How To Make Your Money Work For You: 10 Smart Ways

You have probably heard of the phrase putting your money to work. But what does it mean? How can you make your money work for you in a way that benefits you for years to come?

Right now, you are probably working on an hourly, weekly, or monthly basis to earn money. What if you could turn this around, though?

In this blog post, we will learn how to make your money work for you and answer some popular questions.

Make Your Money Work For You: What Does it Mean?

Before I get on with the “how,” let’s take a few seconds to understand what it means to make your money work for you.

Simply put, when you put your money to work, you are assuming control of your finances. In doing so, you are using your money to improve your financial situation and secure your future.

How To Make Your Money Work For You in 2021

1. Learn How to Budget

Before you put your money to put to work, it’s important that you figure out how you are spending your money now.

This is where budgeting comes in. A budget is a vital tool that helps you take control of your finances and ensure more purposeful spending. A budget can help you:

  • Cut back on your expenses.
  • Pinpoint any unhealthy spending habits.
  • Help you prioritize your purchases.
  • Pay off any existing debt and avoid creating new debt.
  • Save more money for the future.

It’s important to remember here that budgeting isn’t a one-time thing. You may need to revisit your budget every 2 to 3 months and make adjustments to account for sudden expenses or an increase in your income.

2. Pay Off Your Debt

We all accumulate some kind of debt at one point or the other. You might have to pay off your student loans, house loans, or credit card debt.

Once you have established a budget, you need to work toward systematically paying off your debt. The sooner you do this, the easier it will be to gain control of your finances.

Why is paying off your debt a priority here? Because it can help you save money that would be spent on interest payments. Having debt means that you are unable to put your money to work as efficiently as you want to. If you have a significant amount of debt at the moment, here are some tips that can help you pay it off:

  • Organize all your debts from smallest to largest.
  • Try and pay off the entire amount for your smallest debt
  • Make minimum payments on the rest of your debts.
  • If you have any extra money, you can increase the minimum payment you make on your other debts.

This method can allow you to pay off smaller debts in a methodical way and spend more money on your larger debts.

I also recommend upping the minimum payment you make each month on your debts and go as high as you possibly can. This can save you the trouble of paying more money in interest and can lower your cost of borrowing.

3. Open A High-Yield Savings Account

You have probably heard about a savings account. It’s different from a checking account in that the money is not as easily accessible, and you might be required to pay taxes or penalties if you make an early withdrawal.

On the plus side, the money you deposit in this account also earns interest while it’s sitting in the bank and grow in value.

You can also use a savings account to build your savings for use at a later point or in the event of an emergency.

In such cases, you can transfer the money to your checking account and pay off any urgent bills. In the meanwhile, the funds in this account are helping you earn more money without requiring you to do anything.

A high-yield savings account usually offers an interest rate of over 1%. You’ll have to take the terms and conditions and any fees into account – these vary according to the bank and the product you have chosen.  

You can compare what’s available and make a decision based on whichever product offers the most benefit.

4. Invest Your Money in a Tax-Advantaged Account

If you want to learn how to make your money work for you, then I recommend that you invest it in a tax-advantaged investment account like a TFSA or RRSP if you’re Canadian (401k or a Roth IRA if you’re an American).

These accounts help you invest your savings in the market, and depending on the product you choose, you can also allow them to grow in value. The primary purpose here is to save this money for your retirement.

Understand the differences between these accounts. If you’re wise about investing in these, it could mean a difference of hundreds of thousands of dollars by the time you retire.

5. Invest in the Stock Market  

So far, we have covered relatively risk-free ways that allow you to make your money work for you.

These methods help you stay safe, but they also offer a limited amount of money in return. If you are looking to be a bit bolder in your efforts, then we recommend investing in stocks.

Stocks represent a portion of ownership in a company. When the company earns a profit, it will offer you a return on your investment in the form of dividend payments. These payments are typically made on a quarterly, semi-annually, or annual basis.

Investing in stocks can be tricky, especially if you don’t know what you should be buying. We recommend speaking to a financial advisor here who can help you select suitable stocks and build an investment portfolio.

Stocks can be volatile, and they can increase or decrease in value pretty rapidly, so you need to be extra careful. If you want to invest in the stock market while also reducing your risk, here are some options for you to consider:


An ETF (exchange-traded fund) is an investment fund that allows you to invest in a group of securities like stocks, bonds, and commodities at once. It is similar to a mutual fund but costs less in fees.

For instance, a mutual fund might charge an annual fee of 1%. In comparison, an ETF will charge a fee between 0.05% to 0.25%.

ETFs can track specific market indexes or investment strategies. Their value will rise or fall in accordance with the index they are tracking. ETFs are also a great way to add securities like cryptocurrency or foreign assets that may not otherwise be accessible and help you diversify your portfolio.

Some of the most popular fund providers include BlackRock and Vanguard. Every ETF has a different fee, risk profile, and spread. You can choose a suitable ETF based on the following:

  • The level of assets it carries should be at least $10 million.
  • The amount of trading activity for the ETF.
  • The underlying index or asset class the ETF is tracking.
  • The market position of the ETF and whether it is merely a replica of another ETF.
  • The tracking error of the ETF – you should always go for an ETF with minimal tracking error.

Target-date Funds

A target-date fund is a class of ETFs or mutual funds that is offered by an investment company aiming to increase the value of its assets over a specified period.

