Everyone knows the best way to make money is to let your money work for you.

But what does that actually mean?

How can you make it happen?

And how much money do you need before you can get it to work for you?

If you want to know the answers to these questions and a whole lot more, keep reading.

We're going to show you how to make your money work for you… guaranteed.

Let's get started.

1. Talk To Someone With A Successful Financial History
No matter what your financial situation looks like, the first thing you should do is identify someone who has done well with their finances and spend some time asking questions.

It's possible a financial planner might fit the bill here, but the reality is that financial planners are not incentivized to give you good financial advice, and while some take their fiduciary duty seriously and will point you in the right direction, many will give you poor advice in an attempt to make money off of you.

You will learn a lot more by talking with someone in your network who has done well for themselves and is willing to break down what they did to get there. They can help you identify realistic financial goals and put strategies in place to achieve them.

Before you meet with this person, do your homework and think through what you want to get out of your meeting. Is it something specific, like choosing investments or developing a budget? Or are you after a more comprehensive financial plan? Think through questions to ask in the following areas:

Identifying short, medium and long-term goals
Developing strategies to achieve your financial goals
Budgeting and managing your money
Developing an investment plan
Choosing tax-effective investments
Retirement planning and making the most out of your 401k
Working out your insurance needs
Considering your estate planning needs
When you reach out to this person, let them know that you admire how smart they have been with their finances and ask them if you can buy them lunch and ask a few questions. Tell them you are wanting to be responsible with your finances and would love their advice.

You might be surprised at how receptive these types of people are to an inquiry like this, and you will be even more surprised at how much you'll learn from just 30-60 minutes of conversation with them.

2. Develop A Budget
It's something we've all heard a million times before, but how many of us actually have, and stick to, a personal budget? If you're guilty of being in the dark about your incomings and outgoings, putting together a budget is one of the best ways to start taking control of your finances.

In a nutshell, a budget shows you if you are spending more or less than you can afford. It also helps you direct your money to where it matters most, so you can stay on top of bills, pay down debt and start putting money towards your future goals.

What should I include in my budget?
Your budget should summarize all your living expenses, so you can compare your total spend against your take-home pay, cut out or reduce any unnecessary expenses and figure out a reasonable savings plan. Typical expenses to consider include:

Fixed expenses
Rent or mortgage repayments
Phone and internet
Childcare costs
Insurance
Vehicle registration
Debt repayments
Variable expenses
Utilities like electricity and gas
Food and groceries
Medical costs
Vehicle running costs and transport
Education expenses
Discretionary expenses
Entertainment
Eating out
Shopping
Sports and recreation
Personal care items
There's a wide range of free budget planning tools online, and apps like Mint and You Need A Budget make it easy to track your spending at any time. Otherwise, you can kick it old school with a simple spreadsheet.

3. Open A High-Yield Savings Account
In an ideal world, you'd have an emergency savings account totalling about six months of living expenses stored in cash. Even if that isn't the case for you right now, it's wise to start putting money away in a high-yield bank account that earns interest while you save.

Most transaction accounts offer an interest rate of around 0.01% – the equivalent of hiding your money in a sock under the bed. High-yield savings accounts, on the other hand, typically offer interest rates above 1% i.e. 100 times higher than a regular checking account.

Interest rates, fees and conditions vary depending on the bank and the product. Online-only banks tend to offer higher interest rates because they don't have the expense of maintaining branches, but this isn't always the case.

Also remember that some banks put restrictions on how often you can withdraw your money from a high-yield savings account, so it's worthwhile comparing your options online to see what's available.

4. Pay Down Debt
Whether it's credit cards, student debt or other loans, most of us will deal with some form of debt at one point or another. And while owing money might just seem like a way of life, the faster you can remove the burden of debt from your life, the faster you can take control of your finances.

Think of it this way: Every dollar you use to pay down your principal saves you from having to pay interest on that sum – and that can mean being debt-free years earlier than expected.

