If you want to hire people to work for you, then you need a business of some sort. However, even if you don’t yet have a business big enough to hire people, you can have employees work for you. These employees work 24/7, don’t complain about parking spaces, and don’t leave the office microwave a mess. They will work hard at any job you tell them to, and will try to get more of them to work for you. Where do you find such ideal workers without outsourcing to a foreign country? They are actually currently sitting in your wallet/purse and in your bank account. These employees are your money that you work so hard to make.
“Make your money work for you” is a phrase that most people have heard but not many people do. Getting a paycheck and using that money to pay for your expenses and nothing else is just going to keep you on the conveyer belt of consumption. Putting some money aside in a savings account regularly is a great idea, but even that won’t make you money as the monster known as inflation will make that money less and less valuable over time. To really make your money, well…make you money, you can put it to work into different types of accounts depending on what your goals are.
If your goal is to increase your retirement savings, there are some accounts that are great for that. Assuming retirement is a few decades away for you, putting your money to work in a 401k would be a wise move. If you don’t have one at your workplace or your 401k just isn’t that good, another option is an Individual Retirement Account (IRA). There are many brokers that offer an IRA (Vanguard is my favorite one because of its low fees and ease of investing), but the important thing is to invest according to when you will need the money. In general, the farther off retirement is, the more you should be invested in a broad array of stocks because stocks have a good chance of making you money in the long term. If you need the money soon, then your money would probably be better off invested in “safer” investments such as bonds or money market accounts. There are of course billions of variations in between, but you’re much better off following these general rules than not doing anything at all for retirement.
If your goal is to have some money for college expenses for your kids, a 529 plan would be a good place to start. Most states offer their own 529 plans, and some give tax breaks for doing so. The investments in 529 plans can be geared to the year your kids will be expected to start college. If you start early on, it is easy to have a nice fund by the time the little guy or girl is going off to school.
Finally, if your goal is just to save up for a vacation or something else which is a year or two down the road, an online savings account is a good place to put your money. The interest rate can be low for savings accounts, but the money made from interest is just a bonus as the main objective is to have a place to stash money to be used relatively soon. A Certificate of Deposit (CD) account is also a good choice as they can offer slightly higher interest rates as long as you don’t withdraw any money for a specified period of time (usually 1,3 or 5 years).
These are just some of the ways to make your money work for you. If you give your money a job, such as saving for retirement or saving for a vacation, you can usually find a good place to put it to work. Once you pay money for expenses like car insurance or a cell phone bill, that money is gone and can never work for you ever again. If you can pry some money away from expenses and re-direct it to work for you, it will do you a world of good.