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November 4, 2024 by Brett Tams

Are you looking for the best jobs that pay $100,000 a year? Many people dream of making a six-figure salary and making more money. A job that pays $100,000 or more can help you reach your financial goals. It can let you save for the future, pay off debts, or enjoy a comfortable lifestyle. Jobs…

Are you looking for the best jobs that pay $100,000 a year?

Many people dream of making a six-figure salary and making more money. A job that pays $100,000 or more can help you reach your financial goals. It can let you save for the future, pay off debts, or enjoy a comfortable lifestyle.

Jobs that pay $100,000 or more many times need a college degree. But some high-paying jobs only need training.

Best Jobs That Pay $100,000 a Year

Below are the best jobs that pay $100,000 a year.

Recommended reading: 26 High Paying Jobs With No Experience Required

1. Software developer

Software developers are in high demand. They create computer programs and apps that we use every day. This job many times pays over $100,000 a year.

You don’t always need a college degree to become a software developer. Many learn through coding boot camps or teach themselves. The most important thing is having strong programming skills.

This job lets you be creative and solve problems, and you’ll usually work with a team of other developers. Many companies may allow you to work from home (I know a few software developers and they all work from home), and sometimes you may even have flexible hours.

2. Pharmacist

Pharmacists give out medicines and help patients understand how to use them safely. They also check for drug interactions and answer questions about medications.

To become a pharmacist, you’ll need to go to school, and you’ll need a degree called a doctor of pharmacy. It usually takes about 5 to 6 years after high school.

The hard work pays off, though, as pharmacists make over $100,000.

You can work in different places as a pharmacist. Many work in drugstores or grocery stores, and others work in hospitals or clinics.

3. Airline pilot

Many pilots earn over $100,000 a year, especially those who work for major airlines.

As a commercial pilot, you’ll fly passengers and cargo to destinations around the world. You’ll need special training and licenses to do this job. It takes hard work, but the pay can be great!

New pilots usually start at smaller airlines and they may earn less money at first. But as you gain experience, you can move up to bigger airlines that pay more. Some experienced pilots at major airlines can make $200,000 or even $300,000 or more a year!

The job comes with other perks too. You might get free or cheap flights for you and your family. Plus, you’ll get to travel and see new places as part of your work.

4. Blogger

Blogging is what I do, and I make well over $100,000 per year. There have even been many months where I have earned over $100,000 in a single month.

As a blogger, you can write about topics you’re passionate about, whether it’s personal finance, travel, cooking, lifestyle, or something else, while also helping others by sharing useful information.

Making a six-figure income as a blogger typically involves multiple income streams, such as affiliate marketing, sponsored content, ad revenue, and selling digital products or courses (I do all of these to make money on my blog). It takes time and effort to build an audience and establish trust with readers, but once your blog grows, the opportunities are pretty much endless.

The best part is that you don’t need any specific degree to get started – just a willingness to learn, a knack for writing, and a strong work ethic.

You’ll also enjoy flexibility in your schedule and the potential to work from anywhere. Many successful bloggers, including myself, have turned their blogs into full-time, money-making careers.

You can learn more at How To Start A Blog FREE Course and join over 80,000 people who have already taken the course. Want to see how I built a $5,000,000 blog? In this free course, I show you how to create a blog, from the technical side to earning your first income and attracting readers.

5. Nurse practitioner

Nurse practitioners are in high demand and earn great salaries. You can make over $100,000 a year in this role.

To become a nurse practitioner, you’ll need extra schooling after becoming a registered nurse. You’ll need a master’s degree or doctoral nursing degree, as well as pass an exam.

This career lets you care for patients and work in different settings. You might work in hospitals, clinics, or private offices. Some nurse practitioners even run their own practices (many states allow for this).

6. Marketing manager

Marketing managers are in high demand because they help companies (such as in tech, retail, travel, and more) promote products and services to customers. This job can pay $100,000 or more per year.

As a marketing manager, you’d create plans (such as a marketing campaign) to reach target audiences. You might use social media, ads, and other ways to spread the word about a company.

They work with teams to come up with new ideas, and this could include making videos, writing content, or planning events. They also look at data to see what’s working and what’s not.

7. Art director

Art directors can make good money while pursuing their love of art. They get to shape the look of projects. This could be for ads, magazines, movies, or TV shows, and they make big decisions about colors, styles, and layouts.

The pay for art directors is great and many earn over $100,000 a year.

To become an art director, you need a mix of skills. You should be good at art and design. But you also need leadership abilities, as art directors guide teams of artists and designers.

Most art directors have a bachelor’s degree in art or design and many start in lower-level creative jobs first. They work their way up to director roles.

8. Physicians and surgeons

Physicians are among the highest-paid professionals in the medical field. They diagnose and treat illnesses, injuries, and other health problems.

To become a physician, you need to complete medical school and a residency program, and this takes many years of study and hard work.

The average salary for physicians is well over $100,000 per year. Some specialists can earn much more, even over $500,000 or higher.

As a physician, you can choose from many different specialties. These include family medicine, pediatrics, surgery, and more.

Physicians usually work long hours, many times including nights and weekends. But many find the job very rewarding because they help people every day.

Recommended reading: 30 Best Jobs That Help People

9. Copywriter

Are you good with words? Do you love writing? A copywriter job might be perfect for you! Copywriters create content for websites, ads, and more.

Copywriters can make $100,000 or more per year. I personally know many copywriters who make a great income.

Many companies need copywriters. You could work for big businesses, small shops, or even yourself. There are lots of options.

To be a great copywriter, you need to be creative and you also need to understand what makes people want to buy things.

You don’t always need a college degree to be a copywriter. But you do need to be a really good writer.

10. Real estate agent

Real estate agents can make $100,000 a year or more. This job lets you help people buy and sell homes.

You need a license to become an agent. Getting one takes some study and passing a test. Once you have it, you can start working with clients.

Your pay depends on how many homes you sell. Most agents earn a percentage of each sale, so the more expensive the house, the more money you can make.

11. Health services manager

Health services managers play a key role in running healthcare facilities. They oversee daily operations, manage budgets, create work schedules, make sure patients get good care, and more.

To become a health services manager, you’ll need a bachelor’s degree, and many employers prefer a master’s degree in health administration or a related field.

This job is in high demand. As the population ages, more healthcare services are needed. This means more jobs for health services managers.

12. Business operations manager

Business operations managers are in charge of how a company works day-to-day. They make sure everything runs smoothly and this includes things like managing people, money, and resources.

You’d need to be good at solving problems and making decisions. Being organized is also very important.

13. Economist

Economists study how people and businesses use resources. They look at things like money, goods, and services, and they try to understand and predict economic trends.

Economists use math and statistics a lot and need strong problem-solving skills. They might work for the government, banks, or big companies.

To become an economist, you’ll need at least a bachelor’s degree. Many jobs ask for a master’s degree or even a Ph.D.

14. Mathematician

Mathematicians use numbers and formulas to solve complex problems. They work in many fields like science, engineering, and finance.

Many mathematicians work in research roles at universities or government labs. Some find jobs in private industries like tech or insurance companies.

To become a mathematician, you usually need at least a master’s degree in math. Some jobs might require a Ph.D.

15. Architect

Architects design buildings and spaces that shape our world. They might create homes, offices, schools, or even entire cities. It’s a job that mixes art and science.

As an architect, you’ll use your creativity to draw plans and make models. You’ll work with clients to understand their needs and turn their ideas into reality. Math and physics skills are important too, as you need to make sure buildings are safe and strong.

16. Real estate entrepreneur

Real estate entrepreneurs buy, sell, and manage properties to make money. They look for good deals on houses, apartments, commercial buildings, or land.

You can start small with just one property. As you learn, you can grow your business and own more places.

Real estate investors sometimes even fix up old buildings. They make them look nice so they can sell them for more money (this is called flipping).

Some entrepreneurs rent out their properties. They become landlords and collect money from tenants each month.

Recommended reading: 23 Best Real Estate Side Hustles To Make Extra Money

17. Chiropractor

Chiropractors can make a great salary while helping people feel better.

They focus on treating problems with bones, muscles, and joints, and use their hands to adjust patients’ spines and other parts of their bodies.

To become a chiropractor, you need to go to school for several years after college. You’ll learn about the human body and how to treat different issues without surgery or medicine.

Many people visit chiropractors for back pain, neck pain, or headaches. You’d work with patients of all ages, from kids to older adults.

18. Sales manager

Sales managers lead teams of salespeople to meet company goals. You might enjoy this job if you like working with others and hitting targets.

As a sales manager, you’ll set sales goals, train new staff, and track performance. You’ll also work with other departments to create sales plans.

Also, you don’t need to be a sales manager to make over $100,000 each year – there are many sales jobs where you can make good money and not have to manage anyone.

19. Construction manager

Construction managers are in high demand (because construction is booming all over!), and they oversee building construction projects from start to finish. This job can pay over $100,000 a year for top earners.

This job needs good leadership skills as they are in charge of workers, budgets, and schedules. Their job is to make sure everything runs smoothly.

Most construction managers have a bachelor’s degree. You might study construction science, engineering, or business. Some people work their way up from other construction jobs too.

20. IT manager

IT (information technology) managers play an important role in companies, especially nowadays, with nearly all companies using a computer in some way. IT managers oversee computer systems and IT teams. This job typically pays over $100,000 a year.

You’ll need strong tech skills and leadership abilities. IT managers plan projects, set budgets, and manage staff. They also make sure systems run smoothly and stay secure.

To become an IT manager, you typically need a bachelor’s degree in computer science or a related field. Some companies may prefer a master’s degree. Work experience in IT is also very important.

21. Dentist

As a dentist, you can earn well over $100,000 a year by helping people take care of their teeth.

Dentists do many things, such as clean teeth, fill cavities, and fix broken teeth.

To become a dentist, you need to go to dental school after college. It takes about 8 years of school in total – 4 years of undergraduate school and 4 years of dental school.

22. Veterinarian

Vets take care of sick and injured animals, giving them medicine and performing surgeries.

Becoming a vet takes a lot of school (a minimum of 8 years of schooling – 4 years in undergraduate, 4 in veterinary school, and time spent in clinical training), but it can pay off. Many vets earn over $100,000 a year.

Vets don’t just work in animal clinics. They can find jobs in zoos, farms, or research labs.

23. Sell printables

Want to make $100,000 a year? Try selling printables!

Printables are digital designs that people can buy and print at home. You can create all sorts of printables, such as planners, wall art, gift tags, cards, or even party decorations.

The best part? You only need to make each design once. Then you can sell it over and over again.

You can learn more at How I Make Money Selling Printables On Etsy.

Do you want to make money selling printables online? This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.

24. Occupational therapist

If you’re looking for a rewarding career that can pay well, becoming an occupational therapist might be a great choice. This job helps people overcome physical and mental challenges to live better lives.

Occupational therapists work with kids, adults, or older people who have injuries, illnesses, or disabilities.

To become an occupational therapist, you’ll need a master’s degree and you’ll also have to get a license to practice.

25. Lawyer

You can earn a good living as a lawyer and this is typically one of the highest-paying jobs in the workforce. Many lawyers make $100,000 or more per year. The highest-paid lawyers can even make well over $200,000 annually.

Lawyers give legal advice, represent clients, and work on different types of cases. These could include criminal law, family law, or business law.

To become a lawyer, you need to go to law school after college, as well as pass the bar exam.

26. HR manager

Human resources managers play a very important role in companies. They handle hiring, employee relations, and workplace policies. Many HR manager jobs pay $100,000 or more per year.

To become an HR manager, you usually need a bachelor’s degree in human resources or a related field. Some jobs may ask for a master’s degree. Experience in HR is also important.

27. Speech-language pathologist

Speech-language pathology might be perfect for you if you are looking for a job that pays well and also helps people. This career lets you work with people of all ages who have trouble speaking or swallowing.

This job is in high demand and you can find work in schools, hospitals, or private clinics. Some speech-language pathologists even work for themselves.

To become one, you’ll need to go to college and get a master’s degree. You’ll also need a license to work.

28. Personal financial advisor

Personal financial advisors help people manage their money and plan for the future. They can make around $100,000 or more a year.

As an advisor, you’d work with clients to set financial goals. You might help them save for retirement, buy a house, or pay for their kids’ college. You might also give advice on investments, insurance, and taxes.

29. Bookkeeper

Bookkeepers keep track of financial records for businesses, record income and expenses, manage payroll, and create financial reports.

To become a bookkeeper, you usually need a high school diploma or equivalent. Some employers might prefer a bachelor’s degree in accounting or a related field.

