Making money is one thing, but knowing the best ways to make your money work for you is a different ball game.
Most times, it’s not about how much you make. It’s how well you can use the little money you earn to make a difference.
Without a doubt, money remains the most important tool to help you achieve your goals. If you understand the art of making money work for you, it will provide you comfort, stability, and the ability to plan for the future.
But what does it mean to make your money work for you?
Making your money work for you basically means that you can control your finances. It means you know when to spend, when to save, and when to invest.
And when you achieve this level of financial literacy, you will be financially stable and secure.
So, here are 5 unique ways to make your money work for you;
#1. Talk to Someone With a Good Financial History
One of the best ways to make your money work for you is to have a chat with someone with an excellent financial history.
Look around you and identify a few people that are doing well in controlling their finances. Reach out and have a one on one conversation with them.
The tips you will get from someone with good financial history are a million times more valuable than that of a financial adviser.
Because of their experience, these individuals in your network can help you set realistic financial goals and develop strategies to help you achieve them.
Hey! If someone with a good financial history agrees to discuss with you, try to be prepared. It’s a rare opportunity, so don’t take it for granted.
But when you are reaching out to these guys for the first time, let them know that you admire their financial literacy so much.
And once their response is nice, you can offer to buy them lunch so that you can ask them a few questions about financial literacy.
It may be easier to set up a meeting with these guys than you think. Just take action.
#2. Create a Budget
Having a budget is one of the best ways to make your money work for you. You have probably heard the importance of creating a budget the umpteenth time.
But it’s pretty unfortunate that most people don’t have or stick to their budget. If you have a budget and adhere to it, you can easily control your finances.
Your budget will tell you at a glance whether you are spending more than your income or not. It also helps to channel your money to more productive use.
A well-prepared budget should include the following expenses;
Your fixed expenses don’t change with the increase or decrease in your income. They include the following;
- Rents or mortgage repayment
- Debt repayment
- Childcare costs
- Vehicle registration
- Phone and internet
Variable expenses are your expenses that change with an increase or decrease in your income. And these expenses include;
- Food and Groceries
- Medical cost
- Education expenses
- Vehicle running costs and transportations
Discretionary expenses are not necessary. You can live without them. These expenses include;
- Eating out
- Sports and recreation
- Personal care items
#3. Get Out of Debt
One of the best ways to make your money work for you is to get out of debt. When you are in debt, your money can’t work for you anymore.
It makes you pay more interest, increases your financial burden, and leaves you with little or no money to work with.
However, when you pay off your debt, you can redirect your money towards more important things like savings for education, creating retirement funds, traveling, or general improvement of your financial situation.
The truth is, you are less likely to achieve your financial goals if you are still wallowing in debt. For instance, if you want to start a business, create an investment portfolio, and achieve financial stability, you need to have enough money in your savings.
And you can’t even have enough money to save if you don’t get out of debt. So, if you are feeling overwhelmed about your debt, you can use the snowball method to control the debt repayment process;
- Make minimum payment for all your debts except the smallest amount
- If you make any extra money, tailor it towards paying your smallest debt.
- Once you pay off the smallest debt, move to the next smallest one.
#4. Create an Emergency Fund
One of the best ways to make your money work for you is to create an emergency fund. Having an emergency fund will make you less prone to debt.
It prepares you for unplanned situations like car repair, medical procedures, job loss, and other financial emergencies.
Your emergency fund helps you plan for any future surprises. But if there are no surprises, you can put your emergency fund to work, and it will earn you more money.
However, it takes a while to build an emergency fund. So, you must decide how much you will be setting aside every month to build your emergency fund.
#5. Consider Multiple Stream of Income
Having multiple streams of income is one of the best ways to make your money work for you.
There are several side hustles you can start right now to improve your financial situation. All you need to start most of these side businesses are your time, a stable internet, and a computer.
These are some of the ways to make your money work for you. If you start implementing them today, they will help you to have control over your finances.