How to Create Abundance: Make Money Work For You (Part 3)

Making Money Work For You

In the previous two articles of this series on How to Create Abundance, we first covered the five common myths and mindset around money and how these could be holding you back from creating an abundant life. We then talked about how your view of the gift of time is a key factor in creating abundance. In this penultimate part of the Abundance series, we will explore the four uses of money and how to make money work for you, rather than you working for money.

We’re going to talk about how your behaviour around the money you have can influence your lifestyle and wellbeing. In the upcoming final part of this series I will talk about how you can tap into who you are, what makes you unique and the things that you do well to create wealth and fulfilment in your life.

Here is an audio version of this article, “How to Create Abundance: Make Money Work For you”, which is the third part of this series on creating abundance.

The Four Uses of Money

You might be someone who earns a modest salary and lives within your means, believing that you have access to everything you really want or need. Or you could be someone who is outwardly rich, earning vast sums of money, spending it as if there is no tomorrow and still feeling unfulfilled.

Irrespective of how much money you earn or have, and as with time, there are four ways in which it can be used.

#1 Spending

Spending occurs when you exchange money for consumables you need such as food, shelter and clothing, or essential services such as utilities or insurance.  You may also spend on things that you want, such as a nice car, a smartphone, a snazzy outfit for a friend’s wedding, or a holiday.  The thing to remember is that the value of the things you spend money on will generally depreciate from the moment you take possession of them. Sometimes they can have time-limited value (such as a plane ticket), or in other cases have value specific to you (such as the experiences and memories from a family holiday). A good rule of thumb is to not spend more than the value you will be receiving from the product or service.

#2 Saving

Saving money is simply setting some of your earnings aside so you have access to it when you need it. This could be for some sort of emergency (rainy day fund), or for a deposit on a house or car, or for some other aspirational want that you don’t yet have the funds for.  I define saving as money in a fixed deposit account or an interest bearing bank account. It is generally low risk and in a positive interest rate world you can expect to receive at least what you put in (capital preservation). Ideally it will compensate you for the effect of inflation in the form of compound interest on the money you save.

#3 Investing

Investing money can take many different guises. When you invest over the medium to long term (five years or more), you expect that the underlying assets will grow above the rate of inflation. Over time, you might also expect the investment to provide you with an income stream. You can invest in the stock market or into property or directly into a business. Your investment could also be in the form of higher education or a specialist training programme that will create better job opportunities for you. If you’re a business owner, you might invest to upgrade of your equipment that will run more efficiently, or a move to better business premises that will attract more talented employees. 

A good investment creates value for yourself and for others.  One of the best kinds of investment is the one you can make in yourself. Whether it is learning a new skill, or in your own health or personal development via a coach or a mentor.  When you understand the value of time, you can see how valuable it is to invest in someone who can help you get from where you are today to where you want to be; quicker than if you carry on as you are.

#4 Giving

Giving money is often synonymous with charity, and to some extent rightly so.  After all, donating money to a good cause is charitable giving. Established charities and NGOs with the right expertise and track record provide more efficient platforms to tackle some of the big problems that afflict our society.

However, even this seemingly noble act of giving can become laden with expectations: your name on a plaque, visible gratitude and servitude, an unspoken agreement of some favour being sent your way, a feeling of smug superiority because you’ve done a good deed, a belief that you’re now entitled to tell the people you’ve helped how to run their lives and what choices to make.

Giving in its purest sense is unconditional and non-transactional. You give because you want to and because you can. You sometimes give anonymously simply because you want to make a difference to someone else’s life and you don’t want them to feel indebted nor feel like you’re their saviour. You give because the Universe has taught you that it feels good to give, and that if enough people gave in this way, there would always be enough for everyone. In other words, selfless giving sows the seeds for a thriving, fragrant garden of abundance.

How to create a plan to make money work for you

The trick to making money work for you is to find a balance between the four different uses of money.  If you have a regular sum of money coming into your life as your monthly income, it helps to create a rule of thumb and adopt a disciplined approach. The following steps may help you create a plan that works best for you.

Get clear on your wants and needs

In a materialistic world, those two things can often become conflated. You need food, water and shelter to survive. However, you may want organic gourmet food, wine or fizzy drinks and a really nice house with a swimming pool. Learning to live within your means is all about differentiating between the two and spending wisely.

Create a saving habit

Set aside a sum of money each week or month out of your pay packet before you decide how you are going to use the rest of it. Even just creating a savings jar in your home can be a simple way to have a back-up source of funds when you’ve run out of money and luck.

Understand how investment works

Unlike saving, there is no guarantee you will get your money back.  It is higher risk, but it is therefore also potentially more rewarding than money in the bank. When you invest, it is possible to lose some or all of your money. And yet, over the long term, when done properly, investment is what creates millionaires even out of people who’ve earned only modest amounts over their lifetime. The compounding benefits of small changes over long periods of time can create exponential growth. When you invest in yourself, you the sow seeds of change. In practice, this means setting money aside to refresh your skills, develop new skills and create habits that make you more productive, value creative and fulfilled.

Adopt a mindset of letting go when it comes to giving

Understand the difference between giving and giving up. If you can give on a regular basis via a trusted charity, then do so. If not, keep an open mind and willing heart to help someone in need by simply being present and non-transactional.

A Simple Rule of Thumb

You can create a simple rule of thumb for every 100 units of income:

50 units are for your basic needs and regular outgoings towards housing, utilities, insurance, food etc.

20 units are for your aspirational wants such as eating out, holidays, new clothes or shoes, etc. 

The rest of the 30 units can be used towards savings and investments (including towards your retirement), as well as giving. 

How to modify the plan based on your level of earning

If your earnings are very low at the moment, you may find that most of your monthly wage is going towards paying for your basic necessities. In which case, you may consider it to be a victory to simply stay afloat and not go into debt. Living within our means is a practice that has lifelong benefits.  It injects discipline and can remind us of how little in terms of material things we really need to be happy. 

A different kind of challenge will arise when your earnings grow, and you begin to upgrade your lifestyle with every promotion and pay rise.  Remember, just because you’re now earning more doesn’t mean you have to buy a more expensive car, a bigger house, clothes with designer labels, and so on.  Your needs don’t grow even if your aspirations did.  It is so much harder to downsize the way you live once you’ve become accustomed to a grander way of life. 

Creating Abundance

Don’t let your affluent lifestyle become the millstone around your neck that stops you from living a free and fulfilled life. Don’t let money become your master. Abundance is about making money work for you, not becoming a slave to it.

Watch this space for the final article in this series of How to Create Abundance, wherein we will explore simple ways in which you can create an ecosystem that creates value and attracts money thereby completing the circle of abundance.

Other articles of the four part series on Abundance by Rohini Rathour

How to Create Abundance: Busting Common Myths Around Money

How to Create Abundance: The Gift of Time

An Abundant Life: Assess Value For Money and Create Goodwill

About The Author

Rohini Rathour is a Leadership Coach and Mentor. Her superpower is the calming energy she brings to her interactions and her ability to make people feel seen, heard and understood. She works with aspiring leaders as well as CXOs who want to lead with courage and compassion. She brings 30 years of varied work experience including two decades in wealth management.

She is the author of Leading Ladies: Inspiring Stories of Women Who Found Their Purpose With Passion and is currently working on two books, about men in the modern world and another one about finding your flow in life.