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How to Make Your Money Grow

Dreamworker has a lifetime of successful business, relationship, career and financial experiences she enjoys sharing with her readers.

If you want to get your hands on more money than you now have access to and then find ways of hanging onto it, you can do so by

  • finding out how much it costs you to live,
  • earning as much as you can while you can,
  • spending what you have strategically,
  • saving every spare penny,
  • learning how to become a smart investor and
  • avoiding financial risks.

People who follow these guidelines find that doing so increases their wealth and helps them to feel secure.

Guidelines like this also force people to keep watch over what they have so they don't make foolish spending mistakes.

Advice for people who want to grow, preserve and protect their money.

Advice for people who want to grow, preserve and protect their money.

What Is It Costing You to Live?

Before you can do any of these things, you have to know what your net income is and how much if it you are spending to live.

How to Find Out What It Actually Costs You to Live shows you what to do to accomplish this task, so be sure to read it.

Once you know how much you are earning and spending, you'll easily be able to see the difference in the two amounts.

Your goal should always be to earn more in net dollars than you spend because this will provide you with enough money to begin growing wealth.

On the other hand, if you find that you are spending more than you are earning (aka using credit cards to make ends meet) and you want to start improving your financials, you'll need to change your situation.

You can do this by

  • spending less,
  • eliminating debt,
  • getting a second or third job,
  • finding a job that pays more or
  • downsizing.

None of these things are easy to do, but doing even some of them can help you to significantly increase your bottom line.

Earn What You Can While You Can

You need to earn as much money as possible in order to improve your bottom line, and you need to do so while you are physically and mentally able. If you wait to long, gaining financial traction becomes much more difficult.

In addition to the ideas already mentioned, you should also:

1. Educate Yourself

The best way to earn more is to get education or training that will give you the skills you need in order to sell yourself to potential buyers (or employers, or customers). People will always pay more if you offer something special that they either want or need to have.

Fast food cooks make between $8,000 and $12,000 per year whereas chefs earn between $23,630 and $76,280 per year. This is because chefs have more training and have the skills to create better tasting and more sophisticated meals than fast food cooks.

2. Hone Your Talents and Skills

If you have special talents or skills, make it a point to use them often and learn as much about them as you can about them.

The more you know, or the better you are at doing something, the more money you will be able to earn.

Preserve Your Money

Most people waste money because they spend psychologically rather than strategically. Those who buy based on needs rather than on wants will always have extra cash in their wallets at the end of each month.

Strategic spenders make some minor sacrifices but know that these will bring significant benefits their way.

For example, someone who drinks water, not a beverage from the menu, with a restaurant meal can save $2.14 every time he does so. Over ten years his savings can easily add up to $1112.80!

This type of strategic spending allows people to enjoy life's basic pleasures while at the same time helping them to achieve financial security.

Save What You Can

Every time you make a decision to reduce costs, you are providing yourself with money that you can use to help grow your nest egg.

The drinking-water money mentioned above can easily double its value over time if you place it in a savings account, because it will then be earning interest. If you add other savings to it, your investment will grow.

Even the smallest amount of interest one earns in a savings account is money that a person does not have to earn. Furthermore, over time it will start paying interest on the interest it has already earned. This is a concept called compounding. It is what allows money to grow much faster than it normally would and is the very reason why saving money is so good for building wealth!

Therefore, the more you save, the more you can earn.

Invest Wisely

Once your money starts to grow, the amount reaches a point that allows you to invest in products that pay higher interest. However, it's important to remember that the more a product pays, the riskier it is to own. People have lost fortunes investing in high-risk products, so wise investors try to stick to products that allow them to preserve heir principal while still earning.

All of these products function on the same basis, which is to put your money into them and leave it there. If you do this, eventually you'll have enough money saved to invest in products that can serve as passive income (money you don't have to earn).

Put your money to work for you and prosper.

Put your money to work for you and prosper.

Types of Low-Risk Investments

Good investments for novices are those that have very little risk and also earn more interest than savings accounts. These include but are not limited to:

  • money market accounts
  • certificates of deposits
  • fixed-rate annuities

Money Market Accounts

These types of accounts are liquid. This means that you can add or withdraw money at any time without penalty.

If purchased at a bank or credit union, they cost nothing and have no restrictions. However, they generally don’t pay much interest.

Certificates of Deposit

You can purchase Certificates of Deposit at any financial institution or brokerage firm. These generally pay more than money markets, but in order to earn more you must leave the money in the account for a fixed period of time.

If you withdraw your money before the CD matures, you pay a penalty which can be substantial. In most cases, the longer the money is invested, the higher the interest rate. You should never put money into a CD unless you know you won’t need it during the accrual period.

Fixed–Rate Annuities

Fixed-rate annuities are similar to CDs because you invest money that must remain in the account for a set period of time.

Rates between various products can vary significantly and remain the same for the life of the investment. Also, you cannot remove your money early without paying severe penalties to the lending institution as well as the federal government.

Unlike CDs, these are long-term investments that are meant to increase income more quickly during your working years because you do not pay income tax on the money you invest.

When you withdraw your money you can choose to take it as a lump sum or in monthly payments. Since you have to pay taxes on the amount you withdraw, most people take the monthly payout.

Furthermore, you cannot leave the money in these accounts forever. At age 70½ you must start withdrawing some of it each year according to a specific formula.

All of these investments are protected by the Federal Deposit Insurance Corporation. This means that if a financial institution defaults, the government returns your investment to you.

Al of the products mentioned here protect you from losing their principal, though they generally offer low interest rates.

What you do with your money determines your level of wealth.

What you do with your money determines your level of wealth.

Protect Your Money

One of the biggest mistakes people make is to avoid protecting the wealth they have worked so hard to create. They don't realize that it only takes one serious illness or accident to ruin them financially.

They assume that these types of problems will never affect them. As a result, they refuse to buy good health, auto and homeowner's insurance policies, all of which are the first line of defense against financial ruin.

Insurance is expensive. Some people can't see spending money on a product they are never likely to use. They don't understand that it only takes one disaster or accident to ruin them if they don't protect themselves by purchasing the best insurance policies they can afford.

These often are the same people who take chances when investing their money because they want to build wealth faster.

Another behavior that destroys wealth is allowing oneself to become involved with lawsuits. Only the wealthiest among us can afford them, and even some of those people lose their fortunes.

The bottom line is that once you are fortunate enough to have created some wealth for yourself, you need to do whatever you can to protect it. If you don't, you can lose it!

Start Growing Your Wealth Now

There is no question that increasing, preserving and protecting your money isn't easy to do.

However, if you follow the guidelines in this article, you’re going to be able to build a stash of cash that will help you to become financially stable.

Start today if you want to have a better tomorrow.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2016 Sondra Rochelle

Comments

Sondra Rochelle (author) from USA on October 28, 2016:

Happymommy2520: Glad you liked it. I really do believe that keeping things simple is the best way to make headway in life with the fewest problems, and this is especially true when it comes to money management! Thanks for stopping by.

Amy from East Coast on October 28, 2016:

Great hub. I am a pretty simple person as well. I believe time is more important than money. You have a lot of good points in this article.

Sondra Rochelle (author) from USA on October 26, 2016:

billybuc: You are SO funny! Thanks for the laugh!

Bill Holland from Olympia, WA on October 26, 2016:

I started laughing when I read the title. What I know about money is I don't have enough of it. :) Of course, I've never cared too much about it, either, other than having enough for the basics, so that probably explains me not having much. :)