not too many.

Depending on your age, you may need over $80k a year when you want to stop working. If we use the “4-percent rule,” that translates to over $2 million invested. The problem is that fewer than 10 percent of Americans have a net worth that high. Worse, many of those who do have multiple millions also have higher expenses, so they need perhaps $5 million (fewer than 3 percent have this much) or even $10 million (fewer than 2 percent have this much).

From ‘Working for Your Money’ to ‘Your Money Working for You’

It isn’t that making your money work for you is wrong. It’s just not an either/or with working for money. It’s both/and. The way to achieve financial freedom is to gradually transition from working for money without having any money working for you when you start out, to working for money while the money you’ve invested starts working for you, to ultimately having enough invested that you can indeed stop working because your money can now do the entire job without you working for more money.

You can do many things to accelerate the transition, but unless you were born into extreme wealth, you can’t just stop working and expect your money to do all the lifting without you working.

Avoid over-spending (whether through budgeting or any other tool that works for you)
Increase your income (e.g., by gaining skills that lead to promotions or better-paying jobs, starting a side hustle or three, launching your own business, etc.)
Invest rather than simply saving (e.g., in stocks, real estate, etc.)
Control lifestyle inflation by dedicating at least half of any income increase or bonus to investments
Minimize your fixed costs, so you can afford to draw a higher percentage of your portfolio each year

The Bottom Line

So-called financial “gurus,” “experts,” or “influencers” tend to offer sound bites that sound profound and revolutionary. The unfortunate truth is that they’re almost always old wisdom in a shiny new package, or worse, misleading or flat-out wrong. Don’t fall for either. The former may get you to pay for a course or a book about retirement planning that won’t make any difference (other than waste your money and time). The latter may lead you to make stupid mistakes that cost you far more.

Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

About the Author

Opher Ganel, Ph.D.

My career has had many unpredictable twists and turns. A MSc in theoretical physics, PhD in experimental high-energy physics, postdoc in particle detector R&D, research position in experimental cosmic-ray physics (including a couple of visits to Antarctica), a brief stint at a small engineering services company supporting NASA, followed by starting my own small consulting practice supporting 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. Now, I use all these experiences to also offer financial strategy services to help independent professionals achieve their personal and business finance goals. Connect with me on my own site: OpherGanel.com and/or follow my Medium publication: medium.com/financial-strategy/.

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