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How to make your money work for you..let’s dive in!!

Money plays a significant role in our lives, providing us with the means to meet our basic needs and enjoy the occasional splurge. But while earning money requires hard work, there are ways to make your money work smarter for you.

By adopting a few key strategies, you can achieve your financial goals and secure a brighter future. So here are several effective ways to make your money work for you and take your finances to the next level.

1. Open a high-yield savings account

We all likely know the importance of having a savings account, and opening an account is a great start to building a solid financial foundation.

But if you want your money to work harder, consider also opening a high-yield savings.

Unlike traditional savings offered by local banks or credit unions, high-yield savings accounts are typically provided by online banks. These offer higher interest rates, allowing your money to grow more quickly.

And yes, rates can vary. But even during periods of lower interest, high-yield accounts often have better returns compared to a regular savings. In which case, you can take more advantage of the power of compound interest.

It’s not uncommon for a regular savings to earn only 0.01%. However, as of June 2023, many high-yield savings accounts – like CIT Bank’s Savings Connect – earn between 3% and 4%.

2. Contribute enough to get full employee match

If your employer offers a 401(k) plan, take advantage of it to kickstart your retirement savings – and if possible contribute enough to get the full employee match.

Employer matching programs vary, but they often match your contributions up to a percentage. This is essentially free money that can significantly boost your retirement savings. So find out the specifics of your company’s policy and adjust your contributions accordingly.

3. Choose a Roth IRA

If a 401(k) isn’t an option, or if you want to diversify your retirement savings, consider opening a Roth IRA.

Contributions to a Roth IRA are made with after-tax income, meaning you won’t be taxed when you withdraw funds in retirement. This is particularly advantageous if you anticipate being in a higher tax bracket once you retire.

A traditional IRA is a viable option too. However, the tax-free growth and withdrawals of a Roth IRA make it an attractive choice for making your money work for you.

4. Use a rewards card

Take advantage of rewards programs by using a rewards card for your everyday expenses.

Whether it’s a credit card or a debit card with rewards, you can earn cash back, points, or miles on your purchases. These rewards can accumulate over time, providing you with extra benefits such as free flights, cashback, or discounts on future purchases.

The key, though, is to choose a card that aligns with your spending habits and financial goals. And if you’re using a rewards credit card, only spend what you can afford and pay off your balance in full EVERY month to avoid interest and long-term debt.

5. Open a brokerage account

You can also put your money to work by opening a brokerage account and expanding your investment portfolio beyond your retirement accounts.

This allows you to invest in various assets such as stocks, bonds, index funds, and exchange-traded funds (ETFs). And if you’re new to investing, robo-advisors can help by creating a diversified portfolio tailored to your goals.

By investing outside of retirement accounts, you have the opportunity to grow your money further and increase your financial security.

In addition, you can start with very little money and experience. If you’re looking to get your feet wet, I recommend Acorns Invest.

This platform lets you make one-tine or recurring contributions into your account at anytime starting at $5, and there’s an option to round up your everyday purchases (link a credit or debit card) and invest the difference. To get started, use my invite code and Acorns will give you $5 to start.

6. Find a passive income stream

Likewise, consider starting a side hustle or venture that generates passive income.

Passive income refers to earning money with less effort over time – even when you’re not actively working. This can include options such as blogging, affiliate marketing, real estate investing, or renting out assets like a spare room or car.

After putting in the initial effort and setting up systems, you can create an income stream that continues to generate revenue, while providing you with more financial freedom and flexibility.

Add to the list, or let us know how you’re putting your money to work for you…