I have a few friends who provide monthly bookkeeping services to small businesses, and they all really like what they do. Plus, you don’t need a college degree to get started (only one of them has an accounting degree – most do not!) – so this is something you can learn.

You can learn more at Online Bookkeeping Jobs: Learn How To Get Started Today.

This free training will teach you what you need to know to become a virtual bookkeeper and make money from home.

30. Professor

Teaching professors can earn $100,000 or more per year. This job combines a love for education with the chance to make good money.

You’ll need advanced degrees to become a teaching professor as most schools want you to have a Ph.D. in your field. Some might accept a master’s degree for certain subjects.

Your main job is to teach college students. You’ll create lesson plans, give lectures, and grade assignments.

Many teaching professors work at universities. But you can also find jobs at community colleges or online schools. Some professors teach both in-person and online classes.

31. Chief executive officer

As a CEO, you can earn over $100,000 a year and some earn millions of dollars each year.

CEOs lead companies and make important decisions. They set goals, manage teams, and work with other executives. It’s a fast-paced role that requires strong leadership skills.

To become a CEO, you’ll need lots of experience. Most start in lower roles and work their way up. A business degree can help, but it’s not always required.

32. Engineer

Engineers are some of the highest-paid professionals in the job market today. Many engineering jobs pay salaries well over $100,000 per year, so this makes it an attractive career path for those seeking financial stability.

There are many different types of engineers, such as:

Civil engineer – They design and supervise the construction of infrastructure projects like roads, bridges, and buildings.
Mechanical engineer – They work on designing, developing, and maintaining mechanical systems, from engines to manufacturing equipment.
Electrical engineer – They focus on electrical systems, including power generation, wiring, and electronics.
Software engineer – They create and maintain software applications and systems for computers and other devices.
Aerospace engineer – They design aircraft, spacecraft, and satellites, working on systems for flight and space exploration.
Chemical engineer – They apply chemistry to solve problems in manufacturing, healthcare, and energy, usually working with chemicals, fuels, and drugs.
Environmental engineer – They develop solutions to environmental problems, such as pollution control and waste management.

To become an engineer, you’ll need a strong background in math and science. Most engineering jobs require at least a bachelor’s degree in a related field.

Frequently Asked Questions

Below are answers to common questions about the best jobs that pay $100,000 a year.

Is earning $100,000 every year considered to be a good salary?

Yes, $100,000 is a good salary for most people. It’s more than double the average U.S. income. This amount can give you a comfortable life in many places. Of course, in some areas, $100,000 may not seem like enough. So, a lot depends on where you live.

What jobs pay around $100K a year?

Many jobs can pay $100K or more. Some top choices are software developer, pharmacist, airline pilot, and nurse practitioner. These jobs need special training or a degree but they can lead to high pay and good job security.

What is the easiest job that pays $100K a year?

There’s no truly “easy” job that pays $100K. All high-paying jobs need hard work and skills. But some may feel easier if you enjoy them. For example, if you love writing, being a successful blogger could be a good fit.

What are the best jobs that pay $100,000 a year without a degree?

You can earn $100K without a college degree in some jobs such as real estate agent, sales manager, blogger, and pilot. These jobs usually need special training, apprenticeships, or certifications instead of a degree. There are also jobs that I didn’t talk about in the list above that can make over $100,000 a year without a degree such as working as a firefighter, in law enforcement, as a plumber, and more.

What are $100K jobs that no one wants?

Some high-paying jobs are less popular due to stress or tough conditions. Examples include underwater welder, oil rig worker, and coal miner. These jobs can pay well but may have health risks or unpleasant working conditions.

What are some jobs that pay over $200K a year?

Jobs that can pay over $200K many times need lots of education and experience. Some examples are surgeon, investment banker, CEO, and lawyer. These jobs usually need many years of school and work to reach top pay levels.

What are some jobs that pay $100K a month?

Jobs that pay $100K per month ($1.2 million per year) are more rare. They might include top athletes, famous actors or musicians, successful business owners, and high-level executives at big companies. These jobs are hard to get and often involve fame or running large businesses.

Best Jobs That Pay $100,000 a Year – Summary

I hope you enjoyed my article on the best jobs that pay $100K a year.

Finding a job that pays $100,000 or more can open doors to financial security and a better quality of life. Whether you’re interested in healthcare, technology, or even entrepreneurship, there are many options for jobs that pay a high salary.

Some of these careers require advanced degrees, while others only need specialized training or a willingness to learn new skills.

I hope you are able to find the job and career path that you are looking for!

What do you think are the best jobs that pay $100,000 or more each year?

Recommended reading:

Source: makingsenseofcents.com

Apache is functioning normally

November 2, 2024 by Brett Tams

First-time parents can be so preoccupied with the love they feel for their new babies and the constant care required that they may lose sight of their larger financial goals. When you’re busy getting to know your little human, you may not prioritize money management.

But securing your growing family’s finances is an important consideration. You have new needs and goals evolving, such as your child’s education and your retirement. Here’s smart advice to help you manage your money well during this new life stage and beyond.

Key Points

• Parents can avoid overspending on baby gear by considering secondhand items or accepting hand-me-downs.

• Creating a budget using the 50/30/20 rule may help first-time parents manage new expenses like daycare.

• Parents can prepare for unexpected expenses by building an emergency fund in a high-yield savings account.

• New parents should continue to prioritize retirement savings by utilizing employer 401(k) plans or IRAs.

• Parents can start saving early for their child’s education with 529 plans or Coverdell ESAs.

7 Financial Tips for New Parents

Raising a child can cost more than $15,000 a year, according to one recent calculation using U.S. Department of Agriculture data. That can put some serious stress on your finances. Here’s guidance on making your money work for you and your family.

1. Avoid Overspending on Baby Gear

As a first-time parent, you likely have quite a bit of work to do before the baby arrives. You may need to create and furnish a nursery for your child, and stock up on diapers, bottles, clothes, toys, and so much more.

As you’re setting up your new life with a baby, it can feel like buying everything brand-new is the only option, but that can be costly. You might consider taking advantage of used or gifted items so as not to deplete your bank account.

You can buy a lot of items secondhand at a lower cost through online marketplaces or used goods and consignment stores. Or you might see what “freecycle” networks in your area have available at no charge. That’s one way to save money daily.

And if you have friends, family, or neighbors that already have children, they may be looking to unload some of the gear their children no longer use. Families with older kids are often happy to pass on items such as clothes, cribs, playpens, toys, and books. You might check Nextdoor.com and other community sites, which can be a good resource for local families seeking to offload these items.

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

2. Don’t Live Without a Safety Net

As a parent, you have a host of new responsibilities, and expenses you never imagined may pop up. So consider these moves:

• An emergency fund becomes even more important when you have a child or one is on the way. You’re now responsible for all of their needs, and there may be unplanned costs that pop up along the way. Or, if you were to endure a job loss, you’d need to continue to provide for your child.

• Saving for an emergency is a process, and it’s okay to start small — even just $25 a week will add up over time. Some people opt to store their emergency fund in a high-yield savings account or checking account. Earning interest that way will help your money grow faster.

• Review your health insurance. You may want to opt for a different plan now that you have a child. An addition to the family is usually a qualifying life event (QLE) that can allow you to make changes regarding your plan outside of the usual open enrollment period.

• Consider life insurance and disability insurance if you don’t already have it or, if you do, see if you want to update your coverage. When a little one is depending on you, you probably want to protect their future if you weren’t able to earn your usual income. Maybe you can only afford a modest policy at this moment. That can be fine; it’s a start and something you can revisit later as you grow your wealth.

3. Keep a Budget

With a baby on board, you likely have a host of new expenses, from the life insurance mentioned above to daycare to toys (and more toys). Making a budget can help you prepare to pay for the extra expenses.

The word “budget” can conjure up fear, but it’s really just a helpful set of financial guardrails that help you balance how much you have coming in and how much is going out towards expenditures and savings.

• You might try the popular 50/30/20 budget rule which says that 50% of your take-home pay should go toward needs, 30% toward wants, and 20% toward savings.

• You could check with your financial institution to see what kinds of tools they provide for tracking your money. This can be a great resource as you work to improve your money management and hit your goals.

• To make a budget, you might also see what apps or websites offer products that could work for you. Check with trusted friends to see what they may recommend.

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4. Don’t Put Off Retirement Savings

Another financial mistake new parents: Learning to pay yourself first isn’t easy for a lot of parents to do, but it’s vital. (For instance, while you can borrow money for college expenses for your child, you can’t likely borrow for your retirement.)

For retirement saving, one way to start is by enrolling in your company’s 401(k) plan if one is offered. Some employers will match your contribution, up to a certain percentage, and you’ll be able to have your contribution taken directly from your paycheck.

If your employer doesn’t offer a 401(k), you could open an individual retirement account, or IRA, instead. Getting in the habit of saving at least a little for your own future can be important as your focus shifts to your new addition.

It’s never too early to start saving for retirement.

💡 Quick Tip: Most savings accounts only earn a fraction of a percentage in interest. Not at SoFi. Our high-yield savings account can help you make meaningful progress towards your financial goals.

5. Start Savings for Your Child’s College

Saving for your children’s tuition can be an important step for many new parents. That’s because the sooner you start, the better. Your money will have that much more time to grow. College is a big-ticket expense, with estimates of tuition in 18 years being calculated as follows:

• $25,039 per year for a public college

• $48,380 per year for a private college

While a standard savings account may seem like the easy choice, there are other options designed to help you or grandparents save for a child’s education.

• You might opt for the benefits of a 529 college savings plan. There are two types: education savings plans and prepaid tuition plans.

• With an education savings plan, a tax-deferred investment account is used to save for the child’s future qualified higher education expenses, like tuition, fees, room and board, computers, and textbooks. Funds used for qualified expenses are not subject to federal income tax.

• With a prepaid tuition plan, an account holder purchases units or credits at participating colleges and universities for future tuition and fees at current prices for the beneficiary. Money in this fund is guaranteed to rise at the same rate as tuition. Most of the plans have residency requirements for the saver and/or beneficiary.

• A Coverdell Education Savings Account may also be worth looking into. In general, the beneficiary can receive tax-free distributions to pay for qualified education expenses. Contributions to a Coverdell account are limited to $2,000 per year, per beneficiary. The IRS sets no specific limits for 529s.

calculator to check eligibility.

• Adoption Tax Credit: This offers tax incentives to cover the cost incurred if you adopted a child. In 2024, the maximum credit was $16,810 per qualifying child.

You might consult a tax professional to see which of these you can claim.

7. Teach Your Kids About Money

If kids aren’t taught the basics of financial literacy at a young age, they may struggle to make a budget, avoid credit card debt, or save money when they’re older. You can help your children learn what it means to manage money in these ways:

• Kids often love to play store, so go ahead and join in. By exchanging goods for money, they’re already beginning to understand the basic principles of commerce.

• As they get older, you may want to give them an allowance in exchange for chores or homework completion.

• You could even have them make a budget with their earnings, and encourage them to spend, save, and donate.

• You could open a checking account with them, once they are old enough, and teach them how it works.

• You might give them a gift card or prepaid debit card and coach them on sensible spending.

Can You Ever Be Fully Financially Ready for Parenthood?

It’s probably not possible to be fully financially ready for parenthood or for adult life in general. Part of each person’s financial journey is learning how to plan for the unexpected and navigate curveballs. That might mean financing a child’s dance lessons or speech therapy. You might wind up moving to what you consider a better school district and paying more for your mortgage and taxes.

That’s why embracing some of the guidelines above, such as making a budget, stocking an emergency fund with cash (perhaps sending some money there via direct deposit), and saving for the future can be so important.

The Takeaway

Being a new parent is a joyful time but also a challenging one. One priority not to lose track of is your financial health, especially since you are now providing for a little one and their future. By budgeting and spending wisely, saving for the future, and knowing which tax credits you may be able to claim, you can help yourself get on the path to financial security for your family.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

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FAQ

How can you plan financially for parenthood?

Planning financially for parenthood can involve updating your budget, allocating funds to the right insurance policies and long-term goals (such as your child’s education and your own retirement), and creating an emergency fund, if you don’t already have one. Also educate yourself on any tax credits you might qualify for once you become a parent.

What are the biggest unforeseen expenses of parenthood?

Some of the unforeseen expenses of parenthood include your child’s medical, dental, and mental health costs; academic support (such as tutors and prep classes); hobbies (taking tae kwon do classes, perhaps, or traveling with their soccer club); and funding any family travel and vacations.

How much does a child cost per year?

