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Make Your Money Work for You: Use These Tools to Get Ahead

Making money work for you requires some planning, but having a strategy and the right tools can help you maximize your income and build wealth.

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Updated March 13, 2025
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Understanding how to manage your money effectively is crucial to ensuring your financial health. Whether you're trying to get out of debt, buy a house, or ensure you have enough money for retirement, making your money work for you is vital.

One of the hardest things about putting your money to work is that there's no one-size-fits-all solution. Although your financial picture will look different from everyone else's, a few guidelines can help. Things like having goals, managing your income and expenses, and saving for retirement can help you ensure your money is there when you need it.

Set clear goals

Before your money can work for you, you must be clear on what you want it to do. It's tough to see if you've reached "enough" without knowing where you're going.

Spend some time setting financial goals for yourself. Use a goal-setting framework like SMART (Specific, Measurable, Attainable, Relevant, and Time-Bound) to help you stay on track.

This helps you develop a plan to achieve your goals and ensures you don't just say you want to "save more." Instead, you'll figure out how much you'll set aside each month, how it fits into your other spending, and how you'll know you've reached your goal.

It's also important to divide your goals into short-, mid-, and long-term goals.

  • Short-term goals are generally for things you can do in a year. This might be saving for your summer vacation or starting your emergency fund.
  • Mid-term goals take between one and five years to achieve. For example, you could set a goal to pay off your credit card debt, fully fund your emergency fund, or save for the down payment on a new car.
  • Long-term financial goals are for things that (generally) take more than five years like saving for retirement or buying a home.

Set aside time in your calendar to review your goals and measure your progress. I like to set aside a day every quarter for a financial clean-up and catch-up. I make phone calls that I've been putting off, catch up on paperwork, and check in on my goal progress. I also look back on any setbacks I encountered and try to brainstorm ways to avoid problems in the future.

Look at your income and expenses

Budgeting is not always fun, but it's vital to getting a clear picture of your finances. A budget shows you how much you make (your income) and how much you spend (your expenses). Budgeting helps you identify areas of overspending or where you could save more.

List your bills and other expenses such as groceries, clothing, prescriptions, and entertainment. Then, do the same for your income. Include your paycheck, any freelance or side hustle money you earn each month, and other forms of reliable income like child support.

As the month progresses, check in to see how your spending aligns with your budget and make adjustments if needed.

While you can always keep track of your money using pen and paper, a budgeting app simplifies the process. Two of the best budgeting apps are Rocket Money and Quicken Simplifi.

Rocket Money's free subscription lets you link your bank account, receive balance alerts, and monitor your spending. It will also track your monthly subscriptions and monitor your credit score, which is helpful for a free tool.

Rocket Money's paid monthly subscription ranges from $6 to $12 after a 7-day free trial. Paid subscribers can have Rocket Money cancel unused subscriptions, and subscribers get unlimited budget creation, net worth tracking, and other premium features.

While I've used Rocket Money in the past and found it helpful, I currently use Quicken Simplifi for my finances. Its easy-to-use interface lets me create and customize my budget, organize my accounts, and run reports that show trends. I track my spending, savings, debt repayments, investments, and net worth on the main dashboard.

Although Simplifi does not offer a free plan, it currently costs $2.99 monthly ($35.88 billed annually) for the first year. Then it renews at $5.99 a month ($71.88 billed annually) each year after that.

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Pay off debt

Managing your debt is crucial to making your money work for you. Every dollar you owe someone else, whether for a credit card, auto loan, or student loan, is a dollar you can't put into your account.

If you have debt, develop a repayment strategy by listing each account, including the outstanding balance, interest rate, and minimum monthly payment. Once you know what you're working with, you can develop a strategy to start paying it off.

Two popular debt repayment methods are the "snowball" and the "avalanche" method.

With the snowball method, you focus on paying back the smallest of all your loans first, while still making minimum payments on your other accounts. Once you pay off that debt, roll that money into your monthly payment for the next smallest debt. Continue that process until you pay off all of your accounts.

Alternatively, the avalanche method focuses on repaying the debt with the highest interest rate first. Once you've paid off the highest-interest account, you roll that money into your minimum payment for the next highest interest rate, and so on, until your debt is complete.

The right choice depends on what works best for you while still allowing you to live your life.

Build savings

Once you have a plan for your debt, it's time to start building your savings. Having money in the bank is really when your money starts working for you.

For instance, if you have an emergency fund, you don't need to worry about putting an unexpected car repair on a credit card. Instead, you have the savings to cover that bill and avoid going further into debt.

Many experts recommend saving three-six months of expenses in your emergency fund. However, if your first goal is to save $500 (or even $100), every little bit helps you avoid going back into debt.

