Why let your money sit idle in your bank? Use these 5 tips to make your money work more for you as you earn.
Monica and Natasha were colleagues. Their salary package was almost the same. But Natasha was much more financially sound than Monica. Every now and then, she used to face a money crunch. Once Monica went to Natasha for some financial advice. Being helpful, Natasha shared her smart tips with Monica. And then, Monica set on her journey to financial stability.
Are you wondering “how”?
Hard work is not the only key to earning and being wealthy. You have to put your income to work and make more money for yourself. The more money you have, the easier it is for you to achieve your goals. But to do this, you must know how to make your money grow fast.
Here are Natasha’s smart financial tips for you to do the same.
What Does It Mean To Make Your Money Work For You?
To make your money work for you means to have complete control over your finances. With this power in your hand, you can enhance your financial security. However, you have to first understand the wise ways to use it and track expenses. There are various financial decisions that can help you do this.
5 Tips to Make Your Money Work for You
With the idea to put your money to work and the determination to start wisely, you are unstoppable. If you want to know how to manage money effectively, here are 5 tips to guide you on this path –
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Create a Budget
Creating a monthly budget and sticking to it is the first step to growing your money. By budgeting, you can determine where you are spending your income. It also helps you to spend your hard-earned money with a plan. For those wondering, how to make your money work for you, keep a track of any unnecessary expenditure and spend less than you earn.
Budgeting is not a one-time action. You should actively take it up on daily basis. Adjust it every month to map and control your spending habits. By creating a budget, you can:
- Prioritize spending on important things
- Reduce your expenses
- Cut bad financial habits
- Avoid creating new debt
- Save for the future.
Being deliberate about your expenses helps you control your money, rather than your money can control you. There are many, who are more interested in knowing how to double your money in a day. But shortcuts aren’t wise. First learn to rationalize your expenses. Only then, you will be in a situation to put your money to work or even take a small risk for the sake of double money.
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Pay off Debts
A high-cost debt kills your wealth in the worst way. Handle your loans and credit cards smartly. Usually, a personal loan could cost you around 20% and the interest on a credit card can reach up to 35% per annum. That is a whopping amount. And you end up paying much more than you got. This can rob you of much of your income.
It also affects your savings and investment choices negatively. So, try to find ways to eliminate it as soon as you can. If it is possible to repay your credit card in full, do it. This will be equivalent to earning 35% on your investment. Use these savings judiciously. If paying off at once is not possible, you can follow the tips below –
- Start paying off smaller debts.
- Put the leftover money into savings.
- Don’t take any new debt.
Eventually, you can save enough to pay off even the larger debts and consequently increase your savings. So, do consider this as an important one among the 5 tips to make your money work more for you.
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Save and Invest Your Money
You have streamlined your expenses. Your debt payment is in control. Now, you can start putting your money to work. How? Save and invest – long-term strategies to build wealth. Do it according to your goals, lifestyle, and age. You can also explore 10 easy ways to save money. To get insight on how to invest and make money daily, scroll down.
There is no dearth of options to grow money through investments. When you put your money into investments, it grows all on its own through interest. Keep in mind that when you pay interest, you lose money. But when you earn interest, your money is increasing by itself. This is the best way to make money grow in 6 months, 12 months, or the plan as per your choice.
Diversify your portfolio. Investing all your money in one type of investment increases your risk. If it fails, your hard-earned money could be gone. Instead, divide your money and invest in a mix of things to spread out the risk. You can invest in –
- SIP
- Exchange-traded funds (ETFs)
- Government bonds
- Mutual funds
- Real estate
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Earn Passive Income
With the internet becoming an inseparable part of our lives, we can earn some passive income. This helps us generate extra money and achieve financial stability and security. It will be a great support if there is job insecurity at your workplace or you choose to take some time off from work.
This is among the smartest of the 5 tips to make your money work more for you. It will act as a surplus income and can solely direct towards more investments and savings. Some of the passive income ideas are –
- Create a course
- Write an e-book
- Rental income
- Affiliate marketing
- Flip retail products
- Sell photography online
- Peer-to-peer lending
- Dividend stocks
- Create an app
- REITs
- A bond ladder
- Sponsored posts on social media
- Invest in a high-yield CD or savings account
- Rent out your home short-term
- Advertise on your car
- Create a blog or YouTube channel
- Rent out useful household items
- Sell designs online
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Create an Emergency Fund
Another one among the 5 tips to make your money work more for you is by creating an emergency fund. This keeps you prepared for any unexpected expense. A job loss, a medical procedure, or a car repair are some of such expenses that drop in unannounced. If you haven’t prepared with emergency funds, you will be wiped off from the financial progress that you have made.
With such funds, you can gain control of the financial situation again. It takes time to build this fund. You can save at your convenience. Every small amount that you can set aside counts. Having a high-yield savings account is a hero step here. If you want to know how to make your money grow in the bank, building such funds in addition to investment is the answer. It earns you more interest than your regular savings account.
Additionally, having a retirement account is also a great idea. You should also consider whether you need:
- Education savings, for yourself or your children
- Travel savings
- A down payment fund for a house
- Savings to start a business
- A car fund, for repairs or a new vehicle
- Extracurricular fund for dependents
- Long-term care savings, for yourself or dependents
In a nutshell, financial discipline is vital and a long-term exercise. Every small step takes you closer to your financial independence. A small wise decision takes you a long way. For instance, pay bills on time to avoid a late fees and keep liquidity very tight. Resist the tempting claims to double money in 24 hours.
These 5 tips to make your money work more for you help you enjoy financial freedom. Refuse to give in to the urge to overindulge in your expenses. Think twice before any expenditure if it can be avoided. Appreciate the value of money in time and keep hold of it.
It assures you comfort and stability, makes it easier to plan for the future, and allows you to save for important milestones. Save like a king and spend like a beggar. And you will end up being an emperor of your expenses.
