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  • Writer's pictureRick Martin

How to Make Money Work for You, so You Can Work Less

When people feel like they are falling behind on their bills and amassing debt on their credit cards, their natural inclination is to work more. They think I need to work more hours or even find another job or side hustle. Putting your head down and grinding out some more hours may not be one of the best ways to earn some extra money. We don't need to work harder; we need to work smarter. I believe the smartest way to earn some serious dough is to make our money work harder - not us. For me, it is all about time freedom, and the more hours you work, the less time you will have. What is the point of earning all that money if you do not have the time (or energy) even to enjoy it? The point of this article is to inspire you to get your money off the couch and start working, so you can begin to work less. If you are constantly doing the daily grind, you will never have the time to stop and smell the roses.

Trading time for money

Trading time for money won't get you rich, and it just isn't healthy. If you are logging all those hours at the office or on your commute, chances are you are not eating right or getting any exercise. We are conditioned in society that if we put in the hard work, we will be rewarded. We do have to work hard, but it is even more important to work smart.

Have you read the book "The Cash Flow Quadrant" by Robert Kiyosaki? The four quadrants are:

Earned income is limited by time, and there are only so many hours in the day. This type of income is most familiar to us as it's what we make when we're trading time to earn a paycheck. Unlike unearned income (passive income), earned income is the highest taxed of the two. Business owners own a system, and while other people work for them, it does require a certain amount of time to make sure those people are performing for them. The only way to increase our wealth without increasing our time is to invest, and passively investing requires even less time.

There are many ways one can get their money working for them, but several of the methods will not be the best use of your time, in my opinion. We will not spend too much time learning how to earn residual income by taking advantage of reward credit cards, creating youtube videos, earning royalties on books or music—investing in a CD that makes you 2%? Next. There is a better way of getting your money working for you and being more productive in the process. It requires a heck of a lot more than a little spare time to create a youtube channel, and ultimately we are trying to make more free time for you while earning a higher rate of return on your investments.

Analyze your costs by creating a budget

Just as it is essential to write down our goals to see them, we need to write down all of our monthly expenses. A first step would be developing an Excel spreadsheet, or even better, Google Sheet, because it is up in the cloud. Here you can create a fixed cost column like your mortgage or rent, childcare, health insurance. Then below that, variable expenses like utilities, gas, and groceries. Further down the column, you create another subcategory, discretionary expenses such as entertainment, dining out, and shopping.

Early on, it is more about saving than earning

Now straight out of the gate, there is no easy way to build up those savings. Initially, I am afraid you will need to keep that job and log some hours, especially if you do not see that bank account grow. In the beginning, it is more important how much money you save as opposed to how much money you make. It would help if you had a chunk of dough to play with, and it would be best if you had several chunks. If you are a high-income earner, but you are out there blowing it on expensive toys and habits, none of your money will be left around to work. It is a good idea to get yourself the best paying job you can, yes, but practice a little frugality, track spending, and by all means, save. But what is the best strategy to save?

Pay yourself first

The best thing I did for my personal finances when I was just starting was paying myself first. It was a great way to set aside money without really missing it. I set up an auto-withdrawal for every paycheck I earned, where ten percent of my pay would go straight into a high-yield savings account. I wasn't intentionally frugal, but I wasn't spending loads of cash, so I would up my "payments" to 20 percent, and my savings grew. If I needed to dip into it for an emergency fund, I could, but I usually kept enough in my checking account for my emergency fund.

Start an emergency fund

No matter how careful you are, there will be unforeseen occurrences that require cash. Consider setting this up in a money market or a high-yield savings account. You're going to want something liquid as you never know when the next emergency will come knocking.

So you have a savings account, now what?

Now that you have a little money saved, how can you start getting a little free cash on top of that money, so it grows? But let's not waste time searching around for higher interest rates at banks or even CDs. It is time to start ramping up your risk tolerance a bit and investing. Although investing takes some education and research, it is a somewhat passive way to build on the income you've earned. There are various ways one can invest their money, and for most starting in the stock market with mutual funds is a lower risk, diversified, set-it-and-forget-it method. Before the birth of the internet, one had to place their funds with a financial advisor working for a large financial institution. Now buying a stock or mutual fund is at your fingertips as you can set up your investment accounts through an online trader like Etrade or TD Ameritrade.

