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5 Guaranteed Ways to Make Your Money Work For You
Money is an essential commodity that helps you run your life. It is with money you ensure your family is well provided for and stable; it gives you the chance to make the most of your skills and talents and empowers you to pursue your dreams, and with money, you can make plans for the future.
Money is a tool for achieving your dreams. And to achieve all you need money to do, you need to make it work for you. There’s a Nigerian proverb that says “it is money one uses to find money”. That means you can have control over your money and send it on errands to bring in more money, thereby, making it work for you.
Let’s get started on how to make your money work for you:
Develop a budget
Budgeting is a tool that helps you manage your finances better. It is a summary of all your income and expenses over a period, typically for a month. A budget gives you a record of your spending, it shows you if you are spending less or more than you can afford, it helps you understand where your money is coming from and then you can be deliberate about how you spend it. And that is how you make your money work for you: having control over how you spend it.
Here we recommend some free budgeting planning tools to help you get started.
Talk to someone knowledgeable about finances
Do you know someone in your network that has done well with their finances? This person through their experience has a keen understanding of how to manage money and can help you identify realistic financial goals and give tips on how to make smart decisions about your money. Watch out for that person, let them know how much you admire them for their financial wisdom, how you’ve seen their money work for them, and let them know how eager you are to learn from them. You could even have them look over your budget and offer their advice.
Eliminate unnecessary debts
Debts will bring death to the possibilities of making your money work for you. Purchasing stuff on credit and owing money might seem a cool way, but in the long run, you are damaging your finances and adding burdens to your life. The long-term cost that comes from accumulating interest payments will make you lose control over your finances. Paying down your debts will help you redirect your money towards your other important goals.
If you are overwhelmed by multiple debts and don’t know where to start from, you could try the snowball method to start your debt repayment process.
- Pay only the minimum payment on all your debts except the smallest one.
- Put whatever extra money you have toward paying off the smallest debt.
- Once it’s paid off, move onto the next smallest.
With this method, you will have more money to pay your bigger debts as you pay your smaller ones.
Create an emergency fund
An emergency fund – best kept in a bank account – is money set aside to pay for unexpected expenses. No one plans to fall ill, lose a job or have a business crumble, but one can plan for the times when things become difficult and financial challenges creep in. An emergency fund is like a cushion that absorbs the financial blows and helps you stay afloat without having to borrow or take high-interest loans.
Whether you are just starting a family, self-employed, a contractor or you just received your first salary; as long as you earn money, you should have an emergency fund to help you handle life’s financial ups and downs and prevent you from going into debt. Financial experts suggest saving up to half a year’s worth of expenses in a savings account with a high interest rate and easy access.
Invest your money
One way to make your money work for you is to invest it. Investing allows you to significantly grow your money over time and it is one way to provide financial stability in the future through generated returns. You don’t need a huge sum of money before you start investing, once you’ve saved enough for your emergency funds, you can start putting away some money for investment purposes and add to it as you earn. Investing is a long-term strategy for building wealth, some investments pay dividends which you can either take as extra income or reinvest to help your portfolio grow.
A shot at being wealthy starts with a healthy financial lifestyle where you do more than just earn money. The best way to make your money work for you is to be disciplined, consistent, and focused on the personal financial practices mentioned above.
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Featured image: istockphoto