The cost of raising a child per year can vary widely, depending on such factors as medical needs and whether they are attending public or private school. That said, recent studies suggest the current average figure is around $15,000 to $17,500 per year per child.

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As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOBNK-Q324-101

Source: sofi.com

Apache is functioning normally

November 2, 2024 by Brett Tams

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:

Learn how women can excel at investing, overcome financial challenges, and build wealth with practical strategies.

What does it mean to invest like a girl? How can women start investing and overcome financial challenges? Hosts Sean Pyles and Kim Palmer discuss gender differences in investing and practical strategies for women to build wealth. Kim interviews Jessica Spangler, author of Invest Like a Girl: Jump into the Stock Market, Reach Your Money Goals and Build Wealth, about the ways women tend to excel at investing, including taking time to make investment decisions, avoiding rash choices during market downturns, and focusing on long-term goals. They discuss strategies for eliminating high-interest debt, creating a budget that works for your lifestyle, and choosing the right mix of stocks and bonds for personal goals.

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Episode transcript

This transcript was generated from podcast audio by an AI tool.

Sean Pyles:

Welcome to NerdWallet’s Smart Money podcast. I’m Sean Pyles.

Kim Palmer:

And I’m Kim Palmer.

Sean Pyles:

On Smart Money, we are all about answering your money questions, and today we’re tackling an intriguing one. What does it mean to invest like a girl? Investing might seem like a topic that needn’t be gendered, but it turns out there are some gender differences, and that’s part of what we’ll dive into today. Kim, in her role as the host of our regular book club series, is here to guide the conversation. So Kim, who are you talking with?

Kim Palmer:

I’ll be talking with Jessica Spangler. She’s the author of Invest Like a Girl: Jump into the Stock Market, Reach Your Money Goals and Build Wealth. Jess is also a popular money educator on Instagram and she has a lot of ideas to share on women, investing and personal finance.

Sean Pyles:

Sounds great. Well, we also want to remind listeners that you can enter for a chance to win our book giveaway at nerdwallet.com/bookclub for our next book club pick. And with that, Kim, I’ll let you take things from here.

Kim Palmer:

Great, thank you. Jess, welcome to our show.

Jessica Spangler:

I’m so happy to be here. Thanks for having me.

Kim Palmer:

Let’s start with what really feels like the most awkward question. Why do women need their own investing book? I mean, don’t we all have the same basic rules that apply to us all?

Jessica Spangler:

Absolutely. The title of this book is intentionally ironic, right? Invest Like a Girl. What does that mean? Well, it’s really twofold. First of all, when you walk into any big box store, you’re pretty much bound to find ballpoint pens for women or razors for women or even laxatives for women. Really, there’s nothing fundamentally different about these products. They function just the same for people of all genders. There are differences about investing when it comes to women, even though the fundamentals of investing are the same for everyone.

For example, women are more likely to be the primary caretakers in the home, whether that’s taking career breaks or stepping down to part-time to help raise children or even to take care of our aging parents. On top of that, we are more likely to live longer. And so we have longer periods of retirement and higher health care costs as we age. Those factors compound together to equate to lost savings over time. This investing gap needs to be made up so that we can fund these factors that really differentiate us in retirement.

One might think then, the second half of the irony of the title, Invest Like a Girl, there’s similar sayings, hit like a girl, punch like a girl. Well, the thing about investing actually is that women are very good at it. When you look at the data, Fidelity did an unbelievable, wonderful study called the Women in Investing Study that actually showed that women, while we often hesitate to start investing and while our numbers are growing, we hesitate to get started. But actually, when we do, we wind up earning higher returns on average than men.

Kim Palmer:

That is so fascinating to me and that really jumped out at me from your book. What explains that?

Jessica Spangler:

There are some differences that were noted in the study. In particular, women were more likely to take their time when making investing decisions. In fact, the stereotype that women are probably going to be more emotional investors and might be more likely to make rash decisions, well, in fact, it’s quite the opposite. We actually do more research. We are less likely to make split-second decisions. We’re less likely to sell in a market downturn that is likely just a temporary fluctuation. And we’re more likely to have long-term goals and plans that we see to and stick through even when times get tumultuous.

Kim Palmer:

Given the importance of investing for women for all the reasons you just laid out, how can women get started with investing and make it a little bit easier?

Jessica Spangler:

This book, Invest Like a Girl, it’s really designed to be a guideline that will walk you through step-by-step exactly how to get started investing, and it’s really divided into two parts. The first half is really laying the framework for all of the investing lingo, breaking down all of the background information that you need to know about stocks and bonds and index funds and really getting into the finer details about informed decision-making so that when you get to the second half of the book, you have a whole bunch of sample investment portfolios laid out for you so that you can find one that seems to align the most with your goals, and then you can sort of tweak and tinker with those portfolio samples so that they’re really customized to you using all of the information that you learned in the first half of the book.

Kim Palmer:

You’re also a big advocate of the idea that you don’t have to have a trust fund or a lot of money to get started. Do you have to have a certain amount? I mean, when should you get started?

Jessica Spangler:

There is no denying that people that grow up with money absolutely have a leg up. There’s no denying it. But those people are already going to be investing. They’re already going to be utilizing these age-old tools that they’ve known about for generations, whether we do it or not. No matter how much money you have or what background you come from, there is real power in getting some skin in the game.

And you don’t have to have any amount of money, really. Nowadays, you can start with as little as a dollar to purchase fractional shares of a stock. I think that’s a really common misconception about this barrier of entry. Of course, I want to acknowledge that there is very real wealth inequality and there are people who absolutely have a leg up, but it is possible to improve your financial footing no matter where your starting point is with any amount of money using the tools that are in this book.

Kim Palmer:

Do you think that it’s important, just to take a step back, at someone’s overall personal finances? If you also have a lot of high-interest credit card debt, for example, or you don’t yet have an emergency savings fund, should you focus on that first before you think about investing, or do you suggest kind of just doing everything all at once?

Jessica Spangler:

There’s a great section in the first half of this book called Out of Debt and Into the Game. One of the things that we talk about is differentiating between high-interest debt and low-interest debt. When we think about high-interest debt, these are essentially interest rates that are going to exceed the average returns that you can expect in the stock market. And so, when we have really high-interest debt like credit card debt that can be much higher than 7%, going all the way up into 20%, 30% interest rates, it’s going to be really hard to benefit from investing when that interest rate on the debt is going to be taking two steps back every time you take one step forward.

We do talk about the strategies to eliminating high-interest debt in this book, because that really is important before you get started with investing. And of course, like you said, having an emergency fund is absolutely essential so that you’re not digging into your savings when life throws curveballs at us, as it always does.

Important to say that I do think often we feel as if we need to have no debt at all in order to start investing. This idea of you can’t have any student loans whatsoever, you’ve got to pay off your mortgage, that’s just not the case. If we can optimize our debt so that we are eliminating high-interest debt and still maintaining things that hopefully have a lower interest rate, something like federal student loans, whereas we may pay off our private ones if those have higher interest rates, we can really optimize our personal finances so that we can still benefit from the great wonderful compound interest of investing.

Kim Palmer:

Let’s dive into some of your other specific strategies. I know there’s a lot to unpack, but a few things that jumped out at me that maybe you could give us an overview of. You talk about how important it is to figure out your net worth and think about your cash flow. Could you just help us understand what that means exactly?

Jessica Spangler:

The gist of it is that your net worth is really everything that you own minus everything that you owe. It’s really just a snapshot. It’s a picture in time of what your assets are looking like versus what your liabilities are looking like. It really says nothing about necessarily the future of your financial standing or how successful or not you may be at investing. It’s really just a snapshot of where you’re at right now, how much money do you have in assets that you own, and how much money are you spending on liabilities or debt. We just calculate net worth by subtracting your outstanding debt and the money that you owe from your assets and the money that you own.

Assets may be cash. That’s an easy one. It could also be the value of your home if you own a home. It could be valuables, jewelry, furniture, things that have value, things that you could sell for cash. Whereas liabilities, the money that you owe, often we’re talking about loans here, the value of your student loans, the value of the mortgage on your home. If you have the value of credit card debt, you would subtract that number from your assets to get your net worth, and that’ll give you just a snapshot in time of where you are in terms of what you owe versus what you own.

Kim Palmer:

Perfect. And then you can work on growing that.

Jessica Spangler:

Exactly. It’s important to know where you’re at so that you can figure out where you’re going.

Kim Palmer:

And with the cash flow idea, is that basically you’re trying to get a handle on your budget just to understand your money going in and out before you start making any investing decisions?

Jessica Spangler:

Exactly. I think budgets can be really boring and dry and bland kind of conversation for a lot of people, and it’s something that even I just naturally feel kind of averse to because oftentimes it feels so strict and so stringent that it’s just really hard to find something that fluctuates with daily life as it does. But having a good budget means taking a look at all of your money, where it’s coming in, where it’s going, so that you can make room for things that you value. I think that’s really what differentiates a good budget from just an Excel spreadsheet that isn’t really doing anything for you.

A good budget helps you see what is going on with your money so that you can prioritize spending it on things that you love, whether that’s vacations or time with your family or investing. It’s being able to have an idea of the full clear picture so that way you can set aside that extra money for investing.

Kim Palmer:

And then when you are ready to turn to investing, you talk about picking the right mix of stocks and bonds and other investing vehicles. And obviously the best choices are going to vary so much by person. Can you give us an overview of how someone makes those choices for themselves?

Jessica Spangler:

Like you said, it really is such a personal decision. There are a lot of factors that go into why someone may lean more stock-heavy in their portfolio versus bond-heavy in their portfolio. Generally, we’re thinking about a couple different things. First of all is your risk tolerance. This is how much you can deal with fluctuations in the market.

Stock market crashes are normal. It’s a normal part of the market cycle. Even just normal fluctuations in the market, it’s very normal. Some people are totally comfortable with those fluctuations, and they don’t mind seeing their portfolio drop by 30% one year and be up by 30% the next. That person would be more likely to choose a stock-heavy portfolio where equities can fluctuate more rapidly on a regular basis.

A person who wants less risk in their portfolio, that person may be more likely to purchase something like bonds, where the value is less likely to fluctuate, and as long as you purchase government bonds, you are going to get what you put in at the end plus interest. Those ratios in your portfolio can change accordingly.

The other part of the equation is time horizon. How long you have before you need to access the money can really greatly impact what kinds of decisions you decide to make. For example, if you’re relatively young, you have 30-plus years before retirement, you may be very comfortable investing more heavily into stocks and equities because you have 30 years between now and the time that you have to actually think about withdrawing some of that money in retirement. So whatever kind of roller coaster the stock market takes you on in between now and then is really inconsequential so long as 30 years from now you actually net positive. Whereas somebody who’s retiring in the next couple of years and has built up this really solid nest egg, they might be a lot more cautious when investing 80% or 90% of their money into stocks and equities because when their retirement party is 50-something weeks away, they’re going to want to make sure that their money isn’t fluctuating heavily right before they get to retire and sit on a beach somewhere and enjoy the fruits of their labor.

There’s lots of other things to think about, but those are two of the main factors when it comes to selecting your ratio of equities and bonds and all the other different types of securities that we talk about in the book.

Sean Pyles:

More of Kim’s conversation with Jessica Spangler is coming up in a moment. Stay with us.

Kim Palmer:

A lot of people are also concerned about the social and environmental impact of the companies they’re investing in. Is that a good thing to consider? And if you do want to think about that, what’s the best way to evaluate it?

Jessica Spangler:

That is definitely something that we talk about in the book. Environmentally sustainable investing is a topic of growing importance and growing conversation. And more and more data is really coming out about it. It’s often hard to know what a company is reporting in terms of their financials and how that actually holds up on the back end with what they’re doing to be sustainable. There are some markers that we can look for when it comes to more equitable and sustainable investing, whether or not the companies are really transparent in their reporting process, whether that’s emissions or how they are having their products tested and rated for environmental grading groups.

In the book, you’ll read about various certifications that companies can go through to do that. There’s also the topic of diversity and equity and inclusion in the actual upper ranks of the company and whether or not they’re following through in some of their mission statements to include various groups into the higher levels of the executive company. But that said, and we talk about this in the book as well, it’s important to also look out for greenwashing or this concept of appearing to be particularly sustainable or equitable by using terms that don’t really have a clear definition, terms that make a product perhaps seem as if it may be sustainable when in fact it’s not.

I always encourage investors who are interested in sustainable and equitable investing to look into some of the documents and the literature that each individual company will post as part of their annual report and their reporting documents to the SEC, and those are mentioned in more detail in the book, but it really does require a pretty substantial amount of research to really determine whether or not a company is following through on their promises.

