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Earning Easy Money on Your Extra Funds

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Earning Easy Money on Your Extra Funds

Everyone knows that one of the most important principles of personal finance is to build up your savings in order to have extra money on hand. However, they don’t always tell you what to do with those funds once you have them. For that reason, all too many of us let our checking accounts get fat when our funds could be better used elsewhere.

Don’t let your money just sit there—put it to good use! Here are a few ways you can make some extra money from your savings:

Online bank accounts, CDs, and money markets

If you’re like many people, odds are you simply keep your extra money in a traditional savings account. That’s a good start, but unfortunately the interest rates that most big banks offer are minuscule at best. In fact, several major intuitions pay as little as .01%. Luckily there are other options, and one of the best places to start looking is the Internet.

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Since online banks don’t have to deal with many of the costs associated with brick and mortar branches, they typically offer much higher interest rates to their customers. For example, online institutions such as Discover Bank, Ally, Synchrony and others offer savings accounts with interest rates as high as 1%. Additionally, many online banks provide other options like certificates of deposit (CDs) and money markets that can also earn you a return on your money. Both products are somewhat similar to savings accounts but have their own pros and cons.

Starting with CDs, the biggest difference between this option and a regular savings account is how accessible your money is. CDs allow you to deposit money for a set period of time—ranging from one month to 10 years—in order to earn what is typically a higher interest rate. In most cases, the longer the terms, the better the rate. Of course, if you absolutely need the money you’ve deposited, there is a way to get it out. However, you will typically be assessed a penalty for doing so, amounting to a few months worth of the interest you’d collected.

As for money market accounts, they could almost be compared to a savings/checking hybrid. That’s because some banks will allow you to write checks against your money market balance, or perhaps even use a debit card for the account. The downside is that these types of accounts typically require a much higher initial deposit, as well as daily balance requirements you’ll need to maintain in order to avoid penalty. With that in mind, this is really only an option for those with a large chunk of extra cash to stash.

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While it might seem odd to put your money into a bank you can’t actually visit, technology is making it easier to live without physical banks. Many of the aforementioned online banks offer mobile apps and other conveniences—such as partnerships with ATM providers—to make accessing your money easier. However, it’s important to note that there are usually limitations on online accounts, including the number of transactions you can make per month. Lastly, be sure to check that the online bank you go with is FDIC-insured just in case.

Dabbling in investing with FinTech

In terms of passively earning on your money, the 1%+ you can get from online savings accounts, CDs, and money markets is pretty great. On the other hand, if you want a potentially bigger reward and are willing to take a few risks, there are a number of ways to get started in the world of investing. Although that might sound intimidating to many, today there are several tools and platforms from financial technology (mashed together to form the incredibly cool sounding term “FinTech”) companies that not only make investing easier, but also offer new ways to make money.

One prime example of this trend is the mobile app Acorns. Basically, this application links to your debit and credit cards to “round up” your purchases to the nearest dollar and invest the change. What’s also cool is that you can adjust your settings to choose whether you want to be more conservative or aggressive with your investments.

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Another growing FinTech invention is peer to peer (P2P) lending. P2P is actually strikingly similar to crowdfunding platforms like Kickstarter and Indiegogo that you’re likely already familiar with, except that sites like Prosper and Lending Club help borrowers in need of loans. Simply put, approved borrowers can have their loans funded by investors, who then earn interest on the loan.

As investing in peer to peer lending has evolved new tools that help to manage the process, such as Lending Robot, which help to automate your loan investments. The peer to peer platforms themselves are also rolling out tools to manage investments. As these tools gain adoption, investing in peer to peer loans will likely become a more mainstream practice to help diversify investment portfolios. That said, you can still get started today with investing as little as $25 in individual loans.

Interestingly, companies, such as Able Lending, are now combining P2P and crowdfunding so that friends and family can lend money more formally for startup businesses. For that reason and others, it’s worth keeping an eye on the FinTech sector for possible investment opportunities in the future.

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When it comes to building your savings, there are many places to put your money. Whether your prefer passively earning from online savings accounts or taking on some risk by trying your hand at investing, it’s often worth exploring your options and ensuring that your money is put to work earning you even more.

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Last Updated on July 20, 2021

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

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Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Have you ever considered your life now, and how it would be if you had more time to spend with your family and less worries about money?

Nowadays, financial stress is one of the most troublesome weights in life. If you’ve ever encountered financial stress, you know the difficulty of not having enough income to pay your obligations or bills.

Many people say that money is not the ultimate goal of life. While that’s true, money certainly plays a very significant role. The meaning of financial freedom changes with the different phases of our life, but ultimately, it is something that many people strive for.

In this article, we’ll explain how to capture that financial freedom you’ve been looking for. Read on to learn the secrets to financial freedom.

Break Free of Your Finances

Financial freedom is about having a constant flow of cash from your assets to cover all your regular needs.

When you are not worried about your income, or living paycheck to paycheck, you gain a great sense of freedom. It’s the freedom to be obtain and do what you truly need to make your way through everyday life.

Gaining financial freedom, though, is a process of growth, making small improvements and gaining emotional strength.

Though it seems hard to believe, it is really very simple to get financial freedom.

To do so, you simply need to make sure that your assets exceed your liabilities. In other words, you’ll need to find the sweet-spot where your residuals meet or surpass your expenses. This is something that you can achieve with the proper plan.

While not every person will accomplish financial freedom, the potential for anyone to do so is certainly there. Anyone can achieve this success, regardless of their income level.

