The 4 types of lazy money you need to change

Want one big key to wealth building? Turning your lazy money into working money.

Let’s look at some examples of lazy money that might be sitting in your life right now and that could be a hidden treasure for you just waiting for you to uncover it and put it to work.

Lazy money type 1: Underused savings

People often think of money in the bank as ‘safe’ money. That may be true to an extent, depending of course on how much you trust the ‘banksters’ — I mean bankers — and the banking system.

However, there’s a limit to what savings can do for you when they’re simply sitting in cash. You are constrained by how much interest the banks are willing to pay you, which is usually not much; and if left to the ebb and flow of inflation, then you’ll likely be going backwards. This is why cash is trash when it comes to wealth creation. It’s great for a little bit of protection and sound sleep, but you’ll never save your way to wealth.

So, decide what you need for your buffers and savings, then decide what savings you’re not putting to good use. This could include excess emergency funds (beyond what’s necessary), untouched savings for long-term goals that aren’t being optimised, or surplus cash you haven’t allocated to any particular purpose.

While savings are important for financial security, you need to balance them with opportunities for growth. Don’t let your savings sit idle; find a way to make that lazy money start working for you.

Lazy money type 2: Wasted dollars

Wasted dollars are exactly what they sound like — money that has slipped through the cracks owing to inefficiencies in your financial habits.

You’ve probably already spotted some during your ‘plugging the leaks’ exercise. It could be high-interest debt that’s costing you a fortune, excessive fees, inefficient loan structures, unclaimed tax deductions, unnecessary expenses or those sneaky unused subscriptions that quietly drain your bank account every month.

By now you’ve likely identified some of these money-wasting habits and have a clearer picture of how much extra cashflow you could have each month once these leaks are plugged. So what do you do with that freed-up money? Here’s a trick: a dollar without a plan and purpose will naturally flow towards low-value, low-priority activities.

If you don’t give that money a job, it will slowly evaporate from your life, leaving you wondering where it went. Once you’ve uncovered these inefficiencies, the goal is to turn wasted dollars into working dollars by allocating this newly freed-up cash to something that will serve your long-term goals. It could be paying down other debt faster, building up your emergency fund or moving that money into investments that will generate higher returns. The key is to give every dollar a clear purpose, whether that’s wealth building, debt reduction or strategic savings.

Lazy money type 3: Untapped home equity

Let’s talk about one of the biggest sources of lazy money: the untapped equity in your home.

If you own property, you might have a treasure trove of potential wealth just sitting there, in the form of home equity, doing nothing. Now, I know many people love the idea of having a mortgage-free home or building up equity over time, but here’s the thing: while that money is tied up in your property, it’s not actively working to build more wealth for you.

Unlock your home equity

Your home equity is a dormant asset. It has value, but unless you tap into it that value is just sitting there. The good news is you can unlock this equity and put it to work without selling your home.

Options like home equity loans, home equity lines of credit or refinancing allow you to access that money and use it strategically. Maybe it’s to fund another investment, to start a business or even to make improvements to your current home that will increase its value.

Use equity wisely

Of course, tapping into your home equity comes with responsibility. You don’t want to pull out this money for low-value purposes – after all, you have to pay it back at some point.

If you’re going to pull equity out, it should be used for wealth-building activities — things that will give you a reliable return on your investment. Think of it as redeploying a lazy asset to something more productive. The goal is to make sure that, by leveraging your home’s equity, you’re putting yourself in a stronger financial position down the road.

Untapped home equity is one of the most common forms of lazy money. If it’s just sitting there, you’re missing out on opportunities to grow your wealth. The key is to unlock it responsibly and use it for investments or opportunities that will ultimately increase your financial standing.

I’ve seen many investors over the years access their equity and use it to rapidly grow their portfolios, from investing in real estate to deploying into high-income earning opportunities. It all comes down to a mathematical equation: If I can access x amount of equity at x per cent interest and use it to earn y per cent return, then is it a good deal or not? And is the return worth the risk?

Consider the flipside of this risk. What if you don’t access your equity and get it working for you? What impact could that have on your financial results?

Lazy money type 4: Poor-performing assets

If you have been investing for a while, then it’s highly likely you have had that one investment — or maybe more than one — that just isn’t pulling its weight.

Whether it’s a stock that’s consistently underperforming, a piece of real estate that’s not giving you the returns you hoped for or your retirement savings, these poor-performing assets are a classic example of lazy money. They’re stuck in your portfolio, doing very little to help you achieve your financial goals.

Identify the dead weight

The first step in dealing with poor-performing assets is to recognise them. It’s easy to hold onto an investment, hoping it will turn around or simply because you’re emotionally attached to it. But here’s the truth: sometimes you need to cut your losses.

If an asset has been dragging its feet for too long, it’s time to reassess whether it’s worth holding onto or whether that money could be better used elsewhere.

Make the switch

Once you’ve identified these lazy assets, the goal is to replace them with something that offers better potential. It might be time to sell off that underperforming stock or reassess the value of your real estate holdings.

The important part is making sure that every asset in your portfolio is actively contributing to your overall wealth-building strategy. Remember, your money should be working as hard as you are — don’t let it stay lazy.

This is an edited extract from Escape the Middle by Todd Polke. Todd is an investor, entrepreneur, and international educator in investing and wealth creation. For more than two decades, he has guided thousands of individuals in growing and scaling their wealth to achieve financial independence. Learn more at toddpolke.com