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Aug 25, 2023

How To Grow Your Money

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An illustrated person is shown climbing steps shown as dollar bills, alluding to the topic of how to invest in ind

Money doesn’t grow on trees, but it can grow in your investments. Understanding how to store and use your money so it grows can help you build a financial safety net, save for the big goals in your life, and ensure you’re taken care of in retirement. There are many tools and techniques you can use to put your money to work and watch it grow. 

In this article, we’ll discuss:

Position yourself for success

Before your money can grow, you need to build a foundation that protects what you already have. Unplanned expenses or interest on debts can undermine your efforts, and a lack of planning can make your growth strategies less effective. You can set yourself up for success with an emergency fund, debt management, careful budgeting, and a solid understanding of your financial goals. 

Set up your emergency fund

An emergency fund provides the stability you need to weather life’s unavoidable financial ups and downs. By keeping a stash of money readily available for unexpected expenses, you can avoid draining your long-term savings or going into debt for unplanned needs like medical bills, car repairs, a new roof, or even living expenses if you’re laid off from your job. 

An emergency fund is key to safely growing your money because, without one, you may have to go into debt, pull from your investments, or otherwise spend the money you were attempting to grow. Experts recommend having six months’ worth of living expenses in your emergency fund. While that may sound daunting, adding a little bit of money to your fund each month will eventually add up. You can bolster your savings by keeping this money in a high-yield savings account or similar interest-bearing account so that the money you save is making money itself. 

Manage your debt

It’s hard to grow your money when you have high-interest debt, especially when that debt is mounting as interest piles on. Loans and credit cards are often unavoidable financial tools, but they can hinder your growth opportunities. 

If your debt is increasing faster than your money is growing, you aren’t actually building wealth. For example, if your cash is sitting in a high-yield savings account making 5% interest, but your credit card debt is growing at 15% interest, it makes more sense to pay off the credit card before attempting to grow your money (with the exception of your emergency fund). 

It may make sense to focus on paying off high-interest debt, like credit cards or personal loans, before focusing on growing your money. The debt avalanche method is one popular strategy for getting out of debt more quickly. If you have longer-term debts with lower interest rates, like a mortgage or student loans, you might opt for a more balanced method. Consider putting money into growth opportunities while continuing to pay off those debts at a rate that leaves you with a net positive overall financial picture.

Understand your budget

It can be hard to grow your money if your day-to-day expenses outstrip your income, and budgeting can be a challenge no matter how much money you make. In fact, 8 million people earning more than $100,00 a year live paycheck to paycheck. By creating a budget, you can understand and take control of where your money is going, identifying opportunities to save and invest. The 50/30/20 budget rule is one popular method for planning how to spend your income and determining how much you should invest for future growth. 

Understand your goals

When thinking about how to grow your money, you may want to create a big-picture financial plan to guide your decisions. This can help you identify why you’re growing your money and specify short, medium, and long-term goals. Those concrete plans can help you commit to saving, overcome impulse-spending temptation, and start to enjoy the process of investing and saving.

Your financial planning will be most effective if you set realistic goals based on your values and circumstances. That doesn’t mean you can’t shoot for your biggest dreams. You may just need to break your goals into manageable targets so you can work toward them right away without getting overwhelmed. For instance, if you have $1,000 you could invest, realistic goals can help you decide how to make the best use of it now. When that money grows, you can seek ways to work toward your bigger goals. 

How to take advantage of short-term growth

A graphic explains the definition of short-term investments.

Once you have concrete goals in mind, you can set a timeframe for achieving them based on your needs. Your strategy for growing money in the short term will differ from the approach you take for long-term aims. Short-term goals are usually things you want to achieve within one to three years, such as going on a trip, buying a car, or paying for a wedding. Growth vehicles that work better in the short term tend to be more flexible and liquid, so it’s easier to pull money out when you need it. These types of accounts usually carry less risk, since a shorter time horizon gives you less wiggle room to bounce back from volatility. 

Open a high-yield savings account

A high-yield savings account can be a smart place to store your emergency fund and short-term savings. These accounts work similarly to traditional savings accounts but offer higher interest rates and often have a minimum balance you have to maintain. The money you store here is relatively liquid, meaning it can be pulled out at any time, which makes it a great place to grow money for a trip, down payment, or other short- or mid-term goal. Plus, you don’t risk losing your funds as long as you hold the money with an FDIC-insured institution.

Interest rates for high-yield savings accounts are variable, which means they can change at any time. Rates depend on the federal interest rate and the financial institution where you open your account. Be aware that when the Federal Reserve lowers interest rates, banks usually do too, so your interest rate could drop, reducing how much your money grows.

Open a money market account

Money market accounts combine some features of high-yield savings accounts with certain characteristics of checking accounts. They offer variable interest rates, generally on par with high-yield savings accounts, and are held at the same kind of FDIC-insured banks and credit unions. Money market accounts also often have minimum balance requirements.

