Money is something we all need to get by. But not everyone thinks about money the same way. Some people think of money as a burden, while others see it as a tool or an opportunity.
If money is just a means to an end for you and not a way to improve your life, you’ll never achieve the financial success you want. To help you get started on the right path and let your money work for you instead of against you, here are 20 ways to make that happen.
Have a budget and a spending plan
A budget is a spending plan, so if you have a spending plan then you have a budget. It’s an essential part of managing your money, so if you don’t have one, now is the time to start. Having a budget will let you know where your money is going, so that you can make adjustments and prioritize your spending, based on your financial goals.
There are tons of resources available, such as apps or websites that can help you create a budget and stay on track. If you want to make the most of your money, a budget is essential.
For many people, budgeting is the hardest part of managing their money. If you’re struggling to make a budget work, consider hiring a financial advisor or financial coach. They can help you create a budget that works for you and your lifestyle.
Pay your bills on time every month
You might not think much about paying your bills until they are due, but if you don’t pay your bills on time, you can wind up with a bad credit score and a hefty bill. You can also incur late fees and fines, so keep up with your bill payments and make sure you are paying the minimum amount due.
If you are having trouble paying your bills, there are options available to help, like a Money Management Plan. Making late or missed payments can damage your credit score, which can make it harder to get a loan in the future. Having a good credit score can also make it easier to get a loan or even a job, so it’s worth the effort to make sure you keep up with your bills.
Automate your investing
You can’t control what the market will do, but you can control how much you invest. Some experts recommend investing as much as 15% of your income, but the average investor only puts away about 6%.
That’s not nearly enough to help you build wealth over time. While investing can be daunting, especially if you don’t have a plan, there are ways to make it easier. You can automatically contribute to a retirement account, like a 401(k), or an investment account, like a Roth IRA, so you don’t have to think about it.
You can also set up an automatic savings plan to contribute to a brokerage account, so you can start investing with a small amount of money. Investing is a long-term game, but when you automate your investing, you don’t have to worry about missing out on potential gains.
Build your credit score
Credit plays a big role in your financial life, including whether you are approved for a loan or get a good interest rate. The best way to build your credit score is to use credit, but pay it off every month.
It also helps to have several different types of credit, like a credit card, student loan and mortgage, as this can help improve your credit score. Credit scores can vary widely from one person to the next, but certain factors can influence your score.
Paying your bills on time and keeping your total monthly debt below 35% of your total available credit are two of the biggest factors in your credit score. Understanding the factors that go into your credit score can help you make smart financial decisions.
Diversify your investments
Not every investment will go up in value, but over time, you can expect the value of your investments to increase. However, some investments are riskier than others, which can lead to fluctuations in their value.
Diversifying your investments can help you manage risk and protect your overall investment portfolio. Diversifying your investments means spreading your money across different types of investments, like stocks, bonds and real estate to reduce your risk. You don’t want all of your money in one type of investment.
Doing so can leave you vulnerable if that investment takes a hit. Diversifying your investments is one of the best ways to protect your money.
Manage your tax liability
You need to have enough money to cover your expenses, but it’s important to plan for taxes as well. If you get a large tax refund each year, you aren’t doing yourself any favors. Instead, aim to pay less each year, so that you get a smaller refund and have more to work with throughout the year.
There are ways to reduce your tax liability, such as contributing to a retirement account or claiming dependents. You can also consider ways to increase your income, so you end up with more after taxes.
You don’t want to miss out on any tax credits or deductions that you may qualify for, so if you have questions, speak with a tax professional.
Don’t be afraid to lend, borrow or risk it
You can’t earn money if you don’t risk it. This can be as simple as loaning money to a friend or family member, taking on a side hustle or investing in stocks or bonds. You can also take out a loan, like a mortgage or student loan, or take a risk in your career, like switching jobs or going back to school.
If you don’t risk it, you can’t win it. Some risks turn out well and some don’t, but without risk, you can’t expect to get ahead. You also don’t want to live in fear and miss out on opportunities because you are afraid. Talk to a financial advisor if you need help deciding what risks are worth taking.
Conclusion
The keys to letting money work for you are to have a budget, pay your bills on time, build your credit score, diversify your investments and manage your tax liability.
Once you’ve mastered these important basics, you can start to explore more advanced strategies like investing and risking it to make more money. If you are willing to put in the effort and make smart decisions with your money, you can achieve financial success and let money work for you.
