Money is the tool of life that can be used to build your dreams and aspirations. Some may even say money is the currency of happiness. Many of the important milestones in your life will be determined by money. Milestones such as:
- Buying Your First Home
- Building a Family
- Buying Your First Car
These are all important milestones in your life whose outcomes are shaped by financial stability. While money is a tool, it can be difficult to utilize if you do not know how to make your money work for you. If you are searching for financial stability and control, there are resources out there waiting for you.
What Does it Mean to Make Your Money Work for You?
Do you know how to make your money work for you? The answer lies in the control you have over money in your life. If you are struggling to make ends meet each month, chances are you do not have much control over your finances. Financial stability and security are the keys to financial independence.
To reach your desired goals of financial independence, you must be able to understand the impact that money has on your life. Your control over your own financial habits will affect how money works for you. Your credit history controls many aspects of your life, including where you will live, your job, and what car you can drive. The more control you have over your finances, the better your options will be as a consumer and employee.
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While money is a tool that can be used to build your dreams, it can also be a tool to keep you from them. With the right knowledge, you can learn how to make your money work for you!
How Can I Create Financial Independence?
One of the goals of financial independence is to be debt-free with an emergency fund to cover at least three to six months’ worth of expenses. This means you are not living paycheck to paycheck, and you have a cushion if any financial emergency were to arise.
Financial independence is an important tool that can shape your overall quality of life. But how do you get there?
The easiest way to create financial stability in your life and make money work for you is to budget yourself. If you do not have a budget created already, it is never too late to start.
Creating your Budget
First, establish an estimate of your expenses each month, and then your income. Your monthly expenses should not exceed your monthly income.
Estimate your monthly expenses by separating them into two categories:
- Variable Expenses
- Fixed Expenses
Variable expenses are costs that will change in amount depending on your use during the month. These are often harder to estimate for a budget, but you can get an idea of them by looking at your past bank statement and observing your current spending habits. Variable expenses are often things like takeout, entertainment, gas, and other expenses that will change each month. When trimming your budget, these are the items you can often cut back on!
Fixed expenses will not change throughout the month. Items like rent, utility bills, car loan payments, and other expenses that are fixed. These items are often the highest priority for your budget! Ideally, after these expenses are paid, 10% of your monthly income should be reserved for your savings fund or emergency fund.
How Does Getting Out of Debt Make My Money Work for Me?
You can learn how to make your money work for you by getting yourself out of debt. Debt is the biggest reason why many consumers do not have the financial independence or the stability they need. When you have found yourself in debt, you are paying more than what you originally purchased the item for, but every month it increases. Interest payments can hurt your income, and it can be harder to make a budget if most of your income is going towards your debt.
The existence of the chronic debt in your budget is a sign that your money is not working for you. Paying off your debt will allow you to put your money towards your goals each month. The more money you have in your budget to save, the more your money is working for you. When you are stuck in debt, each month a large portion of your income is dedicated to interest. That portion could have been spent investing in passive income to grow your wealth and create more financial stability in your life.
Why Should I Invest My Money?
While financial independence can look different from person to person, one of the goals is to not rely on income to pay your living expenses. For many, financial independence means not having to work! This can be achieved through passive income.
One of the easiest ways to earn passive income is through investing, side hustles, or consulting. Passive investments are the perfect way to invest! You can earn money without working for it, even if you are spending your time doing other things. The goal of passive income is to protect your time.
While having all of your money in one single investment is a risk, there are ways to spread out your investments. Consider these investment options to earn passive income:
- Government Bonds
- Real Estate
- ETFs or Exchange Traded Funds
- Mutual Funds
Whether you are choosing stocks or ETFs, it is important to have a goal with your money! Invest in an emergency fund, to build a family, or even to build an early retirement. This goal can help give you a concrete idea of what you are building financial stability for.
Why Should I Build a Savings and Emergency Fund?
Financial stability also comes from a considerable amount of savings. Each month, a portion of your budget should be dedicated to a savings account and an emergency fund. Financial emergencies can happen to anyone, at any time! An emergency fund is meant to make sure you are not knocked down and in debt when a car breaks down or you have a medical emergency. Typically, at least 10% of your monthly income should go towards a savings or emergency fund. At the end of the year, your goal should be to have at least three months of expenses paid for in case you lose your job.
If you are struggling to build a savings fund, it really just means you are struggling to change your financial habits. Your spending habits will determine the extra money you have left over after paying your fixed and variable expenses! If you struggle with saving your money and impulsively shopping, consider the 30-day rule:
- If You See Something You Want, Hold Off Buying It
- Take the Amount of Money It Will Cost and Set It Aside
- If You Still Want It After the End of The Month and You Have the Budget for It, Buy It!
When you choose not to impulsively purchase something, you are creating better financial habits. This can lead to the road of financial stability and it will help your budget in the long run! There are a few other tips to saving money and changing your financial habits:
- Eat Out Less: Taking your lunch to work or cooking at home can save you hundreds each month!
- Drink Alcohol Less When You Go Out: Alcohol can be pricey no matter where you go. Cutting out drinks can cut your bill in half!
- Set Bill Reminders: Late fees can be a form of unnecessary spending. Make sure you are setting reminders for your bills each month to avoid fees! If you can, enroll your obligations in autopay.
- Unsubscribe from Shopping Emails: These emails can be tempting, especially if you see a discount. Try to unsubscribe from emails that will tempt you into impulsively spending!
Where Can I Apply for Debt Consolidation?
When you are still struggling with your debt, there are resources you can consider! If you have a paid-off or close-to-paid-off vehicle, a title loan can be the most advantageous resource for you to use. Unlike other types of traditional loans, a title loan can accept borrowers from all types of credit histories.1
If you need to consolidate your debt into one easy payment to reach your financial goals, you have options. Loan options like ChoiceCash Title Loans can take just minutes to apply for, and you’ll be able to access up to 75% of your vehicle’s equity!1