Kim Palmer:

Can you share some of the lessons you’ve learned yourself as an investor? Have you personally changed your strategy at all or made mistakes along the way?

Jessica Spangler:

I think that one of the biggest things that I’ve learned is that more complex is not necessarily better. And what I mean by that is I think there’s this tendency, the more you learn about investing and the more you learn about personal finance, to feel like you have to do these increasingly complicated investing maneuvers like, “Okay, I’ve got to have 4% this and 6% this and 12% that, and I should probably incorporate a little bit of this,” when frankly, most of the data suggests that those of us who invest primarily in a well-diversified balanced index fund that represents either the total stock market or the S&P 500, so the top 500 companies in the United States, we typically statistically outperform some of these major professional hedge fund managers who spend all of their time and money manipulating all of these different ratios and portfolios to find the perfect investment. Really keeping it simple can actually be more profitable, and that’s definitely something that I’ve learned over the years.

Kim Palmer:

In the book, you also say a lot of choices around investing really circle back to what your goals are. What are some examples of a short-term goal and a long-term goal that maybe investing could help us achieve?

Jessica Spangler:

When we think about financial goals, I tend to separate them into three different categories: short-term goals, medium-term goals, and long-term goals. Now, when I think about a short-term goal, I’m talking about one to two years, generally. And for a very short-term goal, like maybe you’re saving for a down payment on a house and a high-yield savings account, that might not be something you actually even want to invest for at all. If a goal is so short that it’s right around the corner and you really want to have that money flexible and available to you, a high-yield savings account might be the perfect place to put that money so that you still have access to it in cash, but you’re getting a higher interest rate than you would in a standard run-of-the-mill savings account.

Now a medium-term goal, which now we’re thinking between three to seven or maybe even as far out as 10 years in the future, this might be something that you’re saving for in the long-term. Maybe you are investing to make a major payment on a loan that you already have. Maybe you are looking to invest in some other property. Maybe you’re looking to invest for retirement or for a really great wonderful vacation or a backpacking trip or something that’s still three to seven years down the road. Once we start to think in that kind of time horizon, that’s when we start to focus a little bit more on investing.

Of course, for longer time horizons—10, 15, 20, 30 years out—that is when investing really shines because the longer your money is able to stay in the market, the longer you are able to take advantage of compound interest and really watch your money grow. It’s a lot harder to say that you will certainly make money in the stock market in a one to two year span when fluctuations are almost certain than it is to say that you’ll make substantial profit three to seven to 10 to 30 years out in the future where you have plenty of time to accumulate that nest egg and really work towards more far-out financial goals.

Kim Palmer:

If you do have money invested, it can be so stressful if there’s a news day where suddenly the stock market is just plunging. Putting it in the context of the fact that some of these goals are long-term, do you recommend we pay attention to these daily swings?

Jessica Spangler:

Personally, absolutely not. I mean, that’s just so stressful. And for what? If your long-term goals are far enough out in the future that it’s really not something you need to pay attention to, the only thing that really matters is that 20 years from now, 30 years from now, whatever that longer-term time horizon is for you, the only thing that matters is that in the future you walk away with more money than you put in today and not less. What happens on the day-to-day is just noise, and there’s really no reason to get caught up in it. If you’ve got your long-term vision in mind and you’ve got your goal at the end, you don’t need to get caught up in all of the market mumbo jumbo.

Kim Palmer:

For anyone listening who’s wondering why it’s so important to learn how to invest and create financial security for yourself, you share a really powerful story at the beginning of the book about your family and what you experienced growing up, what really inspired you to take control of your finances. Do you mind sharing that story here?

Jessica Spangler:

Absolutely. I grew up in a middle-class family. My dad worked in construction as a carpenter and my mom was a stay-at-home mom. When I was seven years old, my dad passed away very suddenly from a heart attack, and nobody saw it coming. He was this tall, manual labor job, slender dude. It was totally out of left field, and it was a life-defining moment for me and for my mom. We lost my dad, which was obviously emotionally devastating on its own, but we also lost our only source of income. And neither of my parents went to college. My mom didn’t have a degree where she could just go out and pick up a good-paying job. She really had to figure it out for herself and for her kids. And as women do when they’re faced with any trying situation, she just got it together. She pulled through. She took some classes and started working in real estate, and went on to become this amazing award-winning realtor. She is my biggest inspiration.

But through this whole time, I really learned by osmosis. I went to listing appointments with her. I went to settlements. I walked through open houses. And as fate would have it, in 2008, the housing market wound up crashing. And once again, we really lost our sense of financial stability. It taught me at a really young age, I don’t want to rely on anyone for money. I want to have my own source of income. I want to be able to provide for myself financially and I want to have a sense of control and choice and power in my own financial life.

Neither of my parents went to college, so of course my first instinct in all of this was that of course, I should go to college. I should go all the way and get a doctorate, which is what I wound up doing. But it wasn’t until so many years later when I learned that my paycheck was enough to survive. It was enough to live. And for that, I’m grateful, so grateful because absolutely not everyone can say that. But it wasn’t really enough to retire. It wasn’t enough to really set away a nest egg and to make sure that I was comfortable forever.

What I really had to start thinking about was investing. How do I actually provide for myself so that I never need to rely on anyone, not now or not in the future? I taught myself to invest. I learned everything I could online about investing and got started doing it myself. And here we are all these years later, writing a book and trying to help in some way so that other women feel empowered and feel that they have agency in their own financial future so that they have the choice to leave a job that doesn’t fulfill them or leave a relationship that isn’t safe or just retire on a beach somewhere. Whatever it is that your goal is, it’s possible to have financial independence and it’s something that I spent my whole life looking to achieve, and here we are.

Kim Palmer:

Thank you so much for sharing that. It is definitely so inspiring. Do you have any closing thoughts to share with our listeners?

Jessica Spangler:

I am a huge proponent of women having the agency and the ability to make their own choices in any capacity. And being financially independent, being financially educated gives you that choice. It gives you access, it gives you agency, and it gives you real independence. I just want women to know that if there’s any doubt that they can’t, they absolutely can. There is an entire book of data and numbers and strategies and step-by-step guidance that will show you that you are more than capable. You are great at it.

Kim Palmer:

I love that. Jessica Spangler, thank you so much for joining us on Smart Money.

Jessica Spangler:

Thank you so much for having me.

Kim Palmer:

Yes, that is all we have for this episode. To share your thoughts on money, shoot us an email at [email protected]. This episode was produced by Sean Pyles and myself. Tess Vigeland helped with editing. Megan Maurer mixed our audio. And a big thank you to NerdWallet’s editors for all their help.

Sean Pyles:

Visit nerdwallet.com/podcast for more info on this episode. And remember to subscribe, rate and review us wherever you’re getting this podcast. You can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.

Here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

Kim Palmer:

And with that said, until next time, turn to the Nerds.

Source: nerdwallet.com

Apache is functioning normally

November 2, 2024 by Brett Tams

In some ways, net worth and wealth can be tricky terms to define. To some people, the phrases are synonymous. As others acknowledge, the perception of wealth is influenced by a variety of factors, including where you live, your career, and your age.

Here’s a deep dive into how to calculate individual net worth and some of the factors that may influence our perception of wealth.

Key Points

• Net worth is calculated by subtracting liabilities from the total value of assets, including real estate and investments.

• Assets like cash, life insurance, household items, and jewelry contribute to overall wealth.

• A positive net worth results when assets exceed liabilities, indicating financial health.

• Lifestyle creep can hinder wealth accumulation as higher incomes often lead to increased discretionary spending.

• Middle-income families earn between $56,600 and $169,800 annually, defining economic classes.

How to Calculate Individual Net Worth

An individual’s net worth is the value of all of their combined assets minus any liabilities (that is, outstanding debts). If your assets are worth more than your liabilities, you have a positive net worth. If you owe more than you own, your net worth is negative.

Assets you may use as part of your net worth calculation can include:

• Real estate. Your home, second home, rental property, commercial real estate, or other holdings.

• Cars and other vehicles. Note that automobiles are typically subject to depreciation in value over time.

• Investments. Stocks, bonds, mutual funds, and retirement accounts.

• Cash

• Life insurance. Use the cash value.

• Household items. Furniture, silverware, etc.

• Jewelry. Plus precious gems and metals.

Liabilities are debts such as:

• Balance remaining on your mortgage

• Student loans

• Auto loans

• Credit card debt

Recommended: Does Net Worth Include Home Equity?

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What Is the Difference Between Net Worth and Income?

Net worth and income don’t necessarily go hand in hand. Income is the money that is reported on a tax return, while a high net worth results from owning valuable assets. High net worth could be a result of careful saving, inheriting money, or hanging onto highly appreciated assets.

For example, let’s say someone bought a house in a once-undesirable neighborhood decades ago. Today, that neighborhood is super popular and the house is worth much more. Even if they don’t sell, the homeowner has increased their net worth without a boost in income. (It can be useful to see how net worth changes by age and location.)

On the other hand, a professional with a high salary who carries a lot of debt could have a relatively low net worth, especially if they also maintain a costly lifestyle. That said, various types of income certainly can have a big impact on how much wealth a person is able to accumulate.

Income is also one way that researchers sort individuals into economic classes, though the income ranges that delineate class can vary from year to year and by research methodology.

What Salary Is Considered a Middle-Class Income?

Pew Research Center defines middle-income Americans as those whose annual size-adjusted income is two-thirds to double the median size-adjusted household income. (Size-adjusted household income refers to the number of people within the household.)

A middle-income family of three earned $56,600 to $169,800 in 2022, the most recent information available from Pew Research.

What Salary Is Considered an Upper-Class Income?

Upper-income individuals earn more than double the median size-adjusted household income. This means a family of three may earn more than $169,800.

Wondering how your income compares? It can be helpful to look at the median income for a three-person household in each income tier.

Income Tier	Median Income in 2022
Upper Income	$256,920
Middle Income	$106,092
Lower Income	$35,318

Source: Pew Research Center

Why Wealth Is Relative Person to Person

The definition of “wealthy” differs depending on a person’s background, geography, and age. Consider a law student who earns very little money each year and carries hundreds of thousands in student debt. While their current wealth may be low, their potential future earnings may be quite high, and could catapult them into the wealthiest classes.

Consider, too, that where you live has a big impact on how far your wealth will stretch. A middle-income earner in an expensive city like San Francisco or New York may find it more difficult to make ends meet than someone in a small town in Oklahoma with a lower cost of living.

Ways to Measure Wealth

Wealth and net worth can be considered synonymous in some cases. But there are other factors that play into the perception of wealth and a person’s ability to accumulate it. Examples include demographic differences and potential return on investment, which may not have an immediate impact but can increase future wealth.

Income

As mentioned above, high income does not necessarily lead to high net worth — but it can. High earners may use their income to acquire assets that maintain equity, such as a home. These people may also use their earnings to invest within retirement and brokerage accounts.

Personal Savings

Your personal savings may refer to the cash you have on hand in checking and savings accounts, certificates of deposit, and money market accounts. It may also refer to the savings you have invested in brokerage and retirement accounts.

Ideally, these investments will appreciate over time, increasing net worth and providing a future source of income to maintain your standard of living after you stop working. As you build up your savings, tools like a money tracker app can help you keep tabs on your money.

Investment Rate of Return

An important factor in accumulating wealth is the rate of return (ROR) on your investments. Investment returns are not guaranteed. Stock prices rise and fall according to various trends in the market. Even bonds, which are relatively safe, are subject to default from time to time.

In the past, the stock market tended to rise over the long term. In fact, since 1926, the average annual rate of return for the stock market has been about 10%, surpassing potential returns for other major types of investments, including bonds.

Investors who save more, and hold more of their investment portfolio in stocks, may be better positioned to take advantage of these potential future returns.

Real Estate Assets

One way to think about wealth is as the maintaining of assets. Real estate can be a good place to build equity, and it can appreciate in value. Returns can vary widely depending on what type of real estate you buy — whether a home or commercial property — and where the property is located. Historically, the rate of return on real estate has been close to stock market returns. In the U.S. market, the median return on real estate investment is 8.6% annually, per the S&P 500 Index.

Age and Family Status

Demographic factors can have an impact on how much money you earn and the wealth you can accumulate. For example, median weekly earnings vary by age and gender.

Perhaps unsurprisingly, men and women ages 16 to 24 have the lowest median weekly earnings, with men earning $771 per week and women earning $695 in the second quarter of 2024, according to Bureau of Labor Statistics data.

