The Rich vs. the Poor When it Comes to Investing Time

The Rich vs. the Poor When it Comes to Investing Time

The rich don’t work for money. They make money work for them.

My poor dad said he could not invest because he had no money. My rich dad said, “Invest your time when you have no money.”

In most circumstances, people have no time to invest. Why? Because they think that working harder and longer will make them richer. Of course, nothing could be further from the truth.

Consider these facts:

  • The average U.S. worker clocks in about 1,804 hours per year at work — the highest output in the world

  • 56% of Americans report doing work from home

  • 20% report doing it every day of the week

  • 25% didn’t take any time off last year

  • 43% took less than a week off

Those numbers represent a 400% increase in productivity since 1960 — and a lot of tired, time-constrained Americans chasing the almighty dollar.

Yet, the inflation-adjusted wage growth for the middle class has stayed stagnant or declined. As the Economic Policy Institute reports,

“From 1973 to 2013, hourly compensation of a typical (production/nonsupervisory) worker rose just 9 percent while productivity increased 74 percent.”

Clearly, working more doesn’t mean making more.

The story of a rich man vs. a poor man

Growing up I knew a rich man and a poor man. One was my best friend’s dad, who you know as rich dad. The other was my dad, who you know as poor dad.

As a kid, I watched my poor dad work himself to the bone. Yet, he never got ahead. He came home from work exhausted and had little time to invest in the things he loved. It seemed no matter how hard he worked, he was still a poor man.

Rich dad, on the other hand, worked hard but also had a lot of free time to pursue things he loved. It seemed the less he worked the more his wealth grew. His work life looked nothing like my poor dad’s, yet he was a rich man.

Rich dad told me, “Your dad believes in hard work as the means of making money. Once you master the art of building B-I Triangles, you will find that the less you work, the more money you will make and the more valuable what you are building becomes.”

At first I didn’t understand what rich dad meant, but after a number of years of practice, I understood it more fully.

The rich don’t work for money

Today, I meet people who work hard building a career, working their way up the corporate ladder, or building a practice based upon their reputation. These people generally come from the E (employee) and S (self-employed) quadrants of the CASHFLOW Quadrant.

In order for me to become rich, I needed to learn to build and put together systems that could work without me. After I built my first B-I Triangle and sold it, I realized what rich dad meant by the less I work, the more money I will make. He called that thinking, “Solving the B-I Triangle riddle.”

I have found the difference between those in the E and S quadrants and those in the B (business owner) and I (investor) quadrants is that the E and S people are often too hands-on.

They fall into the classic error that it’s more important to work in your business than on your business. By getting bogged down in day-to-day details, they never work on the business to take it to the next level. They don’t trust that anyone can do a better job than them, and they don’t trust a system that can run without them. They are the barrier to their own success.

Rich dad used to say, “The key to success is laziness. The more hands-on you are, the less money you can make.” Rather than being hands-on and working hard, rich people find innovative ways to do more with less—and they empower their teams to be successful for them.

If you are going to be the kind of person who creates assets that buy other assets, you need to find ways of doing less so that you can make more and build more.

If you are a person who is addicted to hard work, or what rich dad called, “Staying busy in your busyness and not building anything,” then I would suggest learning more on how working less can make you more money.

How the poor invest their time

Today, unfortunately (but also fortunately) many people have more time than they ever imagined. As I write this, we’re in the middle of a global pandemic caused by COVID-19 as it’s officially known. Even this far into the pandemic, many people are stuck at home waiting until infections go down. Those that are still working, have more time than they used to as well. With social engagements way down, the evenings and weekends are pretty free.

But the stress, of course, is very high...especially for those parents who both work and have the mentality I stated above, that working harder means making more, while also trying to take care of their kids. During this crisis, however, perhaps the sentiment is more, working harder will mean keeping my job. I think many people have found that’s not true.

