How to Make More Money

We’re getting closer to the New Year and you know what that means! It’s time to make some resolutions to improve your personal finances next year. Don’t worry; it doesn’t have to be difficult. You might be surprised at how easy it is to make a few small changes that can transform your financial well-being and give you more security. In this article I’ll give you three great ways to make more money next year..

How to Make More Money

There are three basic financial strategies that you can use to make more money in 2011:

1. Increase your income by managing your career more proactively.

2. Earn more interest by managing the money you already have more efficiently.

3. Invest more by refining your spending plan and cutting your expenses.

Those sound pretty generic, so let’s get more specific about each strategy so you can apply them to your situation.

How to Increase Your Income

Even in today’s tough job market, one of the best ways to increase your income is to ask for a well-deserved raise or promotion. You may be working longer hours to cover for laid-off employees and could have picked up some new skills along the way. Compare what you’re making to average salaries or wages in your field and don’t be timid about speaking to your boss if you believe that you should earn more. Discuss what you’ve accomplished for the company and remind your employer about the value you bring due to your education, industry experience, personal connections, or time on the job, for instance.

If discussing a raise with your boss feels a little awkward, just remember how beneficial it can be for your financial future. Here’s what I mean: If you negotiate an additional $3,000 per year, that’s an extra $60,000 over the next 20 years. If you invest the additional income in a retirement account, like a 401(k) or an IRA, and earn 7% on average each year, your raise would swell to $123,000! Having more income also allows you to collect bigger Social Security checks every month after you retire.

When your income is tapped out in your current job, speak to your boss about potential promotional opportunities. If they just don’t exist where you are now, search for a more lucrative position or start hustling on the side at a second job. How about creating a part-time business? Consider what skills you have that other people need, like house painting, computer work, pet sitting, tutoring, music lessons, yard work, writing, shopping, house cleaning, bookkeeping, and so on. Becoming a part-time entrepreneur is a fantastic way to earn more and could even lead to full-time work that you’re really passionate about.

How to Earn More Interest

However, you might be relieved to know that you don’t have to work multiple jobs in order to make more money next year. The second strategy that I mentioned is to earn more interest on the money you already have. For instance, if you have bank accounts that hardly pay any interest, it’s time to make your money work much harder for you. Search for free high-yield checking and savings accounts at sites like depositaccounts.com and checkingfinder.com. If you earn 4% on an account that averages $15,000, you’ll have an extra $600 in your pocket each year. If you invest your earnings for a modest return, it could grow to $25,000 over 20 years.

Another way to earn more interest is to pay less interest! If you’re carrying a balance on a credit card that charges 17% interest, for example, paying it off is just like earning 17% after taxes. So don’t underestimate how beneficial it is to eliminate high-interest debt like credit cards, retail store cards, and payday loans.

How to Invest More

The third strategy to make more money next year is to invest more money. The first step to investing more is to create a budget (or what I prefer to call a spending plan). In my new book, Money Girl’s Smart Moves to Grow Rich, I tell you exactly how to set up a realistic spending plan so you know where your money is going and can carve out a bigger chunk of your discretionary income to set aside for the future. You’ll also learn the right kinds of investments to make based on your age and long-term financial goals.

I recommend using a free online financial application like mint.com to easily import and track your expenses from accounts at banks and credit card companies. Mint allows you to set a budget for each of your spending categories—like groceries, dining out, clothes, and utilities—and to get spending alerts so you always stay on track.

A smart move is to invest at least 15% of your income for the future—so make a resolution to pump up your savings rate. Even boosting contributions to a retirement account by 1% each year is a savvy habit that will really pay off over time. If you use each of the three strategies that I discussed to earn more income, to earn more interest, and to invest more discretionary income, you’ll have what it takes to really get ahead and build serious wealth for your future financial security.

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