Why the rich have money

The purpose of this post is to explain why the rich have money in a way that other people have never explained it.

Why do I know about why the rich have money and wealth?

I grew up in a fairly wealthy family in New England.  Going to an elite boys boarding school and rubbing elbows at the country club and golf club from my early days I was able to observe why and how people got rich.  At my parent’s  great Gatsby parties I meet both old money and some rags to riches stories, like Horatio Algiers. You might say my family was on the tangent of the super rich. Here I observed first hand why the rich have money and how they make money.

I earned a Master’s degree from Trinity in Economics. I worked on Wall Street, however, it was not until I moved to Eastern Europe did I fully become aware of the secret to wealth. Yes there is a secret, but not like you find in most books.

There are countless scores of websites, books and coaching programs that tell people how to get rich. However, most of these are recycled information and do not get you anywhere.  If they did then the people who read them would get rich. I used to read these books, get all pumped up, then have nowhere to go.

The following is the way the world works in any capitalist society. What you do with the information is up to you. I do not sell anything here and do not care even if you believe what I write.  Apply the ideas or not.

The idea of how the wealthy make money are close to how countries get rich.

Why the rich have money

Why some people are wealthy

The real theory of wealth creation is focused on how people work rather than some abstract list of motivational ideas. In a capitalist economy work is the heart of wealth creation. Without work nothing can be done.  I believe in work. All work is noble.

I believe in earning money rather than money just being plucked from a money tree. There may be cases where this is so, but highly unlikely as it is based more on circumstance. Here is the secret for wealth creation.

There are four types of workers or ways to earn money and explains why the rich have money. Which type of worker are you?

  • People who earn money by selling intellectual goods
  • People who earn money by selling intellectual services
  • People who earn money by selling physical goods
  • People who earn money by selling physical services

The people who sell intellectual good generally make the most and the workers of physical services generally make the least. Lets look at these four groups of money earners.

How workers of physical services make money. People in this category work in a shop, clean office buildings, work construction etc.  These are great people and I have been in this category for many years. However, since the service they sell is a commodity, that is you can get anywhere, the price they get paid is relatively low.

How people who sell physical goods make money. These are people who sell things themselves from eBay to apples on the street to computers or washing machines. It does not matter, they all make a better profit for their time then workers of physical services.

How people who sell intellectual services, the almost rich, make money – These people make reasonable money but are not often the super rich. Rather they live comfortable middle class or upper middle class lives and sometimes lower upper class lifestyle (If they get a very large amount of stock options, and thus become owners). These are lawyers, doctors, accountants, teachers, consultants. That is these are your professionals.

However, the problem is most professional people sell their intellect to corporations. Further, they sell their intellect on an hourly basis (a salary is still an hourly basis).  Read my lips, the issue with this is in a capitalist economy the only way to get rich is to be a capitalist. When you sell your services to a corporation by being an employee, they will take most of your value added and keep it as their profit. Further, you are giving up your time to work there. It is your time and life in exchange for money.

A firm will pay and employ a worker when the worker’s marginal product equals or exceeds the marginal product given to the owners or firm. If not the worker (professional selling intellect) is of no value to them and they are let go from corporate America.

You will always be paid less than what you are worth or creating. Otherwise no company would be in business. The owners of the company take your sweat and toil and imagination and live the lifestyle of the rich and famous.

How people who sell intellectual goods, the rich, make money – They sell intangibles. These are people like Bill Gates or J.K Rowling.  These are people who create something unique and interesting and sell it. Authors, actors, people who invent something useful or unique. These people make money by creating something very unique and what people want.

The rich make money by selling intangibles. By selling intangibles you do not need a warehouse or minimal inventory. You do not need capital, just intellectual capital. Write a book, sell software, write music.  These are examples of selling intellectual goods or intangibles. Sell an idea.  Further, you need to own the idea. In a capitalist economy the only way to make money is be a capitalist.

In fact, you basically want to sell air. You could sell rocky mountain air compressed so when people open it in NYC they feel the fresh mountain air fill their room.  This is a metaphor of course but it is true.  You want to sell things at a high premium for real value that is intangible.  Intangible are not connected with survive or something that has a natural value, but rather only a subjective value., and does not require your time to make money, that is being paid as a consultant. Therefore, you do not have to perform a service or give your time to make money once the product is created.

Then you leverage your intellectual capital to have other people sell it for you and give them the usually rah-rah spiel that you have herd in corporate America your whole life. You use your time to sit on top of things. When I was in management and now have my own entrepreneurship, I would just hire good people to do the work and I would just sit on top of things (something I did not like as I am more hands on). Actually now I prefer to do the work myself, than hire specialists and experts for various reasons.

Therefore, to get rich create intangibles that are unique and sell them, rather than work in a job.  The unique part is very important as explained by the diamond water paradox. That is value is determined subjectively rather than on pure utility. This is why people pay more for designer labels. Do not sell it as something cheap, the lowest common denominator (like an e-book), but sell it as something that is of value.

Ask yourself again.  Where are you spending your time?  Which one of those four categories are you spending your life in?  Getting rich, unless it is through a stroke of fortunate circumstance, comes from years of hard work.  What do you work  hard at? Do you work for yourself or someone else?

Getting rich and having money is not important in life, your life is important

OK now I know why people get rich, what are you going to do with this information? People get rich because they work hard for many years to create something interesting or valuable. The question is how do you get the idea? It is easy. Ask yourself what you love to do and work from that.  You do not have to make 100 billion dollars, I just want people to get paid more. What did you like doing as a child before you learned about making a living? That is the question.  Now what is your answer?

