how to make your money work for you

There are many ways to make your money work for you, you can look into the various kinds of savings accounts, investments, and passive income streams. In this post, we’ll share some ways that you can start earning more money and make your funds work for you. 

Create a Budget

Before learning how to make your money work for you, you need money to cover your expenses and basic needs. To grow your money, you need to know what kind of funds are genuinely available to you. You can do this by organizing your spending with a budget

Almost a third of Americans create a detailed, either written or computerized, monthly household budget.1

A budget is the master plan you use to manage your cash flow and apply it to your bills and other expenses. Personal or household budgets usually lay out income and spending on a perpetually monthly basis. Budgets can also detail the finances for short-term projects and savings goals.   

Your budget should be your financial bible, full of unbreakable commandments about how you spend your money and how you shouldn’t. The budget will answer any question that you might have about your available funds. Want to buy a new outfit? Try that new restaurant down the street? Open up your budget and see if you can. 

A definitive list of expenses should include the following: 

Expense TypeDescription
Fixed ExpensesBills for a set amount of money that are consistently due, making them easy to budget for; ideal for automatic withdrawals to avoid late fees and ensure timely payments.
Variable ExpensesBills based on behavior and lifestyle choices, such as electricity bills influenced by habits like leaving lights on; challenging to control or eliminate due to their direct impact on daily routines.
Discretionary ExpensesExpenditures for wants rather than needs; areas to consider cutting costs if necessary, as they represent non-essential spending.

Open a High-Yield Savings Account

This is a savings account that pays a significantly higher rate of interest than a standard savings account/bank account. On average, they carry an Annual Percentage Yield (APY) that pays out 20 times more than a regular account. In other words, these may be a great way to make your money work for you.

While interest rates on these accounts can change, they will always be better places to grow your savings than a regular account when it comes to the dividends paid on your investment

Based on this incredible difference in return, these accounts are an excellent place for your money to flourish. However, before you run out and open an account, it’s essential to understand that this nearly surefire strategy to grow your savings comes with a price: Accessibility.

High-yield savings accounts usually come with minimum requirements on deposits and can carry monthly maintenance fees. Additionally, these accounts offer limited access to your funds. Many do not provide a debit card option or access money through an ATM and only allow withdrawals via electronic transfers, which can also carry additional fees. This may be why only one in five Americans have an high-yield savings account.2

Get a 401(k)

Participating in a 401(k) plan is a popular strategy to make your money work for you by generating passive income. A 401(k) is a savings plan employers offer that gives employees an opportunity to divert a portion of their paycheck into an investment fund like stocks or mutual funds.

Since a 401(k) is a tax-advantaged account, employee contributions are not taxed until they are withdrawn, which usually doesn’t happen until retirement. That means that the employee’s taxable income is reduced every year that they participate in the plan. This means that a 401(k) can essentially make and save you money over time. 

What Is a Roth 401(k) Plan? 

A Roth 401(k) is a retirement plan that broadly operates like a traditional 401(k), but with a few variations. It is still a payroll deduction that occurs before your paycheck gets to you. Still, unlike a traditional 401(k), contributions to a Roth plan are taxed upfront instead of at the point of withdrawal after retirement.

However, the trade for immediate taxation in a Roth 401(k) is a great deal of access and flexibility throughout the life of the plan. You will not be taxed again when you withdraw at retirement, nor will you ever need to make annual withdrawals out of the fund—a condition of traditional 401(k)s that kicks in at age 72. This means that if you ever want to leave this money to others as an inheritance, your heirs can claim it without paying additional taxes. 

If both options are available to you, the choice comes to when is it most ideal for you to pay taxes—now or in the future. There are uncertainties about what taxes may be applied when it’s time for you to withdraw. On the other hand, paying taxes in the present will decrease your contribution, which will affect the potential earnings on your investment.  

Whatever you choose, know that participating in a retirement plan is essential. One that allows you to contribute automatically is a strong bet on your future.  

Ways To Make Some Investments

If you’re looking for ways to make money, investing may be one option. Playing the stock market is no longer just for the people on Wall Street. With the advantages of technology and a more comprehensive understanding of its advantages, more people are investing in stocks and doing so without a substantial initial investment. Getting started can be as simple as opening an online account by signing up for an investment platform and contributing less than $500.

Stock market investment is a great way to put your money to work, provided that you are willing to ride out the market’s natural dips and dives. Diversity in investments can deliver some exciting results, and success in the market has proven profitable for those who build their portfolio around consistently good companies. 

These are two of the best-known investment options available: 

Individual Stocks

This option is for buying single or multiple shares of a specific company. If there is a particular company you want to invest in or want to try out financing on a small scale, this may be the route for you. Just know that buying stocks this way may take you longer to diversify your overall portfolio and will require a significant amount of time and money to build. 

