How to Make Your Money Work for You: 17 Ideas to Make Money While You Sleep

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The rich don’t work for money. They make money work for them. – Robert Kiyosaki

In the timeless book Rich Dad Poor Dad, Robert Kiyosaki wrote one of the most profound yet straightforward personal finance ideologies I have ever heard. The rich don’t work for money. They make money work for them. In other words, the poor and middle class run at full speed on a hamster wheel from the time they leave school to the time they retire (if they’re lucky). Kiyosaki’s book inspired me to want off the hamster wheel – to make money work for me. Now that I’ve learned what it means to not work for money, I want to help you just the same. In this post, I am going to share the 17 best ideas I know for how to make your money work for you. 

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What Does It Mean for Your Money to Work for You?

Before I dive into 17 ways to make your money work for you, I want first to address what that means. 

Take a moment and think about your life today. Where do you get money to pay the bills? If you’re like most Americans, you have a job that pays you an income every month, which in turn pays your bills.

Or, perhaps you have your own business.

Whatever the case, I am willing to bet that you work day in and day out to make a living. And there’s nothing inherently wrong with that, other than the fact that you may not have the flexibility to do the things you want to do in life because you have to keep working.

So, what do the rich do differently when it comes to money? Simple. They take their money, and they put it into vehicles that can make them more money. Turning money into more money is the secret to becoming wealthy – and achieving financial freedom.

While it may be unrealistic to think that you can stop working anytime soon (I know that’s the case for me), that doesn’t mean you can’t find opportunities to make your money work for you. 

So, if you want to build additional streams of income – money that makes money – this is the guide for you. Let’s jump into 17 ideas on how to make your money work for you. 

1. Track Your Saving, Spending, and Investing

The first step in making your money work for you is to get a thorough understanding of where your money is today, how much you’re spending, and tracking your investments.

Seek first to understand and then work on taking action. 

Your best bet is to use the right tool for each of these jobs.

Tracking Saving & Spending

To track your saving and spending habits, the best way to do that is with a budget. Lucky for you, there are a bunch of After School Finance resources to help you with this topic:

Ultimately, the power of budgeting is that it allows you to direct your spending towards your financial priorities. One of these priorities, amongst many others, can be making your money work for you. 

Tracking Investments

Next, as you work on setting up sources of income that make your money work for you, you’ll want to be able to track what is going on with each of your accounts. Admittedly, I have accounts all over the place. While I have a defined reason for each of them, tracking 10+ accounts manually isn’t easy.

Fundrise

Fundrise is my favorite tool for getting started with real estate investing. It allows you to invest in a diversified portfolio of commercial real estate at low costs and with a great deal of transparency. Check out my full review to see if this tool is right for you!

For tracking all of my accounts, I use a tool called Personal Capital. Personal Capital is a free software tool to track your bank accounts, investments, and more all in one place. Additionally, they have an impressive suite of tools to help with this purpose. 

A comprehensive tracking tool like Personal Capital allows you to set your financial goals and understand the progress you’re making towards your financial priorities. 

Once you’ve got a good handle on the status of your accounts by tracking your saving, spending, and investing, you’re ready to dive into the next 16 action-packed strategies to make your money work for you. 

2. Open a High-Yield Savings Account

The very first step to make your money work for you is maximizing how much you earn on your cash. While holding some cash for living expenses and emergencies is a necessity, cash is a drag because it generally isn’t helping to make you more money.

So, for the cash that you do hold, you might as well try to earn as much interest as possible. The way to do this is to set up a high-yield savings account. A high-yield savings account is one that pays a relatively higher rate of interest (likely much more than a big bank like Chase would pay). 

While there are countless choices, I bank with Allyand I have heard great things about CIT Bank. It’s also worth checking out money market accounts in addition to traditional savings accounts.

Whichever bank you choose to go with, just double-check that it is FDIC insured, so you know your money is safe. 

Yield

Bonus Tip:  Open Multiple Savings Accounts

It may be worth considering whether you should open more than one savings account with your chosen bank. I used to have six savings accounts.

Why? I used separate savings accounts for each of my financial goals. For example, I had an emergency fund account, a travel savings account, an automobile savings account, etc. 

While I no longer do this, because my budgeting app (YNAB) shows me what money I have for each purpose, this can be a great way to separate your money by purpose. 

3. Save Automatically

My next tip is to save money automatically. The money you do not see is the money you do not use.

There are a couple of different ways you can approach automatic savings. First, you can have a set amount of money automatically transferred from your checking account at fixed intervals into your savings.

Second, there are now several services that learn your spending habits and then move spare money from your checking account to your savings. Ally has a feature that does this, and I have been quite happy with it. 

There are dedicated services that do this (like Digit), but I do not recommend paid services for this purpose. You shouldn’t have to pay for any sort of savings account.  

Finally, there are spare change investing apps like Acorns that allow you to invest your spare change, and they’re a great way to get started saving automatically.

