Get my FREE insider newsletter that is helping 400,000+ people MAKE MORE MONEY!

How To Make Your Money Work For You (it’s easier than you think)

Make your money work for you. Use these 6 tips to put your money to work and build the foundation for your Rich Life.

Ramit Sethi

There are a lot of ways you can make your money work for you. With the right systems, you can save and invest for your future. Doing so will build a solid foundation for your personal finances.

I’m going to show you the six best money tips that can help you pay off your debt, invest and grow your money, and save for something fun — like a vacation — this year.

The six best ways to make money work for you are:

  1. Eliminate your debt
  2. Invest in a 401k
  3. Invest in a Roth IRA
  4. Automate your finances
  5. Leverage sub-savings accounts
  6. Use target-date funds

NOTE: If you’re REALLY serious about taking charge of your finances and making your money work for you, make sure you grab your copy of my FREE Ultimate Guide to Personal Finance.

Let’s get started.

How to make your money work for you — The 6 best tips

These six money tips are going to leverage something I like to call Time Machine Investing.

No, I don’t have a flying Delorean — but I do have more than a decade of teaching people about personal finances.

Hop in, and leave your budget behind. Where we’re going, we don’t need budgets.

funny meme of Ramit

How to make your money work for you tip #1: Eliminate your debt

If you have debt, your first order of business is to get rid of it. Your money can only work for you once you’re out of debt.

After all, you can’t properly invest in yourself or your future if you have a mountain of credit card debt that you haven’t addressed yet.

We don’t come out of the womb knowing how credit cards work. There’s no “Paying off your loans 101” class in high school. And credit card companies aren’t trying to help you. In fact, they’re in the business to keep you in debt for as long as possible so THEY can make money.

Luckily, there are steps you can take to get out of debt no matter how much you owe.

I wrote an article detailing exactly how you can get out of it. Here are the key insights from that article:

  • Find the exact amount you owe. A study found that many don’t actually know how much debt they owe. However, this just leads to you blindly paying the minimum payment instead of actually owning your debt. Only then can you start a good strategy to get rid of it.
  • Utilize the Snowball Method. Dave Ramsey famously touts his Snowball Method of getting out of debt. This involves paying the minimums on all of your debt, but paying more money to the card with the lowest balance first (i.e., the one that will allow you to pay it off the quickest).
  • Decide how you’re going to pay your debt. There are a number of ways you can approach this. You can negotiate a lower interest rate and put the money you save toward chipping away at what you owe. You can also tap into hidden income to free up some money. If you’re really enterprising, though, you can start EARNING more money.

First step: Go through your account statements, call the companies, do whatever it takes to find out how much you owe on these bills. You can use this tool to track it (it’s the second link on this list). The chart looks like this:


Name of Credit Card Total Amount of Debt APR Monthly Minimum Payment


It’ll help you find out how much you owe to each company and what your interest rates are. You can also use my free online tool here.

Stop right now and do this.


Congrats! Taking the first step is one of the hardest parts — now you’re well on your way to a Rich Life.

If your total debt number seems high, remember two things:

  1. There is a large group of people with more debt than you.
  2. From this day that number is only going to go down. This is the beginning of the end.

If you need help getting out of debt, check out my absolute best resources on getting out of debt below:

BONUS: For even more systems on eliminating your debt, check out my 3-minute video below on how to negotiate your debt.

Bonus: Ready to ditch debt, save money, and build real wealth? Download my FREE Ultimate Guide to Personal Finance.

How to make your money work for you tip #2: Invest in a 401k

A 401k allows you to invest money for retirement AND receive free money from your employer while doing so.

Here’s how it works: Each month, a portion of your pre-tax pay is invested automatically into the 401k. If you hit a certain percentage of contributions, your employer will also match you 1:1.

You aren’t taxed on your earnings until you withdraw it at retirement age (59 ½ years old). This means that you’ll earn more with compounding over your lifetime.

Imagine you earn $100,000 / year and your company offers you a 3% match on your 401k. If you invest $3,000 (3% of $100,000), your company will match you that much in your 401k. You can contribute more — but your company won’t match you beyond 3%.

In 2019 the contribution limit for a 401k is $19,000. Maxing it out is an awesome goal to have.

