By: Kristen Herhold
As a working parent, it can be frustrating when you get to the end of each month without much money left to give your family — and your future — more financial stability and freedom.
Whether you’re saving money for your family’s dream vacation, your kids’ college admission, or retirement, there are ways to grow your wealth more quickly. From savvy investments to side hustles to better budgeting, you can find the options that fit you and your family’s needs best. Here are six ways to make your money work for you.
Build a Budget That Works
One of the most basic ways to make your money work better for you is to create a sustainable budget. An effective budget is one where you spend less money than you make. By managing your money better, you can increase your net worth over time.
Prioritize spending money on the items you need most. This includes your rent or mortgage payment, utilities, and groceries. After that, spend money on what is important to you. Would you rather set aside money to travel or buy decorations for your home? Choose one or two items that bring you and your family joy and say no to the rest.
Create Passive Income
Passive income is a way to earn more income without having to put in the same amount of time and effort of a full-time job. In some cases, you can put in the work up front and earn residual income such as royalties, dividends, or rental payments.
To create passive income streams, think about your strengths. Are you great at meal planning? Write an ebook or start a blog with your tried-and-true recipes. Start with something smaller scale by selling copies of your meal-planning spreadsheet as a download online.
Want to earn more money now while also making a long-term investment? Buy a new home that also has rental income potential. Search for properties that have finished basements with private entrances, a guest house, or a garage that can be converted into a studio. If you aren’t quite ready to become a full-time landlord, rent out your guest units part-time to travelers. As a bonus way to make your money work more effectively, choose a real estate agent that offers a lower commission fee.
Pay Down Your Debt
When you borrow money to buy anything from your groceries to a new car, you will pay more over time unless you pay off your full balance each month. Credit cards, in particular, charge high monthly fees that add up quickly from month to month. You will have more money over time the faster you pay off your debt.
Although it may not be possible to pay off your full debt immediately, you can take steps to become debt-free. Always pay more than the minimum payment due, and make your payments on time to avoid late fees.
Not to be too morbid, but sometimes tragedies in life present opportunities that can help you pay off debt. For example, if you find yourself going through a divorce, it might be tempting to take your full share of a home buyout to put a down payment on a new house. Rather than use the full amount, consider making a smaller down payment on your future home or scale back on what you purchase. Home loans through reputable lenders will have a lower interest rate than from a credit card.
Get More From Your Banking
You probably already have a bank account, but not all accounts are made equal. If you have a standard checking account, your money goes in and out without fanfare. By putting your money in a high-yield savings account, you can earn more from your paycheck without doing anything.
High-interest savings accounts earn interest rates at a higher level than the national average. For example, say your bank’s standard savings account offers a 0.05% interest rate. By comparison, most high-yield savings accounts offer rates closer to 0.5%. If you put $1,000 in both accounts, the first will earn you $0.50 in interest in one year, while the other earns $5. That may not seem like a lot in one year, but it adds up over time.
Save for Retirement
It may sound unappealing to save money for 40 or 50 years down the road when you could use that money now. It is important to start saving for retirement early, however, so it can grow over time. Remember, while you can take out loans to finance a home, car, or education, you can’t get a loan to pay for retirement.
Look into what kind of retirement plans your employer offers. If your employer offers a pension, find out what that involves and if there are any terms and conditions. If your workplace offers 401k matching, it’s smart to start contributing right away — especially if they offer matching. Not only will the amount you invest grow over time, but you’ll also receive extra money for investment without having to dip into your paycheck.
If you aren’t clear on all of the terms, consult the top investment blogs that break down the terms for all of us who aren’t experts in finance. You can also learn about retirement options if you are self-employed or if your employer doesn’t offer retirement benefits.
Invest in Real Estate
Throughout the decades, real estate has proven to be a smart investment. There are ways to earn even more from your investment over time.
For example, when buying your home, look for homes that need some work. You can fix up the property to increase its value over time while you and your family live there. Take a look at these companies that buy fixer uppers for cash as inspiration and modify the model to work for your family.
If you are interested in a fix-and-flip property, you can avoid paying capital gains tax by using a 1031 exchange — whether you’re in Texas, California, or New York, it’s legal in every state.
There are also ways to invest in real estate if you aren’t interested in flipping homes or managing rental properties. You can buy shares of real estate investment trusts or join a real estate crowdfunding group. These types of investments vary in how long you are committed to the investment. Do your research to find out which option works best before buying any shares.