There are a number of ways that you can make an extra income, look for promotions, and get more money coming into the home.
But one thing that you need to think about with your money, is what you do with it. Left in a regular bank account it won’t be able to do as much for you as it could when done in other ways. So how can you actually make your money do more for you?
Having more is great, but regardless of the amount, if what you have does more, simply by it being in the right place at the right time, then it will make a big difference.
So with that in mind, here are some things to think about, if you’re keen to learn more about making your money do more for you.
1. Talk to a friend with a good financial history
To start off with, talking to someone who has a good financial history can be a good place to start. Look for a friend or family member who has made a success of their finances, and start to ask them some questions about it. What did they do and what did they avoid?
You could speak to someone like a financial advisor or planner, but they aren’t always going to be in the best position to counsel you, as they may offer some poor advice simply because they want to make money from you, by you investing with them.
Talking to someone you trust about their choices and decisions can help you to learn a lot, but it can also help when it comes to networking. They can tell you about people that they know, as well as certain choices that they made for their finances.
They can also help you to identify any financial goals that you might have and could help you to put some strategies in place that will help you to achieve them.
Before you get in touch with them, it is a good idea to do research and put in some time to really think about what you want to get out of the meeting. Do you have specific questions about investing, or are you looking for more general financial advice? Here are some questions that could help you as you prepare:
- Think about the financial goals that you have, but break them down into short-term goals and long-term goals.
- Decide what kind of strategies you want to learn about, in order for you to reach your financial goals.
- Think about budgeting questions and general money management questions, if you struggle with this area.
- What do you want to know about investing? Do you know about compound interest or have questions about it? Have some specific questions ready for them.
- Do they advise specific things that are going to be more tax-efficient than others?
- Plan for your financial future, and consider things like retirement; what advice do they have in this area?
When you get in touch with the person that you are going to contact, be open and transparent with what you are looking for. Offer to buy them lunch if they don’t mind answering some questions that you have around finances, money, budgeting, and investing.
It can be quite surprising just how much you can learn from chatting to someone on a topic like this for only an hour and being in-depth with them about this too.
2. High-Yield savings account
One of the next steps to help your money do more for you is to open a savings account with a high-yield interest. Savings are there for a variety of things, but you can easily make your money more for you, the higher interest that you can get from an account.
You can’t be on a path to looking after your finances if you aren’t putting any money away in a high-yield bank account. The reason being is that an account like that will earn you interest simply by the moment being in there; a no-brainer!
A lot of regular accounts will have an interest rate of around 0.01%. This is like taking money out in cash and keeping it in a box in your room; it isn’t going to do anything for you. That is why, when it comes to savings, choosing an account with a high savings yield is a must.
Rates can vary, especially with what is going on with the economy, but they do tend to be above 1% which is going to be much more than a regular bank account would offer. It can be worth looking at banks that are online-only, simply because they offer some higher interest rates as they don’t have the prices or expenses of stores to think about.
You should also remember that banks do put some restrictions on how much you can pay in, as well as when and how often you can take money out from an account like this. So that is definitely worth looking at if you might need to access the cash from time to time.
3. Make a plan to clear debts
No matter what kind of debt you have, whether that be credit card debt, student debt, or other loans, it is important to make a plan to clear it all, sooner rather than later. You don’t want to just presume that owing someone money is just what life will be like, as this doesn’t need to be the case.
When you don’t have debts, it can make your path to financial freedom much quicker and simpler, as there aren’t other factors controlling your money. So make a plan to clear your debts as soon as you can.
Paying down debts can help, and is something that you will need to account for. If you only pay minimum payments for something, then it can mean that it will take years and years to pay something off.
If you decide to increase the monthly payments, as you have seen that you are able to afford to, then it will mean that your debts will get cleared much faster, as you aren’t simply paying enough each month to cover the added interest. You could speak to your provider, if it is a credit card company, for example, and they may be able to set up a pay-down plan for you.
4. Consider passive income streams
A passive income is a money that comes into your account on a regular basis, without you having to do very much in order to get it. This is a great way to make your money work for you as it will take some time to set it up, but then you sit back and see it come in.
Doing this alongside a regular income job can help your finances greatly. Things like investing in the stock market can be seen as a form of passive income, especially if you dedicate a lot of time to it. But what else is there, if you are looking for something that is relatively low-risk too?
Real estate can have its ups and downs, but it is still a strong choice for many people who want to make an investment and see a passive income stream. Investing in the stock market or in your pension doesn’t require as much money upfront, which is why not as many people will get into real estate.
However, depending on the mortgage lender that you choose, and the kind of mortgage for the property that you choose, you could still be able to afford property by having something as small as a 5% deposit. Then, if planned out well, the money that you will get from the rent will cover the cost of the mortgage repayments, and ideally, leave extra for you; your passive income stream.
There are a number of tax deductions that can come from real estate, as there will be legitimate expenses that you have to cover, all connected to the property. So if you are looking for a tax-effective way to invest your money and make your money work harder for you, then it could be the route for you to go down.
Another option for a passive stream of income could be peer-to-peer lending. This works by matching up people who have some money that they want to invest, with some people who are looking for a loan.
There are sites online that can connect lenders with borrowers, but you may also have people that you know looking to do this. The returns with this kind of lending can be quite profitable, but it can be all based on the level of risk.
So that is definitely something to consider. Any investors tend to be paid an amount of money each month on their loans, with the higher rates being given to the borrowers who are considered to be less of a risk. The loan rates could be anything from 4% up to 15%.
Annuities is another form of passive income, and it is a kind of insurance, where you pay upfront. This then helps to give you a passive stream of income for a certain amount of time, with monthly payments. This can be an option if you have children and a spouse, as it helps to guarantee a certain level of income, that will only get bigger with the rate of inflation.
Annuities can sound good at surface level, but it is important to remember that many of these insurances do pay some low-interest rates, but have some high fees. There is often limited access to your money too. So they might not be for everyone, especially if you are only looking for a short-term way to invest.