Loans can help us achieve big goals, like buying a car or going to college. But did you know that the interest rate on your loan can affect how much money you pay back? A lower interest rate means you pay less money over time. So, how can you get a lower loan rate? Here are some simple tips to help you save money.
1. Check Your Credit Score and Credit Reports
We know this is obvious but it needs to be said. Make sure that you are more familiar with your credit than any potential lender could be. This means checking your credit score and your credit reports (all three) because your lender will be looking at more than just your score. You may feel like you have a decent credit score, and then be surprised by what rate your lender quotes you because there are too many negative items in your credit report.
If you’ve never downloaded copies of your credit reports before, you can do so for free at the only official website, AnnualCreditReport.com
If you want a more broken out view of your credit and explanations for what everything means, you can also get a free Credit Report Card from us.
2. Really Spend Time Shopping Around
Don’t settle for the first loan offer you get. Don’t settle for the second. The difference of half a percent can mean thousands of dollars, so really take your time and do your research. Check the rates offered by your own bank, credit unions, digital lenders, mortgage brokers – anyone – to see who has the lowest rates.
Just remember to compare not only the interest rates but also any fees or charges that might be included.
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3. Consider a Co-Signer
If you’re having trouble getting approved for a loan or getting a low interest rate on your own, consider asking someone with good credit to co-sign the loan with you. Having a co-signer with a strong credit history can help you qualify for a lower interest rate.
4. Save Up For a Big Down Payment
Putting more money down upfront can help you secure a lower interest rate on your loan. It shows lenders that you’re serious about paying back the money you borrow. Plus, a larger down payment means you’ll have a smaller loan amount, which can also lead to lower monthly payments and less interest paid over time.
5. Choose a Shorter Loan Term
The length of your loan term can affect your interest rate. Generally, shorter loan terms come with lower interest rates because the lender takes on less risk. While a shorter loan term means higher monthly payments, it also means you’ll pay less in interest over the life of the loan. So if you can afford it, choosing a shorter loan term can help you save money in the long run.
6. Improve Your Debt-to-Income Ratio
Lenders also consider your debt-to-income ratio when deciding your loan rate. This is the amount of money you owe each month compared to the amount of money you make. If you have a high debt-to-income ratio, lenders might see you as a higher risk borrower and charge you a higher interest rate. Paying down debt or increasing your income can help improve your debt-to-income ratio and qualify you for a lower rate.
7. Ask About Discounts
Some lenders offer discounts on loan rates for things like setting up automatic payments or having a checking account with them. It doesn’t hurt to ask if there are any discounts or special offers available when you apply for a loan. Even a small discount can add up to big savings over time.
8. Use Mortgage Points
Mortgage points are a way to lower your interest rate by paying extra money upfront to your lender when you close on your mortgage. Each point typically costs 1% of the total amount of your loan.
So, let’s say you’re getting a $200,000 mortgage, and the lender offers you the option to buy one mortgage point for $2,000. If you buy one point, you’d pay an extra $2,000 upfront, but your lender might lower your interest rate by, let’s say, 0.25%.
If you plan to stay in your house for a long time, buying mortgage points might be a good idea because you could end up saving more money on your monthly mortgage payments. But remember, it’s not always the right choice for everyone. Think about how long you plan to stay in the house and whether you’ll actually save enough money in the long run to make up for the extra cost upfront.
By following these tips, you can increase your chances of getting a lower loan rate and save money on interest. Remember, every little bit counts when it comes to your finances, so take the time to explore your options and find the best loan rate for you. With a little effort, you can be on your way to achieving your goals while keeping more money in your pocket!
Investing can feel like riding a rollercoaster, especially when you’re trying to keep up with market fluctuations. One popular technique that long-term investors use to smooth out this ride is dollar-cost averaging (DCA).
This investment strategy offers a methodical approach to investing that can eliminate the guesswork and stress of trying to time the market. Let’s dive into the world of DCA and see how it might serve your personal finance goals.
Basics of Dollar-Cost Averaging
Dollar-cost averaging is a simple but effective investment strategy. The basic idea is to invest a fixed dollar amount at regular intervals into a particular investment, such as a stock or mutual fund, regardless of its share price. Over time, this approach can result in a lower average price per share compared to making a lump sum investment at a higher price.
