Introduction
Today’s article is all about making money work for you. In this article, we will discuss 10 ways you can leverage your money or time to increase your net income or create a small fortune for yourself.
Open a High-Yield Savings Account
Importance of High-Yield Savings Accounts
Open a high-yield savings account before sending your money off to do your bidding. You’ll want to have an emergency savings account with roughly 6 months of living expenses stored in cash. According to Sean Gold, a wealth strategist with Wadd and Associates, an FDIC Federal Deposit Insurance Corporation would be a smart place to keep it, as it’s a high-yield savings or checking account where it has the potential to generate more money as it waits.
An average savings account offers an interest rate of approximately 0.01%, and an average checking account is the digital equivalent of placing your money under the mattress. However, high-yield savings and checking accounts offer interest rates that exceed 100 times what you would receive otherwise. Usually, these accounts can be found at online banks, which keep costs low by forgoing brick-and-mortar locations.
Develop a budget.
The importance of budgeting
Developing a budget is something that we’ve heard a thousand times before, but how many of us actually stick to it? If you’re guilty of being in the dark about your incomes and outgoings, coming up with a budget is one of the best ways that you can start taking control of your finances.
A budget will tell you if you’re spending more or less than you can afford. It also helps you steer your money to where it matters the most, so you can be on top of bills, reduce debt, and begin putting money towards your future goals. Your budget should sum up all your living expenses so you can compare the total you spend against your take-home pay. Do away with or reduce any unnecessary expenses, and figure out a sensible savings plan.
Develop streams of positive income.
Creating passive income streams
Develop streams of positive income. The most accurate definition of passive income is money earned with little to no effort expended. Once you set it up, passive income streams earn you money while you sleep.
As an entrepreneur, it’s true that you’ll likely always need to depend on the day-to-day work you perform for your clients, but you can always tap into your creative side and find other ways to make money using your skills and abilities.
Invest in the market.
The importance of investing in the market
Invest in the market. After your IRA and 401(k), the next step is an investment account. It’s important to take part in the markets. Being in the market and attempting to time the market is not the same thing. Most experts will advise against putting money in and pulling it out to take advantage of favorable fluctuations and minimize losses when the market takes a hit.
Over time, wavering dips in the market should even out, resulting in an overall gain. People like the comfort of money in cash, but inflation will eat away at your money. Sitting in comfort is not a good way to make money.
It’s a common misconception that you need to have a lot of capital to think about investing in the stock market. According to William O’Neal, an entrepreneur and stockbroker, you can begin with as little as $500 to $1,000 and add to it as you earn and save more money. You also don’t need to know every single thing about the stock market to start investing. There are passive investment options that permit you to set it and forget it.
Store it in retirement accounts.
Store it in retirement accounts such as $400 in Onix and IRAs or investment accounts, which translates to your savings or investments in the market and has the potential to multiply exponentially. Getting the 400 and Oni is vital. You need to save as much as you can so as to have money work for you tax efficiently and to get your funds into the market.
The first bucket outside of the emergency fund is the $400 and Oni up to the match, if your employer provides one. Giving money away isn’t something that you want to do. He further explains that it would be wise to place your money either in an IRA or a Ral IRA.
Another thing that many don’t think about is HSAs, which are savings accounts that are only eligible for those with high-deductible health insurance coverage.
One perk of storing money in an HSA is that you don’t lose it. Whenever you have healthcare costs, you can easily take out the cash and not have to pay taxes on it. For other costs, you can even pay Medicare costs and long-term care premiums.
Become a Silent Partner in a Business
Become a silent partner in a business. Building your own business from the ground up can be a risky move. But if all goes well, you’ll certainly reap the benefits. Another route to take that pays off without the stress that comes with a new startup is to become a silent partner who invests funds but doesn’t get involved in any of the day-to-day running of the business. Of course, this prospect comes with certain pros and cons.
You won’t have a say in how the company is run or the daily decisions that active employees make. But on the upside, you’ll earn a portion of any profits the business makes without putting in any long hours.
Although you still run the risk of financial loss if the venture fails, be careful not to sink your hard-earned money into a business that’s going to tank. To reduce this risk, ensure that you do your research so that you can see financial records, projections, and business plans. You might be required to sign an NDA, but you’ll see that it’s worth it. You might also want to get a lawyer involved to ensure you’re protected if the business gets sued, becomes bankrupt, or has any other legal issue.
Invest in real estate.
If there’s anything that recent history has taught us, it’s that housing isn’t a guaranteed investment. That being said, if you have the required cost and risk tolerance, investing in residential or commercial real estate might suit you. Investing in real estate is double-edged. You could take buying a single home to live in as an investment, or you could invest beyond your home into land to sell, stores, or homes to rent out.
One thing to note is that branching out past your own home depends on your market and the demand for rental and real estate. In most markets, if you can tolerate the headaches and there’s room, it’s an option. But in the spirit of diversifying your assets, bear in mind that many homeowners already consider real estate to take up most of their portfolio, and caution people seeking to invest in real estate to be wary of weighing their portfolios too heavily towards one kind of asset.
Choose credit cards with rewards you’ll use.
Using a credit card might not seem like putting your money to work, but choosing a card with rewards that fit your lifestyle means that every buck you spend on your card is doing double duty. Nobody likes debt, but if you have the cash flow and predictability in your budget and can dutifully pay off your bill at the end of the month, there are many credit cards out there you could choose from. However, if you have credit card debt, this would not be the right move for you.
The secret behind making your money work with your cards is being in a position to pay off your bill in full every month.
Pursue a Professional Degree or Certification
Another way your money can work for you is by elevating your worth on the job market. If you have time and money to invest in furthering your education, you have the potential to make yourself more marketable and earn a higher salary. That doesn’t only mean pouring hundreds of thousands of dollars into graduate school. Making yourself more marketable as an employee or professional might be a simple workshop to work on your public speaking or even taking a class to be a pro at Microsoft Excel.
If you’re looking to broaden your skill set but money is an issue, there are loads of free courses available online.
Pay down debt.
Most of us deal with some form of debt at some point in our lives, be it credit cards, student debt, or other loans. And while owing money might just be a part of life, the sooner you can get rid of it, the sooner you can have a handle on your finances. Think of it this way: every dollar you use to reduce your principal saves you from having to pay interest on that amount. And that can mean being free from debt years earlier than you expected.
If you made three minimum repayments only on a credit card debt of $5,000 with an 18% APR, for example, it would take you more than 12 years to pay it off, and you’d end up paying back over $99,000. However, if you increased your monthly payments by maybe $100, you’d end up clearing off your debt in just under two years and paying back less than $6,000. So basically, paying down debt faster equals guaranteed returns in your bank account over the long run.
Conclusion
In conclusion, there are several ways in which you can leverage your money and time to make extra cash or a fortune for yourself. But the key is finding a system that works for you and doing your due diligence well.