Interestingly, many of these highly-capable employees are spending their days on video conference calls, which makes them even more tired than regular work. They’ve even coined a term for it called “Zoom fatigue.”

Those that are unemployed are spending time trying to find work, or waiting it out by watching Netflix and playing video games. Very few are using the time to grow. And that is the reason many people will come out of this crisis as poor or poorer than they were before it.

The poor invest their time...poorly—working for money

If you ask most people why they’re working so hard...or looking for work if they’re one of the 25 million unemployed, they’ll tell you it’s for money.

By this, they mean a steady paycheck that provides security. Money is one of the primary reasons people take on thousands of dollars in college loans to get a degree for a high-paying job that they don’t like but which they spend most of their waking hours at — all while the things they really love in life sit on the sidelines waiting for them to finish working.

The problem with this approach is that you only make money as long as you work. The only thing of value that you have to sell is your time. So, in order to make more money, you have to work longer hours, which is physically taxing.

Because you only have a finite amount of time and energy, as an employee, your earning potential is finite.

By any measure, this is a poor investment. It is a poor mindset to think I’ll trade my finite resource of time for money. The rich mindset is different, and they look at time and how to invest it very differently than the poor.

Rich time investment vs poor time investments—making money work for you

If you ask most rich people what they work for, they’ll tell you it’s for assets.

By this they mean investments and businesses that provide steady cash flow each month with little-to-no work. Instead of spending their life working for money, the rich work to understand how to make money work for them through financial education. Very simply, the rich don’t work for money, they make money work for them.

Working to add more assets is much different than working for a paycheck. For instance, adding assets doesn’t require working longer or harder. In fact, the higher your financial IQ, the less you have to work to acquire high-quality assets. These assets then provide passive income, even while you’re sleeping or playing.

In other words, again, money works for the rich.

How to make money by setting goals

This is not to say that the rich don’t work. They just work differently.

Each year, Kim and I sit down together and set goals as to how many new assets we want to purchase. It’s important to note, we don’t make goals to make more money. We don’t spend our time looking for a better, higher-paying job. We know that if we focus on finding high-quality assets, the money will come — and for many years, even after the work of acquiring our assets is done.

Kim and I have spent many years building our portfolio slowly and steadily and investing in our financial education. We weren’t always rich, and we didn’t always have the financial IQ’s that we do today. But, like rich dad, we invested the time to grow our financial IQ through financial education when we had no money to speak of. We didn’t put that time into a job; we invested it in our financial future.

Today, we make millions of dollars a year in passive income — money that works for us instead of the other way around.

Invest your time like the rich today to be rich tomorrow

How about you? What are you working for? During this unprecedented crisis, what are you investing your time in?

Are you working towards making money work for you through the power of assets? Or do you spend your days toiling away at a job you hate in order to have the illusion of security? If so, what’s holding you back?

Here’s a couple good places to start:

CASHFLOW Classic: This is the free, online version of our financial education board game, CASHFLOW. Rather than spend your evenings watching Netflix or playing mindless video games, learn more about yourself and how to make money work for you for free.

Rich Dad Classes  For over 30 years, Rich Dad has helped millions of people like you take control of their finances through personal finance classes, personal development instruction and investing workshops. There’s no better time than now to take advantage of this incredible resource.

Rich Dad Coaching: If you’re really ready to invest your time well, consider a Rich Dad Coach. Hundreds of thousands of individuals have trusted Rich Dad coaches to help them eliminate their financial frustrations and achieve success. From athletes to business owners and from relationships to personal finances, professionals understand that they don’t know what they don’t know. Even to this day, with all of my success, I work with coaches in all areas of life—mental, physical, emotional and spiritual. You can too.

During this crisis, I wish you and your family nothing but health and wealth. I know that it’s hard right now, but I encourage you to invest your time wisely now to grow your financial IQ. If you do, you’ll be ready to thrive when things pick up...and they always do.

Original publish date: May 22, 2012