What is the difference between making money and creating wealth?
It is believed that people who chase money do not prosper and those who create wealth live a better lifestyle, work smarter and retire early.
Charles, are you asking that question in the context of owning a business or of working for someone else?
I think you could make a lot of money and not be wealthy( if you spend all of your money). For instance, Warren Buffet is wealthy because he makes money while reinvesting some of the money to increase his resources and net worth.
In my personal opinion wealth should not just be restricted to the financial sense. Writers say "this person has a wealth of ideas". Based on that view, an expert is wealthy in terms of information and could be financially wealthy if the exchange rate between information wealth and financial wealth is favorable to him.
In my mind, I think that wealthy people are almost always happier than rich people.
Creating wealth is more about achieving time and financial freedom.
Making money is more about trading time for money, thus compromising time freedom.
Charles. I liken this to the difference between giving a person a fish or teaching them how to fish. Having money is like having a fish, while having wealth is knowing how to fish.
If you would use the term "generate revenue" for "making money" and the term "create equity" with the term "creating wealth", there can be significant differentiation between the two. I am being a bit liberal in the term equity, as from a financial perspective it is the 'ownership' an individual has in the form of stock. In real estate it is the difference between the market value and outstanding loan amount on a property. From a very abstract view, it is the intrinsic value possessed by an individual of an asset that is able to generate revenue.
If we think about ourselves as a source of revenue generation and equity, the key is to create enduring value in ourselves that is able to generate the revenue we desire while increasing our value so that our equity becomes desirable and marketable and serves our overall personal objectives.
Personal equity is created through the relationships we build, the network we create, the experiences we are able to leverage in delivering business results, our personal reputation and our educational background. Making decisions that develop this equity through opportunities like serving volunteer or professional organizations, going back to school or persevering in our current business roles are all opportunities to create equity.
Wealth is what we desire: goods and service. Money is a tool we use to exchange those goods and services between each other.Giving everyone more money does not necessarily result in everyone getting more wealth. The wealth is created when people start trading that money with each other in exchange for more goods and services. So money changing hands can create wealth, but the act of having money doesn’t do it. Some people hoard money to obtain future wealth. This is a bad idea because unless it is earning interest, the money will lose value overtime due to inflation.In Short money is a tool, and is not a typical commodity. Granted, it sometimes behaves like a commodity, but it has no intrinsic value. Creating wealth should always be the goal, and money should be seen as nothing but a tool used to achieve that goal.
L. Ron Hubbard said, "...Money is just an IDEA. A hundred dollar bill is just a piece of paper. If you want to buy something with it, and the person you are buying from is not CONFIDENT that he also can buy something with that $100 bill, then it is not worth anything. It is only the IDEA of the $100 bill and the confidence that people place in it that makes it worth anything.." He also said that the prime purpose in life is to survive [paraphrased]. Having wealth and having money is a debatable topic for many. Robert Kiyosaki says, "... how long could you survive if your job ended today?" He also said, '...Your luxuries should be paid for by your investments. If you don't have any investments, then you shouldn't buy any luxuries. A luxury is anything which does not directly contribute to survival..." I believe that money is a medium for exchange. I believe money is a tool to create wealth. And I also believe that to have wealth, does not necessarily mean that you have a lot of money. It all depends on how you leverage what you have monetarily to create your wealth. I chase money for deals all day long. I prosper because my profits are the monies I use to create my wealth. In context the statement is not necessarily true depending on which side of the fence you sit. Wealth is something that has real value in meeting our needs and fulfilling our wants and needs. Building wealth means spreading your risk. Having money set aside for emergencies and to pay your bills will keep you marching forward towards building your wealth - no matter what - to consider that your money is your tool to get to your wealth is a great way to think about money when you chase it.
I would not regard 'making money' as wholly separate from 'creating wealth'. If anything, 'creating wealth' would be a subset of 'making money'. I would agree with Faye, wealth is the money you make that you do not need to spend for short term purposes, but invest for long-term gains, safety nets, etc.
Having wealth means having stability and it can be created as much by making smart decisions about how you spend the money you make as it can by making significant sums of money. The average NBA player makes millions of dollars a year, but many are bankrupt before they turn 50 because they spend what they make rather than building their wealth.
Organizations need to do both. Making money pays the bills and provides a foundation for growth and wealth. Wealth is realized in growth and the ability to make money.
Happy to answer your question but because of the industry regualtions, I cannot respond on this format. Please feel free to email me directly at firstname.lastname@example.org. There I will give your question time and thought.
Thank you Charles