Mutual Funds and Exchange Traded Funds

With a mutual fund, you can buy small portions of various stocks at the same time. As an investor, your contribution is pooled with others and operated by a money manager, who decides what securities to invest in. There are many types of mutual funds available, organized to focus on particular securities (stocks, bonds, money markets, etc.) or achieve specific profit goals.  

Regardless of the option you choose, playing the stock market wisely has very little to do with the drama we’ve seen in some of our favorite movies; it’s doubtful that you’ll find yourself shouting “buy” or “sell” on the trading floor of the New York Stock Exchange. To make your money work for you in the market, be patient and listen to advice from the experts to learn how to make the best decisions. 

Find a Passive Income Stream 

Income that you continue to receive on work after you’ve completed it is called residual income. Residual income is an incredible way to make your money work for you because of the potential return on a one-time investment of time and money.  

Examples of potential passive income streams include:  


These are payments to the owner of a property for its use. Artists and inventors make royalties when other people use or recreate their work. Depending on the popularity of the intellectual property, royalties can be a revenue stream that never dries up. 

Rental Property Through Real Estate Investment

If you are fortunate enough to own property, making an investment that can make it viable for renting should be considered. A solid rental property can turn a profit for years to come and can be a source of perpetual wealth to draw from in lean times through the use of equity loans or an outright property sale. 

Real Estate Syndication 

Another long-term property investment option is to explore real estate syndication. A real estate syndicate is a group of investors that pool their funds to purchase and manage large properties. Some of the most popular conglomerates are focused on multi-family apartment complexes. These can yield significant returns due to their size and scalability on things like tenant rents and fees.

Real estate syndications are an ideal investment because your access to your invested capital is restricted for many years. However, your syndicate will inform you of its growth and how it plans to maximize your return. Inside a real estate syndicate, your money is being invested in one of the most sought-after commodities on earth—land. Put your money here, and be okay with not seeing it for a while. 

Earning meaningful money from a residual income stream depends heavily on the individual and their talents. But, if you can find the audience looking for what you can give them, a residual income stream can help you realize your financial dreams, even while you sleep.  

Pay Off Debt, and Don’t Create More 

One of the only ways to make your money work for you is if you have money to begin with and ensure you aren’t losing money. In order to invest in your future, you have to handle the bills that you created in the past. This means paying off credit card debt as soon as possible.

The best way to pay off debt fast is to make on-time payments that exceed the minimum amount due. Staying on top of payments on your bills such as your debts like payday loans, title loans, and cash advance loans, will ensure that the bulk of the money you pay goes directly to the balance.  

In addition to paying off credit card balances, it is also critical that you don’t create any more new debt. Many feel that some credit cards are worth their hassle—particularly those that offer rewards or incentives.

While some of them sound great, adding another credit card won’t put your money to work for you. Instead, another credit card is just another potential bill to pay. 


How can I adjust my own spending habits to manage interest payments?

To manage interest payments effectively, review and adjust your spending habits. Prioritize paying off high-interest debts and consider using credit card rewards strategically to reduce costs.

What are some beginner-friendly ways to invest money that can pay dividends for financial stability?

For beginners, investing in dividend-paying stocks or mutual fund options can be a way to make your funds work and contribute to financial stability. Starting with a small investment in a separate savings account can also help build financial savings gradually.

How much should I allocate to an emergency fund to cover unexpected surprises?

Aim to allocate enough in your emergency fund to cover 3-6 months of living expenses. This fund acts as a financial buffer against emergency fund surprises and contributes to overall financial success.

Are high-yield savings accounts a good option for a down payment fund or education savings?

High-yield accounts are ideal for both options due to their higher interest rates compared to regular bank accounts, which means more money. They provide a safe place to grow your money while keeping it accessible.

What’s the difference in tax implications between a traditional retirement account and a Roth retirement account?

The main difference is in tax treatment. Traditional retirement funds are taxed upon withdrawal, while Roth funds are funded with after-tax money, making withdrawals tax-free, which can make your funds work more efficiently in the long term.

How can I balance paying off debt with building an emergency and retirement account?

Start by tackling bad financial habits and high-interest debts. Simultaneously, allocate a portion of your income to an emergency fund and a retirement fund. Even small contributions can accumulate over time.

Key Takeaways With CreditNinja

Every option for making your funds work for you has its advantages and disadvantages. Like any financial endeavor, you will have to make the choice that is right for you right now. That means that you should stay curious about financial options for investments of any kind. Finding ways to make your funds work for you is a never-ending process.

One of the most significant barriers between the average person and wealth is their fear of the unknown. It’s essential to find ways to maximize the impact money has on our lives. This will help us build security to protect us in lean times. So do your research, ask questions, and don’t be afraid to ask for help in getting started, ever. It’s never too late to start building the wealth that will set you free. To learn more about managing money, savings, and investing, check out CreditNinja’s blog. 


  1. One in Three Americans Prepare a Detailed Household Budget | Gallup
  2. 4 out of 5 Americans are making this savings mistake | SFGate

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