Did you know that 58% of Americans are living paycheck to paycheck due to the inflation spike? One of the best things to do is learn how to grow your money so that you can be ahead in times when the economy takes a turn. We have put together this guide to share our top tips on how to make your money work for you and give you some peace of mind for the future.
Read on to learn our top tips.
Learn to Embrace a Budget
In order to make the most out of your money, you need to have an effective budget in place. If you don’t know where you are spending your money, there’s no way to effectively save your money.
First, you will have to take a look at where your money went over the last two or three months. This will give you an insight into your spending habits. Once you have this figured out, make a list of wants and needs and place what you spent in the appropriate category.
After you learn know where your money is going, it is time to figure out how much money you are bringing in. The total amount should be your net income (the money that you are left with after taxes, insurance, retirement, etc.).
Last but not least, you will create a plan of where you want your money to go in the future. A helpful method is the 50/20/30 method. This means that 50% of your net income goes into your needs, 20% will go into your savings, and 30% towards your wants.
Another way to make your money work for you is to put money aside each week or month into companies listed in the stock market that you strongly believe in their mission and growth. It is wise to diversify an investment portfolio and invest in multiple companies because a reward is never guaranteed with investments.
Keep in mind that depending on how the market is, your portfolio and investments will fluctuate. We recommend speaking to a financial advisor if you do not have experience with investing. Also, check out this article on Forex scams to help you steer away from falling victim to an investment scam.
One way to think about investments is thinking about inflation. For example, if inflation increases around 2-3% each year, your investments will increase about the same percentage as well.
High-Yield Savings Account
Opening a savings account with a high-yield return is better than just having your money in a checking account. Not only will you keep your money separate from the money you normally use, but you will also make money the longer your money sits there and the more money you add to the account.
Although the interest rates are not huge gains, it is a smart place to build and keep your emergency fund money because you will earn a little something while your money sits there.
Credit Card Rewards
Taking advantage of credit card rewards is another way to make your money work for you. There are plenty of credit card companies that offer a percentage back on certain spending categories or on all your transactions.
Some companies also offer welcome bonuses that can add up quickly. When you use your credit cards to pay for things such as your cell phone bill, gas, and groceries and pay the card back right away to avoid interest charges, you can rack up rewards and/or bonuses quickly.
Paying off your balance each month will take discipline, but it is a smart financial move to get rewarded for using your credit card’s money free of charge monthly.
Having money coming in every month (separate from your job) can make the world of a difference in your finances. There are plenty of unique ways to make passive income, but some ways include starting a blog, creating and selling crafts, writing a book, selling baked goods, etc.
Some people also choose to invest their money into real estate and rent out to tenants long term or to tourists through apps such as Airbnb. This is a great way to pay down your mortgage balance and make money on the side.
Say Goodbye to High-Cost Debt
When you have debt with high interest, it can be nearly impossible to grow wealth and grow your money. Typically, credit cards will have a much higher interest rate every year compared to personal loans.
If this is the case for you, then you might want to look into either consolidating your debt or pay off your credit card debt ASAP. Make a plan and start with the card with the lowest balance or the one with the highest interest rate. Starting with the one with the lowest balance can help give you a faster sense of accomplishment, in turn, making you more excited to pay off your other cards.
Now You Know How To Make Your Money Work for You
Now that you have learned how to make your money work for you, it is time to start applying what you learned above. The top financial experts out there all agree that learning how to make our money work for us is a must. Remember that making your money work for you is going to take patience, diligence, and planning, it is not going to magically happen overnight.
If this article helped you out, please continue browsing our finance section to learn more tips and tricks.