Acorns Disclosure

After School Finance (“Affiliate”) is an affiliate of Acorns Advisers, LLC ’s website (“Acorns”). The Affiliate will receive compensation from Acorns if you enter into an advisory relationship or into a paying subscription for advisory services. You will not be charged any fee or incur any additional costs for being referred to Acorns by the Affiliate. The Affiliate may promote and/or may advertise Acorns’s investment adviser services and may offer independent analysis and reviews of Acorns’ services. Acorns and the Affiliate are not under common ownership or otherwise related entities. Additional information about Acorns is contained in its brochure.

4. Open a CD

Next, another way to make your cash do more to work for you is to open a certificate of deposit or CD. The downside to a CD, of course, is that you are tying up your money for a fixed period.

Typically, I use CDs for cases where I need the money in the next one to five years. Anything under a year, it’s probably not worth your while to use a CD, as a savings account will often offer a similar rate. For any financial needs after five years, I invest my money. 

In the one- to five-year sweet spot, however, it’s okay to sacrifice some liquidity, while also gaining the guaranteed return of a CD. To summarize, here is where I typically put my money depending on when I need it:

1 Year or Less:  Savings Account

1 to 5 Years:  Certificate of Deposit

5+ Years:  Invest

If you are worried about shorter-term cash needs, it may also be worth looking into a no-penalty CD.

While CD rates do remain low right now, I have found reasonable rates with Ally and CIT Bank. Additionally, I encourage you to check out Bankrate to see who is offering the best CD rates. 

Certificate of Deposit

5. Build an Emergency Fund

Once you have your short-term savings squared away, start to think about building an emergency fund. I recommend you build up six months of expenses in savings.

Now, you may be asking, how is having an emergency fund making your money work for you? An emergency fund isn’t causing your money to make you money.

While that’s true, an emergency fund does make your money work for you. It offers you protection in the event you hit a financial speedbump. For example, if you lose your job, your emergency fund creates a cushion to fall back on, preventing you from going into credit card debt and lowering your financial stress.

So, yes, in a different way, your emergency fund is working for you. 

6. Use Series I Bonds for Your Emergency Fund

Looking for a unique way to make sure your emergency fund tracks inflation (i.e., the real value of your emergency fund doesn’t decrease over time)?

Check out Series I savings bonds, a unique tool backed by the federal government. Series I savings bonds accrue a fixed rate of interest plus the rate of inflation, so the real value of your investment doesn’t decline.

Learn more about how I use series I savings bonds for my emergency fund.  

7. Pay Down Debt

Next, paying down debt is a guaranteed return on your money. While it doesn’t necessarily generate more cash flow, it does lower your total interest costs. Plus, once you pay off your debt, your monthly cash flow will increase.

When it comes to paying down debt, focus on high-interest-rate debt such as credit cards. While there’s no absolute rule of thumb, any liability with an annual interest rate of 7+% is where you should focus your efforts. It’s not worth prepaying inexpensive debt, such as your mortgage.

The reason I use the “7% rule” is that, historically, investments in the stock market have earned ~7%. So, if your debt costs more than this, chances are you can’t “out-earn” the interest costs. If the debt costs less, you’re better off investing the difference instead of prepaying.

8. Earn Credit Card Points on Your Spending

What if I told you there’s a way to get back money on every single purchase you make? Well, there is. Credit card points are one of my favorite ways to get money back on nearly every purchase I make. 

I have five credit cards (all of which get paid in full every month). Depending on the purchase, I select the card that gives me the highest level of rewards. As an example, if I book travel, I get 3% back on my travel card. If I go to the pharmacy, I use my card that gives me 2% back at drugstores. And when I pay my insurance bill, I use the card that gives me 1.5% back on my premium.

Earning credit card points is exceptionally easy, but it does require you to be strategic. In the first six months of this year, I made over $1,000 in credit card rewards – all on my everyday spending. Check out the three cards I recommend for every wallet to get started.

Credit Card Stack

Bonus Tip:  Cut Your Spending without Cutting Your Purchases

As a bonus tip, I love saving money on things I am buying already. However, there are a handful of bills that seem like they do nothing but go up.

Most recently, I discovered a service called Truebill, which helps negotiate your everyday bills like cable, internet, and cell phone. Since using Truebill, I have saved $885. 

Check out my full Truebill review to see if it’s right for you.

9. House Hack

My next set of tips is about maximizing what you spend on housing costs. One of my favorite ideas is something called house hacking. House hacking is when you buy a multi-family house, like a duplex, live in a part of it, and rent out the rest, effectively allowing you to live for free.

What makes this powerful is you can place a renter that allows you to live for free. Here’s an example. Let’s say you buy a duplex, and the mortgage payment is $1,000 per month. Now, you place a renter in one half of the duplex who pays $1,000 in rent. You live in the other half, and your mortgage payment is covered.