Here’s how to dollar-cost average: Suppose you decide to invest $500 into an index fund every month. The share price of the fund fluctuates from month to month, sometimes high, sometimes low. By investing regularly, you buy more shares when the price is low and fewer shares when the price is high. Over time, this can lead to a lower average purchase price.
A Deeper Dive Into How Dollar-Cost Averaging Works
One way to get a better grasp of how dollar-cost averaging works is to look at a hypothetical scenario. Suppose you decide to invest $200 in a mutual fund every month. In January, the share price is $20, so you buy 10 shares.
In February, the share price drops to $10, so your $200 buys you 20 shares. In March, the price goes up to $25, so you can only afford 8 shares. Despite the market’s fluctuations, your regular investment allowed you to purchase more shares when the price was low and fewer shares when the price was high, resulting in a lower average purchase price.
Benefits of Dollar-Cost Averaging
The key advantage of the dollar-cost averaging approach is that it mitigates market volatility. Instead of trying to time the market and potentially making ill-timed investment decisions, DCA allows you to follow a fixed schedule and make regular investments.
This strategy can be especially beneficial in declining markets. When stock prices fall, your fixed dollar amount can purchase more shares. If the stock market recovers, you would have bought those shares at lower prices, potentially leading to gains. This way, DCA can turn market declines into opportunities.
Another benefit of dollar-cost averaging is that it can promote disciplined investing. By investing a fixed amount at regular intervals, you are more likely to stick with your investing strategy, even when the market is turbulent.
The Psychology Behind Dollar-Cost Averaging
Dollar-cost averaging isn’t just about mathematical probabilities and financial strategy—it’s also deeply intertwined with investor psychology. Investing can be an emotional roller coaster, especially during periods of significant market volatility. When stock prices swing wildly, investors often let their emotions guide their decisions, which can lead to costly mistakes.
For instance, a sudden market downturn might provoke feelings of fear and uncertainty. In response to these emotions, some investors may resort to panic selling, hastily offloading their investments to stave off further losses. This can be detrimental to their long-term financial goals because they might miss out on potential gains when the market eventually rebounds.
On the flip side, during a bullish market when prices are high, feelings of greed and fear of missing out (FOMO) might take over. These emotions can lead to impulsive buying, where investors pour money into the market hoping to ride the wave. But if the market corrects or crashes, these investors stand to lose a significant portion of their investment.
This is where the dollar-cost averaging approach comes into play. The discipline of investing a fixed amount at regular intervals removes the need to time the market and reduces the influence of emotions on investment decisions. It provides a systematic investment plan that is followed regardless of whether the market is up or down. This disciplined approach can prevent impulsive decisions, providing a level of emotional comfort and stability.
Limitations and Risks of Dollar-Cost Averaging
While dollar-cost averaging offers many benefits, it’s not without its potential drawbacks. One potential downside is that if the market consistently rises, a dollar-cost averaging strategy could yield lower returns compared to lump sum investing. In bullish markets, a lump sum invested early would have more time to grow.
Another risk is that despite the potential to achieve a lower average price per share, DCA doesn’t guarantee profits or protect against losses. If the market continually declines, you may lose money, especially if you need to withdraw your investment before the market has a chance to recover.
Finally, for dollar-cost averaging to work effectively, it requires regular and continuous investments. This may pose a challenge if you have a tight budget or unpredictable cash flow.
Dollar-Cost Averaging vs. Lump Sum Investing
Lump sum investing is another common strategy where an investor puts a large sum of money into the market at once. This approach can yield higher returns during a bull market because your entire investment is exposed to the market’s growth from the beginning.
However, timing the lump sum investment correctly can be challenging, even for professional investors. Misjudging the market can lead to buying high, which could result in lower returns or even losses. It’s also worth noting that investing a large sum all at once can be a significant risk if the market takes a downturn shortly after.
Choosing between dollar-cost averaging and lump sum investing largely depends on factors like your risk tolerance, investment horizon, and the amount of money you have to invest.
