Top 3 Ways to Make Your Money Work for You

One of the biggest differences between the wealthy and the less wealthy is that wealthy people earn interest, and everyone else pays interest. It is important to realize that money is a tool that can help you to achieve your goals. For you to reach true financial independence, you need to have your money begin to work for you—not you for it. Here are three things you can do to start making your money work for you. These three steps can also help you break free of the bad financial habits passed down through your family. If you can follow them, you will begin to manage your money.


The most important way to change the way you handle your money is to budget. When you are budgeting, you are making your money do what you want it to. By assigning each dollar to a category, you control where your money goes and what it does. This control will help you to begin to reach your financial goals.

Your budget is the best tool you have next to your income to build wealth. Your budget gives you control over your finances and allows you to make financial decisions at the beginning of each month. When you master budgeting, you will be able to reach your financial goals more quickly and avoid debt.

A budget is similar to a fitness tracker, as it helps you monitor your spending and income. 

If you want to change your financial picture, your budget is your first step to doing that. People will often create a budget, but fail to follow through on sticking to it or stopping after a month. You need to create your budget each month, track your expenses, and make changes as needed, so you are always spending less than you earn. When you decide on how you will spend your money at the beginning of the month, you can decide what priorities are the most important to you and begin to make progress on your goals.

Get Out of Debt

Do you know how much money you are paying in interest each month? How much of your monthly budget is being eaten up by student loans, car payments, and credit card bills? If you could take all of that money and put it into retirement, it is amazing how quickly you could save for your retirement and other things that you want. Debt often becomes a burden and limits the choices that you can make, so one of the best things you can do with your money is to get out of debt and stay out of debt.

You may also be able to start your own business or quit a job you hate if you were debt-free. Take the time today to start getting out of debt.

If you have a lot of debt, it may seem like a problem that is too big to tackle. You can start by just clearing up your smaller debts and then working on tackling the bigger ones with the extra money you have. As you pay off more debt and then apply that money to the next debt, you begin to build momentum, and you will be surprised at how quickly you can get out of debt. 

Save and Invest Your Money

Once you have freed up all that extra money from paying off your debt, you need to begin saving aggressively. There will be a point when the savings you have will earn more than you do in a month. This particular situation would take quite a bit of money, and for this to happen, you need to put a large amount away each month. Once you have a six-month emergency fund saved, you will need to begin investing your money. This how you can grow your wealth the most effectively. Additionally, saving money can help you handle the ups and downs that will happen throughout your life.

Saving for an emergency fund may be the first step, but you will begin to really build wealth when you invest. Think beyond savings for retirement and find a good financial planner to help you save and invest your money. Take the time to start saving your money today. 

As you begin to invest, it is important to remember to diversify your portfolio. You never want to have all of your money invested in just one type of stock and especially not all in one business. You may get to the point where you want to purchase investments that generate income for you. Many consider real estate a good investment option because it will generate a monthly income once you have paid off the property.

The Bottom Line

It helps to have a specific set of goals that you are saving for and investing in since it will help focus your spending and give you motivation. Think about the things that you need to pay for, like your child's education, purchasing a home, or early retirement. These goals may also drive what types of investments you choose to use.

The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal.

Article Sources

  1. U.S. Department of Education. "The High Cost of Being Poor," Page 3. Accessed May 25, 2020.

  2. Oxford Academic. "Wealth Inequality in the United States Since 1913: Evidence From Capitalized Income Tax Data." Accessed May 25, 2020.

  3. "Making a Budget." Accessed May 25, 2020.

  4. Consumer Financial Protection Bureau. "How to Reduce Your Debt." Accessed May 25, 2020.

  5. Vanguard. "What's the Right Emergency Fund Amount?" Accessed May 25, 2020.

  6. "Saving and Investment Options." Accessed May 25, 2020.