Often, we let money control our lives instead of using it as a tool to advance our goals and live a more comfortable life. But what you want to do is make money work for you now and into the foreseeable future.
However, the challenge is we often don’t realize the financial mistakes we are making and instead, let money be in the driver’s seat and steer the wheel for us. Don’t worry, it’s possible to fix this and here you’ll learn how to make money work for you.
1. Learn how to budget
Having and managing a budget is one of the best ways to start making your money work for you, because it allows you to see clearly where every cent is going and make plans for the future.
Creating a budget does not have to be complicated or too detailed. Start by simply tracking where your money is going. Either export your bank statement to an Excel sheet, or use a budgeting app that can keep track of everything for you.
2. Get out of debt
The less debt you’re in, the less interest you’ll need to pay in the future. That’s why paying off your debt as soon as possible is a great way to make money for you. Although there are some loans that are difficult to pay off early (such as a mortgage), some other loans should be paid off as soon as possible.
3. Establish an emergency fund
Having six months (or more) of living expenses stored in cash is a great way to make money work for you. Building an emergency fund does take time, but it pays off financially and emotionally. Make sure to research the best savings account, and be aware that some do set limits on how much money you can withdraw per month or year.
4. Master your credit scores
Your credit score is a three-digit number that rates how trustworthy you are when it comes to paying off debt. A high credit score is above 800, and a low or bad score is usually around 580 or less. A good credit score will offer you a much better interest rates when you’re taking out a loan. And having a great credit score is an excellent way to put your money to work because it can save you thousands in interest payments.
5. Invest in retirement accounts
Investing in retirement accounts is one of the best ways to make your money work for you. That’s because retirement accounts allow your money to grow tax-free and also accumulate free monetary contributions from your employer.
Every month, some of your salary is invested in a retirement account like a 401k. Depending on your employer, you may be also offered a match up to a certain percentage of your contributions.
6. Consider a health savings account
A health savings account is a health plan that you can use to pay for medical expenses if you’re enrolled in a high-deductible health plan. It puts your money to work because you don’t pay taxes on it, and you can pay for eligible medical expenses tax-free. You can contribute to your HSA even when you’re not working, and the money in the HSA is yours forever.
7. Start a lucrative side hustle
You can also put your money to work for you by investing in a side hustle. Side hustles are a good way to make additional income while still working a full time job. Part-time or under the table jobs are options, but getting involved with a side hustle that you can do from your computer means you have a lot more flexibility and freedom.
8. Invest in real estate
Real estate is one of the most popular way to make your money work for you. Investing in real estate does require some specialist knowledge as well as a larger upfront contribution to your down payment. The most popular way to make your money work for you with real estate is to invest in rentals.
9. Invest in yourself
Your skills and talents will be with you for your entire life, so investing in them early on can pay off in bucket loads in the future. Put your money to work for you by buying books, taking courses and even going back to school. It doesn’t always have to be related to your career, simply be curious and explore anything that piques your curiosity.