Putting extra money into your pocket is not an easy feat. It either requires working even more or tightening up your belt and making some hard sacrifices.
If you are not making ends meet or have a dream to buy a house then either making more or saving more money is essential to master. Making more money can be done passively if done right, and saving doesn’t always mean that you have to live on porridge and darn the holes in your socks.
In this article, I will go over the differences between passive income and saving so you can decide which path towards your goal is going to work best for you.
How to save extra money
Saving money is not as hard as it sounds. And even little bits can add up over time to be something substantial that can make a big difference in your life.
There are a couple of ways to approach this. You can do it passively by using an app like Acorn that takes any of the balance when shopping and sets it aside. You can learn more at MoneyMonarch, but the idea is that if you buy a shirt and the total comes to 24.65 then those 35 cents will get set aside in an investment account for you. It doesn’t seem like a lot but it does add up and takes no effort.
The traditional way is to set up a budget for yourself. Track your expenses every month either with an app, spreadsheet or even just writing it on a piece of paper. Literally everything you spend money on from a cup of coffee to your rent or mortgage needs to be accounted for.
Divide up the expenses according to category and then you can get a clearer picture of where you can cut out some of your expenses.
Passive income sounds like making money for doing nothing. That’s not really an accurate picture, though there are some ways that you can indeed make money without having to do any real work. We’ll get to that in a minute, though.
Making passive money in essence just means that you can make money without really trading your time for it. You don’t have to be clocked into a job or sitting in an office to make money.
This can be truly passive, by investing, for instance, or it can mean setting up processes so you can make money while doing other things. If you have some extra money, you can always invest in the market. Either high risk high reward stocks or something safe and dependable with lower returns like index funds.
Or, you can start an activity like a website or ecommerce store in which you work hard in the beginning to set it up and then later it works on autopilot and you collect the revenue while you sleep.
Of course, the best way to get ahead is to do both. Save your money and set up a passive income. To generate wealth this combination is hard to beat.