The main difference between a money market account and a high-yield savings account is the flexibility you have for accessing your money. You generally have the ability to write checks and use a debit card with a money market account, making it easier to spend the money you’ve saved up.

Put your money into a certificate of deposit (CD)

CDs are bank-issued savings vehicles that earn a fixed interest rate over a set length of time (known as the term). CD terms usually range from six months to five years; when you redeem the CD at the end of the term, you get your principal investment plus the accrued interest. Unlike high-yield savings accounts, interest rates for CDs are locked in when you open the account, so you have a guaranteed return. 

Generally, you can earn more interest with a CD than with a high-yield savings account, but the minimum amount required to open one is often higher, and your money is usually locked up until the CD matures at the end of its term. For example, a two-year CD might have a $1,000 minimum and 5% interest, which means you would get $1,102.50 in two years if you invest the minimum. You’ll usually incur a penalty if you close a CD before it matures. 

How to grow your money with long-term investing

When most people think about how to grow their money, they tend to have long-term investment vehicles in mind. These are the accounts you use to build wealth over the course of many years or decades. Long-term investing generally requires more commitment and carries a higher level of risk, but it can earn more than short-term options. 

Invest for retirement

The most common long-term savings goal is retirement. If you’re investing for retirement, you may want to consider a 401(k), traditional IRA, Roth IRA, or a combination of these.


401(k)Traditional IRARoth IRA
Annual contribution limit$22,500 as of 2023$6,500 (among all IRA accounts) as of 2023$6,500 (between all IRA accounts) as of 2023
Where the money comes fromInvested pre-tax (usually before you receive your paycheck)Invested pre-taxInvested post-tax
Employer matchSome employers match contributionsNoneNone
Tax treatmentContributions lower taxable income in the year they are made; distributions are taxed as incomeContributions lower taxable income in the year they are made; distributions are taxed as incomeNo immediate tax benefit; qualified withdrawals in retirement are tax-free
EligibilityLimited by employerNo investment limitsAbility to contribute reduced at higher incomes
Investment optionsLimited by employerLarge investment selectionLarge investment selection

The type of retirement account you choose will depend on your employment, income, and how much money you expect to need in retirement. Many investors decide to have two or even all three account types, investing up to the limit in IRAs and up to their employer match in a 401(k). 

Put your money to work in a brokerage account

If you’re looking for long-term investment accounts that aren’t specifically for retirement, you may want to consider a brokerage account. A brokerage account is a taxable investment account you use to buy and sell securities, including stocks, bonds, exchange-traded funds (ETFs), and mutual funds. Unlike retirement accounts, you can invest as much money as you want and withdraw that money at any time. 

Brokerage accounts offer specific features, benefits, and drawbacks. 

  • Flexibility: You have total control over your investment strategy and the assets you hold in your portfolio.
  • Taxes: Unlike retirement accounts, brokerage accounts don’t offer any specific tax advantages. You will pay taxes when you realize a profit on your investments.
  • Risk: Your risk will depend on what you invest in, but all investments come with some level of risk.
  • Time horizon: Generally, investments in brokerage accounts are best suited to mid- to long-term goals.
  • How money grows: Money invested in stocks and funds grows through increases in share value or dividends. Investments in bonds earn a return based on interest.  
  • Investment options: Most brokerages provide access to stocks, bonds, and funds. 

Invest in real estate

Real estate investing can be a useful method for diversifying your investment portfolio outside of traditional stocks and bond investments. Because of its long-term growth potential, real estate has long been a staple of wealth building, but, like any other market, real estate fluctuates and can represent a major commitment. 

Investing directly in real estate by purchasing and renting or flipping properties can be expensive, require significant effort, and yield high rewards. But there are also lower-effort, lower-expense ways to gain exposure to the real estate market. You can invest in real estate through the following methods:

Grow your money your way 

How you grow your money may change over time as your income and life circumstances evolve. You may be focused on balancing your budget and squirreling away small amounts of money at one point in your life but devote more to saving and investment once your income grows. Your age, financial situation, how far you are from retirement, and your goals all play a part in deciding what methods are right for you. But one thing applies in any instance: the sooner you start putting your money to work, the more time it will have to grow. Stash can help you start investing today, no matter what your budget is.  

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Written by

Sarah Spagnolo

Sarah Spagnolo serves as Managing Editor, Head of Brand at Stash, the investing app that helps people achieve their financial goals. As Managing Editor, Sarah oversees all personal finance content and brand experiences, ranging from partnerships to influencer marketing and webinars, and is the editor of the Stash 100, Stash’s annual collection of the best money tips for hardworking Americans. She has two decades of experience working in brand, communications, and content for companies across media, tech, travel, design, and finance. Over the course of her career, she has appeared as an on-air expert in outlets including The Today Show, Good Morning America, CNN, MSNBC, Dr. Oz, the Weather Channel, Cheddar, and many local news channels, and has been quoted in Axios, The Information, CoinDesk, the Wall Street Journal, and dozens more. A graduate of Syracuse University, she lives in Brooklyn with her husband and family.


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