Be sure to take advantage of your employer’s 401k plan by putting at least enough money to collect the employer match into it. This ensures you’re taking full advantage of what is essentially free money from your employer. That match is POWERFUL and can double your money over the course of your working life:


Age Your Contributions Employer Match Balance without Employer Match Balance with Employer Match
25 $5,000 $5,000 $5,214 $10,428
30 $5,000 $5,000 $38,251 $76,501
35 $5,000 $5,000 $86,792 $173,585
40 $5,000 $5,000 $158,116 $316,231
45 $5,000 $5,000 $262,913 $525,826
50 $5,000 $5,000 $416,895 $833,790
55 $5,000 $5,000 $643,145 $1,286,290
60 $5,000 $5,000 $975,581 $1,951,161
65 $5,000 $5,000 $1,350,762 $2,701,525


For more on 401ks, be sure to check out my article on the topic here.

Bonus: Want to fire your boss and start your dream business? Download my FREE Ultimate Guide to Business.

How to make your money work for you tip #3: Invest in a Roth IRA

This is another tax-advantaged retirement account that allows for incredible growth and savings.

Unlike your 401k, though, this account leverages after-tax income. However, you’re not taxed on your earnings when you withdraw it at retirement age. AWESOME.

Like your 401k, you’re going to want to max it out as much as possible. The amount you are allowed to contribute goes up occasionally. As of 2019, you can contribute up to $6,000 / year.

I suggest putting money into an index fund such as the S&P 500 as well as an international index fund as well.

For more information about Roth IRAs, be sure to check out my article on them here.

Note: If you don’t know where to find the money to invest in these accounts, find out how you can save a bunch of money with just a few phone calls.

Bonus: Want to know how to make as much money as you want and live life on your terms? Download my FREE Ultimate Guide to Making Money

How to make your money work for you tip #4: Save automatically

The best time to grow a tree is 10 years ago. The second best time is today.

I know, I know. I sound like a cheesy motivational poster — but the adage is true.

If you want to buy a house or a nice car one day, you don’t want to think about where you’re going to get the money the day you plan to buy it. You want that money to already be there.

That’s why I’m a HUGE proponent of automating your finances.

There are still people out there who have heard me harp on this for literal YEARS and still haven’t automated their finances. And why not? For a few hours of work, you can save yourself thousands of dollars down the road.

One reason many are averse to saving money is due to the pain of putting our hard-earned cash into our savings accounts each month. That’s why we turn to automation. It’s a set-it-and-forget-it approach to your finances, allowing you to send all of your money exactly where you need it to go as soon as you receive your paycheck.

After all, if you had to track your spending and move money into savings every month, it would eventually be one of those “I’ll get to that later…” things and you’d NEVER get to it.

And so, just like cutting out luscious, perfectly foamed 12 Corners lattes, we might put away money for savings once or twice — but if we have to make the decision EVERY paycheck, we’re setting ourselves up to fail.

That’s why automated finances work so well. You can start to dominate your finances by having your system passively do the right thing for you. Instead of thinking about saving every day — set it and forget it.

To do this, you need just one hour today to set everything up so your paycheck is divided into four major buckets as soon as it arrives in your checking account. They are:

  • Investments: I highly suggest you put your money into a Roth IRA. Like your 401k, you’re going to want to max it out as much as possible. The amount you are allowed to contribute goes up occasionally. Currently, you can contribute up to $6,000 each year.
  • Savings: Here, you should use “sub-saving accounts” that you’ve created for long-term goals like your wedding, vacation, or down payment on your house. Many banks provide the option to create smaller sub-accounts in your normal savings account — perfect for goal setting.
  • Guilt-free spending: Make automatic payments for recurring services like Netflix, Birchbox, and gym memberships using your credit card. You’re going to have plenty of guilt-free spending money in here for things like the occasional night out or fun purchases you want to make. Be sure to log into your credit card’s website and set up automatic payments with your checking account so your credit card bill is paid off each month. You can rest assured that you will have enough money in your checking because you’ve already set up automatic payments with everything else.
  • Fixed costs: These are for bills that can’t be paid off with a credit card, such as rent, electric, water, and gas.

Once that money is in your savings account, don’t touch it unless you’re ready to pay for your long-term goal (or if there’s a HUGE emergency).

For more information on how to automate your finances, check out my 12-minute video where I go through the exact process with you. (Try not to be too impressed with my awesome whiteboard art.)

If you’re worried about your personal finances, you can improve them without even leaving your couch. Check out my Ultimate Guide to Personal Finance for tips you can implement TODAY.

How to make your money work for you tip #5: Use sub-savings accounts

Once you automate your finances, you can optimize your savings by leveraging a sub-savings account.

This is a savings account that you can create within your regular savings account to save for specific purchases or events.

