Money is one of the most important aspects of our lives.
Hey readers, welcome back I hope you are doing great and I am sending a lot of positivity to all of you.
We all work hard to make money, but the wealth doesn’t grow much. Why? Cause we don’t understand the importance of making money grow.
It’s an art and science that we lack, of course, nobody teaches about money or personal finance in schools and colleges and this itself creates a gap.
Nobody teaches the art and science of making money work for you without hard work.
Money is the tool that can help you in achieving your goals and can provide freedom and security for you and your family.
But to achieve these goals you need to understand the art and science of making money work for you.
Making money work for you is one of the most important skills that need to be learned.
And so in today’s blog post, we’ll be talking about the ways of making money work for you.
10 Ways to make money work for you:-
Making money work for you also means taking control of your finance, and then using it to continuously improve your financial ability and security.
It’ll eventually help in gaining independence or build wealth through investing.
But neither of these things will be achieved unless you understand the art and science of money. The adrenaline of making more money.
So, without any further adieu let’s understand certain ways of making money work for you and I am sure that it’ll work and will help you achieve your goals:-
Write it down:-
One of the mandatory things to make money work for you is to write it down.
Writing down your financial goals is pretty much important as it’ll help you to make financial goals.
Having a financial plan is like having a path towards your life goals with proper financial implications and a plan to achieve them.
The reason why people suck at achieving their financial goals is that they have not to figured out how much they need and just blab about it.
So, it’s important to maintain a financial journal and write down your financial plans such as,
How much money do you need to retire?
Children’s education.
Equity portfolio.
You should be able to figure it out.
If you write down your plans, you’ll get to know more about your finances and your life will be easy.
Also Read:- How to Set and Achieve Financial Goals
Open a high-yielding savings account:-
This one is necessary.
Sean Gould a wealth strategist and a certified financial planner with Waddell and Associates explain that before sending your money off to do the heavy lifting, you need to have an emergency savings account of about six months of living expenses stored in cash.
A typical savings account gives an interest rate of around 0.01%.
So, a smart way is to keep it in an FDIC-insured high-yield checking or savings account, where it can generate more value.
Overall, high-yield checking and saving offer interest rates that exceed 1% and are equivalent to 100 times what you’d get otherwise.
Learn to budget:-
Budget is a vital part of financial planning.
While preparing a budget you understand the money from where it’s coming from and where to spend it.
You are making your money do what you want it to do, rather than spending it without having a plan.
While writing down the budget you get to know certain aspects such as,
Expenses.
Where the money is going.
Identify bad financial habits.
Clear debt off.
Save for the future.
Budgeting gives a basic layout of your financial goal and it helps in tracking down your expenses.
And it’s not just a one-time exercise, you need to update it all the time, so write it down and you’ll see a major change.
Get out of debt:-
Debt is a curse.
Nothing kills long-term wealth like high-cost debt. Debt could be anything right from credit cards to personal loans.
Debt also means your money isn’t working for you, it’s going towards paying that interest.
This itself creates a financial burden and limits the choices. It doesn’t help in accomplishing financial goals.
Clearing off your debt allows you to make decisions such as paying for education, traveling, and improving your life without much stress.
You can even start your own business.
So, if you have a lot of debt and are stuck then you can use the snowball method to control the debt repayment process such as,
Paying maximum amount to clear the smallest one.
The extra money you have can be used towards clearing off the smallest debt.
Move on to the next thing once it’s paid off.
It starts by clearing off small debts and once it’s paid off then you have money available for the future.
Find passive income streams:-
There’s this quote from Warren Buffett you know the sixth richest man in the world and the quote goes like this, “If you don’t find a way to make money while you sleep, you will work until you die”.
It’s true and is logical.
You can’t work for your entire life to make money, you need to find another source for making money and this is where passive income comes.
Passive income is the pinnacle of making money work for you.
Passive income is a type of income that doesn’t require you to work hard, rather requires smart work.
Overall the secret lies in investing in the right assets. Here are some sources of passive income such,
P2P lending.
Asset leasing.
Dividend stocks.
Rental income.
Generating passive income requires basic knowledge.
And if you don’t know in which passive income stream to invest then I highly recommend you to consult your financial advisor/planner.
Also Read:- Hard Work V/S Smart Work
Invest in Stocks:-
The stock markets are booming all the time.
In today’s fast-paced time it has never been so easy to invest in the equity market. Stock markets are a daunting place for beginners but with little effort, the risk is worth it.
Stocks represent legal ownership of the company. When you invest in a particular company’s stock, you become a part-owner.
Before investing in the stock figure out how much you need to save and then work out your spending.
Second, the biggest risk in investing is not taking risks.
But if you want to build wealth then equity is good for the long run.
And while investing in the stocks check the Cash flow statement, as having Free Cash To Equity will help in generating wealth.
Lastly, I believe women should invest in stocks as they are better than men in terms of making financial decisions.
Also Read:-Free Cash Flow to Equity – FCFE Definition
A systematic approach to investing:-
If you can’t invest a lump sum money in the stock market, then it’s better to use the Systematic Investment Plan(SIP).
There are various advantages of using the Systematic Investment Plan such as,
Syncs with your income flow, so that your investments work hard for you each month.
It gives you the benefit of rupee cost averaging.
You can use SIP and invest in a mutual fund or even better you can invest in an index fund.
An index fund is a fund that invests in various companies and tries to match the benchmark.
There are various index funds such as the S&P 500 and Nifty 50.
SIPs are about financial discipline, which you get after investing on a regular and sustained basis. And that’s how money works.
Real Estate is and will boom:-
Real Estate was and will be booming all the time.
But if recent history has taught us anything and that is housing isn’t a guaranteed investment and that said if you have the cash and risk tolerance then investing in residential and commercial real estate may be a good fit.
So, investing in real estate comes up with two possibilities,
Passive rental income.
Future sell-off.
Both of the possibilities are useful in putting your money to work for you.
After all, that’s how most real estate investors take out a loan to buy these properties.
Overall, the expectation is to earn a profit that is greater than the loan and interest both.
But investing in real estate is a long-term play and it requires capital. Alternatives such as REITs generate passive income with less overhead.
Start a retirement fund:-
Earlier there was the pension system where the retirees will get a pension.
But now that system is dead.
And that’s the reason why it’s important to make money post-retirement life.
Post-retirement accounts such as 401(k)s and IRAs are investment accounts, which means that your savings are invested in the market and have the potential to grow exponentially.
The approach has to be goal and risk-based with a special focus that covers all your bases such as short, medium, or long-term expenses.
Here are some retirement funds that you can try,
National Pension Scheme.
Public Provident Fund.
Pension Fund.
Take risk only when warranted:-
The world of equity is not safe as compared to the world of fixed income.
It comes with risk. You should take risks but take risks that you can bear.
Always remember, higher returns entail higher risk but higher risks do not guarantee higher returns.
You should take calibrated risks if you want your money to work hard for you. Don’t put all eggs in one basket.
Diversify your portfolio. Measure your risk before jumping into it.
So, we wrap up today’s blog post.
Making money work for you is essential to survive in today’s time and it’s important to educate yourself.
And it’s a skill that needs to be learned.
What are your views on it do let me know in the comment section?
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