Everyone has a different financial situation, but there is one thing almost all of us have in common. No matter who you are, how to grow your money is probably a question at the top of your mind.
What key steps should you be taking to grow your money? Here, we’re not going to tell you how to make your money grow fast or how to get rich quickly. Instead, we’re going to give practical tips that actually work to help you build wealth over time.
If you want to grow your money, do you have to follow these tips? Of course not! But if you really want to see your wealth rise, try to incorporate at least some of these tips into your financial plans.
If you’ve ever thought something like, “I want to learn how to grow my money, but I don’t know where to start,” you’ve come to the right place. Let’s dive into the best tips to show you how to make your money grow!
1. Set up an emergency fund
Before you even begin to think about how to grow your money, you need to think about your savings. Specifically, about setting up an emergency savings account.
An emergency savings account is a fund where you stash cash away for the unexpected. Whether it’s an unplanned medical procedure, a visit to the vet, or any number of emergencies, those costs can start to add up.
Having an emergency fund is a crucial step toward growing your money. Because when (not if) an emergency happens, you’ll want to have money set aside to tap into.
This way, you will not have to rely on a credit card or high-interest rate personal loan if something happens. By avoiding debt, you’ll be one step closer to growing your money.
Once you have your emergency fund set up, one of the best ways to maximize its savings potential is to put that money in an interest-bearing account. A high-yield savings account is a liquid investment vehicle, meaning you’ll be able to withdraw the cash when you need it.
Plus, you will earn more interest on your money in this type of account than in a regular savings account or checking account, making it a win-win for savings and growth.
2. Establish financial goals
It isn’t easy to fulfill your dreams if you don’t know what you want. Similarly, it’s difficult to achieve your financial goals if you don’t have something to work toward. If your goal is to grow your money, it helps to know precisely why you want to grow it.
What are your financial goals? Consider your needs and what you want to work toward. Do you want to set aside money for a down payment for a house? Are you saving to start a business? A travel fund? Education for your children? Retirement?
All of these goals (and more) are common things that people say they want, but not many take the time to sit down and really lay them out. When you pinpoint exactly what you want your money for, you’ll be in a better mindset to put the tools in place to help it grow.
3. Change your mindset
Speaking of mindset, once you know your goals, it’s time to level up your money mindset. First, determine what is blocking you from fulfilling your money goals. Fear is one of the major blocks you might have when it comes to figuring out how to grow your money.
Fear is a totally understandable feeling when you are new to something, like so many are to personal finance. One of the best ways to combat fear is through education. Clever Girl Finance’s completely free “Build a solid foundation” bundle is a great place to start.
After you’ve educated yourself on the topic you fear, you’ll still have to push through to get started. Once you take that first step, though, you’ll see that none of these financial topics are that scary after all.
Another mindset shift you might have to make? Expecting growth to happen overnight. We hear all of the get-rich-quick stories, but that’s unlikely to happen. If you expect to learn how to make your money grow fast, you aren’t looking for the right thing.
Patience is the key to growth. Understand that growing your wealth will take time. Little by little, you’ll see progress and, eventually, your money will grow.
4. Set and stick to a budget
Knowing exactly how much money you earn and exactly how much you spend is one of the keys to financial growth. The best way to do that is by setting and sticking to a budget.
If you’ve tried budgeting before without much success, try a new approach. There are even special ways to budget when you have an irregular income if you are budgeting with a partner, and if budgeting hasn’t worked for you in the past.
Being in control of your money starts with understanding what you do with it. Once you know this, you can begin to work toward other goals, like saving, paying off debt, and investing.
5. Pay off your debt
With debt hanging over your head (and possibly increasing monthly), it can be hard to imagine how you could possibly grow your money. But it absolutely can be done. The first step is to come up with a plan to pay off your debt.
Loans are important financial tools that help us accomplish all kinds of things, like getting an education or paying for a house. However, high-interest-rate loans can lead to all sorts of unnecessary costs.
In fact, it’s estimated that the average American will spend over $160,000 in interest payments alone over the course of their lifetime.
By paying off your debt, you’ll reduce the amount of money you spend on interest payments and have more money to use toward making your money grow, like investing in the market or investing in yourself.
