Getting your money to work for you is an important step on the path to financial security and independence. earn money Your time is important in trading, but it is just as important to find a way to make money without being actively involved. While you may dream of being able to Make money while you sleep, there are many steps you can take to get your money to work.
Pay off your debt
The most important thing you can do to keep your money working for you is to pay off and get rid of your high interest debt. This includes things like credit card payments, some auto loans, and other types of consumer debt. You may pay up to 20% or more in interest – which means that you can get a 20% return on your investment when you use money to pay off that debt. It's hard to beat that kind of guaranteed return.
Start a budget, identify your income and expenses and start paying off that debt. The exact Debt settlement strategy which you use is less important. The important thing is that you make a plan and start sooner rather than later. Once you've got your high-interest debt eliminated, it's time to get started with the other suggestions in this article.
Open a high yield savings account
One starting point can be to open a high-yield savings account that is separate from your checking account, where you keep the money to pay for your regular monthly expenses. This is important for two reasons. The first is to keep your savings separate from the money you use on your regular savings to keep you from raiding your savings to pay your bills.
The second reason is that a savings account may offer slightly higher interest rates than a checking account. Interest rates are currently at historic lows. This is great for refinancing or taking out a mortgage, but not for savings accounts. Still, a high interest savings account is a great place to keep your Emergency fund money. For more than that, you should look for investments that offer higher returns.
Grow your wealth by investing
if Inflation fluctuates around 2-3% every yearAny investments you have should be making at least that much. Otherwise, you'll have more money, but that money will be worth less than it was the year before. If all of your money is in a savings account with 1% interest or less, then you lose money every year due to inflation. There are many opportunities, earn residual income, and you want to choose the one that makes the most sense to you. For example, Invest in the stock market has returned around 7% per year in the past.
Take advantage of credit card rewards
Another way to make your money work for you is to take advantage of the benefits Credit card rewards. Many credit cards offer rewards of up to 5% or more in certain spending categories. There are also several cards that offer initial welcome bonuses worth $ 1000 or more. Taking the time to strategize with credit cards can be a worthwhile investment. Check out our list of Best Reward Credit Cards to see if any of them might make sense to you.
Start a passive income stream
The holy grail of financial independence is passive income. Passive income is income that you continue to earn money on without your daily commitment. There are many different ways to generate passive income. A couple Passive Income Ideas could be creating and selling handicrafts, writing a guidebook or book, starting a blog, or investing in the stock market.
Investing time and money in Property can also be a way of achieving a (relatively) passive income. While rental property is not without its complications, if everything works, you will earn rental income every month. This will help settle your mortgage balance, hopefully with a little more left over each month. If you think becoming a landlord is not for you, then you can invest in real estate too Real Estate Investment Trust (REIT). REITs combine some of the best aspects of real estate and investing in the stock market.
The bottom line
There is an important difference between making money and having money work for you. While making money from a job is important, the real key to financial security is residual income. Pay off your debt, start investing, and watch the returns materialize. You may not make money while you sleep, but following these tips will help you find your way financially.
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Dan Miller (72 posts)
Dan Miller is a freelance writer and founder of PointsWithACrew.com, a website that helps families travel for free / cheap. His home base is in Cincinnati, but he tries to travel the world as much as possible with his wife and 6 children.