It automatically rebalances asset class weights within the fund to offer optimal returns, and manage risk and you have to make very little effort to manage your investments.

The primary goal of a target-date fund is to allow the investor to reach a particular goal by a specific date. This can be retirement, marriage, or sending their child to college.

The asset allocation of this fund will gradually adopt a conservative profile as the target date draws closer so that you are exposed to minimal risk by the end. The portfolio manager of a target-date fund will also base their investment strategy on the time period specified so that the fund can meet its return objectives.

Some of the most popular providers of target-date funds include Vanguard, Fidelity, Invesco, BlackRock, and more. I recommend choosing a target fund based on the following:

  • The target date.
  • The amount of risk you are willing to take.
  • The level of diversification offered.
  • The fees.

Pro-Tip: If you are not sure how to start investing, you can also use a robo-advisor. This is a service that picks investments on your behalf based on your investment goals. They are cheaper than a human financial advisor and can help you make better investment choices

6. Invest in Real Estate

If you want to put your money to work, you can also invest in real estate. They are several ways to do this. You could buy a home or an apartment using a property loan and put it up on rent to generate passive income.

You’ll also have to make a pretty significant down payment, though, and this option might be more viable when you don’t have any other additional debt and can afford to invest in real estate.  

The money you receive in rent should exceed any mortgage payments and other costs required to maintain the property, so you can generate a positive income stream. You can also qualify for certain tax deductions for any money you spend on the rental property.

If you can’t buy a property yet, you can also use REITs (Real Estate Investment Trusts) to invest in the real estate market.

These are companies that own, operate, or finance income-generating real estate. You can invest in a REIT and earn passive income paid in the form of dividends by the company. These are usually generated by any income, gains, refinances, or sale of the property.

7. Try Out Peer-to-Peer Lending

Peer-to-peer (P2P) lending involves giving out a personal loan to a borrower via a third party. You can charge interest on these loans to generate passive income.

If you are willing to take on increased risk, then peer-to-peer lending can be a lucrative way to earn money by charging a higher interest rate.

However, bear in mind that these loans are unsecured, and if the borrower defaults, you could lose the entire initial amount, as well as any chance to earn a profit.

You can avoid this by giving out smaller loans to multiple lenders. You can check the minimum investment for each loan on P2P lending sites and start from there. You can also analyze the borrower’s credit history to reduce your risk.

8. Purchase Annuities

Annuities are financial products that you can pay for upfront and that allow you to earn passive income for a specified period in the form of fixed payments. These products are typically used by retirees and help ensure they don’t outlive their savings.

You can also use an annuity to provide a source of income for your spouse and any other dependents. One advantage of annuities is that they are fairly simple, and the income can also grow in value to account for inflation.

On the downside, the interest rate on an annuity might be low, and it may also come with a high fee. I recommend investing in an annuity if you are looking for a stable source of income in your retirement years and want to avoid taking on the risk associated with other methods.

9. Sign Up for Rewards Credit Cards

I know what you’re thinking. Don’t credit cards mean more debt? Not necessarily. If you are smart with them, credit cards can also help make your money work for you.

All you have to do is choose a card with a rewards system that complements your current lifestyle choices. You can win anything from cash back, gift cards, and frequent flyers miles.

I only recommend using this method if you don’t have any existing credit card debt and make a habit of paying your credit card bills in full each month before the interest-free period ends. You don’t have to spend an extra dime here and get something valuable in return.

10. Invest in Yourself

Finally, if you want to master the art of how to make your money work for you, I also suggest investing in yourself. Sign up for a course or a certification that allows you to pick up a new skill. You can also build a network of useful contacts that may come in handy later on.

Finally, look after your health. Nothing is more costly than poor health. If you’re healthy, you will also get to enjoy all that passive income you are earning or the money you have saved up for retirement.

I Also Get Asked

How Can I Make Money With My Money?

If you want to make money with your money, I suggest using one or more of the methods discussed above. You can start with a high-yield savings account and a tax-advantaged account. As your finances improve, you can consider other options like investing in stocks and investment funds.

How Can I Grow My Money Fast?

If you want to grow your money fast, then you need to start by tracking your current expenses and savings. You should also consider investing your money in financial products or assets like stocks or engaging in peer-to-peer lending. These investments allow you to grow the value of your money much more quickly.

How Can I Double My Money?

One of the easiest ways to invest in the stock market over a long time period. Understand the Rule of 72: If you divide your return by 72, that’s how many years it will take for you to double your investment. So if your return is 10% per year, it will take 7.2 years for your investment to double.

How Can I Make $100?

That’s a fairly relative question and depends on what you are doing with the money you have right now. For instance, if you invest in cryptocurrency and its price goes up by $100 or more, you could sell it and earn a profit.

You can also try out peer-to-peer lending and charge an interest rate that lets you earn $100 in return for two or three loans. Besides this, investing in products like ETFs and target-dated funds could also help you make $100 on your investment.


How to make your money work for you

When it comes to how to make your money work for you, there are several options at your disposal. If you are looking for low-risk options, I suggest opening a high-yield savings account or purchasing an annuity.

ETFs and target-dated funds typically offer low levels of risk too. If you have got the funds to spare, you can also invest in real estate and earn money through rental income or by investing in a REIT.

Whatever you choose, make sure you speak to a financial advisor about it and allow them to guide you on the nuances of making your money work for you. Good luck!

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Read about how he quit his 6-figure salary career to travel the world here.

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