10 Smartest Ways to Make Your Money Work for You, According To Experts

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If you’re in the fortunate position to have a bit of extra income that isn’t earmarked for expenses and you’re wondering what to do with it, there are a number of options to grow your money. Financial experts explain the 10 smartest ways to make your money work for you.

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Automate your finances

In this digital age, it’s now incredibly easy to automate your finances in just about every way you can imagine, from automatic bill payments to automatic investment contributions, according to Kenny Senour, certified financial planner with Millennial Wealth Management.

“For example, if your goal is to max out your Roth IRA in 2022 by contributing the full $6,000, consider setting up an automatic contribution of $500 each month,” he said. “Automating your finances can be a huge help in managing your monthly cash flow, so any automation should ideally occur the same day your paycheck or direct deposit hits your bank account.”

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Create specific financial goals

You can’t make your money work for you if you don’t know where it’s going. According to Jake Hill, CEO of DebtHammer, you should “create specific financial goals.”

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“Maybe you want to earn a certain amount through a side hustle or you want to invest a certain amount in real estate — whatever it may be, work toward it. Make sure that your financial goals are ones that will adequately benefit you down the road, and preferably choose goals that will benefit you consistently, like setting up passive income.”

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Plan for Each Dollar

To make your money work for you, have a plan for each dollar that comes in.

“Money without a purpose ends up being spent, so give some thought to what your goals are and how you should divide your income between them,” said Nick Bormann, financial planner at Bormann Wealth Management LLC.

He added that mindfulness about your money is key to financial success, which means “making conscious choices about where to spend, what types of accounts to use and what your highest priorities are.”

Get Rid of Your High-Cost Debt

You can’t grow wealth into the future if debt is holding you back, said Christopher Sioco, COO of Parachor Consulting.

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“High-cost debt kills long-term wealth,” he said, pointing out that credit cards typically have interest charges as high as 35% per year while a personal loan could have interest charges of 20%.

“With such high-interest rates on loans, you cannot create wealth,” he said. “Get rid of high-cost debt as soon as possible. By paying off a credit card in full, you earn 35% on your investment and can put the savings to better use.”

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Open a High-Yield Savings (and Checking) Account

If you have your money in traditional savings accounts, you’re missing out on interest you could be earning. Enter the high-yield savings account, which functions the same as a regular savings account except that it offers a greater annual percentage yield. You do have to pay taxes on that interest, but it’s likely to still net you more money than a regular account. And, since you are limited on how many withdrawals you can make, you’re less likely to spend that money.

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Invest in Real Estate

If you have enough money to make down payments on property, investing in real estate is a great way to make your money work for you, said Omer Reiner, president of FL Cash Home Buyers, LLC, a real estate investment company.

“When you own a property,” Reiner said, “you control how you want to make money from it. You can rent it out, fix it up to sell it, add value to increase rents, etc.”

Invest in the Stock Market

To really grow your money, your best bet is to invest in the stock market, by purchasing individual ETF’s (exchange traded funds) and mutual funds in a “model portfolio,” according to Johnny Medina, CEO of Nabla Financial.

“The general concept is very simple: Save at least 10% of your gross income. Invest the savings with a long-term mindset and leave it to compounding to do the rest.”

For example, if you start with $10,000, save $1,000 each month and invest in a portfolio that will yield 10%. After 30 years, you would have $2.3 million.

Invest in S&P Funds

Another type of fund likely to yield good, reliable results — and which historically yields an average 11% annual return — is the S&P fund.

According to Andrew Lokenauth, CEO of Fluent in Finance, “The S&P 500 comprises 500 of America’s largest companies, across all 11 industries. Investing in the S&P 500 is an easy and stress-free way to invest for the majority of people, because you’re not betting on a single company but 500 of America’s largest companies.”

Invest in Indexed Mutual Funds

Indexed mutual funds are also a great way to grow wealth, advised Carter Seuthe, CEO of Credit Summit. These funds work by investing equally in every stock in a given exchange, such as the Dow Jones or the NASDAQ, he explained.

“They have consistently been shown to outperform most actively managed investment accounts,” he said, “and come with the added benefit of avoiding the fees that come with intensive management.”

Indexed mutual funds provide a good return without a huge amount of risk, he added.

Use a Rewards Credit Card and Pay It Off Each Month

Aside from saving and investing, a simple way to earn money is to use a rewards credit card without an annual fee, “an excellent tool for financial growth,” said Kasey Ring, personal finance expert at Upward Personal Finance.

As long as you pay off your balance each month, she said, “You can add hundreds to your bottom line each month just by spending your money with a different tool. It takes discipline, but getting rewards for using the bank’s money free of charge every month makes sense and financially savvy people do this.”

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About the Author

Jordan Rosenfeld is a freelance writer and author of nine books. She holds a B.A. from Sonoma State University and an MFA from Bennington College. Her articles and essays about finances and other topics has appeared in a wide range of publications and clients, including The Atlantic, The Billfold, Good Magazine, GoBanking Rates, Daily Worth, Quartz, Medical Economics, The New York Times, Ozy, Paypal, The Washington Post and for numerous business clients. As someone who had to learn many of her lessons about money the hard way, she enjoys writing about personal finance to empower and educate people on how to make the most of what they have and live a better quality of life.

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