Men age 35 and over enjoyed the highest median weekly earnings:

• 35 to 44: $1,379

• 45 to 54: $1,470

• 55 to 64: $1,361

Women earned less overall than men:

• 35 to 44: $1,114

• 45 to 54: $1,151

• 55 to 64: $1,048

The number of people in a household has a different impact. More people under one roof may require a larger home and more money spent on things like groceries, clothing, and transportation. As a result, a single individual usually requires less wealth to maintain a certain lifestyle than a family of five.

Good Credit Score

While not exactly a measure of wealth, a good credit score is a measure of financial health. It suggests that you have not taken on more debt than you can handle, and that you are able to make your payments on time.

A good credit score can also help you leverage your wealth to achieve financial goals. For example, lenders will look at your credit score when you apply for a loan to determine your creditworthiness. A good score can help you qualify for loans with lower interest rates. Individuals with bad credit, on the other hand, may be seen as a risk, and lenders may charge higher interest rates to compensate.

As a result, a good credit score can help you qualify for loans, such as a mortgage, at affordable rates that can help you build wealth.

Difference Between Material Wealth vs Spiritual Wealth

Material wealth is dependent on the physical and financial assets that you own and the debts you carry. Spiritual wealth, on the other hand, is not based on tangible items. Rather, it’s based on things like a sense of well-being and happiness.

Are material wealth and spiritual wealth linked? In a 2023 paper, authors Daniel Kahneman, Matthew A. Killingworth, and Barbara Mellers discovered an overall connection between larger incomes and increasing levels of happiness. But they also found that happiness peaks at $100,000 a year and then plateaus in people who are already unhappy.

Appreciating What You Have

One of the reasons that higher income doesn’t always translate into greater wealth is a phenomenon known as “lifestyle creep.” This occurs when increasing income leads to an increase in discretionary spending. A certain amount of lifestyle creep can result from trying to “keep up with the Joneses” — a tendency to accumulate material goods to compete with others in one’s perceived social class.

For example, as a person earns more, they might buy a bigger house, a more expensive car, pricey clothes, and start sending their kids to private school. These costly habits can mean that the individual may not be able to save more than when their salary was lower.

Try to avoid lifestyle creep by putting off grand lifestyle changes, like buying a large home, and putting off big purchases until absolutely necessary. Build and stick to a budget that includes wealth-building line items, such as saving in retirement funds. Track your progress with a budgeting app.

Practice appreciating what you already have, and you may find that some of the upgrades you desire are just wants — not necessities.

Recommended: What Credit Score Is Needed to Buy a Car?

The Takeaway

Net worth and wealth are inextricably linked. Measuring net worth helps people assess how many assets they currently have at their disposal. Accumulating wealth is about acquiring and maintaining assets that hold their value or increase in value. Doing so often requires careful saving and investing, as well as constant monitoring to ensure you stay on track.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

What salary is considered middle-class income?

Middle-income Americans have annual incomes that are two-thirds to double the median income, according to Pew Research. For example, a middle-income family of three will earn $56,600 to $169,800.

What salary is considered upper-middle class income?

An upper-middle class income is at the high range of middle class income. According to the U.S. Census Bureau’s “Income in the United States: 2022” report, that’s an average annual income of $94,001 to $153,000.

What salary is considered lower-class income?

Low-income Americans are anyone earning less than two-thirds of the median household income. Per Pew Research Center, that means a family of three would have a household income of less than $56,600.

Photo credit: iStock/fizkes

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SORL-Q424-004

Source: sofi.com

Apache is functioning normally

November 1, 2024 by Brett Tams

Real Estate

November 1, 2024
by Mark Ferguson

Over the last 20 years, I’ve bought and managed hundreds of rental properties. While most of my experience is with long-term rentals, I’ve also dabbled in short-term rentals and helped many other investors analyze both strategies. In this article, I’ll break down the key differences between short-term and long-term rentals to help you determine which strategy might work better for your situation.

Quick Overview: Short-Term vs Long-Term Rentals

Before diving deep into the analysis, here’s a quick comparison:

Short-Term Rentals:

Higher potential monthly income
More hands-on management required
Higher operating costs
More market volatility
Often better in tourist areas

Long-Term Rentals:

More stable monthly income
Less day-to-day management
Lower operating costs
Generally more predictable
Work in most residential areas

Analyzing the Numbers: Real-World Example

Let’s look at a real example using a 3-bedroom, 2-bathroom house worth $300,000 in a decent area. I’ll break down the potential returns for both strategies using my rental property calculator.

Long-Term Rental Numbers:

Monthly Rent: $2,000
Annual Gross Income: $24,000
Vacancy Rate: 5% ($1,200)
Property Management: 8% ($1,920)
Maintenance: $2,400
Insurance: $1,200
Property Taxes: $2,400
Net Operating Income: $14,880

Short-Term Rental Numbers:

Average Nightly Rate: $150
Occupancy Rate: 70%
Annual Gross Income: $38,325
Cleaning Fees: $4,800
Property Management: 25% ($9,581)
Utilities: $2,400
Maintenance: $3,600
Insurance: $2,400
Property Taxes: $2,400
Net Operating Income: $13,144

While the short-term rental generates significantly more gross income, the net income is actually lower in this example due to higher expenses. However, these numbers can vary dramatically based on location and market conditions.

Advantages of Long-Term Rentals

1. Stability

Long-term rentals typically provide more predictable income. When you have good tenants on a yearly lease, you know exactly how much you’ll make each month. This makes it easier to plan for expenses and calculate returns.

2. Lower Operating Costs

With long-term rentals, tenants usually pay utilities and handle yard maintenance. You also don’t need to furnish the property or pay for regular cleaning services. This significantly reduces your operating expenses.

3. Less Management Intensive

Once you place good tenants, long-term rentals require minimal day-to-day management. You might only hear from tenants occasionally for maintenance issues. Learn more about how hard it is to be a landlord.

4. Easier Financing

Traditional lenders are more comfortable with long-term rentals. You’ll typically find better interest rates and down payment requirements compared to short-term rental properties.

Advantages of Short-Term Rentals

1. Higher Revenue Potential

In popular areas, short-term rentals can generate 2-3 times the gross revenue of long-term rentals. This higher income potential can lead to better cash flow in the right market.

2. Property Condition Control

With short-term rentals, you can regularly inspect and maintain the property between guests. This helps prevent major damage and keeps the property in better condition.

3. Personal Use Flexibility

If you want to use the property occasionally, short-term rentals offer that flexibility without violating any lease agreements.

4. Tax Benefits

Short-term rentals often qualify for additional tax benefits as a business rather than an investment property.

Key Challenges to Consider

Short-Term Rental Challenges:

Regulations: Many cities are implementing strict short-term rental regulations or outright bans
Market Volatility: Income can vary significantly by season and during economic downturns
Higher Time Commitment: Managing bookings, cleanings, and guest communications requires more time
Initial Costs: Furnishing and setting up a short-term rental requires significant upfront investment

Long-Term Rental Challenges:

Problem Tenants: Bad tenants can be costly and time-consuming to remove
Property Damage: Less frequent inspections mean damage might go unnoticed longer
Market Constraints: Rental rates typically can’t be adjusted until lease renewal
Lower Income Potential: Monthly income is generally lower than successful short-term rentals

How to Choose the Right Strategy

Consider these factors when deciding between short-term and long-term rentals:

Location Matters Most

Tourist areas → Short-term rentals often perform better
Residential neighborhoods → Long-term rentals usually make more sense
Business districts → Either can work, depending on specific market demands

Time Availability

Limited time → Long-term rentals are usually better
Flexible schedule → Short-term rentals might be manageable
Full-time investor → Either could work well

Financial Goals

Steady income → Long-term rentals
Maximum revenue potential → Short-term rentals (in the right market)
Building equity → Either strategy works

My Recommendation

After managing both types of rentals, I generally recommend starting with long-term rentals unless you have a property in a prime tourist location or significant experience in hospitality management. Long-term rentals provide a more stable foundation for building wealth through real estate with less risk and time commitment.

For those interested in short-term rentals, I suggest:

Starting with one property to learn the market
Choosing a location with year-round demand
Building a reliable team (cleaners, maintenance, etc.)
Having significant cash reserves for seasonal fluctuations

The Bottom Line

Both short-term and long-term rentals can be profitable investment strategies when executed properly. The best choice depends on your specific situation, including:

Available time
Market location
Risk tolerance
Management experience
Financial goals

I’ve found that most investors do better starting with long-term rentals and potentially adding short-term rentals to their portfolio later as they gain experience. Whatever strategy you choose, make sure to thoroughly analyze the numbers and market conditions before making your investment.

Want to learn more about rental property investing? Check out my guide to building a rental property empire or try my rental property calculator to analyze potential investments.

You might also be interested in learning about how to get started in rental properties or understanding the risks of rental property investing.

Source: investfourmore.com

Apache is functioning normally

November 1, 2024 by Brett Tams

Table of Contents

High-yield savings accounts (HYSAs) typically offer significantly higher returns than traditional savings accounts. As of August 2024, the national average interest rate for savings accounts was 0.45% APY as of October 21, 2024 according to the FDIC¹, while some HYSAs provided annual percentage yields (APYs) of 3.00% or more.

Whether held at a traditional bank, online bank, or credit union, these accounts can keep your money liquid (meaning it’s nice and accessible), plus they don’t expose you to the risk that may accompany investing. However, you may have to meet a high initial deposit requirement or maintain a significant balance to reap that enticingly high interest rate.

Key Points

• High-yield savings accounts (HYSA) offer significantly higher interest rates compared to traditional savings accounts, enhancing the growth of deposited funds.

• These accounts are available at various financial institutions, including online banks which often provide the highest rates.

• Funds in high-yield savings accounts are typically insured up to $250,000, providing security for depositors.

• Accessibility to funds is easy, though withdrawals may be limited to six per month, with potential fees for exceeding this number.

• High initial deposits and maintaining minimum balances might be required to obtain the higher interest rates offered.

What Is a High-Yield Savings Account (HYSA)?

A high-yield savings account (HYSA) is a savings vehicle similar to a traditional savings account but pays considerably higher interest rates. These accounts almost always offer better returns than traditional checking accounts.

Depending on the financial institution, a high-yield savings account will likely be insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) up to $250,000 per depositor².

Earn up to 4.20% APY with a high-yield savings account from SoFi.

No account or monthly fees. No minimum balance.

9x the national average savings account rate.

Up to $2M of additional FDIC insurance.

Sort savings into Vaults, auto save with Roundups.

How Are High-Yield Savings Different Than Regular Savings Accounts?

As briefly mentioned above, the average savings account interest rate is currently 0.45% APY as of October 21, 2024. What’s more, many of the nation’s biggest banks pay significantly less than that – only around 0.01%. Yes, it’s better than nothing, but not by much!

Here’s how the math works out: If you had $5,000 in a savings account earning 0.01% per year, you would only earn 50 cents for the entire year it sat in your savings account, assuming no compounding occurred.

How Do High-Yield Savings Accounts Work?

How a high-yield savings account works is very similar to how other savings accounts operate.

• You make an initial deposit to open the high-interest account, while also sharing identification and other personal information with the bank or credit union.

• You can then add to your account as you see fit.

• You can also take money out of the account (there may be a cap on how many times a month you can do this, however), either withdrawing it or transferring it to another account.

Your account may also have minimum balances and monthly fees. This will vary with the institution. While traditional banks and credit unions may offer these accounts, it is common to find them at online banks, which have a lower overhead and can pass the savings on to you. You may find accounts that have no fees, like a SoFi Savings Account.

In many cases, your funds will be protected by either FDIC or NCUA; check with your financial institution to know the coverage limits in place.

Example of Interest Earned in a High-Yield Savings Account

To see how a high-yield savings account works, consider an example of a $5,000 deposit earning 4.00% APY over 5 years, compounded monthly.

Year	Account Balance	Interest Earned (5%)	New Balance
1	$5,000.00	$200.00	$5,200.00
2	$5,200.00	$208.00	$5,408.00
3	$5,408.00	$216.32	$5,624.32
4	$5,624.32	$224.97	$5,849.29
5	$5,849.29	$233.97	$6,083.26

At the end of 5 years, a $5,000 deposit earning 4.00% APY, compounded monthly, would earn you $1,083.26 in interest. In comparison, a traditional savings account with a 0.45% APY would only earn you $113.52 over the same period. That’s a difference of $969.74.

Recommended: To see personalized scenarios, use our High-Yield Savings Account Calculator.

