Hey there DINKS! Today we have a guest post from fellow blogger, Jon Dulin. Enjoy!
Most of us work for our money. We have to go to a job to earn an income so that we have the money to pay our bills and live life. But the rich really do have things figured out. They don’t work for money, they have money work for them. The key to this concept is to know that you too can act like the rich and have your money work for you. Now, you might not end up with billions of dollars, but you will end up with a lot more money than if you just keep working for money. In fact, you could easily end up a millionaire if you follow my tips below.
Steps To Making Your Money Work For You
Step #1: Pay Off Debt
The first step to making money work for you is one that you’ve all heard before – you have to get out of and stay out of debt. It is so important to live within your means and pay off your debt. The more debt you have, the more you have to keep working for money. In fact, you aren’t even working for yourself at this point, you are working for the credit card company, the student loan company, etc. This is because you have to work in order to pay them their money back.
That is the mindset I took on when looking at my debt back in the day. I resented the fact that all my hard work was resulting in the credit card companies getting all of my money. Granted, I put myself in the situation because I spent more money than I had, but I vowed to never have to work to pay off debt again.
So your first step here is to get your spending under control and start paying off your debts.
Step #2: Save For A Rainy Day
You can easily start doing this step while paying off your debt. The idea that you need to have some money set aside is key to avoiding going back into debt or even going into debt in the first place. Make sure you have around six months worth of living expenses saved up in a savings account. It can mean the difference of you getting ahead financially and you falling behind or stuck spinning your wheels not making progress for a while.
One note here – resist the urge to chase returns. We are in a low interest rate environment and savings accounts aren’t paying much in terms of interest. Don’t risk your savings for emergencies by investing it and trying for a higher return. The point of this money is to be there for you. Find a good online bank that pays a decent rate and stick with it for the long-term.
Step #3: Invest For The Long Term
Once you have the first two steps taken care of, you need to start investing for your future. This includes retirement. In this case, you have to invest this money in the stock market in order to get the growth to allow you have enough money. If you keep your money under your mattress or in a bank account, odds are you are going to have to keep working for money.
Let the stock market do its job by growing your money and you do your job. What is your job in this situation? It’s to keep investing money every month and to not get rattled when the market drops. It will drop. It is the way the market works. Over the short term, the market moves up and down, sometimes by a lot. But over the long term, the trend is up. Keep your focus on the long term, not the short term.
Finally, make sure you are invested in a way that makes sense for you. This includes taking on the right amount of risk and understanding the power of passive investing. The more you understand how the markets work, the more successful you will be financially.
Overall, if you want to stop working for money and have your money start working for you, you need to take action. Get out of debt, have an emergency fund and then start putting as much as you can each month into the stock market.
As the market rises and your investments grow in value and throw off income in the form of dividends and interest, you will see your money working for you. And sooner rather than later, you can take joy in this fact.
Jon writes at Penny Thots, a personal finance blog that talks about all things personal finance. The goal of the site is to improve your finances one day at a time.