Implementing Dollar-Cost Averaging in Your Investment Strategy
If you’re interested in implementing a dollar-cost averaging strategy, you’ll need to consider several factors:
Choosing an investment: First, choose a suitable investment option. This could be individual stocks, mutual funds, or exchange-traded funds (ETFs). It’s wise to diversify across different asset classes to reduce risk.
Budget: Decide how much money you can invest regularly. This could be a fixed dollar amount you set aside from your paycheck every month. The key is to ensure it’s an amount you can commit to over time.
Frequency: Determine how often you want to invest. This could be monthly, quarterly, or any interval that fits your financial situation. The main point is to stick to a regular schedule.
Duration: Consider how long you plan to keep investing. This would typically be linked to your financial goals. Are you saving for retirement, a down payment on a home, or your child’s college education? Your end goal can help you determine how long you dollar-cost average.
Dollar-Cost Averaging in Different Market Conditions
Dollar-cost averaging can prove beneficial in various market conditions:
Bullish markets: In a steadily rising market, a DCA strategy may underperform a lump sum investing approach. However, the benefit is that you’re not risking a large sum of money at once and aren’t trying to time the market.
Bearish markets: In declining markets, DCA comes into its own by allowing you to buy more shares at lower prices. This can reduce the average cost of your investment over time.
Volatile markets: Market volatility can make it difficult to time your investments. With DCA, you’re investing at regular intervals, which means you’re less likely to be swayed by short-term market swings.
Dollar-Cost Averaging With Robo-Advisors and Investment Apps
Nowadays, you don’t need to manually make investments at regular intervals. Many financial institutions offer automatic trading plans, and several robo-advisors and investment apps also provide automated DCA services.
These tools can automatically deduct a set amount from your bank or brokerage account and invest it according to your preferences, making DCA even more straightforward.
Conclusion
Dollar-cost averaging helps you manage fluctuations in the market, mitigate the risks of market timing, and potentially lower your average purchase price. It offers a systematic and disciplined approach to investing. However, like any investment strategy, it’s not without risks. Always consider your financial goals, risk tolerance, and investment horizon before deciding to implement DCA.
Remember, past performance is not indicative of future results, and it’s important to evaluate your investment options carefully. While this article provides a thorough understanding of how dollar-cost averaging works, it does not provide investment advice. You should consider seeking advice from professional advisory or brokerage services that can provide personalized advice based on your circumstances.
Frequently Asked Questions
Can I use dollar-cost averaging in my retirement account?
Yes, DCA fits perfectly in retirement accounts like 401(k)s or IRAs. You’re typically contributing a set amount regularly, which is DCA in practice. Over time, this can help smooth out the impact of market volatility on your retirement savings.
Do I need a large sum of money to start dollar-cost averaging?
No, the advantage of DCA is that it allows you to start investing with any amount you’re comfortable with. You simply invest a fixed amount at regular intervals, which could be as little as a few dollars every month.
How does dollar-cost averaging help me build wealth over time?
DCA can contribute to wealth building by potentially lowering the average cost of your investments over time. By buying more shares when prices are low and fewer when they’re high, you might lower your average cost per share, setting the stage for potential gains in the long run.
Can dollar-cost averaging protect me from all investment losses?
While DCA can help mitigate the effects of volatile markets, it does not guarantee protection from all investment losses. The value of your investments can still go down, particularly if the entire market is in a prolonged downturn. It’s important to have a diversified portfolio and a strategy that aligns with your risk tolerance.
Is dollar-cost averaging only suitable for stocks?
Not at all. While often associated with buying stocks, you can apply dollar-cost averaging to other types of investments as well, like mutual funds, index funds, exchange-traded funds (ETFs), or even Bitcoin. The key is that the asset’s price changes over time.
How often should I make investments if I’m using a dollar-cost averaging strategy?
The frequency of investments in a DCA strategy can vary based on your personal finance situation and goals. Common intervals include monthly and bi-weekly, often aligned with pay periods. The key is to be consistent and stick to your predetermined schedule.
Inside: Making money is one thing, but saving it is another. Learn how to save 10000 in a year using the following steps. Plus download your free printable!
The number of people who do not save money is growing at a rapid pace. The economy has changed and many families are struggling to make ends meet, even with two incomes.