Benefits of a High-Yield Savings Account

There are definitely some big pluses to opening a high-yield savings account. Here are some of the main ones:

• The interest rate, of course! It is typically many times that of a traditional savings account or a CD.

• It’s a secure place to deposit funds when you are savings towards a relatively short- or medium-term goal (say, building an emergency fund, or saving for a down payment, a wedding, or another purpose)

• These accounts often come with no fees, zero! Typically, this is the case with online banks rather than bricks-and-mortar ones or credit unions.

Recommended: How Much Money Should You Have Left After Paying Bills?

Disadvantages of a High-Yield Savings Account

You know the saying, “Nobody’s perfect”? It holds true for high-yield savings accounts, too. These accounts may not suit your needs for a couple of key reasons.

• While the interest is higher than your standard savings account, it may not be able to compete with other financial products (such as stocks) for long-term savings, like retirement. In fact, it may not even keep pace with inflation. So if you are able to take some time and take on a degree of risk, you may be better off with stocks or mutual funds to reach some financial goals.

• More restrictions and/or requirements may be part of the package. For instance, you may need to deposit or keep a certain amount of money in the account, especially for those high-yield accounts offered by traditional banks. Or might need to set up direct deposit or automate bill payment.

• Less access may be an issue. It may take more steps and/or more time (perhaps a couple of days) to transfer funds when you have a high-yield savings account.

Practical Uses for a High-Yield Savings Account

A high-yield savings account can be used for a variety of purposes, just as other types of savings accounts can be.

Building an Emergency Fund

It may be a good place to build an emergency fund that is your safety net in case you have an unexpected car or household repair needed. You typically want to have a three to six months’ worth of living expenses available, but you can certainly start one of these accounts with less and add to it.

Saving for a High Value Purchase

Perhaps you are saving for a car, a cruise, or other big-ticket item. Or maybe you are getting close to having enough money for a down payment on a house. A high-yield savings account can be a secure, interest-bearing place to park those funds until you are ready to use them.

Saving Surplus Money

A high-yield account can also be a great place for any extra cash for which you may be figuring out next steps. Perhaps you received a tax refund or a spot bonus, or you are selling your stuff that’s no longer needed on eBay. That extra cash can go into a high-yield savings account rather than sit in your checking account, potentially earning zero interest.

Separating Your Money

Sometimes, setting up an additional savings account (or two) can help you organize your money. Perhaps you want to have multiple savings accounts to help you achieve different goals, such as an account for future educational expenses and one for paying estimated taxes on your side hustle. As you save money towards each of those aims, you might as well accrue some interest. A high-yield savings account will help you do that, and let you check on how your cash is growing towards each goal.

What to Look For in a High-Yield Savings Account

Ready to explore high-yield savings accounts a bit further? Here are a few things to look for (and to look out for) when considering a high-yield account.

Annual Percentage Yield (APY)

One of the most important factors to look for in a savings account, the APY is how much you’ll earn in returns in one year. Some accounts will specify that the currently advertised rate is only available for an initial period of time, so that can be something to keep in mind.

Required Initial Deposit

Many high-yield savings accounts require a minimum opening deposit. If that’s the case, you’ll want to make sure you are comfortable depositing that much at the outset.

Minimum Balance

Some banks require you to maintain a minimum balance to keep your high-yield savings account open. You’ll want to feel comfortable with always meeting the minimum threshold because falling below it can trigger fees or mean you won’t get the interest rate you’re expecting.

Ways to Withdraw or Deposit Funds

Banks all have their own options and rules for withdrawing and transferring funds. Options might include ATM access with an ATM card, online transfers, wire transfers, or mobile check deposits. Withdrawals may be limited to six per month.

Balance Caps

A balance cap puts a limit on the amount of money you can earn interest at the high-yield account rate. So, for example, if an institution offers 3% interest on your savings account, but sets a balance cap at $2,000, you would only grow that interest on the first $2,000 and not on any additional funds you may deposit.

Bank Account Fees

It’s a good idea to understand what, if any, bank fees may be charged — and how you can avoid them, such as by keeping your balance above the minimum threshold or minimizing withdrawals per month.

Links to Other Banks and/or Brokerage Accounts

Make sure you know whether you can link your high-yield savings account and other accounts you may hold. There could be restrictions on connecting your account with other financial institutions or there might be a waiting period.

Withdrawing Your Money

You’ve just read that it may be a bit more complicated or time-consuming to get your funds transferred. You should also check to see how withdrawals can be made. For instance, would it be possible to pull some funds out of your high-yield savings at an ATM? Your financial institution can answer that question.

Compounding Method

It’s up to the bank whether they compound interest daily, monthly, quarterly, or annually — or at some other cadence. Compounding interest more frequently can boost your yield if you look at the APY versus the annual interest rate (the latter takes into account the compounding factor btw).

Recommended: 52 Week Savings Challenge

How to Open a High-Yield Savings Account

Now that you’ve learned about high-yield savings accounts, you may be ready to say, “Sign me up!” If so, a good first step is to take a look at your current bank and see if they have a high-yield savings account available — that could be the quickest, easiest path forward.

If not, look for an account and interest rate that speaks to you, and move ahead. Most high-yield savings accounts can be easily opened online with such basic information on hand, such as your driver’s license, your Social Security number, and other bank account details.

How Do High-Yield Savings Accounts Compare to CDs?

Another option you can use to grow your savings is a certificate of deposit or CD.

A CD is a type of deposit account that can pay a higher interest rate than a standard savings account in exchange for restricting access to your funds during the CD term — often between three months and five years.

Interest rates offered by CDs are typically tied to the length of time you agree to keep your money in the account. Generally, the longer the term, the better interest rate.

When you put your cash in a CD, it isn’t liquid in the way it would be in a savings account. If you want to withdraw money from a CD before it comes due, you will typically have to pay a penalty (ouch). This could mean giving up a portion of the interest you earned, depending on the policy of the bank.

Another key difference between CDs and high-interest savings accounts is that with CDs, the interest rate is guaranteed. With savings accounts, interest rates are not guaranteed and can fluctuate at any point.

A CD can be a good savings option if you’re certain you won’t need to access your cash for several months or years and you can find a CD with a higher rate than what high-yield savings accounts offer.

Make the Most of Your Money With SoFi

If you’re ready to amp up your money, a SoFi Checking and Savings account can help. We make it easy to open an online bank account and — if you sign up for direct deposit — you’ll earn a competitive APY on a qualifying account. Need more incentive? How about this: SoFi has zero account fees and offers Vaults and Roundups to further grow your cash. Plus, you’ll spend and save in one convenient place.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.20% APY on SoFi Checking and Savings.

FAQ

Can you lose money in a high-yield savings account?

In most cases, you likely won’t lose money with a high-yield savings account. If your account is held at a financial institution insured by FDIC or NCUA, you are covered in the rare event of a bank failure for up to $250,000 per account category, per depositor, per insured institution. That said, you might lose money vs. inflation if the rate of inflation exceeds that of the APY on your high-yield savings account.

Is a high-yield savings account a good idea?

A high-yield savings account can be a good idea. It provides significantly higher interest than a standard savings account, but offers the same security and easy access/liquidity.

Can I withdraw all my money from a high-yield savings account?

You can withdraw all your money from a high-yield savings account. One of the benefits of this kind of account is its liquidity. If you are ready to close the account, check with your financial institution about their exact process for doing so.

Are there any downsides to a high-yield savings account?

There are some potential downsides of a high-yield savings account. While these accounts earn more interest than a standard savings account, they may not keep pace with inflation nor how much you might earn from investments. There may be restrictions at some financial institutions, such as a minimum balance requirement and withdrawal limits. While the funds are liquid, access may require some maneuvering. Transfers may take longer, and if you keep your funds at an online bank, you cannot walk into a branch to take out cash.

Article Sources

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Source: sofi.com

Apache is functioning normally

October 31, 2024 by Brett Tams

Housing, utilities, credit cards, streaming services—the list of bills is often longer and costlier than anyone likes. But guess what? In many cases, you can negotiate or otherwise reduce your “fixed” expenses—which can make sticking to your budget a far easier task, especially if you’ve already trimmed your spending elsewhere.

Here are six tips to help you save money.

How to lower bills at home: Negotiate your bill payments

Most people never consider asking a big corporation—like an internet provider or utility company—for a lower monthly charge. But these providers can bend the rules on their rates more than you think.

Calling a phone, cable, or other utility company to say, “I’m interested in lowering my bills,” can be fruitful. For example, you may be able to negotiate with companies to remove a recent late fee or reduce your monthly rate.

Consider fixed pricing plans for utilities

To manage your utility bills, consider switching your electricity, gas, or water bill to a fixed-price plan, sometimes called “budget billing.” You’ll incur the same charge each month—as determined by your utility company based on your past usage—which can remove surprises from your monthly budget.

Your utility usage is very likely to change over time—maybe a mild summer meant you used your air conditioner less often or a brutal winter led to spiking heat costs. As a result, your monthly amount will likely change as well when a new year begins, but utility companies will typically notify you in advance of any change.

If energy costs decrease overall, you may pay more annually on a fixed-price plan than on a traditional plan, where amounts will vary month over month. But depending on your budgeting needs, it might be worth it in exchange for predictability.

Downgrade, rotate, or bundle streaming services

If you’ve amassed several streaming services—and who hasn’t?—you may be paying a premium to watch only a handful of shows. If so, here are a few strategies to consider when trying to lower your bills:

Drop any services that get significantly less play than others.
Try rotating your streaming options. For example, keep two services for one month, bingeing all their best stuff, then cancel those and switch to another service the following month.
Sign up with a bundling service to mix and match the options you want without paying for those you don’t.

Carefully consider balance transfers, debt consolidation, or refinancing

Switch debt from a high interest rate to a lower, or even nonexistent, one? Yes, please! But sometimes, the costs can outweigh the benefits. Often, hefty balance transfer fees can make switching to a card with a lower rate not worth the trouble. Debt consolidation loans may come with high origination fees and balance transfer fees. And refinancing a mortgage can bring closing costs and restart the clock on paying off your home. The bottom line? Weigh all the pros and cons first.

Spend smartly on everyday items

Sometimes, spending money in the short term can help you save money in the long term. Here’s how.

Buy in bulk

Loading up on household staples and nonperishable foods is one way to save money on your grocery bills. Think: paper towels, toilet paper, coffee, pasta, and trash bags.

Choose quality over quantity

Comparing how much something costs versus how long it lasts can help you avoid regularly replacing inferior products.

DIY

Paying for at-home exercise equipment or a weekly meal kit might seem like a big hit to your budget, but these solutions could cost less over time than a monthly gym membership or frequent takeout orders.

Waste less, spend less

Reducing the waste you create—from food to energy—is good for the environment and your wallet.

When considering how to lower your bills, think about:

Reheating leftovers and planning your meals each week to avoid impulsively splurging on food
Buying secondhand items or joining a group on social media where you can find free used products
Unplugging appliances like your coffeemaker or laptop when they’re not in use to save on electricity

Read our guide to a zero-waste lifestyle to learn more.

With a little effort and strategy, you can learn how to manage bills. To help earn cash back¹ from your monthly purchases, make sure you’re using a checking account that offers this perk. These techniques can make it even easier to meet financial goals and build your savings.

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Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.

Source: discover.com

Apache is functioning normally

October 30, 2024 by Brett Tams

A full-time job isn’t always enough to achieve your financial goals. That’s why nearly 40% of U.S. adults have a side gig, according to a 2023 Bankrate survey. Making extra money can help you pay off debt, save to buy a house, or catch up on retirement savings.

Fortunately, there’s a wide range of side hustles and passive income streams that can help you tackle financial to-dos or even take your wealth to the next level, says financial blogger Kelan Kline. A side hustle is typically an additional job a person can take to earn extra money to supplement their primary income. On the other hand, passive income can be income that requires little or no effort to maintain.

Kline should know. When he and his wife Brittany were saddled with student loan debt, they launched The Savvy Couple—a blog focused on side hustles and money management tips—to help them earn extra income.

“It became a full-time business that allowed us to quit our 9-to-5 jobs in law enforcement and helped teach us to fast-track our financial freedom,” Kline says.

While most secondary gigs won’t turn into new careers, they can add a spark to your savings. So, what are some side hustle and passive income ideas that can help you make extra money? Read on to see which types of side hustles and passive income ideas can inspire you to accelerate your financial targets—and learn how your new income streams can work together to generate even more cash.

What is a side hustle?

A side hustle is any income-generating work outside of your primary job—anything from food delivery to selling items online. People use the extra income to improve their financial health, from building up savings to preparing for a big purchase.

