3 Easy Ways to Make Your Money Work for You
Let’s face it, we all work hard for our money, right? But wouldn’t it be awesome to learn how to have your hard earned money work for you for a change? What would be even better is if one day we don’t have to work at all because we have enough money coming in to support our lifestyle! We could just hang out on the beach. Well, that’s actually my goal. You know what I mean.
In all seriousness, the only road to reach true financial independence is to have your money working for you, not you just working for it, period. I know it sounds daunting and impossible at times but all you have to do is get started.
Here are three things you can do to start making your money work for you. These three steps can also help you break free of the bad financial habits passed down through generation.
Follow these 3 Easy Steps and begin to take control and get your money to work for you:
The most important way to change the way you handle your money is to create a budget. When you are budgeting and watching where your money goes, you are making your money do what you want it to. By assigning each dollar to a category you are controlling where your money goes and what it does.
This will help you to begin to reach your financial goals. Your budget is the best tool you have next to your income to really build wealth. Your budget gives you control over your finances and allows you to make better financial decisions at the beginning of each month.
When you master budgeting, you will be able to reach your financial goals faster and avoid debt. Think of a budget like a fitness tracker, instead of how many steps you take, it helps you monitor your spending and income.
2. Get Out of Debt
Your debt limits your other opportunities. Just think what you could do with the extra money you would have each month if you were completely out of debt. Most people have no idea how much money they are paying in interest each month. You would want to pay off your bills quicker if you realized how much of your monthly budget is being eaten up by student loans, car payments, and credit card bills.
When you figure out that number and you could take all of that money and put it into an emergency fund, college savings, retirement or other goals and dreams that you have, you will see how quickly you could begin to save for the things that you want.
I know that if you have a lot of debt, it may seem like a problem that is too big to tackle. However, you can start by just clearing up your smaller debts and then work on tackling the bigger ones with the extra money that you have. As you pay off one debt and then apply that money you were using to the next debt, you begin to build momentum and you will be surprised at how quickly you can start getting out of debt.
Here is how to get started:
a) Make a list of ALL your debts
b) Rank them in order of how you want them paid off
c) Use the extra money that you are wasting that you found in your budget to put towards debt.
3. Save Your Money
Once you have freed up all that extra money from paying off your debt you need to begin saving aggressively. There will be a point when the money you have will earn more than you do in a month. This takes quite a bit of money, and in order for this to happen, you need put away a large sum each month.
Once you have a six-month emergency fund saved, you will need to begin investing your money. This is the most effective way to grow your wealth. Additionally, saving money can help you be prepared to handle the ups and downs that occur throughout your life.
Saving for an emergency fund is the first step because when something unexpected comes up you do not want to have to reach for those credit cards to pay for it. You will begin to really build wealth when you invest and make your money start to work for you.
Start saving money today in these three categories:
a) Emergency Fund
d) Goals & dreams
If you really want to change your financial picture, your budget is your first step. But sticking to it is the key to your financial success. Often people will create a budget but fail to follow through and only keep up with it for a month or two. You need to create your budget each month, track your expenses and make changes as needed so you are always spending less than you earn.
When you make better decisions about how you will spend your money at the beginning of the month, you can then prioritize and decide what you have to pay, and what are the most important things to you and what isn’t as important. This is so you can identify how much you have to start using in order to begin paying down your debt.
Once you’ve created your budget, identify your savings and future goals. Sit with a financial professional that can help you get those accounts set up. Be patient, getting your finances in order, it is a step by step process. Take the time to initiate and follow these 3 steps and you will be well on your way to having your money working for you!
Cheers to financial independence.
Lynetter Barbieri is a successful financial advisor with 25 years of experience. She is also the co-founder of ETTW (Entrepreneurial Think Tank For Women)