Why Earning A Lot of Money Doesn’t Make You Rich

A salary with a bunch of zeros attached on the end doesn’t necessarily relate to riches. At the end of the day, it’s only a number — and if the cash behind that number is not managed properly, it can crumble in a matter of time. “Most people fail to realize that in life, it’s not how much money you make. It’s how much money you save,” writes Robert Kiyosaki in the personal finance classic, “Rich Dad Poor Dad.”

At the end of the day, money does not take care of financial issues — truth be told, it usually worsens them. Consider the lottery winners who lost it all in a couple of years; or the professional athletes who made millions in their 20s and ended up broke later on.

At the point when income increases, people tend to spend more; this can rapidly wind into risky overspending habits. “Money often makes obvious our tragic human flaws, putting a spotlight on what we don’t know,” explains Kiyosaki. “That is why, all too often, a person who comes into a sudden windfall of cash — let’s say an inheritance, a pay raise, or lottery winnings — soon returns to the same financial mess, if not worse, than the mess they were in before.”

What takes care of financial issues and creates money is knowledge. “Money without financial intelligence is money soon gone,” according to Kiyosaki. Sadly, while a large number of we are taught how to make money— how to find a job and work hard— we are not taught how to intelligently manage it, the critical part.

The good news is that you don’t need to be a certified financial manager or have an MBA to develop financial intelligence. Start by studying the difference between an “asset and a liability“, the absolute most critical differences to understand if that you want to get rich, Kiyosaki says.

Next, pay attention on bettering your savings, and ensure that more money is coming in than going out. With that, you should know that why earning a lot of money doesn’t make you rich.

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