That is why saving $10,000 in one year can seem like an impossible goal for some people.
You can save $10,000 in a year.
This has been proven over and over here at Money Bliss.
This has happened because my readers dedicated themselves to one of our money savings challenges.
A lot of people are interested in saving more money right now, but not everyone can afford to save a lot of money. You do not need a ton of income to be successful, you just need to dedicate yourself to new habits of saving.
The thing is – money doesn’t grow on trees, and I wouldn’t recommend waiting for one either if you want your savings plan to be successful.
Are you ready to be the next Money Bliss success story to save 10000 dollars in a year?
If so, then you are in the right place. Let’s create your 10000 saving plan.
How to Save $10000 in One Year
It’s not as difficult to save $10,000 in one year as you may think. All it takes is a few small changes, creating a plan, and some careful budgeting.
The first step is to start saving money.
This can be done by paying yourself first. Decide on the amount you want to save each pay period. Then, you prioritize your savings before all of your expenses and money runs out
Next, you have to decide where to save your money.
Will you put the money into an online savings account where the temptation goes away?
Or invest in your future with a Roth IRA and/or 401k?
Where can you grow your savings over time?
Do not underestimate the power of your employer match contribution. If they offer this option for retirement savings or another type of investment account like Roth IRA or 401K, take advantage by contributing the maximum your plan allows each pay period.
Finally, you have to make sure you are living below your means with your increased saving rate.
These are all the fine details to make sure you learn how to save $10,000 in one year with cutting expenses.
Don’t forget to set up automatic transfers for all of your savings so they’ll be taken care of even when you don’t do it!
Shortly, you will find savings tips to help you save $10,000. The exact steps you need to do to save your first $10K or whether you want to do it again.
Breakdown How to Save 10000 Dollars in a Year:
But, first how much do you have to save to hit that 10K milestone in a year?
To save $10,000 in one year, you must set aside an average of $833.33 per month for 12 months.
Don’t quit reading now and walk away! You are reading this post for a reason. So, you will reach your saving challenge goal.
Let’s break that monthly number down into bit-size chunks.
Daily:
$27.40
Weekly:
$192.31
Bi-Weekly:
$384.62
Monthly:
$833.33
Bi-Monthly:
$416.67
Quarterly:
$2,500.00
Places to Save $10K in a Year
Your goal for the year is to save $10,000.
First, decide where you want to put this dollar bump in savings.
Everyone is at a stage in their financial journey, so what you choose will be completely different than someone else.
Here are some ideas:
Also, you may likely divide up your $10K savings into more than one bucket!
What are the ways you plan on saving $10,000?
Tips to help you Save $10000
According to the Federal Reserve, only half of Americans have retirement accounts.1
This means that most people will retire broke. Yikes!
The only way to achieve a comfortable lifestyle is by saving, investing, and planning for your future.
You can save $10,000 in one year if you make a goal and try your best. It will take some effort as it is not easy to do so, but the rewards are worth it.
If there’s anything that we know for certain about living life well, then this is: “you must be willing to work hard.”
So, what are some practical steps that you can take to save money? Let’s start with the first one.
1. Mindset
The purpose of this personal challenge is to help you save $10,000 in one year.
To save $10,000, you probably cannot continue doing what you are already doing when it comes to saving money.
You need to change your money mindset and your money habits.
There are a few key steps you need to take in order to save money. The first step is to have a proper mindset towards your savings – figure out where all of your money is going, then figure out whether or to what degree you’re living as you can afford it.
The next step is you believe that you are capable of saving money. That is the bigger part of the battle for most. It is believing that are incapable of saving that much money.
If you haven’t heard of a vision board, then you must create one ASAP. And don’t forget those money affirmations.
2. Automate Savings
Automating savings is a great way to save money.
It can be done by setting up automatic transfers from your checking account or even transferring funds from your paycheck into an emergency fund that you will never touch.
This allows for more freedom in spending without having to think about if you saved your goal for that pay period.
With direct deposit, you will save money automatically and the temptation to spend drastically goes down.
If direct deposit is unavailable, you could set up an automatic transfer with your bank.
