How to Make Your Money Work for You

Updated on December 10, 2017
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Dreamworker has a lifetime of business, career and financial experience she shares with her readers here.

One of the things that makes rich people different from poor people is that they have learned how how to make their money work for them.

Of course, to do this, you have to position yourself in a way that gives you expendable income.

To do this you have to be willing to

  1. work (sometimes at more than one job at a time),
  2. improve your marketability and
  3. live beneath your means.

These things may sound simple, but they are not easy to do.

How to put your money to work so that you can live better and retire well.
How to put your money to work so that you can live better and retire well. | Source

Step 1: Work

Most people have to work, but few understand that it is the kind of work you do and how you do it that makes the difference in how much you earn.

  • The kind of work you do is based on the quality of the skills you have or the type of talent you possess.
  • How you do your work is based on your ability to "work smart" as well as your desire to work hard.

The key that opens the door to earning well is education. This does not mean that you have to go to college, but rather that you have to increase your knowledge base.

Many plumbers and carpenters earn much more than most college grads because they have learned skills that provide services that people need and are willing to pay for. Those who are especially good at what they do, earn even more!

I know a man whose formal education ended with a high school diploma but who was a very talented carpenter. He was diligent in the work he did and created beautiful pieces. A customer who was an executive with a big airline noticed this, employed him and got him the training he needed to have. Eventually, the former carpenter became a vice president in the company!

This is a perfect example of what someone without much formal education can accomplish if he hones his talents and does good work.

Working smart is another way to improve earnings.

My husband and I used to own a small trucking company. We noticed that other truckers had the attitude that "the more you drive, the more you earn", but we quickly realized this couldn't be true because so many of them never had any money!

So, we analyzed our situation, and changed the way we did things. We found the 20 most profitable states to work in, and stuck to them. The next year we drove15,000 miles less and earned $8,000 more!

There are good lessons in these two stories that you can apply to just about any type of work you do.

Step 2: Marketability

If you want to earn more money, you need to have a skill or talent that people will find worthwhile.

As stated above, the best way to achieve this goal is to increase your knowledge base or hone the talents you already have.

If you want people to pay for your services, you have to make doing so worth their while.

Nobody is going to pay a cleaning lady $500 per hour, but everybody will pay that much to see a heart or cancer specialist!

It's nice to want to earn more money, but before you seek it out, ask yourself what you bring to the table that will make someone want to give it to you!

If you can't think of anything, then it's time to realize that you need to become a product that people want to buy!

Step 3: Living Beneath Your Means

  • If you follow steps one and two and have improved your income, the next thing you need to do is find ways to hang onto the money you've earned!
  • If you spend more than you earn, having more money will do nothing for you in terms of increasing your bottom line.

It is not how much you earn that matters, but how much of it you are able to keep that counts.

  • The best way to keep your money is to live beneath your means.
  • The best way to make it go to work for you is to learn how to manage it.

To live beneath your means spending less than what you earn and doing so with cash!

Once you start doing this, you'll find that there will always be some cash left over at the end of each month.

What you do with that money will determine whether you waste it, or make it work for you.

Making Your Money Work for You

The people who are able to become financially successful are the ones who do all of the things mentioned above and, in addition, learn how to put their money to work for them.

The goal here is to eventually have your money work for you instead of you working for it!

Below are things you can do with the stash of cash you now have to make this happen.

Invest your money will it will earn well for you and stay safe.
Invest your money will it will earn well for you and stay safe. | Source

Save Your Money

Saving is one ofways that you can make your money grow and eventually earn for you.

A process called compounding is the vehicle through which this happens. Here’s a simple example that shows how it works:

  • A man puts $10 per month into a savings account that is earning 5% annually.
  • At the end of the first year, he has saved $120 dollars, and his principal investment (the $10 per month) has earned $6 in interest. He now has $126.
  • Using the same strategy the second year, he will have $258.30 because he has doubled his investment and added the interest on it for the two years.
  • If he continues doing this for ten years, he will have saved $1585, $385 dollars of which will be from interest.

The chart below shows the details, but the point is that for only saving $10 per month over ten years, a person can earn $385!

This is money that was earned from investment, not sweat. It may not seem like much, but if you do the math, you'll see how investing more can bring much stronger results.

This, of course, is a simplified chart due to the fact that the man will have to pay taxes on the interest earned.

How interest on a $10 per month investment compounds at 5% over a 10 year period.
How interest on a $10 per month investment compounds at 5% over a 10 year period. | Source

Invest Your Profits

You can continue to save and use compounding to increase wealth, but at some point you should want to start investing those profits because by doing so, you will earn more and create better opportunities for putting your money to work for you.

There are many ways to do this which include but are not limited to

  • buying annuities,
  • investing in equities (the stock market)
  • investing in bonds,
  • buying certificates of deposit,
  • creating an IRA (Individual Retirement Account)
  • investing in real estate,
  • invest in a business,
  • buying antiques and collectibles or
  • buying gold and silver.

Some of these investments are much safer to buy than others because the lower the risk, the less likely you are to lose your initial investment.

If you don't understand any of these products, find a financial adviser who can educate you. Just make sure he is one who does not earn commissions on the products he advises you to buy!

Reduce Your Taxes

Because taxes take away some of people's financial gains, the savvy ones use investment vehicles that will allow them to defer or even avoid paying them completely.

Doing this allows their money to grow tax free for many years.

Examples are investments such as

  • Certificates of Deposit,
  • Fixed Income Annuities and
  • Tax Free Bonds.

Investments such as these are considered to be low risk because they grow wealth while at the same time protecting a person's initial investment.

They don't earn large amounts, but over time, the profits from them can really add up.

Think Rich, Become Rich

One of the best financial guides I have ever read is called "Rich Man Poor Man". What I like about it is that it shows you how changing your attitudes towards money can make a huge financial difference in your life.

In short, if you think like a rich person you are more likely to earn like one!

Following the suggestions in this article can be the first steps you take to learning how to make your money work for you. This is important information to know if you hope to retire some day and have some financial stability while you are waiting to do so.

Do you think that doing the things mentioned in this article will help you to improve your financial status?

See results

© 2016 Sondra Rochelle


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  • Dreamworker profile image

    Sondra Rochelle 13 months ago from USA

    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.

  • Happymommy2520 profile image

    Amy 13 months ago from East Coast

    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.

  • Dreamworker profile image

    Sondra Rochelle 13 months ago from USA

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

  • billybuc profile image

    Bill Holland 13 months ago from Olympia, WA

    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. :)

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