The best thing about coming up with a plan to pay off your debt? With the right strategy in place, you can pay off debt and save and invest, all at the same time. Paying off debt doesn’t have to come at the expense of growing your money.
6. Earn more
If you really want to grow your money, earning more is one of the best approaches to take. There are so many ways to earn more, including:
How to grow your money by asking for more
Are you making what you deserve? Chances are, you are underpaid. Women earn just 84% of what men earn, so the gender pay gap is, unfortunately, still very much here.
Asking for a raise at work, while difficult for some, is one of the most straightforward ways to grow your money. With a raise, you’ll have excess money you can use to pay off debt, invest, or otherwise grow.
How to grow your money by changing your job or career
If asking for a raise isn’t going to cut it, it might be time to change jobs. Job hopping or even career switching can offer a large bump in pay. Compared to small incremental raises at a company, it might be worth it to take the leap and try something new.
How to grow your money by starting a side hustle
Don’t forget about the power of the side hustle to increase your income. Whether you want to eventually quit your job and go full-in on your own business, or you want to make some extra income on the side, a side hustle might be right for you. It’s one of the best ways to invest in yourself and grow your wealth.
7. Invest, invest, invest!
Lastly, if you want to see your money grow astronomically over time, the combination of patience, investing and a long-term timeline is the answer. For some, investing might sound intimidating or even scary, but it doesn’t have to be.
Clever Girl Finance’s book, Learn How Investing Works, Grow Your Money, is a great place to start to learn how to grow your money with various investment assets.
Once you learn the basics of investing, you’ll see that you don’t have to be a billionaire to invest. In fact, you can invest with as little as $500! Here are some ways you can start investing today:
How to grow your money with retirement investment accounts
One of the fundamental principles of investing is that the longer you leave your investments alone, the more they will grow. This happens from the power of compounding, appreciation, and earning dividends. This is why your retirement accounts are one of the best places to begin investing.
You’ll put money into these accounts and essentially leave them alone to grow until you are ready to withdraw from them in many years.
While there are multiple types of retirement accounts, depending on your employment status, here are three of the most common ones:
401(k)
This is an employer-sponsored account. You contribute a portion of your pre-tax income, and, sometimes, your employer “matches” that amount and contributes to the account as well. Be sure to take advantage of the employer match program because it’s free money for you!
Roth IRA
Contributions made to a Roth IRA are made post-tax, meaning you are taxed today but not upon withdrawal. The benefit to this type of account is that the earnings on your contributions are not taxed when you withdraw.
Traditional IRA
Contributions made to a Traditional IRA are made pre-tax. Like a 401(k), this means that you will not pay taxes today on this amount. Instead, they are taxed upon withdrawal during retirement.
Index funds and ETFs
If you are ready to invest beyond retirement, index funds and exchange-traded funds (ETFs) are both great options. Index funds and ETFs are an aggregation of securities in the stock market. They track an underlying index rather than one stock.
Both of these types of funds have low fees and historically perform well over time, making them appealingoptions for long-term investors.
How to grow your money with other investment vehicles
If you want to dive even further into investing, there are other vehicles that might work for you, depending on your situation.
For example, if you are saving for a child’s college education, a 529 plan would be a great option. (Find out is a 529 plan worth it?) If you’re looking for a tax-efficient way to pay for medical expenses, a health savings account (HSA) would be something to look into.
You might also want to consider real estate investments or investing in Real Estate Investment Trusts (REITs).
The bottom line is that there are various ways to invest, and educating yourself on what best works for you will certainly help your money grow over time.
Keep in mind that when it comes to investing, it’s important to have broad diversification to hedge against volatility.
When it comes to how to grow your money, it isn’t as complicated as you might have thought!
The sooner you learn how to make your money grow, the greater the growth you’ll see. Unfortunately, “how to grow my money” is not a course many of us were offered in school.
Luckily, though, it’s never too late to learn how to make your money grow fast. Incorporate some of these tips and see for yourself just how these practices can transform your finances over time!
Learn more about growing your money with our completely free “How investing works” bundle! Don’t forget to subscribe to the Clever Girls Know podcast and YouTube channel for more great tips on how to make your money grow fast!