What are some side hustle ideas?

“To find a side hustle, you should think about your existing skills and interests to narrow down what kind of opportunity you’re looking for,” says Randa Kriss, small business specialist at NerdWallet.

We’ve collected some side hustle ideas you can try without too much previous experience to help you make extra dough—or even find a new job:

(All earnings information courtesy of ZipRecruiter🙂

Ride-hailing or ride-sharing apps make it easier for people to get around on demand, while creating a market for drivers and their cars. For many ride-share drivers, this is their primary source of income, but it can also be a convenient side hustle option.

“Driving for a ride-sharing service is a great way to make some extra money,” Kline says. “It allows you to be your own boss and set your own hours, which can be especially beneficial for people who have a flexible schedule or want to supplement their income.”

Approximate earnings: $13 an hour

Delivery driving

Don’t want to drive strangers around? Deliver food instead. Many delivery service apps need drivers to drop off grocery hauls and restaurant takeout.

“Delivery driving is a great way to earn some extra money on the side, while also having some time to decompress,” says Jacqueline DeMarco, a freelance writer specializing in personal finance content. “Driving can be stressful, but it’s a lot less stressful without passengers in the car. You can even listen to podcasts or audiobooks to make it feel like less of a chore.”

Approximate earnings: $18 an hour

Grocery shopping

Grocery delivery services also need people who can shop for items before they’re delivered. Once you sign up and choose a nearby supermarket, customer orders will pop up on your phone. Efficient shoppers who can quickly navigate local stores are making extra money by filling up shopping carts—and you could, too.

“Enjoy the free air conditioning while you fulfill grocery orders,” DeMarco says.

You can even take care of your own grocery needs once your customer orders are fulfilled. You may be less tempted to order expensive takeout if you’re already in a supermarket.

Approximate earnings: $16 an hour

Tour guide

If you love your area and have an engaging personality, become a local tour guide.

Being a tour guide can be a great way to meet new people and show them a city or neighborhood you’re passionate about—all while making extra money. You might need to pass a test to work for certain organizations, and many tours use a pay-what-you-like model so the income can be inconsistent. But it’s a side hustle with growth potential, DeMarco says.

“You can learn the ropes working for a tour guide company or app, then eventually take that knowledge and start your own tour guide business,” she says. “That way, you don’t have to share the profits.”

Approximate earnings: $19 an hour

Virtual assistant

Virtual assistants aren’t algorithms or chatbots—they’re real people. Virtual assistants can work from almost anywhere in the world as they perform digital tasks like scheduling, fielding emails, and even managing social media for companies or individuals.

“It’s an excellent option for people who have administrative and organizational skills, as well as the ability to work independently,” Kline says.

Approximate earnings: $24 an hour

Babysitting

If you’re trustworthy, responsible, and enjoy working with kids, babysitting is a great opportunity. And once you start establishing solid relationships with parents, it can evolve into a regular gig that provides a stable income. You can list your services on online platforms catering to babysitters.

When DeMarco was a babysitter, she also worked on freelance writing assignments while the kids slept, which helped her to maximize her side income opportunities. “If you love kids, it’s a fun way to earn extra cash,” she says.

Approximate earnings: $18 an hour

“To find a side hustle, you should think about your existing skills and interests to narrow down what kind of opportunity you’re looking for.”

Randa Kriss, NerdWallet

Pet sitting

Are fur babies more your thing? Countless pet sitting opportunities exist—especially now that more people have returned to on-site work since the pandemic pet adoption boom. Multiple apps and sites allow you to list your pet sitting services. Just make sure you emphasize any experience you have as a pet sitter or a pet owner.

Approximate earnings: $16 an hour

House sitting

Many homeowners prefer to have someone stay over or regularly check in on their property (and also maybe look after their pets). House sitters not only get paid but often have full access to the home’s amenities, which might even include a pool or home theater.

“A lot of my babysitting clients would ask me to house sit or pet sit when they were out of town,” DeMarco says. “The best part about side hustles like this is you only have to say yes to a job when it works for your schedule.”

Approximate earnings: $17 an hour

Studies and focus groups

Research companies always need focus group participants. Whether they meet remotely or in person, these groups may give feedback on new products or provide insights that help organizations develop new services.

“Participating in focus groups and studies can be an interesting way to make extra money,” says Kline. “It is a great option for people who have flexible schedules, as it does require some time commitment and availability.”

Approximate earnings: $27 an hour

Translation work

Are you fluent in multiple languages? If so, you can put that skill to work. Translation duties can include working with marketing copy or medical and legal documents, so additional expertise may be necessary. And certain languages may offer more opportunities—and more money—than others, so research apps and online job boards to gauge the demand for your specific language skills.

Approximate earnings: $28 an hour

Graphic design

You can start a side hustle creating logos, visual assets for social media, or custom stickers for events or companies if you have the skills—or the willingness to learn. Creating designs for a friend or family member at a discount rate and posting them to your online portfolio is one way to gain experience and attract more—and higher-paying—clients.

“Graphic design can be a great side hustle for people who have an eye for design,” Kline says. “It is also a relatively easy and low-cost way to get started.”

Approximate earnings: $27 an hour

DIY for hire

Can you install a light fixture, assemble furniture, shovel snow, or paint a room? You can get paid for those tasks by signing up as a service provider on any freelance labor marketplace or app.

Approximate earnings: Varies depending on the job

Data entry

Data entry can be repetitive work, but the advantages extend beyond the ability to do it from home. Tasks can range from transcribing audio for a documentary filmmaker to inputting a company’s financial records on a spreadsheet. And the work is easy to find, as many job sites list part-time data entry roles.

“Data entry jobs typically require minimal training and can be done on a flexible schedule,” Kline says.

Approximate earnings: $19 an hour

Tutoring

Tutoring can be a flexible side hustle, too. You can work with students remotely or in person—from elementary school kids who need help after school to high school and college students who need weekend guidance to help them cram for exams.

“Tutoring can be a great way to make some extra money if you have the knowledge and skills,” Kline says. “It is also an excellent way to give back and help others.”

Approximate earnings: $20 an hour

Background acting

The people in the background of your favorite movies and TV shows actually get paid. And you don’t need to live in Los Angeles or New York City to find those roles. Production companies and university film students often post online ads for background acting opportunities across major U.S. cities. The time commitment will likely vary, but the extra money—and on-location craft service spreads—can make it worth your time.

“You can learn more about the film industry and meet interesting people,” DeMarco says.

Approximate earnings: $27 an hour

How can a side hustle complement a passive income strategy?

While side hustles and passive income ideas can both add income to your bottom line, they aren’t the same thing. So, what is passive income?

Unlike a job or side hustle, passive income does not require much, if any, additional effort. Examples include stock dividend payments, property rental income, and book or music royalties.¹

Of course, no one will show up at your house and start handing you cash. Usually, a passive income stream will require some initial effort and an upfront cost to set up, but ideally, it requires minimal effort once the wheels are in motion. That initial effort or investment might mean that passive income streams won’t be as accessible as side hustles, at least not until a little later in life.

“Having both a side hustle and passive income can be incredibly powerful when it comes to building financial freedom,” Kline says. “For example, you could use the money from your side hustle to invest in stocks and bonds, which can generate dividend payments.” (Please consult your tax advisor with respect to information contained in this article and how it relates to you.)

Or you could use the money earned from a side hustle to eventually purchase a rental property, which can generate long-term passive income, Kline says.

“Ultimately, having both sources of income can help you achieve your financial goals faster,” he adds.

Most passive income streams could be considered a form of investment. But this includes much more than buying and selling stock in companies. Anything you purchase with the intent to make more money from could be considered an investment.

Consider these additional ideas for making extra money:

Dividend investing

“Dividend investing is a great way to earn passive income,” Kline says. “It involves purchasing stocks or bonds that pay out dividends, which could be a great source of income over time.”

You should do research or consult an investment professional to learn which companies offer the best mix of dividend payments versus risk. Most dividend-paying stocks pay out quarterly, though some may pay out more or less frequently. The amount paid will be a percentage of your holdings, likely in the low single digits.

Dividends can be a reliable source of income for retirement, and advocates of the Financial Independence, Retire Early (FIRE) strategy for early retirement often recommend investing in dividend-paying stocks.

“Having both a side hustle and passive income can be incredibly powerful when it comes to building financial freedom.”

Kelan Kline, financial blogger

Rental income

There are many different types of property you can buy in order to rent out, depending on what’s available in your area or what investments you’re willing to consider.

Consider these different types of rent-based passive income ideas:

Long-term home or apartment rental

Leasing out a home or apartment can be a reliable and significant source of passive income, but it’s also a very involved process. You’ll need to learn the rental regulations for your area and your obligations to your potential tenants. Unless you can afford to pay someone to manage the property, the upkeep may resemble a job of its own.

Short-term rentals

If you have a spare room or vacation property, you could list it on a short-term rental platform or app.

“It’s a relatively easy way to make money by renting out your unused space or investment property,” Kline says.

While this may not provide the same degree of reliable income as a long-term lease, it’s easier to get started. Plus, utilizing black-out dates means you still get to access your space when you want, while having the opportunity to make an income from it when you don’t.

Other rental spaces

A spare parking or storage space can also be a source of passive income, and several apps and services exist for listing them. Best of all, renting out a space you never use, like a garage spot, requires little effort to earn reliable passive income.

Rent out your car

You can even list your car on some auto rental apps to earn money. If you don’t mind the additional wear and tear on your car—or the idea of other folks driving it—this could be a good way to make your car work for you. Just be sure to check with your car insurance provider to see if you need to carry additional coverage before booking your first renter.

What can you do with your additional funds?

Wondering what to do with the extra cash you earn from implementing side hustle ideas and passive income ideas is a great problem to have. But what are your options? Sometimes, you’ll want to reinvest in a side hustle (like upgrading the ties in a car you use for ride-share driving) or in a passive income strategy (such as painting the walls of your rental property).

Often, you’ll need a safe place to store your money that will still give you a generous return so that it keeps growing until you know what to do with it. Here are some low-risk options that can deliver growth on your additional cash:

Savings accounts

Savings accounts can provide a safe place to put your extra cash as long as you’re depositing your funds at an FDIC-insured institution. The interest your deposits earn can also be a source of portfolio income, which can include interest, dividends, and capital gains on investments.

CDs

Choose your term, lock in your rate, and watch your CD grow

Discover Bank, Member FDIC

A CD, or certificate of deposit, is similar to a standard savings account but with one key difference: CDs tend to have higher interest rates, which means they can also provide portfolio income. As a tradeoff, you’re expected to leave the money in the account for a specific amount of time, and there’s often a fee for early withdrawal. It helps to know how CDs work to get the most out of them.

Money market accounts

Money market accounts are similar to CDs in that they offer greater returns in exchange for restrictions. You won’t need to wait multiple years to withdraw your funds from a money market account, but there likely will be a limit on how often you can withdraw funds, and you might need to maintain a minimum required balance amount.

Retirement accounts

Certain jobs will offer retirement accounts, like 401(k) plans, as a benefit of employment. Whether you have a 401(k) plan or not, you can open up an individual retirement account, known as an IRA—either a traditional IRA or a Roth IRA. The primary difference has to do with when you pay taxes on the money in the account. For a traditional IRA, you pay taxes when you withdraw funds from the account. For a Roth IRA, you pay taxes on the money as it’s put into the account. For either, you may have to pay a fee if you withdraw your money before retirement. Always check with your plan provider for specific rules and fees related to early withdrawals.

There are even more choices to make. For example, you might consider an IRA CD in addition to an IRA Savings Account. IRA CDs function just like other CDs but are intended to build up funds for after you’ve finished working. It could be worth speaking with a retirement planning professional to establish a personal saving strategy.

How can you benefit from side hustles and passive income?

Both side hustles and passive income can add financial comfort and confidence.

Has this tour through passive income and side hustle ideas inspired you to pursue additional income streams to boost your finances? Whether you start a side business or just pick up some gigs via an app, extra income sources paired with passive income streams can be a game-changer for your financial health.

Looking to maximize your financial health? Try using a financial checklist to see how you’re tracking against your financial goals.

¹ The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover Bank or its affiliates. For specific advice about your unique circumstances, you may wish to consult a qualified professional, at your expense.

Discover Bank does not sell non-deposit investment products (“NDIP”) or provide recommendations regarding NDIP. NDIP are NOT FDIC insured.

Source: discover.com

Apache is functioning normally

October 30, 2024 by Brett Tams

Could logging in to your computer from a deluxe treehouse off the coast of Belize be the future of work? Maybe. For many, “freelance” means flexibility, meaningful tasks, and better work-life balance.

