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You are here: Home / Love & Money / Money / Easy Ways to Put Your Money to Work For You

Easy Ways to Put Your Money to Work For You

August 29, 2019 By Greta Brinkley

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Many people find themselves living paycheck to paycheck. This is happening even if they’re making a steady income and limiting their expenses. Many people, especially millennials, often feel like we’re treading water rather than forging ahead; staying afloat for now, but struggling to really prepare for the future. It’s frustrating when you feel you have little to show for all the work you’ve put into your life!

The ultimate financial goal is to put your money to work for you. Getting the most out of your money requires a few things: managing your income well, saving smart and investing to grow your wealth in the background.

Get a Multi-Faceted Savings Strategy

Financial experts are always telling us to save, save, save. But that’s a very broad term. Yes, you should absolutely be setting aside money from each paycheck to devote to savings. But under the general umbrella of “savings” there are a few specific subcategories to consider.

Money Crashers breaks down three important categories of savings that everyone should have:

  • Emergency fund: This fund helps you avoid taking on debt when unforeseen expenses crop up. Expenses like losing your job, your car breaks down or someone in your family has a medical emergency. This account should be off-limits except in extreme cases.
  •  Personal savings: Personal savings provides a cushion to cover planned expenses, like buying a car, revamping your wardrobe or traveling. Your savings should be accessible, but less so than your checking account.
  •  Retirement account: It’s important to start socking away money for retirement as soon as you can, either in an employer-sponsored 401k or a Roth IRA. Compound interest means your money will make more the longer it’s invested. Try to contribute 10 to 15 percent of your income whenever you can.

 Having money in savings can help you avoid having to scramble to cover life’s unexpected costs. It’s also a powerful defense against racking up excessive debt.

Simplify How You Manage Money

Before you can make your money work for you, you must understand where it’s going each month. Just as important as what you’re saving is what you’re spending. When it comes to the question of how to manage money, there’s no one-size-fits-all correct answer. But apps like Clarity Money make budgeting much simpler than it used to be.

The primary advantage of using a money management app is convenience. Instead of having to sit down and pull up your spreadsheets to track spending manually, you just have to pull out your smartphone. You’ll know at a glance where your income is going, broken down by category. It also allows you to keep an eye on your credit score. You can even manage your subscriptions, freeing up more money by canceling those you barely use.

Invest to Grow Your Wealth

When people say things like “let your money work for you” they’re generally referring to what happens when you invest money. Over time it grows, often in a big way.

The Simple Dollar outlines what can happen if you save $100 per month for a year, then invest this $1,200 in an index fund with an average return of 7 percent a year. By the end of the second year, your $1,200 will have turned into $1,373.88 including interest. By the end of year five, you’ll have almost $1,700. The growth just keeps accelerating as your investment accrues compounding interest. If you leave it for 30 years, you’ll have more than $9,000—and that’s without contributing any additional money than the original $1200.

At the end of the day, putting your money to work for you simply means managing your money, hitting your savings targets and investing wisely.

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Filed Under: Money

About Greta Brinkley

Greta is originally from the West Coast. Now living in the Midwest, she loves hockey, sparkles, nail polish, and bright colors. She also cannot resist anything that has peanut butter and chocolate together. And she hates filling out bios. Yep.

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About Me

Hi! I’m Greta, a Lifestyle and DIY expert. I’m originally from the west coast, and currently living in the Midwest. We’re mad about DIY and travel, lover of fashion and food, and slightly obsessed with trivia. And you can never go wrong with glitter, nail polish or hockey. Did I mention we were named one of the top DIY blogs?

"Want to work together, or just say hi? Drop me a line! WhyHelloGreta@gmail.com
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