Examples of How to Make Your Money Work for You

Examples of How to Make Your Money Work for You
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Effective money management requires separating your needs from your wants. Stop being a slave to your wants, and start setting money aside for a rainy day. Bypassing short-term wants for long-term money growth is the key to developing significant wealth. Funding your savings accounts, retirement accounts and investment accounts allows you to use the power of compound interest to make your money work for you.

Eliminate Debt

Put your money to work paying down your high-interest debts. You pay money in interest each month on your credit cards and car loans. By paying these down, you free up money in your budget to put toward developing your assets. Historically, the stock market brings about a 10 percent return on your investment -- although that’s not guaranteed. It doesn’t make sense to pay 14 to 20 percent on your credit cards and earn 10 percent on investments. Kill any high-interest debt before you start investing money.

Automatic Savings

Put your money on autopilot. According to MSN Money, you should put aside 20 percent of your monthly income in savings. Use automatic transfers to take the money out of your account before you even see it. Your money earns a small amount of interest by sitting in a savings account or money market account. You want to have enough money in a savings account to cover your bills for six to nine months in the event of an emergency.


Start contributing money to your retirement accounts. Take advantage of any employer incentives such as employer-matching programs to maximize your investment. Fully fund an IRA account -- Roth or traditional -- based on your particular needs. By preparing for retirement now, you give your money plenty of time to grow.


According to Time Business & Money, the stock market averages an annual return of 10 percent over the long-term -- remember, that's not guaranteed. By investing your money, you could significantly increase your wealth. Consider speaking with a financial planner who could direct you on investing in stocks, mutual funds and exchange-traded funds. Investing in the market is not without significant risks -- you could lose your initial investment. Make sure you have plenty of emergency cash before you sink money into the market.

Lend Money

By loaning your money to banks and businesses, you earn interest on your investment. Bonds and certificates of deposit (CDs) are ways you can loan your money to others to earn a set rate of interest. CDs are loans to your bank. You give the bank a set amount in exchange for a guaranteed interest rate. You earn a higher interest rate if you commit to longer terms. Expect a penalty on your earnings for early withdrawals from a CD. Bond funds are pools of bonds where you and other investors buy shares. You earn money from dividend payouts.