Blog | Entrepreneurship, Personal Finance

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

The rich don’t work for money, they make money work for them

Poor dad said he couldn’t invest because he had no money. 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. This couldn’t be further from the truth.

Take a look at the facts below:

• As of January, 2023, it’s expected that the average American will clock in about 2012.4 hours annually.

• 66% of Americans work remotely, at least part-time.

• It was reported in July of 2022, that 72% of Americans had used less than half of their paid time off.

• While 65% of Americans agreed that they urgently needed a vacation from work, 56% had reported already being burnt out.

Furthermore, the United States’ inflation rate hit a record high in June 2022, peaking at 9.1%, while wages only increased by about 4.5%.

Clearly, working more doesn’t mean making more.

The story of a rich man vs. a poor man

As a kid, Robert Kiyosaki knew a rich man and a poor man. One was his best friend’s dad, which you know as rich dad. The other was his own dad, who you know as poor dad.

He watched as his poor dad worked 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 poor dad’s, yet he was a rich man.

Rich dad told Robert, “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.”

Though it took years of practice, Robert grew to understand this completely.

The rich don’t work for money

Today, people work hard building a career, climbing 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.

Robert realized that in order to become rich, he needed to learn to build and put together systems that could work without him. After he build his first B-I Triangle and sold it, he realized what rich dad meant by “the less you work, the more money you will make…” He called that thinking, “Solving the B-I Triangle riddle.”

The main 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 in 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 it’s time to learn 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. About 35% of Americans surveyed by Pew Research Center admit that socializing had decreased in priority for them as a result of COVID-19. 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 now have no social life and are also trying to take care of their kids. The economy seems unpredictable, and the pandemic showed how fickle employment can be.

Interestingly, many 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 either 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 6 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 vs poor: how a time investment can make 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, Robert sets goals as to how many new assets he wants to purchase. It’s important to note, he doesn't make goals to make more money. He doesn't spend his time looking for a better, higher-paying job. He knows that if the focus is on finding high-quality assets, the money will come — and for many years, even after the work of acquiring our assets is done.

As a result, he has spent many years building a portfolio slowly and steadily while investing in his financial education. Though he wasn’t always rich, he invested the time to grow his financial IQ through financial education when he had no money to speak of. He didn’t put that time into a job; instead, he invested it in his financial future.

Today, he makes millions of dollars a year in passive income — money that works for him 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 did you invest your time in? Is it something you’d like to pivot away from? Where are you headed?

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 are 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 his success, Robert works with coaches in all areas of life—mental, physical, emotional and spiritual. You can too.

Though there can be a pile of reasons to convince you why now isn’t the right time, there is no better time than the present 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.