By Daniel Staiger, CFP®, CRPC®
Picture this: your money is a racehorse, and you’re the jockey. You’ve got a valuable asset in your hands, but without proper guidance and direction, it will never reach the finish line. It’s true that with the right strategies and a little bit of savvy, you can make your money work hard for you while building a more stable (pun intended) financial future. In this article, we’ll explore tips and tricks for optimizing your finances, enabling you to take the reins and steer your wealth toward victory. So, get ready to saddle up and let’s begin the race toward financial freedom!
The first step is to set clear financial goals; after all, you can’t make your money work for you if you don’t know where you want to go! Make sure your goals are specific, measurable, and realistic. Common financial goals include saving for a down payment on a house, paying off debt, building up an emergency fund, and achieving your ideal retirement lifestyle. Once you have a clear goal in mind, you can create a plan to get there and manage your money in ways that will work toward your ultimate goal.
Next, you’ll want to create and stick to a budget. If identifying your goals and outlining a plan is the map, the budget is the actual route you take to get to your end goal. Budgeting often has a negative stigma associated with it. There’s a persistent belief that only people who are barely getting by need to budget, but this is so far from the truth. Those who consistently budget often make better decisions with their money and achieve their financial goals faster.
To create a budget, you must understand your income and expenses and allocate your money in ways that align with your financial goals. The first step is identifying areas where you may be overspending, allowing you to redirect those funds toward savings or investments.
Put simply, revolving high-interest debt is the archenemy of making your money work for you. It is the villain in your fairy tale story, and it should be avoided as much as possible. If you have high-interest debt, such as credit card debt, paying it off should be your top priority. If left to accumulate, it can be incredibly challenging to make progress toward your financial goals. Consider consolidating your debt or using the snowball or avalanche method to pay it off systematically.
Automating your finances can be a powerful tool for making your money work for you. Setting up automatic transfers from your checking account to your savings or retirement accounts allows you to consistently save and invest without even having to think about it. You can also automate bills to ensure you never miss a payment and avoid late fees. Automating your finances not only saves you time and effort but also helps you stay on track toward your financial goals. Just be sure to monitor your accounts regularly to keep everything running smoothly.
This tip can be a great way to make your money work for you, but it should be used with caution and not as a way to live beyond your means. Many credit cards offer cash back, points, or miles for every dollar you spend, which can add up to significant rewards over time. Using these cards for everyday expenses you have to pay regardless can be a powerful way to make your money stretch further.
It’s crucial to use this strategy responsibly and pay off the balance in full each month to avoid interest charges and debt. By paying off your balance each month, you can enjoy the benefits of a rewards credit card without incurring any additional costs. Compare different cards and their rewards programs to find one that fits your spending habits and financial goals.
One of the easiest ways to make your money work for you is by putting it into a high-yield savings account. These accounts offer competitive interest rates and allow you to earn more on your liquid cash assets (like an emergency fund) without subjecting them to the volatility of the stock market. Start by comparing different banks and their interest rates, fees, and other features to find a high-yield savings account that suits your needs. While the interest earned on a savings account may not be as high as other investment options, it provides a low-risk way to earn passive income on your savings.
If your employer offers a retirement savings plan, such as a 401(k) or 403(b), don’t neglect to take advantage of any matching contributions. Employer matching contributions are essentially free money that can significantly boost your retirement savings. For example, your employer may offer a 50% match on the first 6% you contribute. If you earn $150,000 and contribute the full 6%, your employer will contribute an additional $4,500 to your retirement account. That’s an extra $4,500 toward your retirement that you didn’t have to earn or invest on your own! Be sure to contribute enough to your retirement account to maximize any employer-matching contributions, as it can make a big difference in the long run.
As you create an investment strategy, it’s important to consider your specific growth needs, which will vary depending on your personal circumstances and goals. For example, if you’re a young professional, your growth needs may be more focused on long-term capital appreciation, while if you’re nearing retirement, your focus will likely be more on capital preservation.
The first step is assessing your financial situation and goals, which involves taking into account factors such as your income, expenses, debt, and existing investments. You may also want to consider your risk tolerance, which is the degree of uncertainty or potential loss you’re willing to accept in pursuit of higher returns. Based on these factors, you can then identify the most ideal investment vehicles and asset classes to include in your portfolio, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), and real estate. Regular monitoring and periodic rebalancing of your portfolio can also help keep your investment strategy aligned with your growth needs over time.
Lastly, consider investing in yourself as a way to make your money work for you. Whether it’s learning a new skill, taking a course, or pursuing further education, investing in yourself can improve your earning potential and help you achieve your financial goals. By continuously developing your skills and knowledge, you can become more valuable to employers or clients, increase your income, and build a stronger financial foundation for yourself.
Additionally, investing in your health and well-being through exercise or nutrition can lead to long-term savings on healthcare costs and improve your overall quality of life. Be sure to prioritize investing in yourself as part of your overall financial plan.
While it may seem intimidating at times, making your money work for you can be accomplished by adopting the right mindset and approach, and by breaking the process down into manageable steps. Building wealth is a gradual strategy that requires consistent effort and dedication, but with patience and discipline, a stable financial future can be established for yourself and your family. Don’t hesitate to take action today and start your journey toward financial freedom. Schedule a no-obligation introductory meeting by emailing me at daniel.staiger@raymondjames.comor calling (631) 319-6777.
About Daniel
Daniel Staiger is a partner at Matarazzo Staiger Wealth Management and Financial Advisor with Raymond James Financial Services. Matarazzo Staiger Wealth Management is an Independent Practice and our team is committed to helping families, pre-retirees, and union employees build a sense of security and confidence around their financial future. With more than 10 years of experience, Daniel is dedicated to providing trusted advice and tailored solutions that help his clients realize their financial potential. He is known for building relationships with his clients so he can better understand their values and the goals they want to pursue. As a CERTIFIED FINANCIAL PLANNER™ and Chartered Retirement Planning Counselor℠ professional, Daniel specializes in serving union employees, such as tradespeople and teachers, with well-thought-out guidance and a personal touch. When he’s not working, Daniel spends his time pursuing interests such as guitar, volleyball, golf, and cooking. He is also an active member of his church. To learn more about Daniel, connect with him on LinkedIn
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