Each month, you can automatically transfer your money into these accounts. Once the transfers are in place, you’re going to get a lot closer to your savings goals. AND you can do it without having to remember to set money aside.

Check out all the different sub-savings accounts I had in my old savings account:

Screenshot of Ramit's Sub Savings Accounts
ING Direct is now Capital One 360. BTW that wedding one was put to good use.

Here’s a look at a few sub-savings accounts I have now:

Screenshot of Ramit's New Sub-Savings Accounts
ING switched to Capital One 360. I used the money I saved to buy an engagement ring.

So set up a sub-savings account and start automatically putting money into it each month. If you need help, check out my article all about sub-savings accounts to get started.

This is an example of using a system to make sure you have the money needed for an expensive purchase. These sub-savings accounts can be for a new car, a new wardrobe, a trip you want to take … anything at all.

You can even set aside money for more nebulous things. See my “stupid mistakes.” Or maybe you can have a “for when my buddy insists on ‘just one more drink’” account.

Now, each time I want to spend money on an expensive purchase, I KNOW I have the money. Because I have been storing a little bit at a time automatically. And I can make the purchase stress-free.

If you’re worried about your personal finances, you can improve them without even leaving your couch. Check out my Ultimate Guide to Personal Finance for tips you can implement TODAY.

How to make your money work for you tip #6: Use target-date funds

Target-date funds (or lifecycle funds) are a collection of assets that automatically rebalance and reallocate themselves as time goes on. They’re a great way to save for retirement if you don’t want to deal with choosing your portfolio mix.

Target-date funds diversify based on your age. This means the funds will automatically adjust to be more conservative as you get older.

For example, if you want to retire in 30 years, a good target-date fund would be the Vanguard Target Retirement 2050 Fund (VFIFX), since 2050 will be close to the year you’ll retire.

If you invest in this fund today, the investments will be much more aggressive. This means it’ll be higher risk but with the potential for greater returns. As the years pass and we inch closer to 2050, though, the fund will automatically adjust to invest in more conservative investments like bonds.

Most target-date funds require a $1,000 to $3,000 initial investment. If you don’t have enough to invest in one of those, don’t worry. Check out my article on earning more money to get the investment this month.

In all, these are fantastic funds for anyone looking for an automatic, painless way to invest for retirement.

Invest in a Rich Life

If there’s one thing that I hope my readers have gained from my blog, it’s that you should always be in a state of curiosity. Be inquisitive. Ask questions when you don’t understand something and don’t be afraid to seek out more information through books, courses, or schooling. It’s only then that you can hope to truly live your Rich Life.

And don’t just focus on things that you think are closely related to your career. I want you to approach education laterally. You’ll be surprised at the things you’ll be able to pick up that’ll help you in life and at the office.

  • Are you an investment banker? Go take an improv class and become better at public speaking (and cracking jokes with others).
  • Small business owner? Take a course in another language like Spanish or French. You might be able to broaden your audience that way.
  • Aspiring baker? Join that cool sci-fi writing workshop you saw online. At the very least, you’ll be able to craft solid business proposals.

Your thirst for education should be constant and voracious. I don’t care if you’re reading this in your 20s or your 60s. There’s always something new to learn that you can add to your well of knowledge to draw upon.

Want more lessons from this time machine? I have an offer for you: My Ultimate Guide to Personal Finance.

In it, you’ll learn how to:

  • Master your 401k: Take advantage of free money offered to you by your company … and get rich while doing it.
  • Manage Roth IRAs: Start saving for retirement in a worthwhile long-term investment account.
  • Automate your expenses: Take advantage of the wonderful magic of automation and make investing pain-free.

Subscribe to get instant access to the Ultimate Guide to Personal Finance PDF

100% privacy. No games, no B.S., no spam. When you sign up, we'll keep you posted with a few emails per week.


  1. avatar

    I was wondering if you have a guide on annual mutual-fund investing? For example, I have not a clue when it comes to investing, stocks, bonds, mutual funds, etc. However after reading all the great advice on this site I am excited and want to start investing. I am 27yrs old and want to invest in something that will be fairly safe but will be rewarding also. I have already setup my finances and this is my next step. Any advice on mutual funds for those like me? Thanks again for the awesome advice!