For example, if you made 3% minimum repayments only on a credit card debt of $5000 with an 18% APR, it would take you more than 12 years to pay off, and you'd end up paying back over $9,000. If you upped your monthly payments by around $100, you'd end up paying off your debt in just two years and pay back under $6,000.

In other words, paying down debt faster equals guaranteed returns in your bank account over the long term.

5. Invest In A 401k or IRA
One of the best ways you can make your money work for you more efficently is to take advantage of tax advantaged accounts.

401ks and IRAs are types of investment accounts where your savings are invested in the market and have the potential to grow exponentially. Both are great options for tax-advantaged retirement saving, as you don't pay any taxes on either the money invested or the growth of your investments.

401ks vs IRAs: What's the difference?
A 401k is an employer-sponsored retirement plan. That means if you contribute a certain percentage of your pre-tax pay into the 401k, your employer will match your contributions 1:1. Most but not all employers offer some form of 401k savings plan to employees.

If your employer doesn't offer a 401k or you're self-employed, you can begin saving for retirement in an IRA. Like a 401k, assets in an IRA aren't taxed until they're withdrawn. Some IRAs also offer tax-deductible contributions for people who don't participate in an employer-sponsored plan.

The obvious advantage of a 401k over an IRA is that employers match contributions over a certain threshold. However, having an IRA is a good idea if a 401k isn't available to you or you want to save more than the annual 401k contribution limit ($19,000 in 2019). As of 2019, you can contribute up to $5,500 every year into an IRA, on its own or in addition to a 401k.

6. Invest In The Stock Market
It's a common misconception that you need to have access to a lot of capital to start investing in the stock market.

As entrepreneur and stockbroker William O'Neil puts it in his book How to Make Money in Stocks: "If you're a typical working person or a beginning investor, you should know that it doesn't take a lot of money to start. You can begin with as little as $500 to $1,000 and add to it as you earn and save more money."

You also don't need to know everything—or even a lot—about the stock market to start investing. There are a number of passive investment options that allow you to "set it and forget it" and literally start making money in your sleep:

Robo-advisors
A robo-advisor allows you to invest without needing to research and pick individual investments yourself. Robo-advisor services work by using your investing goals to build an investment portfolio designed to achieve those aims.

Management fees for robo-advisors are also typically a fraction of the cost of what a human investment manager would charge – around 0.25% to 0.50% of your assets.

You can get started using a robo-advisor by opening an account online – Betterment, Wealthfront and Schwab Intelligent Portfolios are some of the most popular services for beginning investors. Once you've signed up for an account, you'll be asked to fill out a survey about your goals, risk tolerance and timelines. The robo-advisor will then work its magic and recommend an automated investment portfolio based on your preferences.

Exchange traded funds (ETFs)
An ETF is a group of securities – such as stocks – that tracks an underlying index, like the S&P 500. ETFs can contain many types of investments, including stocks, bonds, commodities, or a combination of those. When you invest in an ETF, you own units or shares in the ETF, and the ETF owns the underlying investments.

An ETF's value moves in line with the index it tracks. For example, a 2% rise or fall in the index would result in approximately a 2% rise or fall for an ETF that tracks that index. This rise or fall would be reflected in gains or losses to your returns.

These types of funds are a popular choice for low-key investors, because they contain multiple assets, which means a diversified (and usually less risky) portfolio. They also typically have lower fees than a traditional managed fund.

Most ETF fund providers like Vanguard, iShares and SPDR allow you to sign up online in minutes. Different ETFs come with different fees, investment spreads and risk profiles, so it's a good idea do some research online to compare your options, or talk to a financial advisor about which ETF is most appropriate for your financial goals.

Target-date funds
A target-date fund is a fund offered by an investment company that aims to grow assets over a particular period. The collection of assets within a target-date fund is automatically rebalanced and reinvested as time goes on, so it requires very little effort on your part.