Dollar-Cost Averaging

One thing that can bite us in the butt is trying to time the market. Even though buying low sell high sounds great in theory, unless you want to be watching the stock ticker from dawn until the market closes every day, you may find it challenging to achieve. Warren buffet is a big believer in putting your money into index funds and just letting it roll, but you want to invest in regular intervals and apply what is called dollar-cost averaging. When you are investing regularly, you are consistently buying during the highs and lows. While you may be buying into an index fund that is about to plummet, if you remain consistent, you will be buying back in at that eventual low, smoothing out your curve. You'll be enjoying gains but also buying things on sale, and over time, you will come out ahead.

Retirement Accounts

Retirement accounts have pros and cons. If your employer is offering to match your contributions to your 401k, then you take it. That is a free return. Another significant benefit is having a large tax deferral, which can help you reduce your taxable income and hand over less to Uncle Sam. The tradeoff is when the government attaches many rules, which can limit what you do with those funds and when. You have a large sum that can build, but you cannot tap into it in many cases, which could be a good thing or put you in a bind if you need access to those funds. Also, be aware that nobody ever got rich by solely investing in their IRA or 401k. While the returns are positive, they are average.

In the last several paragraphs, I laid out my method for building up some funds. I did the pay yourself first, and then I started investing into mutual funds and index funds, taking advantage of dollar-cost averaging. I remember the financial gurus telling me, you follow this path, and you will retire early! After about ten years, I took a look at my stock and retirement accounts and realized that my nest egg wasn't going to be enough to get me through my golden years if I was going to keep at this pace. There had to be another way.

Real Estate Saved My Hide

Buying my first house in a major coastal metro was the first peek at creating some serious wealth, and it was my first taste of adding additional cash flow supplementing my salary. I had gone back to school for a career change and wasn't working during that time. Instead of putting that house on the market, I rented it, and the light bulb went on. I could be not working and still have money coming in. I knew right then I needed to build up many different income streams, and I could supplement my salary or even replace it one day. I was getting my first taste of financial stability, and I realized that if I were going to increase my net worth, I would have to increase my real estate investments. I ended up netting $350,000 on the sale of that property, and I knew if I could do that a few more times, I could earn my first million. However, doing that well, consistently, on rental properties is a challenge, and it also requires quite a bit of time.

Rental properties are just one of many real estate strategies. House flipping is another method people pursue but make no mistake; you may be trading in your old job for a new job, as it is very time-intensive and more heavily taxed due to its short-term nature.

A REIT or a Real Estate Investment Trust is another alternative. When investing in a REIT, you're buying stock in a company that invests in commercial real estate, and they can either be private or public. The company will use your capital to invest in hotels, self-storage, retail centers, office buildings, or apartments. It is very passive, but it feels very similar to Mutual Funds, only that you are investing in a different asset class.

What makes real estate investment so special:

Cash flow (build up enough passive cash flow streams, and you'll more than supplement your income)

Appreciation (You don't wait and buy real estate, you buy real estate and wait)

Tax benefits (The federal government rewards people that restore communities)

Leverage (the bank will loan you money to purchase assets, which dramatically increases your cash on cash return. You get to keep the profits while putting less of your own money into the deal)

So this may all sound great, and you may be thinking, I would like all those benefits, but I just don't have the time. It takes a lot of time to start researching markets, meeting with brokers and property managers, and hiring general contractors, much less overseeing the entire process. You may also not like the thought of getting a call about a clogged toilet while enjoying a nice meal with your family. So how does one take advantage of these benefits when one currently has little time and would like their money to earn some good money without exerting too much effort?

The answer is real estate syndication. A real estate syndication is a group investment where funds are pooled together with other investors to purchase a property that's more expensive than any of them could have afforded on their own. So instead of buying several smaller commercial properties individually, the group of people can come together and buy a larger asset. The group of investors is known as the limited partners, and the general partners run the investment itself. The general partners have the expertise to oversee the operation of the asset. The ongoing cash flow and profits at the sale are split amongst all the partners, yielding above-average returns.

It does require a relatively significant amount of capital, but you are most definitely getting that capital to work, and on average, doubling it every five to six years. Once you pull money back out of these opportunities and redeploy, you will start to understand that you are building multiple income streams that ease the financial and physical burden on you.


So it is most definitely a process, but hopefully, I have laid out a blueprint here that you can follow. Paying yourself first is an important concept, so you can begin to build up reserves that you can put to work. Treat your "Benjamins" as your employees that you can put to work, and give you a choice to work less. It would be best if you never gave your money a vacation. It is there to work relentlessly, so it is you that can go on vacation. Make your money work more, so you can work less!

If you are ready to get your money working harder, Let's have a chat and get you started.

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