Who doesn’t want to create their own hours, love what they do, and work from wherever they want? Freelancing can provide all of that—but that freedom can quickly vanish if you don’t know how to manage finances as a freelancer.

“A lot of the time, you don’t know about these expenses until you are in the trenches,” says Alyssa Goulet, a freelance copywriter. “And that can wreak havoc on your financial situation.”

Some workers may choose to work in a freelance capacity hoping to increase their savings and their feelings of self-sufficiency. But for all its virtues, the cost of going freelance can carry some serious sticker shock.

Most people who freelance for the first time don’t realize that everything—from taxes to business software to retirement planning—is on them. Learning how to manage your finances as a freelancer early on will help set you up for success.

The key to budgeting as a freelancer is to plan for five expenses: taxes, business expenses such as your workspace and tools, health insurance, retirement savings, and general business costs.

1. Taxes for freelancers and the self-employed

First things first: Don’t try to be a hero. When determining how to budget and manage your taxes as a freelancer, you’ll want to consult a financial advisor or tax professional for guidance. A tax expert can help you determine what makes sense for your personal and professional situation and provide financial advice to help you build your freelance business.

For instance, just like regular employees, freelancers owe federal income taxes, as well as Social Security and Medicare taxes. When you’re employed by an organization, you and your employer each pay half of these taxes on your income, according to the IRS. But when you’re self-employed (earning more than $400 a year in net income), you’re expected to file and pay these taxes yourself, the IRS says. And if you think you’ll owe more than $1,000 in taxes for a given year, you may need to pay quarterly taxes.

That can feel like a heavy hit when you’re not used to planning for these costs. “If you’ve been on a salary, you don’t think about taxes really,” says Susan Lee, CFP^®, a tax preparer and founder of a website that provides tax information for freelancers. “You think about the take-home pay. With freelance, everything is take-home pay.”

Estimating what you’ll owe

Once you determine how often you’ll need to file taxes, Lee recommends doing a “dummy return,” which is an estimation of your annual self-employment income and expenses. You can come up with this number by looking at past assignments, industry standards, and future projections for your work—which Goulet also finds valuable.

Then, use that number to refine your estimate. “I determine the tax bracket I’m most likely to fall into by taking my projected monthly income and multiplying it by 12,” Goulet says. “If I experience a big income jump because of a new contract, I redo that calculation.”

Budgeting for what you’ll owe

After you estimate your income, you can determine how much money to set aside for your tax payments. Lee recommends saving around 25% of your income to pay your income tax and a self-employment tax (which funds your Medicare and Social Security). Once you subtract your business expenses from your freelance income, however, you may not need to pay that entire amount, according to Lee.

Adjust your estimates often—and always round up. “Let’s say, in one month, a freelancer determines she would owe $1,400 in tax. I’d put away $1,500,” Goulet says.

2. Business expenses for freelancers: Get a handle on two big deductions

For freelancers, tax deductions can yield big savings—if you know where to look for them. From the mileage you log between appointments to supplies for your home office to fees for coworking spaces, many freelance business expenses may be deductible, according to Lee.

The costs of freelancing vary from person to person. Some freelancers are happy to work from their kitchen tables, while others require a sophisticated (read: expensive) setup. Your freelance expenses will also change as you add new tools to your business arsenal.

Here are two budget categories you’ll need to account for as a freelancer:

Renting or furnishing your workspace

Joining a coworking space can help you establish the camaraderie you might miss when working at home alone. Yet these workspaces may charge membership dues, ranging from $20 for a day pass to hundreds of dollars per month for a dedicated desk or private office—something to consider when you’re calculating the cost of freelancing.

Coworking spaces may be all the rage, but you can still rent a traditional office space for several hundred dollars a month or more. However, this fee usually doesn’t include networking events or other membership perks like food and drink.

If you want to avoid office rent or dues but don’t want the kitchen table to pull double duty as your workspace, you might convert another room in your home into an office. When planning a home office on a budget, all it takes is a little creativity and know-how to create a functional, productive workspace.

Amy Hardison, a freelance copywriter and content strategist, retrofitted part of her house into a simple office. “I got a standing desk, a keyboard, one of those adjustable stands for my computer, and a squishy mat to stand on so my feet don’t hurt,” Hardison says.

Start with the absolute necessities. When Hardison launched her freelance career, she purchased a laptop for $299 and worked out of a coworking space—using its office supplies before creating her own workspace at home.

Going digital: freelancing business tools

There are a range of digital tools, including business and accounting software, that can assist with the majority of your business functions. These digital tools for freelancers can save you valuable time, which you can then invest back into growing and marketing your business.

The right business software can also help you avoid financial lapses as you grapple with how to manage finances as a freelancer. Hardison’s freelance business had ramped up to a point where a manual process was costing her money, so using invoicing software became a no-brainer.

“I was sending people attached document invoices for a while and keeping track of them in a spreadsheet,” Hardison says. “And then I lost a few of them, and I just thought, ‘Oh, my God, I can’t be losing things. This is my income!’”

You might use digital business and software tools to help manage scheduling, web hosting, accounting, audio/video conferences, and other business operations. When you’re determining how to budget as a freelancer, remember that the costs for these services depend largely on your needs.

For instance, several invoicing platforms offer options for as low as $9 per month, though the cost increases the more clients you add to your account. Accounting services also scale up based on the features you want and how many clients you’re tracking, though you can find reputable platforms that cost as little as $5 per month.

If you sign up for a business or accounting software platform, start with the “freemium” version, where the first tier of service is always free, Hardison says. Once you have enough clients to warrant the expense, upgrade to the paid level with the lowest cost. Gradually adding services will keep your expenses proportionate to your income.

3. Health insurance for freelancers: Harness an inevitable cost

Saving for healthcare costs can be one of the biggest hurdles to self-employment and successfully learning how to manage finances as a freelancer. In 2024, the average monthly premium under the Affordable Care Act (ACA)—for those who do not receive discounts due to qualifying income—was $469 for a 40-year-old individual and $1,491 for families of four, according to Forbes.

“Buying insurance is really protecting against that catastrophic event that is not likely to happen. But if it does, it could throw everything else in your plan into a complete tailspin,” says Stephen Gunter, CFP^®, a financial advisor at a wealth management firm.

Speak with an insurance advisor who can help you determine which plans are best for your health needs—and your budget. An advisor may be willing to offer a free consultation so you can gather important information before making a financial commitment.

4. Retirement savings for the self-employed: Learn to “set it and forget it”

Part of learning how to budget as a freelancer is thinking long-term, which includes estimating retirement expenses. That may seem daunting when you’re navigating new business expenses, but saving for retirement is a big part of budgeting when you’re self-employed, Gunter says.

“It’s kind of the miracle of compound interest,” Gunter says. “The sooner we can get it invested, the sooner we can get it saving.”

His freelance money management tip? Set aside whatever you would have contributed to an employer’s 401(k) plan and put it on autopilot. One way to do this might be to set up an automatic transfer from your primary checking account to your savings or retirement account.

“So, if you would have put in 3% [of your income] each month, commit to saving that 3% on your own,” Gunter says. The Discover® IRA Certificate of Deposit (IRA CD) could be a good fit for helping you enjoy guaranteed returns in retirement by contributing after-tax (Roth IRA CD) or pre-tax (Traditional IRA CD) dollars from your income now.

Prioritize retirement savings every month, not just when you feel flush. “Saying, ‘I’ll save whatever is left over’ isn’t a savings plan because whatever is left over at the end of the month is usually zero,” Gunter says.

5. General business expenses: Update your rates to cover them

With time, you’ll likely find that one of the best financial tips for freelancers is to build your costs into what you charge. “As I’ve discovered more business expenses, I definitely take those into account as I’m determining what my rates are,” Goulet says.

She notes that freelancers sometimes feel guilty for building business costs into their rates, especially when they’re worried about the fees they charge to begin with. But working these costs into your rates is essential to sustainable money management—and building a thriving freelance career.

Your expenses will change over time, so reevaluate the rates you charge annually. It’s also wise to do quarterly and yearly check-ins to assess your income and costs and see if there are any processes you can automate to save time and money.

Knowing how to manage finances as a freelancer is the key to a successful career

When you understand how to manage finances as a freelancer—effectively accounting for the costs of being self-employed—you can build the foundation of a long (and, with luck, lucrative) freelance career. From planning for taxes to saving for retirement, smart money management can provide you with much-needed financial stability and peace of mind if and when you decide to strike out on your own.

“There are many hats you have to wear and expenses you have to take on,” Goulet says. “But for that, you’re gaining a lot of opportunity and flexibility in your life.”

Working as a freelancer has its benefits, but it also means your pay can fluctuate from month to month. If you want to be even more prepared for freelance money management, then find out how to make a budget when you have an irregular income.

The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. Please consult your tax advisor with respect to information contained in this article and how it relates to you.

Source: discover.com

Apache is functioning normally

October 30, 2024 by Brett Tams

They say the kitchen is the heart of the home. So it’s not surprising that a kitchen remodel is one of the most expensive home refreshes you can do—and it can be one of the best projects for generating an eventual return on investment, per Investopedia.

Bankrate reports that remodeling your kitchen can cost as much as six figures, and even when remodeling on a budget, you can expect to spend a minimum of $14,000. That’s a huge range to navigate, and many homeowners dreaming of a new kitchen may wonder how they can effectively budget for one.

Elizabeth H., an Atlanta homeowner, spent years saving up to make over her home and recently completed a series of renovations—including a kitchen remodel. “It was a pretty massive thing,” she says. “But now that it’s over, it’s fantastic.”

As a result of her experience, Elizabeth can offer some insight into how to plan for a budget kitchen remodel—from doing lots of research to preparing for the unexpected. She also has some surprising tips for cutting costs.

Establish your priorities

When creating her kitchen remodel budget, Elizabeth thought long and hard about what updates would have the most impact aesthetically and practically.

“I thought about which things I use the most and which would have the biggest impact,” she explains. For example, when her friends and family come over, they tend to gather around the kitchen island. “I thought, I definitely don’t want to skimp on the island because that’s going to be a focal point for me on a day-to-day basis and when my friends come over, whereas with the flooring I can choose something more modest.”

Elizabeth opted to focus more of her budget on the areas of her kitchen that would help her enjoy the space and cut back on things that didn’t matter to her as much. Once she settled on her priorities, she could plan her budget more strategically.

Tip: Cabinets are typically the priciest part of a kitchen renovation, accounting for roughly 30% of the total job, according to the same Bankrate study. Shopping around for a style that fits both your taste and your budget could be time well spent.

Set your budget

Elizabeth heavily researched what a remodel would cost her—even factoring in expenses unrelated to labor costs and materials. For example, when renovating a kitchen on a budget, she recommends earmarking funds for dining out, takeout, and any other solutions you need to pursue while your kitchen is out of commission. “You need a pizza fund,” she jokes.

You may also need to budget for alternate housing. Elizabeth rented a short-term apartment to live in while her home was uninhabitable. Once she had a realistic budget that took into account these extra costs, she spent a few years saving up to reach that goal.

Staying focused and being patient enough to reach her goal helped her avoid financial stress when it came time to start the work. While looking for new appliances and cabinets as soon as you start daydreaming about your project can be tempting, you also want to be realistic. “Save first, shop later,” Elizabeth suggests.

Tip: If you’re saving for a renovation, stash your funds in a money market account or online savings account. You’ll earn interest and grow your savings faster.

Expect the unexpected

The tricky thing about redoing a kitchen on a budget is predicting how much the final cost will be.

“Whatever you think your budget will be, go over by a good bit,” Elizabeth warns. “A lot of people say plan for 25% extra, but I think the older your home is, the more of a buffer you need. Once they start opening up walls, they may find more issues that need repairing.”

A budget kitchen remodel typically comes with unexpected hurdles, and Elizabeth recommends being prepared for surprises so they don’t shock you. This mindset also applies to how long a kitchen remodel will take, not just how much it will cost. “You just have to roll with it,” she says. “I think whatever timeline they give you up front, it’s important to recognize they’re probably not going to stick to it.”

The bottom line is that there will always be surprises and hiccups. “No matter how much you plan or how much you prepare, no matter how organized you are or what research you do, there will still be things that vary,” Elizabeth says. “Having really good construction partners you can trust is the best way to navigate the process overall.”

Once you’ve figured out your kitchen renovation budget, start growing your savings to pay for it with confidence. A Discover® Online Savings Account offers competitive yields with no monthly fees.

Source: discover.com