One other alternative is that some people will rent out a spare bedroom in their own house, but obviously, this doesn’t give you the same privacy as a multi-family home.

If you plan to house hack, make sure you do the math before buying, but this is a potent tool worth considering to cut down one of your highest living costs. 

10. Refinance Your Mortgage

Another tip is to take advantage of low mortgage rates and refinance your mortgage. You can take a couple of different options here. You can choose a different term, take cash out of your home equity, etc.

To make sure it makes sense to refinance, do the math on how much interest cost you could be saving.

Check out our guide to determine if refinancing is right for you. 

11. Invest in a 401(k) or IRA

My last seven tips are all about investing money. This section is where you learn how to make your money work exceptionally hard for you because your money starts producing more money.

You can develop passive streams of income, which can both be used to grow your wealth but also to provide a source of income down the road. 

My first tip is to invest in your 401(k) and IRA. The reason is that these tax-advantaged accounts can help you grow additional wealth compared to investing with after-tax dollars. 

Looking for some guidance to get started? Check out these After School Finance guides:

12. Invest Using a Robo-Advisor

My next tip to make your money work for you is to use a robo-advisor. What’s a robo-advisor? It’s a tool that automatically invests your money based on your financial goals and risk tolerance.

Robo-advisors are the best way to invest using a hands-off approach. If you’re looking to get started, there are a couple of robo-advisors that I like.

The first is M1 Finance.

M1 Finance

M1 Finance is a full-featured money management app with a free robo-advisor feature. The best part is, it also functions as a regular brokerage to give you more control over your investments. You can read our comprehensive M1 Finance review to learn more. 

Another alternative is an app called Acorns. Acorns is a “spare change” investing app that allows you to invest in small increments. While you’ll never get rich with Acorns, it is a great way to get started investing with little money

13. Use Index Funds for Stock Investing

My next tip is to invest in stocks using diversified index funds. If you want more control over your portfolio beyond what a robo-advisor offers, this is a great solution.

There are lots of great brokerages you can use, but M1 Finance is the only I like the most.

You can also check out our guide on How to Invest in Mutual Funds

14. Learn to Invest in Bonds

Another way to make your money work for you is to invest in bonds. Bonds will pay you a fixed income in exchange for providing the use of your money. 

I use bond index funds for this purpose, but again, there are lots of options from which to choose.

In the current low-interest-rate environment, this is not my preferred solution, because you frankly don’t earn that much. 

15. Put Your Money to Work in Passive Real Estate

One of my favorite tools to make your money work for you is investing in passive real estate. I invest in a platform called Fundrise, which allows you to buy commercial real estate deals passively, all with as little as $500.

Fundrise

Fundrise has averaged 9+% returns since its inception, and it’s a great way to help build additional cash flow. You can check out my honest Fundrise review to learn what I like, don’t like, and more about Fundrise. 

16. Buy Rental Properties

Another alternative to investing passively in real estate is to invest directly in rental properties. While this does require more work and due diligence upfront, real estate can be a tremendous cash-flowing asset.

If you’re looking for something more turnkey, check out Roofstock. They offer cash-flowing real estate and help you with the entire process. However, make sure you understand the numbers and what you’re buying before you take the plunge. 

17. Consider Peer-to-Peer Lending

Finally, my last idea to make your money work for you is to invest in peer-to-peer lending. Imagine someone is trying to refinance $10,000 in credit card debt. Perhaps a borrower is currently paying 18% interest to their credit card company but could instead refinance for just 8%. Through a peer-to-peer lending platform, that person could receive a $10,000 loan that is funded by 400 investors, who each put up $25. 

In a nutshell, you invest in small slices of a large number of notes (for diversification) and make loans to other people. It’s sort of like being your own bank. 

Lending Club and Prosper are two of the most popular platforms. I have been investing through Lending Club for several years and have been quite happy with the results.

Peer to Peer Lending

How to Make Your Money Work for You

As I mentioned at the start of this post, my goal is not to work for money forever but instead have my money work for me. While I still have a long way to go, I am on the path towards that goal by implementing many of the above ideas.

While there are countless ways to make your money work for you, here is a recap of my 17 favorite ideas.

  1. Track Your Saving, Spending, and Investing
  2. Open a High-Yield Savings Account
  3. Save Automatically
  4. Open a CD
  5. Build an Emergency Fund
  6. Use Series I Bonds for Your Emergency Fund
  7. Pay Down Debt
  8. Earn Credit Card Points on Your Spending
  9. House Hack
  10. Refinance Your Mortgage
  11. Invest in a 401(k) or IRA
  12. Invest Using a Robo-Advisor
  13. Use Index Funds for Stock Investing
  14. Learn to Invest in Bonds
  15. Put Your Money to Work in Passive Real Estate
  16. Buy Rental Properties
  17. Consider Peer-to-Peer Lending

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