“Rich people don’t work for money, money works for them”?

This quote encompasses the idea that once you have sufficient money, you can use it to earn more money. So, while rich people may work, and live off their earnings, they maintain their wealth by making their assets work for them. This is how land owners manage to pass their wealth down the generations – monetary wealth has been converted into an asset (land) that earns passive income.

In his book ‘Rich Dad, Poor Dad’, Robert Kiyosaki uses the quote, “The poor and the middle-class work for money… the rich have money work for them.”  Karl Marx talks about this a lot too.

Why should the rich have access to passive money-making assets, while the rest of us do not? For Marx, this is a call to revolution; for the rest of us, it’s a call to action.

However, it is also a matter of scale: if you have below a certain amount of money in savings and investments, everyone else is making money out of you, especially your bank. Sure, you might be accumulating savings in your bank account and you might be earning income, but the chances are, whatever interest your savings are earning, it’s lower than the rate of inflation.

If your savings aren’t keeping pace with inflation, then in real terms you are not becoming richer, you are in fact becoming poorer, because the buying power of your savings is decreasing year by year.

In reality, banks are charging you to keep your money secure with them. How come? Because you can be sure they are taking your savings and lending it out to their clients and charging those clients interest rates well above the rate of inflation. However, they are only passing on a small, below inflation, portion of the profits to you, and keeping the rest for themselves and their shareholders. They are using our money to make themselves richer and to make us poorer. Karl Marx would be fuming at this injustice; so should we.

Now, before you reach for your revolutionary pitchfork, consider this: how is it different for the rich? Well, they don’t give their money to banks to look after. Instead, they employ banks to loan out money on their behalf, direct to individuals and businesses. This requires a whole different financial strategy that might, at first, seem counter-intuitive, but once you understand the financial risks involved,

it actually makes a lot of sense. This financial strategy of the rich and famous, has been working for them for hundreds of years. There is no magic to it, all it requires is an understanding of personal financial risks and how to mitigate those risks.

To make this switch from ‘your money working for you, instead of you working for your money,’ is more than just a matter of mindset, it has always required a large amount of capital (cash or assets).

I said earlier, this is a matter of scale, so how rich do you need to be to make this switch? There is no single answer to this question: historically, it depends where you are, when you are, and with whom you are doing business. However, there is a simple formula:

(Net interest) > (inflation)

[(Net interest) is greater than (inflation)]

Let’s break that down so we can see where the real hurdles lie:

Net interest:  The total interest generated, less banker’s/financier’s/agent’s fees, less taxes, less financial/managing charges, less admin.

Inflation:  The increasing cost of living.

Basically, the amount of interest you receive after deducting costs must still be reasonably higher than the rate of inflation. That way you are becoming richer – ‘your money is working for you’.

Some of these costs (especially the larger ones) will be up front: Agent’s fees and admin fees; some will be annual like management fees, tax, and ongoing admin fees. Have you spotted the real hurdle to moving from ‘your money working for you’, instead of ‘you working for your money’? It can be summed up in one word:


You need to pay the banker/financier/agent for their skill/knowledge to lend directly to individuals and corporations. You need to pay them again for their skill/knowledge to manage a workable financial strategy on your behalf, and you need to pay them annually to keep the whole thing going.

Now comes the big question: What if you could remove the people from the equation and gain knowledge of that financial strategy yourself? How rich would you need to be then?

The answer: not very rich at all. Furthermore, it’s completely possible for almost anyone to achieve. The internet and computer automation has finally enabled anyone with access to the internet, a bank account, and a computer/smart phone, to make their money work for them. Anyone prepared to invest a bit of time, learn about financial risks, do some product research, and follow simple, logical, financial strategies, can make their money work for them. Anyone with a bit of money can now manage their money like the rich and famous, with above inflation growth.

Now let’s be realistic here, investing a small amount of money in the same way as the rich and famous is not going to mean we can instantly give up work. But it all makes a difference, it all adds up, it all improves our lives, just that little bit extra.

Making our money grow in real terms and ‘work for us’ instead of ‘working for someone else’, will help stabilise our finances and provide options. And the real advantage of being rich isn’t the money, that’s just a tool; the real advantage, is having options, because options enable us to stabilise our lives, overcome adversity, and plan for the future.

Even just a small amount extra, can make the difference when adversity strikes, providing those precious additional options, which means we control our response to life, rather than life controlling us.

Manage Your Money Like The Rich And Famous, by N J Travers, is available from your local Amazon store in your currency.

Wishing you well with your finances,


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