CAREER ADVANCEMENT / NOV. 13, 2014
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How to Save Money and Make Your Money Work for You

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Did you know that the average American household has very little in the way of savings ? 40% of working Americans do not save for retirement, and 25% of families have no savings at all. The average American family has less than $4,000 in their savings account, yet they have a household debt of nearly $120,000!

Saving Smart

Saving money is very important, but it’s easier said than done. Here is what you need to know about smart saving:

  1. Have enough money saved up to live for three months. Factor in rent, food, utilities, school, car payments, etc., and put that aside.
  2. Build up an emergency fund--money set aside "just in case" something happens.
  3. Save the money in an account that’s accessible in emergency situations.
  4. Don’t invest too much in your emergency fund.
  5. Don’t touch that money unless you need it.
  6. Pay off your debts as you save up. Once you have paid off your debts, all of your savings will go toward improving your financial prospects.

Make Money Work For You

However, saving money isn’t the only thing you should be doing with your paycheck. If you saved all of your money, it would just be sitting inert in the bank. You wouldn’t be losing it, but you wouldn’t gain anything from it either. It’s time to make your money work for you!

One great way to get your money working for you is by setting up an interest-yielding savings account. As you deposit more and more of your savings into that account, the interest you accrue increases over time. It won’t lead to huge financial gains, but it will help you earn a bit on the money you’re saving for specific purchases or goals.

If your company has you investing in a 401(k) or an IRA, it’s time to think about how you can use that money to make more money. The investment firm holding your retirement account may be able to help you expand your investment portfolio, increasing what you can earn off the money your company sets aside every month.

For those who want high-risk/high-reward investments, there are a few good options to consider:

  • Real estate -- Buy an old home, fix it up, and flip it/rent it to make a small profit.
  • Government bonds -- This is a low-risk investment opportunity, but it’s also fairly low-yield.
  • Stocks and futures -- This is a much higher-risk investment, but the yield can be very high!
  • Private portfolio -- Instead of investing your retirement account, start your own private investment portfolio, complete with stocks, futures, index funds, options, etc.
  • Annuities -- For those who have already created an investment portfolio, annuities may be an option to consider. The returns can be quite good if you can find the right annuity to invest in. Find more advice on annuities here…

You could even consider investing your money in starting your own company, offering a product or service that you have always dreamed of. It’s a high-risk venture, but you could actually end up supporting yourself doing something you love.

You have to work to earn money, but you should make that money to work for you as well! Follow the tips above to save money, and then put it to work!

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