Make Your Money Work For You

Hey pals! Kavita here - financial coach, ex-farmer wannabe, and resident volcano enthusiast at Money Positive. Folks come to us from about 1000 different lifestyles, with 1000 different money problems, and 4000 different questions. However, amidst that variety, one question comes up a LOT, especially these days: How do I make my money work for me?

Don’t worry, my blog-reading friends. We at MP have the secret answer to this ever-recurring question. In short: making your money ‘work’ for you is the wrong question.

(I know, I know. I sound like I’m full of it. But hear/read me out!)

So, yes. Sometimes, dollars that are just sitting in your average savings account can accumulate more interest, and therefore ‘work’, if you strategically move them out of said savings account. However, that interest on your savings dollars isn’t the icing on the cake, much less the cake itself. It’s more like the chocolate coating on the cherry on the icing on the cake. In order to get the chocolate right, you first need the cherry, but to have the cherry, you need the icing, and to have the icing, you need the cake. Let’s start with the cake before jumping to the chocolate.

How the heck does this cake metaphor relate to your money? Upping the interest on your savings (chocolate) is less important than having a clear and realistic plan for putting more dollars into that account in the first place (cake). It’s tempting - and easy - to focus on things like credit card miles, which justify spontaneous spending. Spending more on your card may give you more miles, which are sugary goodness molecules that allow you to indulge yourself. I’m all for indulging yourself - but with a plan. Those miles are not free because the interest on your card is most likely not low. Step one is making sure you are able to keep that interest in check by making your minimum payments. Once you’re able to do that, then we think to the future of when you are able to remove that debt because high interest makes credit card debt one of the most debilitating kinds. Once that is planned out, then we can talk miles - but not a second before.

Related to this question, of course, is whether to invest your savings in bonds, the stock market, or the like. Obviously, the COVID economy is a weird and confusing thing that much more intelligent people than I am can really understand. You have probably heard that interest rates are low, and thus far that cuts across the board. In short? A high-yield savings account isn’t going to be much different than other options. As of this moment, you are not necessarily missing out on any surefire get-rich strategies. In all likelihood, there aren’t any surefire get-rich strategies. While a bummer (sorry, y’all), it does mean your path is clear: stick to your plan. Stow away however much you can into savings, and do so responsibly. You can still eat more than rice and beans and indulge in your favorite lattes, but do so in line with your plan. The rest is just gravy (or chocolate).

In other words, please, please, PLEASE don’t be this guy:

You got this ✊. Stay Money Positive!

-Kavita