Home Business Pay Yourself First: Ways to Invest In Yourself to Maximize Future Earnings

Pay Yourself First: Ways to Invest In Yourself to Maximize Future Earnings

by Olufisayo
Ways to Invest In Yourself

One of the most common adages when it comes to personal finance is to “pay yourself first.” Put in its simplest terms, paying yourself first means investing in yourself and your savings goals prior to spending any other money, even on bills or your rent or mortgage.

Doing this sort of saving automatically is a great way to ensure that you’re meeting your financial responsibilities since you’ll be adjusting to your lower-income similarly to how you already deal with other pre-tax deductions.

While saving in a traditional savings account is a good way to keep money that you may need for emergencies safe, you likely aren’t going to gain a lot of money with low-interest rate savings accounts. That’s why it’s very important to learn personal finance from reputable sources, so you can really start increasing your budget with smart financial decisions.

As such, it’s a good idea to think about different options that may be available to you if you really want to maximize the impact of paying yourself first.

Here are just a few options to think about if you want to make your money work for you instead of always working for your money.

Invest in mutual funds and other stocks.

One of the best ways to make your money work for you is by taking advantage of a concept called compounded interest. Put in its simplest terms, compound interest takes into consideration the principal and interest rates in your account, meaning that you’re making money on the money as it accrues interest. The stock market takes this to a whole new level, as interest rates allow your money to grow exponentially.

For example, if you have $1,000 invested in the stock market and you earn a seven percent return in a year, that means you now have $1,070. If you earn another seven percent the next year, however, that interest rate takes into account your new amount and not just the principal.

That means that you’re now looking at $1,144.90 instead of only earning another $70. Over many years, this really adds up, especially if you’re continuing to invest in mutual funds and other stocks.

If all of this math has you concerned, don’t fret. There are plenty of ways to handle your stock portfolio without having to be super hands-on or check the markets each morning and afternoon.

An online portfolio rebalancing tool is perfect for anyone interested in automating the rebalancing of their stock portfolio without breaking a sweat.

Best of all, online rebalancing tools like Passiv let you get email updates and access analytics to make sure that your allocations are going to help you achieve future goals, such as retirement or your kids’ college funds.

Being able to have the peace of mind that your greatest wealth-building asset, the stock market, and compound interest, is being properly managed can be exactly what you need to really help out your future self.

Invest in real estate.

Another area you may want to do some investing in is the real estate market. You should only invest in real estate if you’re in good financial standing and have your own debts and mortgage under control; however, if you are financially able to set some of your “pay yourself first” money aside getting into the real estate game is an excellent option for making some big money moves.

If you’re really looking to get the most from your property investments, consider buying some land and then taking a look at luxury home builders in Easton, PA, or wherever it is you’ve just purchased land.

While this is certainly a more expensive route to take than the traditional strategy of purchasing a home and then renting it out to others, flipping land can be an incredibly lucrative way to leverage your assets and continue building wealth.

Related Articles