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6 Steps to Make Your Financial Assets Work Harder in 2019

Six ways to make your money work just as hard as you do

You work your ass off every day while your money just sits there. Why not make your money work just as hard as you do?

I want you to make an early New Year’s resolution. Right now, resolve to make your financial assets WORK FOR YOU.

How will you accomplish this goal? Simply change the way you view wealth. Instead of focusing on what you already have, look at what you can do with your money and assets.

Too often, we think the only way to make more money is to work overtime at work or take on a second job for a few months of the year. That’s not the only way to increase your net worth.

If you like making your money as valuable as possible, these tips might be the solution to your financial resolution.

Use Assets to Make Extra Debt Payments

If you currently have any personal loan or credit card debt, your interest rate on these payments can be as low as 10% or as high as 36%. You won’t earn continual passive income from this suggestion, but it can be more lucrative than your average stock or mutual fund investment in the short-term.

By zeroing in on these high-interest debts and making extra payments, you will save hundreds or even thousands of dollars in interest charges.

On your next credit card statement, look at the tables that show how much interest you will pay on your current balance if you only make the minimum monthly payment. Your current balance of $2,500 will cost you $5,400 if you only make the minimum $25 monthly payment for the next 13 years.

The sooner you pay off your consumer debt, the sooner you have more money to save or invest and earn passive income. If you haven’t realized it yet, passive income is the secret to being able to retire early or being able to afford a career change.

Avoid Bad Debt but Use Good Debt as a Financial Tool

If you don’t currently have any consumer debt with an interest rate of at least 5%, avoid borrowing money except as a financial tool.

how to make financial assets work harder 2018Anytime you have a monthly payment, that’s money you can’t save or invest for the future. Instead, it’s being used to pay for a purchase you made in the past that probably won’t make you any money in the future.

Here’s what to do instead. Buy used from Craigslist, wait until you have enough cash to make the purchase, or keep what you have until it’s unrepairable, so you have more time to shop and save for a good deal.

Even before you take on good debt like a business loan, home mortgage, or student loans, borrow as little as possible. Doing so will keep your monthly payment and interest charges as low as possible which means your net worth can begin growing sooner.

Don’t Oversize Your Emergency Fund

At one point in time, I could survive on my emergency fund for about 15 months. While the thought of being able to take a 15-month work sabbatical was nice, my money wasn’t working as hard as it could have.

Most financial experts will tell you to save no more than six months in your emergency fund at one time. While my money was in an interest-bearing savings account, the extra nine months of living expenses could have been invested and generated even more passive income.

All I needed to do was earn more than 1% to have those assets work harder than they were in my emergency fund. By investing my extra cash, I wouldn’t have immediate access to them, but I still would have had ample time to exchange them for cash because my emergency fund was fully funded.

If you have extra cash sitting around, make sure it’s at least earning interest. For any cash you don’t need immediate access to, consider investing it in the stock market, P2P loans, or another investment vehicle with a better potential yield.

Sell Depreciating Assets

Another step I took to increase our cash flow was selling our unused depreciating assets and investing the profits.

My largest “flip” was selling my $20,000 car and buying a $3,000 vehicle instead that still gets me to work trouble-free. I used part of the $17,000 cash difference to make extra debt payments and invested the other portion. If I had waited another year or two, the profit margin would have been less because cars almost always continue to lose value.

Maybe you can downgrade vehicles, declutter your house, or even trim your monthly spending. Even if you only put the extra money in a savings account until you figure out a better use for it, this is a simple tactic to boost your long-term net worth because your cash is in an appreciating asset.

Invest Your Financial Assets to Outpace Inflation

Unless you receive a salary increase of at least 3% each year, your salary is actually decreasing because of inflation. Right off the bat in 2019, you may have to “work harder” to make up for the difference.

That’s why you need to invest.

Investing is the easiest way to outpace inflation consistently. Since 1928, the S&P 500 has returned 7% on average each year after you include inflation even though there have been several years of negative returns in this same period.

You can’t invest your entire paycheck into the market, but you do have the advantage of earning compound interest as you earn interest on your annual dividends. Consistent investing is how you can retire as a millionaire even by earning a modest income.

Start a Business and Create More Financial Assets

This last idea might not necessarily turn a profit in 2019, but it can produce steady and stable returns in the future. If you’re like me, you want to invest a portion of your time and money in tangible assets that won’t fluctuate in value like stock investments.

If you crave multiple passive income streams, you should consider creating your own business that provides a service people will always demand. Whether you buy local rental properties (people always need a place live) or start a blog that earns revenue from affiliate links and internet ads, you can earn consistent passive income.

Depending on which business idea you run with, you may need to lay down some initial capital until you begin receiving a monthly income to recoup the upfront startup costs. That’s why it’s so important to avoid bad debt because you are paying somebody else’s mortgage with those interest payments instead of investing that money in your own long-term financial goals.

Whether this venture only remains a part-time hustle or eventually replaces your full-time job, you can earn residual income for life by owning your own business. And, you’re not affected by the ups and downs of the stock market as people will always be spending money on key items, even if the company stock isn’t appreciating.

There are many different ways you can make your financial assets work harder. It all starts with a few ideas and a look at how you’re spending your money now. Sometimes, you just have to take a step back and look at what needs to change first. The sooner you do it, the better!

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