Making your money work for you means finding ways to grow your wealth without having to work harder for it. In fact, unlike you, money has all the time in the world and no limitations when it comes to age or time, so why not capitalize on it?
From investing approaches to creating multiple streams of income and exploiting credit card rewards, your hard-earned dollars can work for you, and we have all the tips and tricks to get you started.
Read on to learn how to make money work for you and how to maximize profits using proven methods that even financial beginners can follow.
Smart Ways to Make Your Money Work for You
Based on your individual goals, and how much money you have on the side, there are several strategies you can explore to make your money go farther than ever before. And the best part is, some don’t even require you to be actively involved:
1. Invest in the stock market
Investing in the stock market can be a great way to grow your wealth over time. However, it’s important to do your research and invest in companies with strong fundamentals.
One way to go about it is to ‘dollar-cost average’ – invest a set amount of money each month, regardless of fluctuations. This approach can help you to spread out your risk in the market, as well as take advantage of any dips in prices.
Buying ETFs (exchange-traded funds) is another great way to make your money work for you, as they tend to have lower management fees than mutual funds and are more tax efficient. Whichever you opt for, know that the concept is really simple – you invest around 10% of your annual earnings and stay on the market for as long as possible.
In time, you’ll be earning better than putting your money in a bank account, as data says the average return on stocks is about 10% a year. For example, if you start with $10,000 and save $1,000 every month by investing in a portfolio with a 10% yield, in a couple of years, you’ll be counting your profits in millions.
2. Automate your savings
Setting up automatic transfers from your checking to your savings account each month can help you save money without having to think about it. This is because you’ll be keeping your savings in a separate account from the money you use on a daily basis. And the best part about this option is that you don’t have to be an expert investor to make your money work for you.
Opening a high-yield savings account is an easy first step, as it can help you earn more on the money that you are already saving. Currently, the US national average yield for savings accounts is 0.24% APY, but it is possible to aim for higher. In fact, some of these accounts offer as much as 4% or 5% APY. All you have to do is research which ones offer the best yield, and your money will grow in no time.
3. Get rid of your debt
Most Americans are in debt, and one in eight have student loans, so if you belong to either of these categories, it might be time to start working on freeing up your finances.
Getting rid of your debt should be a priority if you want to let your money work for you and start making financial progress. Take time to identify what debts you’ve accumulated over the years and develop a debt-payment plan.
You could look into refinancing your loans, consider debt consolidation, or reduce your spending to free up more cash for debt payments each month. You might also benefit from joining a non-profit credit counseling agency that can provide advice and guidance on how best to tackle your debts.
4. Utilize credit card rewards
Using credit cards wisely can work to your advantage. And while it’s true that credit card companies make money off their clients, it’s also true that they provide an option to save money. For instance, you can use credit cards for your day-to-day expenses, such as groceries, gas, and dining out, and pay off your balance in full each month. This will not only help you earn rewards but may also keep you clear of paying interest.
To have your money work for you, pick a credit card that offers around 5% cashback or more, and make sure to check whether it’s valid for the categories you usually spend money on. Also, many cards offer welcome bonuses of $1,000 or more, so make sure to take your time and research the ones that will give you the most.
5. Invest in S&P Funds
Did you know that investing in S&P funds has a long-term return of around 10%? This means that if you invest $100,000 in S&P funds, in 10 years’ time, that investment could be worth over $200,000.
Risk-averse investors should consider investing in S&P funds as they provide a steady return and are less volatile than other investments. Think of it this way – you’ll be investing in America’s largest companies operating across more than ten industries, and you’ll not be betting on just one of them.
So if you’re looking for passive income ideas, start by researching the different options available and create an investment portfolio that works for you. You could also hire a professional to manage your funds. True, it will cost you as this is how financial advisors make money, but they will also be monitoring and changing your investments as needed, so it’s a win-win.
6. Buy real estate
Investing in real estate is the best way to make your money work for you. If you have enough money to make a down payment and there is room for appreciation, buying a house or apartment can be a great way to increase your wealth.
You could rent out the property or live in it yourself and pay off the mortgage over time. In fact, according to data, legal owners occupy 64.4 % of the housing units in the US, which means the remaining are looking to rent, and you could potentially tap into that market.
7. Create multiple streams of income
Among the many ways to make your money work for you is to create multiple streams of income. For example, if you’re already working in a full-time job, consider taking on additional freelance work or investing in a hobby business.
The metaverse offers lots of opportunities to create multiple streams of income. For example, if you have a knack for gaming or creating digital art, you will be able to monetize your skills in no time. You could also launch an online store – it’s an easy way to sell products and services from the comfort of your own home. Granted, you’ll be paid in virtual currency, but according to data, the market is currently worth $4.67 billion and is projected to grow even further, so it’s definitely worth looking into.
8. Invest in yourself
Taking on courses, attending conferences, or pursuing certifications to improve your career prospects may not seem like the best way to make money work for you because you’ll be spending it, but it will make you future-proof.
The world is changing super fast, and you have to keep up if you want to stay ahead of the game. Whether you choose to make an educational investment, or even explore leadership and business development courses, investing in yourself is the best way to boost your skill set and commit to a long-term strategy.
The Bottom Line
It’s crucial to know the difference between earning money through a job and developing a long-term strategy to help you select which of the many ways to make money work for you actually works for you. And while it is true that earning money from a job is vital, earning passive income is the real key to achieving financial security. However, it does require patience, discipline, and willingness to take calculated risks.