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Outlined below are 9 secrets that will help you in your goals of achieving financial freedom.

1. Stop Unnecessary Spending

We often spend money inwardly, instead of objectively.

For example, you may spend when you’re anxious, depressed, restless, exhausted, from fear of missing out, or to please others. This is a very unhealthy way to handle your finances.

To stop this habitual spending, log down all your spending over the course of a month.

Just as some people keep a food diary, keep an expense diary. Remember not to just write down how much and what you spent the money on, also include the circumstances of why you spent the money. Was it an impulse buy at the checkout line or was it something you planned to purchase?

This increased self-awareness could enable you to avoid triggering situations in the future when you are considering an impulse buy.

2. Plan a Monthly Budget

This is a great opportunity to get serious.

Take a seat with your spouse or partner and make a monthly budget based on your income, not your expenses. You are never again going to spend more cash then you have on hand.

Overspending is the thing that led you to more financial obligations. Make sure you decide every month what is coming in and what will be going out and stick to that budget… no matter what.

3. Cut-up Credit Cards

Perhaps you are the type of person who always pays your credit card balance in full before the end of your billing cycle, and enjoys the reward points you gain. If this is the case, then you’re already way ahead of the game.

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If not, you may want to consider ridding your life of the burden that credit cards bring.

Many cards have strategies set up so that if you make a certain number of late payments, they will raise your interest rate much higher. This can really add up in the long run and you won’t be doing your financial situation any favors. If you’re prone to late payments or have a large balance due on your cards, cut them up!

Without proper self control on credit card spending and payments, you are basically throwing your money away. To ensure that you have better control over your spending, use only cash or debit for all future purchases (and don’t forget to pay at least your minimum payment on your cut-up cards each month!).

4. Increase Savings

There is no doubt that for a comfortable retirement you must accumulate satisfactory savings throughout your working life.

It’s good practice to save up to 15% of your income.

Start with your workplace 401(k), if you have one. If not, a Roth IRA (if you are eligible) or a traditional IRA (if you are not eligible for the Roth) are the next logical steps.

Increase in longevity means you might be able to look forward to 25 to 30 years in retirement, or possibly even significantly more. Investing now in good retirement plans will ensure that you have a guaranteed a stable monthly income when the time comes to stop working. [1]

5. Invest Wisely

Consider investing in funds.

Specifically, you will gain higher returns if you invest in different types of mutual funds such as Debt funds, Equity funds and Hybrid funds with a proper balance, although it absolutely relies on your personal preferences and sense of risk taking.

To get the most of these benefits, make sure you are investing in a variety of assets. Another resource of investing in mutual funds is SIP (Systematic Investment Plan) where you invest some money every month in funds. SIP works by averaging the per unit price of the stock.

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Mutual fund investors are aware of the benefits of an SIP (Systematic Investment Plan). For one, it is the most secure way to invest in equity mutual plans so that wealth is created over a long period of time. This plan also helps you to gain a better sense of financial discipline, which will come in handy in all your financial endeavors.

6. Invest in Gold

There isn’t really a better way to invest in gold than to have the physical gold itself in your possession.

You can purchase gold coins and bars from mints as well as from coin dealers and other private sellers.

Another way to invest in gold is through ETFs (Exchange Traded Funds).

These are is similar to mutual funds but they are exclusively investments of gold. ETFs are great because they offer more liquidity; the ETF owns the actual physical gold, stores it, and retains the value of the shares. These shares can then be bought and sold in the stock market, and one big benefit is that the transaction costs of gold ETFs are much lower than the that of physical gold.

With its consistently-increasing demand, investment in gold can be very wise long-term investment to make.

7. Stash Emergency Funds

Whether it’s a cash gift or a work bonus, always try to save any extra money that comes your way rather than making unneeded purchases.

If you get paid every other week, you’ll get an “extra” paycheck (three rather than the usual two) twice a year. Either save those paychecks towards your emergency funds or utilize the money to pay down other obligations, such as loans, credit cards or other debts.

Make it hard to get your cash.

Put your savings in an alternate bank, maybe an online bank that forces you to delay for several business days before transferred money hits your regular bank account.

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8. Find Fabulous Mentors

Find a mentor, such as a friend or family member, who has exceptional control over their finances and pay attention to everything they do.

If you do not have any friends or family that are enjoying financial freedom, then find a mentor online! There are numerous blogs and guru websites featuring the advice of many people who have reached financial freedom, and they exist primarily to let you in on how to achieve it for yourself.

There are also plentiful forums available that share tips and tricks on how to best achieve financial freedom. Read as much as you can and start changing your habits for the better.

9. Be Extra Patient

Patience is the key of financial success.

Being patient can be quite tough, especially when you’re struggling with your finances, but having faith is worth it. You’ll continuously be on the right track if you are taking the proper steps above.

So don’t be discouraged, even if you are only saving a few dollars a month; it all adds up. Within just a few years you’ll look back proudly at your accomplishments and be glad that you had the patience to get there.

Financial Freedom for All

Anyone can achieve financial freedom, regardless of their financial circumstance.

Use the tips provided above to get yourself on the track to financial freedom and toss your monetary concerns out the window. If you wish to achieve a life with financial freedom for yourself and your family then you must adopt a disciplined approach towards your finances.

Following the simple secrets above is a great start to making your money work for you, so you can work less and live more!

Featured photo credit: rawpixel via unsplash.com

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Reference

[1] Hartford Gold Group: IRA Retirement Accounts

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