  2. avatar
    Misty Sawyer

    37 years old and have invested in state retirement and 401-k for 7 years….401-k interest has been about 11%….suggestions (Roth IRA, etc and/or higher savings account interest than my credit union)? Thanks…Misty

  3. avatar

    Hey thanks for the adivce. I was wondering if you could explain where you think it would be a good place to begin investing. Mutual funds, shares.etc

  4. avatar
    Deb Thompson

    My husband and I are second marriage coupe. My husband is 58. We own our home worth about $200,00 and have no outstanding debt. We have $100,000 to invest and would like get around 8-10 percent in mutual funds (after fees) and we want to start withdrawing in 5 years ($8,000 a year) We don’t want to run out of money. Right now have what little money we have in CDs. What suggestions would you have regarding mutual funds that althoughI know the earning fluctuate — average 8-12% with minimum fees and how would this play out in five years when we want to start withdrawing a bit each year???

  5. avatar

    My husband and I are second marriage coupe. My husband is 58. We own our home worth about $200,00 and have no outstanding debt. We have $100,000 to invest and would like get around 8-10 percent in mutual funds (after fees) and we want to start withdrawing in 5 years ($8,000 a year) We don’t want to run out of money. Right now have what little money we have in CDs. What suggestions would you have regarding mutual funds that althoughI know the earning fluctuate — average 8-12% with minimum fees and how would this play out in five years when we want to start withdrawing a bit each year???

  6. avatar

    Just letting you know the article on survivorship bias is no longer available on its Web site.

    I appreciate all the information, thank you!!!

  7. avatar

    hi, my bank is calling me to invest in variable funds, i have about 63k in the bank and would like to earn about 100k by the years end please what can I invest in for better return my money is in dumb savings, little returns and checking what should i put my money in

  8. avatar

    which one do you think about investing in mutual funds or a cD ? Please let me know so I can go about it

  9. avatar

    Considering your 2nd largest reader’s age group is 30-39, and you want to increase the number of women who read your advice, please do consider adding more financial information for that age group and gender.
    There are a lot of women in their late 30’s who, like me, are looking for the next challenge in their life since they’ve already pinnacled at work and done the kids thing…
    now we are actually interested in learning about finance and not leaving that to the husbands. That, along with yoga is the new trend…

  10. avatar

    Hi, I am a regular follower of your articles. Just like other ones this article too is informative. I have started my investment plans with Fair Investments ( ) and will keep all your points in mind. Thanks for sharing.

  11. avatar

    I am 40years i want to invest #30,000 monthly for the next 5years where can invest,bond or shares

  12. avatar

    I’m a Nigerian living in Lagos. I’m 35 yrs old. I work with an Events Management company. I earn an equivalent of $880 per month. I’m financially illiterate but i do really want to develop myself and make money work for me.
    A few years ago, like 8 or 9yrs ago, as a fresh graduate, i did invest in some bank/company shares worth $125/$62.5 at that period but i don’t know what has become of them nor how to track it.
    Two months ago, i made a conscious effort to invest in a low capital investment fund called FBN Capital after listening to a radio programme. Now apart from making some commitments towards this investment i really do not understand how it all works and will really love to educate myself. I will appreciate if i can get tips, manual or stuff that can really help to become financial savvy.

  13. avatar

    I’m really glad i came across this. And I’m excited about it all and feel really motivated. Warm regards for your efforts. Looking forwards to your reply

  14. avatar
    Evans Were

    I love this article, I really want to make some steps so money can work for me . I do admire investing. And I don’t know the best way to do it , I have ksh 100,000 to invest what is the best investment I can go for. Advice please.

  15. avatar

    I have been trying to figure out what the best will be. To invest in a mutual fund, an index fund or the exchange investments. I see u said that in a mutual fund i should expect 11% interest. Can u suggest a place to open a mutual fund? I just moved to america and i am 28. I recently sold my firat business so have some money i want to invest but donr know where. Please advice thank u

  16. avatar
  17. avatar

    If you want to make some money then check out the S&P 500. I wish I was in it right now… had it at 7.80 four years ago and got married and sold it all. It’s still a great buy and will likely see 70 within ten to fifteen years. Dividend is 7.8 percent a year plus inflation on top of that.

  18. avatar

    Also, as you begin to make money, GUARD IT WITH YOUR LIFE! There are so many scams and stupid investments out there. Believe in yourself and make certain you’re not investing your money foolishly. This sounds like common sense yet it happens all the time.

  19. avatar
    Pierre Robidoux

    Thank you for sharing. It’s very useful. Hope to hear more from you.

