How To Make Your Money Work For You

Growing up, I often heard successful people say, “If you want to get rich, you have to make your money work for you.” When I first heard this advice in high school, I had no idea what it meant.

Robert Kiyosaki, the author of Rich Dad Poor Dad, said, “The rich don’t work for money. They make their money work for them.”

Our teenagers often bring their friends over to our house. I enjoy talking to them about their future and asking them what they want to do after high school. One kid recently said he wanted to be filthy rich by 30.

I repeated the advice I had heard growing up: “If you want to get rich, you have to make your money work for you.”

His immediate question was, “How do I do that?”

That’s the million-dollar question.

Think back to your childhood.

Where did you get your financial advice? Was it from your parents, teachers, or friends’ parents? If so, you saw them working full-time jobs to earn money. You likely overheard their financial stress and concerns about job security. You may have even heard them say they “couldn’t afford” certain things.

Imagine the stress if you continue relying on a single income source, and that source disappears. This is how I felt years ago after injuring my hand while snow skiing. As a dentist, I need both hands to work!!

Trading time for money will never make you wealthy, and it’s an unhealthy way to live.

Most people work until they’re 65 or older, investing in the stock market through retirement accounts, always worrying if they’ll have “enough” for retirement. I started this way when I opened my business until I learned about working smarter, not harder.

The first time I received a distribution check from a real estate syndication, it hit me—I was finally making my money work for me. It felt like receiving free money!

Are you ready to learn how to put your money to work too?

Read on…

---

---

The First Step…Understanding Your Current Financial Situation

Understanding your financial situation is step #1 for making sound financial decisions. If you don’t know where you’re starting from, it’s hard to figure out where to go.

Creating a Budget

Creating a budget helps you keep track of your income and expenses.

Start by listing all your sources of income, such as your salary, bonus, or side hustle earnings.

Next, list your monthly expenses, such as rent, utilities, groceries, and entertainment.

To manage your money better:

• Categorize expenses: Fixed (rent, insurance) and variable (groceries, dining out)
• Use budgeting tools or apps
• Set a limit for discretionary spending

Balancing your income and expenses ensures you can save and invest money wisely.

Unfortunately, most of the doctors I coach spend MORE than they make. This is why it’s so important to focus on the basics first before making a financial plan.

Assessing Your Debt

Understanding your debt is the first step toward managing it effectively.

List all your debts, including credit card balances, student loans, and any high-interest debt. Note down each debt’s interest rate, monthly payment, and remaining balance.

Next, use the Debt Snowball to attack the smallest debt first and pay minimum payments on the remaining debts. If you want more information about how to do this, check out where I first learned it from….Dave Ramsey.

Setting Financial Goals

Setting financial goals gives you direction and purpose.

No goals? No problem.

Check out this video for help:

Goals can be short-term, like saving for a vacation, or long-term, such as retirement planning.

Write down your financial goals and make them SMART (Specific, Measurable, Achievable, Relevant, Time-bound).

To achieve your goals:

• Break them down into smaller steps
• Create a timeline
• Monitor your progress regularly

Planning and goal setting help you stay motivated and on track.

Join the Passive Investors Circle

Maximizing Savings

To make your money work harder, consider moving it into accounts that earn higher interest. Also, consider setting up automated saving methods and leveraging tax benefits.

These steps can grow your savings more efficiently.

High-Yield Savings Accounts

A high-yield savings account offers significantly higher interest rates than traditional ones.

This is important for building your emergency fund since it maximizes the return on your savings without risking the principal amount.

Many online banks offer high-yield options with no minimum balance requirements, making them accessible to everyone.

Setting Up Direct Deposits and Automatic Transfers

Automating your savings can ensure consistency and minimize the temptation to spend.

By setting up direct deposit, a portion of your paycheck can go straight into a separate savings account, such as your emergency fund or high-yield savings account.

Additionally, you can arrange automatic transfers to move money regularly from your checking to your savings accounts.

We have several different accounts that we automatically send money to each week for things such as vehicles, kid’s weddings, trips, etc. This is an easy way to always have money available for expenses you know are always looming.

Taking Advantage of Tax Credits

Tax credits can significantly boost your savings.

For example, contributing to a retirement account like a 401(k) or an IRA can provide tax credits that reduce your overall tax burden.

Additionally, consider looking into credits for education, energy efficiency, and healthcare.

Properly utilizing these tax credits means more money remains in your pocket, which you can use to further increase your savings.

Investing Wisely

There are various ways to invest your money; each option has its risk and return profile.

As a dentist, we’re typically pitched ONE main way to invest….the stock market.

But what if something happens to us, and we can’t work until 70? I had this wake-up call after my hand was injured while snow skiing. This accident made me rethink how I was making money.

If you want more details, check out this video:

Whether you invest in the stock market, real estate, or something else, it’s important to understand these options, as they can help you choose the right strategy for your financial goals.

Real Estate Investing

Real estate investments can provide steady income and potential growth in property value.

