How to Make Your Money Work for You


If you have some spare cash, the first thing to remember is that your cash will earn a lot less for you in a savings account than if you use it to pay off some of your borrowing. This is because you will be paying a much higher interest rate on your borrowing than you will be receiving on your savings. However, it is always wise to keep some cash handy for emergencies – experts recommend that you should keep at least three months’ worth of your salary in an instant access savings account, just in case. While you have a debt situation this will probably not be possible, and you should make paying off your debts a priority, especially if you are paying a high rate of interest on them. Eventually, however, when you have knocked your finances into shape, your next aim should be to set aside some cash to cover any emergencies.

When you do have some spare cash, you should always shop around for the best place to put it. Make sure you earn the highest possible interest for your money by researching the market carefully and finding the very best deals.

At the very least, you should make sure that your money is earning more than the current rate of inflation. If the rate of inflation is, say, 2.5 per cent, you should make sure your money is at least earning this amount net (after tax) each year, otherwise inflation will be eating into your nest egg and you will, in effect, be losing money. This is why experts urge you not to store your money under your bed – apart from the obvious security risk, your money will gradually disappear through the effects of inflation.

It is not within the scope of this article to suggest particular investments. Market conditions are always changing, and the best investments today are not necessarily the best investments tomorrow.

Stocks and shares, for example, have traditionally been regarded as the best performing investments over the last few decades, but recent falls in stock-market returns have driven investors into other forms of investment, such as property. The best course of action, as always, is to do your own research, and consult an independent financial adviser who will be able to suggest an investment strategy to suit your personal needs.

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About the Author: Marie Mayle is a contributor to the MegaHowTo team, writer, and entrepreneur based in California USA. She holds a degree in Business Administration. She loves to write about business and finance issues and how to tackle them.

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