How many times have you heard you need to spend money to make money? We’ll take a wild guess and say over one hundred times. But have you ever explored how you can spend the money in order to double or triple it?
To start a business, you need some starting funds. That money can come from savings or loans. Spending money to fuel your start, order stock, rent space, pay for logistics, etc., is nothing unfamiliar. But using a loan for starting a business can put you in an uncomfortable situation.
A friend of mine has been riding the business waves for over two decades. He’s seen the changes; he knows how to adapt and overcome difficulties.
For example, he sets a portion of his yearly profits from the business to go back into it.
How does this work? He has a couple of cafes, which he renovates almost yearly, improves the menus, raises the employee’s paychecks for a certain percent, and gives back to customers via promotions, discounts, etc. Sound perfect, right?
A year ago, he decided to open a more luxury cafe in another town via a consultant’s suggestion. This meant taking out a loan. Having confidence in his business sense, he dived in.
Fast forward a year and a half later, and he shut the cafe. It was unprofitable and put him back thousands of dollars. Unfortunately, this left him with a hefty amount of debt. Now, the profit from his old businesses goes into repaying the loan.
You need to spend money to make money is an outdated practice. Instead, spend money on things that will bring you money, like an original business idea, marketing, good staff, and quality of products. Don’t splurge on “make money fast” ideas and unnecessary business-related costs, and don’t feel pressured if you’re not comfortable taking out a loan in order to make more money.
Why You Need To Spend Money To Earn Money
Getting is job is the essential step towards earning an income. When you think, you spend your hours, invest your knowledge and skills to make money. Spending money is no different; you find the right thing to spend money on and get awarded a profit.
Spendng Money As A Business Owner
Turning an idea into a profitable business requires you to spend some money. And it doesn’t stop there. Your profit is the income minus the operating costs.
These are the expenses your business generates, like paychecks, rent, advertising, accounting, etc.
That profit is yours to keep, right? So here’s where spending money to make money comes into the picture.
According to many financial managers, reinvesting a portion of the profit is among the first steps to a successful business. This includes a different advertising plan, improving your products, get better appliances, a bigger office, etc.
Spending your profit towards your business now can help you earn more in the following period. Better advertising will attract new customers, and good products will keep them.
The trick here is you can go overboard, reinvest too much, and be left with an insufficient profit. While you don’t have complete control over how much income your business will generate, you can control how much you spend.
Spending Money As A Young Proffesional
To earn a higher income, you need to spend money on yourself. This includes good education, courses, certifications, and other ways to improve your skills and expand your knowledge.
A course of $3,000 might seem excessive, but it can put you in a different salary bracket for years to come.
Things You Need To Spend Money On
There are things you should not skimp on when it comes to spending money to bring more home. Here are some smart ways to spend money in order to earn more.
Starting a Business
To start a business, you need to spend money initially. But, first, you need to ensure you have a business plan and your business will yield you profits.
And to grow and expand your business later, you’d need to put money back consistently.
Starting a business is not an easy task, and it doesn’t only involve spending money. You need to make smart decisions about what you’ll be spending on, not only the amount of money you’ll be paying. More doesn’t mean better, and it can throw you in debt.
Starting a Website or Blog
Find your niche and invest some money by purchasing a domain, hosting and you’re set to run a website. With consistent and thorough content, you can earn money from ads, affiliate marketing, etc.
Later, you’ll reinvest some of the profit and make it mobile-friendly.
The blogging world is saturated, so to earn money from your blog and site, you’d need to pick a rare niche you’re passionate about and can explore for an extended time.
Some famous bloggers and influencers have started with limited resources, so you don’t really need to spend a hefty amount of money initially.
Renting a Room
Furnishing and decorating your guest room to a hotel level can be expensive, but renting it just a few weeks a month can provide a consistent income.
If you’re comfortable with this, sites like Airbnb are an excellent place to start. However, you’d need to spend a portion of your profit for upkeeping the cleanliness, furniture and provide some extras for your guests.
Trade Cryptocurrency
With the rising popularity of cryptocurrencies, you’ve probably got tempted to dive in. Of course, investing in cryptocurrency is not for everyone, but it can yield a great profit if you’re willing to get involved in this world.
Spending money to buy during a bull market is one of the options. Selling later at a higher value can result in more than your annual salary in profits.
This is one of the riskiest spend money to earn money methods, along with starting a business from scratch.
Enroll in a Course
If you’re not the entrepreneurial type and prefer staying at your job and using your employer’s benefits, there are still ways to earn more money with a bit of investment. Of course, investing in your education is always a good idea.
Enrolling in a course to learn a new skill can open your door to better-paying jobs or leveling up at your current company.
Platforms like Coursera, Udemy, and many online academies can help you switch your career by learning in your free time.
Of course, these certifications come at a higher price but will increase your income in the future.
Make Arts and Crafts
If you want to explore your creative side, you can spend money on equipment and supplies for arts and crafts. You can explore many branches, like jewelry making, t-shirt printing, decorating mugs and plates, and paintings.
The initial investment is pricy, especially if you need to buy larger machines and pricier supplies.
In addition, you can build your own platform to sell the products or try some sites like Facebook Marketplace, Etsy, etc.
Write an Ebook
If you’re good at something, don’t do it for free, and if you have some knowledge, don’t share it for free. Books will never go out of style, but ebooks are the new preferred way of reading.
If you’re not good at writing, you can spend money on a ghostwriter to turn your idea into a book. An original idea backed up with some more money for advertising is a sure way to make a good profit.
Spending Borrowed Money To Earn Money
Many people think that you need to take out a loan to start a business. The truth is, while you can create many businesses with your savings, more significant ideas need more funds. This is when business loans come to play.
The risk of funding a business idea with borrowed money is enormous. Therefore, your business plan needs to be foolproof because you don’t want to spend your days dreading if you’ll be able to make the payments each month.
If personal finance has taught us something is that debt is never a good idea. However, a loan taken out to increase your future profits can be a good option. Calculate your risk before spending borrowed money to make money.
FAQs
What do people mean when they say that you “have to spend money to make money”?
Spend money to make money reference is often used to describe the process of investing a sum in a profitable business and the related costs. Spending a certain amount of money wisely will provide you with so much more in the following period.
Do you have to spend money to make money?
You don’t have to spend money to make money. If you already have a set of skills, you can sell your time and knowledge as a regular employee or freelance consultant. However, people aiming to create a passive income are keener on spending money to make a steady profit without much effort.
What should you do with $1,000?
There are so many things you can do with $1,000 to make more money. You can invest it in stocks, add it to your emergency fund, purchase a domain, set a website, buy supplies for crafts, etc. You can purchase a course to learn a new skill or buy a better computer and look for freelance jobs in your field you can work from home.
Bottom Line
Old-school financial managers will always keep saying, “you need to spend money to earn money.” But, with the world going forward and the economy being relatively unpredictable, spending money you don’t have to earn more money and repay the loan is a significant risk.
A good business idea is worth taking the risk, but having a safety net is always advised. For example, spending your savings and ending up with an unprofitable business will set you back at the moment.
But spending a loan into an unprofitable business will not only set you back currently, but it will also be a burden for years to come.
In the end, it’s up to you if you’re willing to spend money currently to earn more money in the future. You should always do what you feel comfortable with and calculate the risk you’re taking and how it will affect your finances.
Are you willing to spend money to earn money? Do you prefer high-yield risking over safe, low-yield investing?