Owning rental properties means you make money from rent and property appreciation. Being an active investor is something that I initially didn’t have time for. Instead, I chose to invest passively in real estate syndications.

If you want to learn more, check out this video:

You can also invest in a Real Estate Investment Trust (REIT), which also lets you invest in real estate without owning physical property.

REITs are traded on the stock market and can offer dividends and growth potential.

Managing rental properties involves additional responsibilities but can be rewarding if done correctly.

Stocks, Bonds, and Mutual Funds

Stocks represent ownership in a company and can offer high returns, especially if the company grows.

Bonds are loans you give to companies or governments, which pay you interest over time.

Mutual funds pool money from many investors to buy a diversified portfolio of stocks, bonds, or other securities.

Exchange-traded funds (ETFs) work similarly to mutual funds but trade like stocks on the exchange.

Investing in these assets can help spread risk and improve your chances of earning higher returns.

Retirement and Tax-Advantaged Accounts

Retirement accounts like 401(k)s and Individual Retirement Accounts (IRAs) offer tax advantages that can help your savings grow faster.

A Roth IRA, for example, allows your investments to grow tax-free, and you can withdraw money tax-free in retirement.

These accounts often include investment options like stocks, bonds, and mutual funds.

Maximizing contributions to these accounts can provide a more secure retirement.

---

---

Creating Passive Income

Making your money work for you often involves creating passive income streams.

This can be achieved through various methods like exploring side hustles, investing in dividend-paying stocks and utilizing online platforms. Each approach offers unique benefits and considerations.

Exploring Side Hustles

Side hustles can be an effective way to generate passive income. They offer flexibility and can often be started with minimal upfront costs.

For instance, you can rent out a room in your home to create rental income.

As previously mentioned, my go-to passive income source is syndications. 

A key benefit of side hustles is that they can grow into significant income streams over time.

Investing in Dividend-Paying Stocks

Investing in dividend-paying stocks is a reliable way to build passive income. When you buy shares from companies that pay dividends, you receive regular payments based on the share price.

These dividends can be reinvested to purchase more shares, which increases your potential earnings over time.

Companies in sectors like utilities and consumer goods often have stable dividend payouts. It’s essential to research and choose companies with a strong financial track record.

Utilizing Online Platforms

Online platforms offer various opportunities for creating passive income. High-yield online savings accounts, for example, provide interest higher than traditional savings accounts.

Some platforms allow you to lend money to others in exchange for interest, which can also be a steady income stream.

Additionally, you can leverage your network of friends to promote products or services, earning commissions based on sales.

With numerous online options, it’s important to choose platforms that align with your financial goals and risk tolerance.

Estate Planning and Wealth Transfer

Getting your money to work for you is one thing; keeping it to pass along is another.

Estate planning ensures your assets are distributed according to your wishes. Create a will, and designate beneficiaries for your accounts.

This prevents legal challenges and ensures a smooth transfer of wealth.

Consider setting up a trust. Trusts provide more control over asset distribution and can be beneficial for tax planning.

Discuss with an estate attorney to understand the legal intricacies.

Life insurance is another essential aspect ( I use term). It provides financial support to your beneficiaries in the event of your passing, helping to cover debts and other expenses.

Regularly updating your estate plan is crucial. Review it after major life events to ensure it remains relevant and complete.

Frequently Asked Questions

What are the best ways to make my money work for me?

There are several effective strategies to make your money work for you, including investing in rental property, using a high-yield savings account, exploring money market accounts, and building an investment portfolio with a mix of stocks, bonds, and other financial products. Additionally, using credit cards that offer rewards and benefits can also provide added financial perks.

How can I improve my credit score to support my financial goals?

Improving your credit score involves consistently paying your bills on time, reducing credit card debt, maintaining low credit utilization, and regularly checking your credit report for errors. By improving your credit score, you can qualify for better interest rates on loans and credit cards, ultimately saving you money and aiding in achieving financial stability.

Is investing in a rental property a smart way to generate passive income?

Yes, investing in a rental property can be a great way to generate a passive income stream. Rental properties can provide regular cash flow, and over time, they can appreciate in value, contributing to long-term wealth. However, it’s important to consider the work involved in managing the property and the market conditions upfront before investing.

What financial products should I consider for long-term financial success?

For long-term financial success, consider diversifying your investment strategy with financial products such as certificates of deposit (CDs), retirement funds like IRAs or 401(k)s, and investments in public companies. Additionally, using online platforms and mobile apps offered by financial institutions can help you manage your investments and track your progress toward your long-term goals.

How can I maximize the benefits of my bank accounts to support my financial future?

To maximize the benefits of your bank accounts, look for checking and savings accounts that offer higher interest rates, greater annual percentage yield, and low fees. An online bank or digital age financial institution might provide better rates compared to traditional banks. Additionally, regularly contributing to your savings goals and making additional payments towards any existing debt can enhance your financial stability and future prospects.