Consider using a high-yield savings account (HYSA) for your emergency fund and other savings. These accounts are typically found at online banks and can offer a higher interest rate on your balance because they don't have as many overhead costs. Look for one with low (or no) fees and a low minimum balance requirement.

Check out our list of the best savings accounts to learn more.

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Contribute to retirement savings

Saving for retirement as early as possible helps you ensure you have enough money to live comfortably and maintain your lifestyle.

While it can be hard to set aside money for retirement when you're young, getting started early is crucial. When you start saving in your 20s or 30s, you can take advantage of compound interest (the interest you earn on interest) and your savings will increase over time.

To help you save as much as possible, start by contributing to your employer's 401(k) plan, if available. Some experts recommend saving 15% of your pretax income yearly for retirement. However, if you're just starting, that might not be reasonable. Instead, determine how much you can save, and if you receive a raise, consider raising your contribution level as well.

Some employers match a percentage of your contribution up to a certain amount, so make sure you contribute at least enough to qualify for the employer match. Otherwise, you'll be leaving free money on the table.

If you don't have an employer-sponsored retirement plan, consider using a traditional individual retirement account (IRA) or a Roth IRA. A traditional IRA uses pre-tax money, like a 401(k), which means you can generally deduct your contributions and reduce your taxable income in the year you contributed.

You won't get an up front break on your taxes with a Roth IRA, but you also won't have to pay income tax when you withdraw money in retirement, as long as you meet specific criteria.

Earn passive income with investing

Investing money in stocks, bonds, mutual funds, or certificates of deposit (CD) can help you grow your money without much effort. The idea of investing intimidates some, but if you have a retirement account, you already have an investment account. However, you can also put money in a taxable brokerage account.

There is always some risk in the stock market; there's no guarantee you'll make money. Depending on market fluctuations and the types of investments you have, you could lose money if the market goes down.

A diversified portfolio can help you withstand the market's ups and downs. Diversification involves investing in multiple types of assets to minimize risk and (hopefully) maximize return.

Since investing can become complicated, it's helpful to have some guidance. You can hire an investment advisor, but that can get expensive. If you're new to investing, try an app that helps you get used to putting money in the market and handles all of the work for you.

Two of the best investment apps to choose from are Stash and Acorns.

Stash is a robo-advisor app that offers banking, investing, and budgeting tools.6 When you sign up, Stash will ask questions about your finances and investing goals. Based on your answers, it will recommend a portfolio to help you meet those goals.7 You can set up automated investing and move money into your portfolio on a schedule that works for you. You can also set up an individual portfolio and pick investments.

Stash starts at $3 monthly for a Growth subscription, which offers a personal portfolio and other features. A Stash+ account costs $9 monthly and offers premium features like market insights and access to a kids portfolio.8

Visit Stash | Learn more in our Stash review

Similarly, Acorns can help you set up an automatic investing account. However, its portfolios only include exchange-traded funds (ETF), a type of investment. It also does not offer a self-pick option.9

The feature I like most about Acorns is the Round-Up feature. After linking your credit and debit cards to your Acorns investing account, any purchases you make get rounded up to the nearest whole amount, and Acorns will invest the difference.

So, if you spend $2.50, Acorns will round it up to $3. Once your Round-Ups reach $5, Acorns will transfer the money from your linked checking account and invest it for you.

Acorns has three account levels starting at $3 a month. The Bronze account offers an individual investment account with Round-Ups and access to banking features. If you need more account options, an Acorns Silver account costs $6 a month, and Acorns Gold costs $12 monthly.

Visit Acorns | Learn more in our Acorns review

Other ways to earn passive income

Of course, there are other ways to earn passive income that don't involve traditional investing.

One popular choice is real estate investing. Investing in real estate, like flipping houses, buying a commercial property, or buying a rental property, isn't necessarily passive. Still, it can generate income without you having to work a traditional job.

Similarly, you can look for less common ways to earn income that don't take up as much time as a nine-to-five job like purchasing and maintaining vending machines or buying into a laundromat. You'll likely need to make a significant upfront investment, but once you have the equipment and location, you can check in periodically and spend the rest of your time as you like.

Finally, if you want something closer to home and enjoy writing, consider starting a blog or newsletter. While blogging isn't as lucrative as it once was, you can still make money, especially if you already have a social media following. Look for ways to monetize your platform such as with brand collaborations, ads, or sponsored posts.

Bottom line

Figuring out how to make your money work for you takes trial and error. However, putting in the effort now can mean you are better prepared to handle whatever comes your way.

Spend time thinking about your goals and outlining a financial plan that helps you meet them. Then, start slowly putting the pieces in place by paying off debt, prioritizing savings, and investing for retirement. Although you won't get rich quickly, finding ways to give each dollar a job can help you plan for the future and provide peace of mind.

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