As the name suggests, investors typically use a target-date fund to reach a specific goal by a specific date, such as retirement or a child reaching college age. A fund's portfolio managers use the specified time period to craft their investment strategy and ideally meet the investment return objective by the end date.

These types of funds are popular with investors looking for an automatic, hands-off way to save long term.

You can sign up for a target-date fund online with a provider like Vanguard or Fidelity, but keep in mind that every fund has its own set "target date". You should choose one that will mature at the right time, as early withdrawals typically trigger a penalty. For example, if you're planning on retiring around 2050, you might choose the Vanguard Target Retirement 2050 Fund.

7. Use Rewards Credit Cards To Your Advantage
Conventional wisdom says that credit cards are best avoided, but there's a caveat. If you choose a card with rewards appropriate for your lifestyle—think frequent flyer miles, cashback, gift cards, and more—you can actually save big in the long run.

Most credit card companies offer specific cards that come with rewards for spending. If you pay off your entire balance each month during the interest-free period, you can reap the benefits of these rewards without paying a dime in interest.

Hypothetically, you could funnel all your spending through your credit card and rack up some serious rewards, as long as you're diligent about paying off your balance in full every month. This tactic takes careful budgeting and restraint, though, so it's not the best idea if you're prone to building debt (or have existing debt).

8. Consider Alternative Passive Income Streams
Passive income is money that flows in on a regular basis without much(or any) effort your part to create it—and it's one the best ways to make your money work for you. Activities like investing in the stock market can be considered a form of passive income depending on how much time you spend on those activities.

If you've already done most of the steps above, it could be time to branch out and look at other passive incomes streams you can use to bolster your finances. Here's just a handful to consider:

Real estate
Despite its ups and down, real estate is still a preferred choice for people who want to generate long-term returns on their investments. Unlike investing in a 401k or the stock market, investing in real estate typically requires more significant capital upfront to use as a down payment.

However, depending on the lender and the type of loan, you may be able to get a property loan by putting down as little as 5% of the property value. Ideally, the money you receive from renting out the property will exceed the cost of mortgage repayments and other expenses, leaving you with a monthly passive income stream.

There are also a number of legitimate tax deductions for expenses connected with rental property, so it can be a tax-effective way to invest if you choose the right property in the right location.

Real estate investment trusts (REITs)
REITs can be a good investment option if you're not willing to take on the risk of buying property yourself or can't afford it. An REIT is a company that owns and operates income-producing real estate.

As an investor in an REIT, you benefit from the gains, refinances, sale, income (or loss) on the property in the form of dividends paid to you by the company. One downside to note, though, is that dividends are taxed as ordinary income, which could push you into a higher tax bracket.

You can invest in an REIT by purchasing shares through a broker like eTrade or Ally Invest. You can also purchase shares in a REIT mutual fund or REIT exchange-traded fund such as the Vanguard Real Estate ETF. Talk to a financial advisor about which option is best for your situation.

Peer-to-peer lending
Peer-to-peer lending works by matching people who have money to invest with people who are looking for a loan. Sites like Upstart, Funding Circle, Prosper and others act as online marketplaces for peer-to-peer lending and make it easy for investors to connect with borrowers.

When it comes to returns, peer-to-peer lending can be profitable, particularly for those who are willing to take on more risk. Investors are paid a certain amount of interest on their loans, with the highest rates given to borrowers who are seen as the highest credit risk. Depending on the loan and rates, returns typically range from 5% to 12%.

Annuities
An annuity is a type of insurance product that you pay for upfront, which then provides you with a passive income stream for the rest of your life in the form of monthly payments. You can also opt to protect your spouse or other dependents with the income, and you can even guarantee that the income will grow with inflation.

Annuities sound great on the surface, but keep in mind that many pay low interest rates, have high fees and limit your ability to access your money – so they're not for everyone. However, if you have a very low tolerance for risk, investing in an annuity is one way to guarantee indefinite monthly returns.

© The Life Coach