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 So once you have earned money, what's the best way to make that money work for you? Pay yourself first. Many people get into the habit of saving or investing by following this advice: "Pay yourself first." Many people find it easier to pay themselves first if they allow their bank to automatically remove money from their paycheck and deposit it into a savings or investment account. Other people pay themselves first by having money automatically deposited into an employer-sponsored retirement savings account, such as a 401(k). Avoid credit card debt. Many adults-and plenty of students-have wallets filled with credit cards, some of which they've "maxed out" (meaning they've spent up to their credit limit). Credit cards can make it seem easy to buy expensive things when you don't have the cash in your pocket-or in the bank. But credit cards aren't free money. Most credit cards charge high interest rates-as much as 18 percent or more-if you don't pay off your balance in full each month. If you owe money on your credit cards, the wisest thing you can do is pay off the balance in full as quickly as possible. Few investments will give you the high returns you'll need to keep pace with an 18 percent interest charge. That's why you're better off reducing your credit card debt. |