  20. avatar

    I like your story.
    Thank…x for teach me

  21. avatar
    Expert Soft

    Nice article,
    Make your dreams true about earning a lot of money here this company gave you the chance to get your own business start and also promote yours business

  22. avatar

    Sexist much? The article is fairly broad talking about anyone, male or female. You need to actually read before you start getting all pc on everybody.

  23. avatar
    Vivek Pandey

    I can help u

  24. avatar

    Hi i have 70000$ how to work with my money and be a successful person in my economy.

  25. avatar
    Logan L

    Hi I’m 16 years old and recently started investing in precious metals. I’m interested in investing my money in other stuff but have the foggiest idea on where to start. Can anyone help??

  26. avatar


  27. avatar

    This. This is how you write an article! Well done.

  28. avatar
    Joy Butler

    I agree how the article illustrates the importance of long term investing and managing risk. It is a great idea to take on long term investments in the earlier stages of life so they can grow to a high return. It is also good to worry more about hedging risk when you are approaching retirement and your risk tolerance is minimal. I think that long term insurance would be something to invest in middle stages of life because it provides security when the time comes to exit the workforce.

  29. avatar

    Read Ramit's book.

  30. avatar
    Steve M

    Index ETFs. Simple and low fees. If nothing else, just put money in an S&P 500 Index Fund. They all track the same index, so just look for the lowest expense ratio.

    I haven't read Ramit's book, but that would probably be a good place to look when you have the time.

  31. avatar
    Steve M

    If your investment horizon is 5 years, the risk you need to take to earn 8-12 percent is too high. Anything that could make that much (most likely equities or equity funds– i.e. "stocks") could lose it as well. When your time horizon is 5 years or less, you don't have time for the market to swing back if it tanks (think 2007), so most experts would advise a safer investment (and there is no safe 8-12 percent return investment at today's interest rates).

    It's not the answer you want, but I'd look for ways to earn more and perhaps put that money in a more aggressive investment, knowing you have your "safe" money available to hold you over in the event of losses.

  32. avatar
    Jerry G

    OK. What I wish someone had told me (made me do!) in my twenties. Save SOMETHING!!! Start NOW. NO MATTER WHAT. No matter how insignificant you think it is.

    I was a poor as a churchmouse musician trying to make it. Then had a family with all that expense. That's OK.Not complaining. BUT… I still should have saved SOMETHING! Anything!

    I finally started when I was 52. $50 per month into an IRA. AUTOMATIC. Increased as I could. When I hit $3000 I put it into Vanguard Index fund. Since inception – dollar averaging/compound interest – 10.4% (past 12 months gain 14.2%).

    Fast forward to now. 60 years old. $42,000. Pathetic given my age, I KNOW…

    But you know what? It's NOT ZERO.

    Read Ramit's book. Start saving now. Rock on with your bad self and your rich life.

  33. avatar

    Buy AAPL, GOOG, NFLX and AMZN. Don't ask, just do it. And back up the truck when you do.

  34. avatar
    Tiffany Hughes

    This is great! I loved your advice about automatic investing and have most of my expenses set up to go out around the first of the month. I'm also following the "7 Jar system" that is outlined in "Secrets of the Millionaire Mind." Something I recently found out as well is that it's possible to earn double digit returns on a retirement account and grow it tax free! WOW, was I blown away! And for paying off debt, I've recently learned that it's possible to pay off student loans, mortgages, car loans, and credit card debt in a fraction of the time without changing your current monthly income and expenses. Though I don't have those (I used scholarships to cover my school after reading "Confessions of a Scholarship Judge" by Josh Barsch- and I currently rent), it was super fascinating to find out. The CashFlow 101 board game also helped me learn more about income, expenses, assets, liabilities, doodads, and money management. #4 is the best advice-always be learning and implementing what you learn.

  35. avatar

    My Advice to Millennials (I am a father of a millennial) — max out your investment in your 401(k). Invest in both taxable and tax free (401(k)) accounts. Invest every month. If you can't figure out what to invest in, the best investment is an S&P 500 fund. Forget actively managed funds. They will have one or two good years, which shows incredible well, but actively managed funds can't win over an S&P 500 fund if you invest on a monthly basis over a long period of time. Actively managed funds will also eat you alive from a capital gains perspective in a taxable account. My father and I both tried the latter and failed…

  36. avatar
    Sheldon Sandbekkhaug

    Ramit's book "I Will Teach You To Be Rich" covers investing in index funds like you described. "The Bogleheads' Guide to Investing" is also a great resource. I take their advice so seriously that my portfolio is modeled on the index-based format.