In a world where costs are continuing to rise each day, every penny that’s spent on a day to day basis is more important than ever. Money has never needed to work as hard as it does right now, with US household debt reaching $1.7 trillion in December 2022. With this in mind, we are going to explore 5 ways in which spending your money can allow you to earn it back.
5 Easy Ways To Make Your Money Go Further
1. Investing In Real Estate
Real estate is a huge area for growth of capital, with US house prices growing by 8.8% in the final quarter of 2022, with an average year on year growth rate of 5.4% since March 1992. What this means is that if you were to buy a home now at $100,000, in one year’s time, based on the average home price growth rate, that home would be worth $105,400. By investing your money into that property, you would make $5,400 in that year just by holding onto it.
In order to purchase a property, you normally require at least a 20% downpayment, which would be $20,000 in the above example. A bank would then lend you the rest of the amount, based on your credit score, employment, income and location. This is one example of how you can grow your income each year by spending your money wisely.
2. Investing In The Stock Market
Investing in the stock market is another way that you can make your money go further. As long as you are prepared that your investment can go up or down, it is a relatively safe place to put your money for the long term. The S&P 500, one of the most well known funds, in the past 5 years gained 54.51%, which averages roughly 11% a year if you were to have invested in it 5 years ago.
What this means in principle, is that if you had invested $10,000 into the S&P 500 in 2018, and never added any more capital, that would now be worth approximately $15,451. While this seems like a no-brainer, stocks and shares can go both up and down just like any other market, and in the past year, the S&P 500 has actually fallen by 6.7%.
3. Investing In A Business
If you are looking to find a way to make an infinite return on your money, investing in and starting a physical business is one place to look. For example, if you started a lawn mowing business, all you would need to get is a lawnmower, which may cost in the region of $200 to $300. Each lawn you mow could probably earn on average $40, so you would need to mow 8 lawns to make all of your initial investment back.
Anything on top of that is pure profit which would go directly into your back pocket. This would certainly be a return on investment that could make you lots of dollars going forward.
4. Investing In Yourself
The same goes for investing in a skill for yourself. For example, a course to become a lifeguard may cost $100, but if you can go from earning $6 an hour to $12 an hour by completing this course, you only need to work 17 extra hours and you have made the difference back, plus an extra $6 an hour for the future. If you do have money available, this is a prime example of how money spent is money earnt.
5. Lending Money To Family Or Friends
If a friend or family member was in need of money urgently, and couldn’t get a traditional loan from the bank, they would have to go down the alternative route of taking out a payday loan or installment loan, which would have significant interest rates, and a negative impact on their credit score if the loan couldn’t be repaid back in full and on time.
Many people resort to borrowing money from their friends or family as it is a way to instant cash, and there is less risk to the individual. However, some people who allow this to happen, will still write up some sort of contract, and even charge interest to the family member or friend.
If someone was to want to borrow $1000 from you, and you were to charge them 5% interest, they would have to pay you back $1050, but comparing that to the likes of a payday loan, that would be a significant saving to them and something they would most likely be happy to agree on. Of course you do not have to charge interest if this situation arises, but this article is all about how money spent is money earnt and this is a way that you can accomplish this.
In conclusion, spending money doesn’t always mean that the money is gone forever. If money is spent correctly it can be a very smart financial decision that can lead to returns on your investments for many years to come.