Lazy dollars refer to the amount of money that is invested in a particular thing, but does not bring any returns. In terms of business, it refers to money that is not generating any other funds, or is generating less than the amount that it is expected to. I have a checking account where I keep emergency funds, to pay living expenses, to pay off a line of credit and pay mortgages. This money is just lying around gaining little or no interest. Other lazy dollars are on my credit card. It has a 17% interest rate and have a loan of about $1000. By keeping this high balance, I am slowly losing money since I will have to pay a higher amount.
The first step will be to identify the important and essential expenses I make each month by looking into my previous bank statements and receipts. Taking the average amount will give a more accurate figure. The next step would be to determine income generated per month. It should include all income sources. The next step will be to determine my savings goals and the way I plan to pay my debts (Livingstone, 2016) . I will incorporate two strategies. Saving will help in transferring the money in my checking account to the savings account. A savings account earns better interest. The other strategy will be to pay off the high cost debt on my credit card since they more I put it off the more it gains more interest.
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I earn $4000 a month. I also have a side business that earns me an extra $1700 per month on average. That makes a total of $5700. I spend around $5300 on all my expenses and have a balance of $400. This is not enough so I will cut down on unnecessary expenses such as weekend outings and do them only once in a month. This will get me around 400 more dollars. This way, I am able to save around $600 per month. In 5 years, I save $36,000. In 10 years, I will have $72000 and about $144000 in two decades.
References
Five Saving Strategies . (n.d.). Retrieved from America Saves: https://americasaves.org/for-savers/make-a-plan-how-to-save-money/five-strategies-to-saving
Livingstone, A. (2016). 5 Best Money-Saving Strategies Proven to Work for Anyone. Money Crashers .
