Summary: In this article, we will discuss how to make your money work for you. Including, what to know before getting started, eight ways to make your money work for you and how to increase your earning potential.
Introduction: How To Make Your Money Work for You
A while back, I wrote an article related to our topic today: how to make your money work for you. In that article, I talk about specific ways to invest to make money. Like opening a high-yield savings account, putting your money into retirement accounts, and investing in the stock market and real estate.
Today, we are going to focus on ways to make your money work for you and not just about where to invest.
Before Getting Started…
Know Your Net Worth
Before we get started, figure out your current net worth. Your net worth is the sum of all of your assets minus liabilities. Your assets could be cash, savings, mutual funds, home equity, cars you own, etc. Liabilities may include student loans, credit card debt, mortgage, etc.
There are several free online tools to help you calculate your net worth.
Know Your Objective
Now that you’ve established your net worth, now come up with an objective. What is your money goal? How soon do you want to reach this goal? Earning an extra $1,000 a month in cash flow is going to look differently than a 30 year retirement goal.
I’d suggest setting a realistic short-term goal and a longer-term goal (6 months) to start. Setting a short term goal and achieving it will keep that positive momentum going and propel you toward your long-term goal.
8 Ways To Make Your Money Work For You
1- Track Your Spending, Savings, and Investments
I’ve written a lot about budgets previously and why everyone should have a budget established. Most of us have probably downloaded a budget app or two to help us track our spending and savings. Where most people trying to budget fail, is the tracking part.
Even if we have our budget in the palm of our hand, it doesn’t mean we’re going to stop and take the time to track each and every dollar spent. Even when we should be.
Figure out what works for you. Whether it’s an Excel spreadsheet, an app, or pen and paper, get to tracking your spending, savings and investments. Keeping a constant pulse on your finances is a must if you’re trying to make your money work for you.
2- Pay Yourself First
We don’t work hard all week to pay someone else first. If you want to make your money work for you, start building your savings. On payday, pay yourself first. Treat the money you put towards savings as an expense. Every month, the first “expense” to come out of your bank account goes straight into your savings account. Automate this process to stay on track with your goal to make your money work for you.
3- Find a Residual Income Stream
Residual income is basically putting in some work upfront to earn money over time, instead of just once. After doing the initial work to set up a residual income stream, you’ll have to invest less and less time moving forward. The goal for residual income is that it becomes passive income. In essence, you stop trading time for money. Your earning potential is no longer directly limited by how many hours you have in a day.
Start by looking into dividend-paying investments. Real estate investing can also be a great income stream, especially now that it’s so accessible online.
4- Get a Side Hustle Going
We all want to earn more money. But what are we actually doing to try and make that money? Here’s where the side hustle comes in. Find ways to make money outside of your full-time job. You could always get a second, part-time job, but that limits your flexibility.
There is a growing number of “work-from-home” jobs that allow lots of flexibility. A couple of my side hustles include freelance writing, graphic design, and woodworking. And even better, most of my side hustle gigs I actually like doing.
Depending on your skill set, jot down a few ideas for your own side hustle. You might consider proofreading, a virtual assistant, customer service, web design, photography, etc. Put all the money you earn from your side hustle toward your goal of making your money work for you.
5- Become a Silent Partner in a New Business
Let’s say you have a trusted friend who is trying to start a business. This friend is wickedly talented and works hard. Maybe you have watched this friend through the process of trying to start a business and believe in the product or service.
Assuming you have some money you are looking to invest, a new business venture may be a great way to make your money work for you. Depending on the success of the business, a silent partner can sit back and hopefully watch their money grow.
Investor Tip: Make sure to take emotion out of investing, especially with friends and family.
6- Get Cash Back or Rewards for Everything You Buy
We all have expenses we have to pay for, like groceries, a pair of shoes, a cell phone. Because we are spending this money anyway, we might as well get rewards for doing so.
When I was looking at different credit cards, I thought about what kinds of benefits I wanted. After shopping around, I decided on a skymiles card, because I love to travel. While that works for my lifestyle, others may rather get cash back, gift cards or discounts.
Use a credit card for essential purchases that comes with rewards you will actually use. There are so many offers out there that will fit your needs and lifestyle.
Investor Tip: Be careful with credit cards! Make sure you’re paying off your balance in full every month to avoid interest.
A few good cash-back apps and sites to check out:
- Ibotta: Take a picture of your receipt after shopping and save on groceries and more.
- MyPoints: You can earn cash gift cards to places like Amazon and Walmart by shopping through the MyPoints portal.
- Ebates: This site offers rebates, promo codes and discounts.
7- Invest in Real Estate
If you have the cash and risk tolerance to invest in real estate, you should consider it. There are so many ways to invest in real estate these days and they don’t all require a lot of time. You could consider buying a single-family home to rent out. Use the rent money to pay the mortgage, build equity and maybe even some extra cash flow.
You could invest in crowdfunding online and buy into a larger real estate project. Or explore real estate investing clubs online and see if you could benefit from a professionals expertise. Where you decide to invest will depend on how active or passive you want your real estate investing to be.
8- Get More Education! And Increase Your Earning Potential
Going back to school, getting additional certifications, or investing time into learning is a lot like a side hustle. You are essentially increasing your earning potential. The more expertise you gain in a specific field or subject area, the more valuable you become.
Investing in yourself may be the ultimate way to discover opportunities to make your money work for you. Come up with a way to provide unique value through education and expanding your skill set to make yourself indispensable.
There’s no easy button for how to make your money work for you. The first step is to start simple, set a savings goal or objective, stick to your budget, and track your spending. Then, you’ll start creating momentum when you watch your savings grow. It’s exciting to think about ways to make your money work for you and having enough money to dip into the investment pool.
Finally, it may take a little while to figure out the best way to put your money to work. Take advantage of online resources, talk to experts, consider a financial advisor, and consult with real estate investment professionals. It’s time to make your money work for you.