Be actively indifferent towards money and riches

See you have to be actively indifferent towards money. That means you should not care if you are rich or poor.  You should not worry if you are a person of honor or a person of disgrace.  You should not prefer fame and fortune to anonymity and poverty. You should be actively indifferent to the things on this world.  All these things are in God’s hands. You should focus on the real meaning of life. Take a lesson from St. Ignatius on active indifference.

What is more important, making money or your life?

If you really want to make money it really is easy, just do something that you love and create something unique in this world for others, than you will have a higher probability of being paid more.  The best is an intangible product created from your intellectual rather than financial capital.

I have given you some subtle but powerful information about how to make money. I have given you very valuable information on the real secret of how and why people get rich. As a gift to me you can paypal me a donation mbiernat@hotmail.com.  If you do no have any ideas, write me, maybe I can help. Write your circumstances life and I will tell you my idea for you. Leave a comment and you will see. I am not selling anything. I simply enjoy economics and had the opportunity growing up to observe the rich. This is why I wrote about how the rich earn their money.

4 Replies to “Why the rich have money”

  1. Thank you for providing me with an explanation of mercantilism v capitalism. I am trying to teach the concepts to a group of sophomores and am having some trouble reaching them. I did wonder if you would comment on my idea. I am a teacher, obviously make little money.
    My goal, like yours, is not to make millions. It would be nice to do something I am passionate about though. My passion seems to revolve around kitchens. I don’t mean cooking in them–decorating them. If money were no object and I didn’t need to pay bills, that is what I would do. I just don’t know how to see it to fruition. Any words of advice? Again, thank for the information on your blog. I think I can explain it better to a group of 15 and 16 year olds. Blessing.

    1. Mark Biernat says:

      Thank you for the comment. I teach in Eastern Europe. The best way to reach people is using a good metaphor or something that they can personally relate to. If you want specific metaphors on any topic let me know.

      With regards to your idea I think you can make money fairly easy. If you are interested in kitchens and their styles, chances are others are too. In fact, I do not know anyone who is not interested in this, I certainly am. If you spruce up that room in the house, it adds more value to your home than any other room, did you know that? Dollar for dollar the kitchen and the bathroom are your best investments.

      Therefore, from an ascetic standpoint and a monetary standpoint you will have a lot of people interested in what you are interested in.
      How to make money off of this? I think there are many ways to monetizes an interest. Think about what I wrote in ‘Why the rich have money’ or my other posts on money.

      You can monetizes an interest by:

      providing a physical service
      Selling something physical
      providing an intellectual service
      selling an intellectual good

      This list in order of least to best ways to make money or at least easiest. For example, at the top of this list you could physically work to revamp someone’s kitchen floors. The second item is selling something to decorate it, the third way is to provide something like advice or on colors and design and the fourth item on this list is about writing a book or having a blog or website about such things.
      I think if you think of all the great companies today from Google to Microsoft they sell something intangible and intellectual and something of value. This in my opinion is the best way to make money today in today’s economy. Why? We are moving to a high level economy.

      That is, people’s basic needs under Maslow’s hierarchy of needs are satisfied. Therefore people are looking for more things besides food and shelter. They want to make their kitchen more foofy for example.

      If you had a blog or a book on such a thing, it is not a bad idea.
      Take a look at these two websites:
      thepioneerwoman.com
      101cookbooks.com
      They are both very rich ladies. They did this with pursuing their interests. You can to. You do not have to have a website, but it is just one idea.

      You might say, well I am not you Mark. I know nothing about these things.

      My reply is this. I did not either. I moved to Poland, a country where I did not speak the language, have a visa and lived in a 180 square foot apartment and did my wash in the sink. I learned the language, got a citizenship, made money in many different ways, learned website and online money making and now living my dream. I have not worked really in a traditional job in eight years.
      I also have a brain lesion that caused me a lot of problems on a cognitive and physical level. So if I can do it, so can you. I am no one special. I just believe that we are all equal in the sense, everyone has a talent or something to offer the world.
      It is like in the Bible, Paul I believe says something like ‘ some of us have the gifts of healing while others have the gift of tongues’. If you believe that God makes everyone unique and has a special purpose you can live that dream.
      It does not mean you quit your day job, it means you start thinking about an additional way to apply your talents or discovering the ones you buried long ago. You might have a buried treasure.
      Do you remember the book The Count of Monte Cristo? When the priest tells the new prisoner that if he helps him dig an escape tunnel out he will give him a classical education. And the new guys asked how long it will take, and the priest replies, about 8 years. The guy says now way too long, however with the rebuttal ‘do you have anything better to do’?.
      If it takes time to think about how to apply your talents to your life let it take time.
      If you have questions ask me.

  2. Telisha M.L. says:

    When I was in college I’ve tutored math, all subjects from basic to college algebra. The very first time I started tutoring, I loved it and just this year I’m starting again and I love Algebra. I’m not tutoring in learning centers such as Sylvan and those other places. I’ve read the blog about why the rich have money and you identified ways to monetize interest and still a bit confused on where tutoring would fit in all this. Would tutoring be considered providing a physical service or can it be selling intellectual service?

    1. Mark Biernat says:

      This definitely falls into the category of intellectual service. I make no distinction between Lawyer and teacher or consultant. They all use their brains to provide a service to others. Each on of those fields can make equal money if you position yourself right. For example, when I lived in Eastern Europe, I tutored English to foreigners. That paid OK. But when I focused on teaching business English to Lawyers, doctors and business people when they were preparing for a big project, I charged more than they did. Really, supply and demand is subjective and if you can find a niche than anything is possible in terms of income for services.

      However, I recommend taking the idea one step further and developing an intellectual product that can be sold, from a book or manual, then you do not have to perform a task everytime to get paid. But intellectual services you will never be poor.

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