3 Ways the Rich Manage Their Money Better than You

They Focus on Net Worth, Not Salary

Your salary is only as good as your ability to continue to work. As we've seen with athletes with million-dollar-a-year salaries, you can't count on money to always be pouring in.

The real rich focus on growing their net worth. From the book:

Your net worth is:

• the difference between your assets and debts
• a full picture of where you stand financially
• the best barometer to measure your financial success

Too often, our society places value in people with high incomes and just as high expenses. Celebrities and athletes may pull in multi-millionaire dollar salaries, but if they're spending all of it, their net worth isn't increasing.

Your net worth is dependent on how much you save and invest – not on how much you spend.

Buying a BMW isn't going to make you rich. Owning a million dollar home isn't going to make you rich. Not spending all of your income each month will make you rich.

By keeping more of the money you make, the longer you'll have it to keep you rich.

They Know Where Their Money is Going

The rich treat their spending like a business: they know exactly where their money is going.

Every expense has a category, and every category gets scrutinized.

Are you dining out too much? Cut back this month. Cable bill too high? Get a discount today.

Now, the rich may pay someone to do the spending reports for them, but you don't need to. Account aggregators like Yodlee's MoneyCenter and Mint can do it for you — for free.

Start tracking your expenses today and get a grip on where your money is going.

They Treat Money as a Tool, Not the Goal

For every Scrooge McDuck, famous for diving into his pile of money, there are tons of rich people who realize money is only a tool for achieving your dreams.

Why do you think the covers of most personal finance books show people on the beach?

Having money is great, but it's what you do with it that matters. And each person's goals are different, be they traveling the world, sending your kids to college or buying a beachfront house.

Money is only as useful as what you do with it.