Do you work for money, or Does money work for you?

The simple difference between working for money and having money work for you can be the difference between being poor or becoming wealthy!

It’s your lucky day…

Someone comes up to you and offers to make money for you. Even better, they expect nothing from you!

Initially, you think that it is a joke. But it is not, and there is no catch. Someone will work for you to make you money, and they do not want anything in return.

What would you do in this situation…

Will you accept the offer? Or will you ask this generous person to go work for someone else and make that other person wealthy?

The choice

We are faced with this exact choice many times a day. Every time we earn a dollar – it comes to us with the promise of working for us and making us more money. We can allow it to work for us. Or we can give it to someone else, and it will work for them.

If we decide to let it work for us, the dollar will work non-stop. It will never complain or ask for anything in return. And we can determine what work we give it – for example, one option would be to put it in a bank where it will work and earn interest for us.

The dollar will work for us for as long as we want it to – months, years, decades. Over time, it will grow to become two dollars. The second dollars, in turn, will also continue to work for us. Eventually, there will be four dollars, then eight, then sixteen, and so on…

Instead, if we spend the dollar, we are telling the dollar not to work for us but to go and work for someone else.

Working for money

So, what is the difference between working for money and having money work for you? In the first case (working for money), we work to earn money every month. But after making money, we proceed to summarily spend it by the end of the month.

We again need to work the next month to earn money, which we again spend in that month.

This cycle repeats – basically, we are constantly working to make (and spend) money.

Working for Money = Earn, Spend, Repeat

Money working for you

In this case, instead of spending all the money, we save some money each month. Now suddenly, something magical happens – we now have some money saved, and we can ask it to work for us!

How that money works for us is totally up to us – we may choose to put it in the bank to earn interest. We can buy stock (shares) and earn dividends. Or we can buy a government bond and earn interest.

There are many different ways to put our money to work. However, the important thing is to put the money to work (the type of work we assign is less important).

We work hard to earn money. It is only natural that we make our money work hard for us!

Money Working for Us = Earn, Save, Invest (put the money to work), Repeat

What is wrong with working for money?

Nothing. As a matter of fact, I did that for many years. I used to spend what I earned.

But at some point, I realized that it was a never-ending cycle. If I work for money (spend what I earn), I will have to continue to work forever. And I was not too fond of the idea of working into my 70s and 80s.

The simple difference between working for money and money working for us is the difference between having financial independence and not.

Make your money work for you, or you will always have to work for your money.
Marshall Sylver

An apple a day!

Let us say you decide to put your money to work by buying one share of a company – Apple. You are now a part-owner of that company! You actually own a small piece of Apple (one share worth of the company).

So next time Apple launches a new product, you will stand to gain from it. The more money Apple makes, the better for you ….. makes you feel less guilty about buying that new iPhone!

Think about this for a moment – what you have accomplished by doing this simple task of buying one share in Apple. The best and the brightest engineers at Apple partly work for you now! Their hard work helps your Apple share price go higher. They are working to make you money!

You can invest in the best companies in the world and share in their growth and profits.

From theory to practice

The first step to making money work for us is to save money. This is where the concept of paying yourself first comes from.

Pay Yourself First: Decide how much you want to save every month. Once you get your paycheck, keep that money aside (pay yourself first). The rest of the money you can spend as you like.

There are two benefits to this approach. Firstly you will end up saving your desired amount of money every month. Secondly, you will not feel bad or guilty about spending the remaining money – since you already have met your savings goal for that month.

Once you have money saved, you can start investing your money. Even though it may seem small at first, the money will grow over time due to the power of compounding.

Eventually, you will have so much money working for you that you can stop working for money. That is when you are financially independent.

Do not save what is left after spending.
Instead, spend what is left after saving.
Warren Buffett

In conclusion

Every time we earn money, we have a choice to make. We can take the easy approach and spend it all. This pretty much guarantees that you will always work for money.

Or we can save it and invest it. When you invest your money, it will work for you – forever!

The choice is yours…

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