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making money vs building wealth

making money vs building wealth

Do you think there’s a difference between making money and building wealth? If you think like a majority of the population, you probably would say both these phrases mean the same thing. However, there’s a substantial distinction between them.

“Making money” comprises a short-term process where you get paid for the amount of effort you put into your work. “Building wealth,” on the other hand, is a long-term discipline, where money comes to you effortlessly. One involves working hard for money, and the other means creating circumstances and conditions where money works hard for you. Let’s understand this night and day difference between the two by an example. 

Imagine that there’s a guy named Bob, who works as the Vice President of a multinational company and earns a pretty good income every month. He is definitely making great money, but is he also building wealth? There’s no way we can tell that. 

Bob might be taking home an impressive wage, but if he’s not saving and investing a dedicated percentage of his income every month, he’s definitely not accruing wealth. But let’s say, he saves a little amount of money for the downpayment of a house, and invests a certain amount in mutual funds and/or real estate, he would be building wealth, because in that scenario his money would be working hard for him in the long run, and not the other way around. 

Making money revolves around short-term thinking and reflects transient financial success. You don’t worry about the future and are only concerned about how you want to spend the money you get from your next paycheck. But living paycheck to paycheck is never a sound strategy to win with money. What if things go south and you no longer have your next paycheck coming in?

Building wealth, on the flip side, is all about long-term planning. When you invest in real estate or mutual funds, you won’t get immediate returns. But over time, as these assets increase in value and investments start paying off, you’ll keep generating recurring income without any external effort, hence positioning yourself to massively increase your net worth.

PS: If you enjoyed this essay, I encourage you to read or listen to my book Daily Wealth (The Daily Learner, Book 1). This short book is an attempt to distill the life-changing ideas from the best books on finances, money management, and investing in clear and concise daily meditations. I can confidently say that your money game will reach a new higher level in record time if you put the principles mentioned in this book into practice.  

You can order Daily Wealth here:

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