3. Focus on Saving Goal
All of your money decisions revolve around your goal of saving 10000 dollars.
That is the smart financial goal you have created for yourself. Now, that is your #1 focus.
Here is how to believe you will save $10k before you start:
Tell yourself over and over that you will save $10K by (insert your date).
Post reminders about your goal.
Put a sticky note on your debit or credit cards and/or cash envelopes.
Find an accountability partner.
Review your habits that make saving more different.
All in all, you have to stay dedicated and commit to your saving goal.
4. Budgeting
Budgeting allows you to save money and reduce stress.
It is important to take the time and create a budget that works for your needs to minimize spending and maximize savings.
When you sit down and take a hard look at your budget, it is easier to make cuts and prioritize what needs the most attention.
In this case, your goal for the next year is to save 10000 dollars!
Don’t skip this step! You must pay yourself first to reach your 10k goal.
5. Biggest Expenses
We are talking about your biggest fixed expenses – housing, transportation, and food.
Big moves are difficult, but they produce big results. Downsizing or moving to a cheaper place is drastic, but it can save you thousands of dollars in the long run.
Other options include renting out space in your home on Airbnb, negotiating with your landlord, and taking other measures to reduce housing expenses.
Although it is now more uncommon for families to have only one car, that is a great way to save money on a depreciating asset and ongoing maintenance costs.
Refinancing a car payment or trading in your set of wheels for an affordable ride will help you keep up with the latest trends without breaking the bank. You could also save on gas by doing your own maintenance.
In order to save some money, you should start meal planning and save money on food. You can also eat out less and use coupons or cash back apps for your grocery shopping.
Buying in bulk is a great way to get cheaper prices on certain items, but it might be too much of a hassle if you’re unsure about what kind of foods work best with each other–and there’s always the possibility that they’ll go bad before their expiration date!!
6. Increase Your Income
When you increase your income, the sky is virtually your limit. There are various ways to accomplish this goal but each way comes with its own set of risks and rewards.
The best way to increase your income is by taking on a second job. Even better, negotiate or find a new job that pays more and increases your income.
The next possible way to make money is from a side hustle or an online business, such as Amazon FBA, Etsy, eBay flipper, Rover, or affiliate marketing. This will allow you to be your own boss and work from home.
Check out the best ways to make money online for beginners.
People who want to save $10,000 in a year should increase their income. To do that, you must find ways to earn more money.
Don’t forget that you always want your money to make money! This is called passive income.
It is possible to make more money on your business than you make more money in your current job or career.
7. Track Progress
It’s important to track progress with goals. This will help you see the journey and milestones of your savings.
To track progress, download our free $10000 printable and check off boxes as you hit milestones.
Before you can reach $10,000 in savings, you must first reach smaller amounts such as $500, $1,000, or $5,000.
8. Celebrate Milestones
You can decide what to reward yourself with, but it’s important to celebrate each win by rewarding yourself somehow.
Plan your milestones and rewards in advance.
That way you have the motivation to keep going and know that you can afford your milestone.
Some examples:
$500 = Ice cream treat out
$1000 = Take out from your favorite place
$2500 = Something you want, but haven’t wanted to splurge.
$5000 = Halfway point! Celebrate with dinner out.
$7500 = Plan an experience gift like ziplining or rock climbing.
$10000 = A hotel night and dinner to celebrate with your significant other or friends.
Now, come out with your own milestones and rewards that match your lifestyle and desires.
Bonus Tip – Get Out of Debt
Saving money becomes way easier once you have paid off all debts (excluding mortgage).
This can be accomplished by prioritizing your loans, paying down the highest-interest loan, and then moving on to the next one.
Once you’re free from debts, it’s time for some simple adjustments in your spending habits that will help save thousands over a year.
Debt will always hold you back on your financial journey until you enjoy a debt free life!
How to save $10000 fast
So, you want to save $10,000 in a year?
Many of the methods listed above will help you save $10,000. But, let’s add ways to get your results faster!
You can do it!
At first glance, this might seem like an impossible task but with these tips and tricks, it’s not too hard to set your budget up so that you’ll be able to afford everything from a vacation abroad in your future.
The key is finding ways around spending money on things such as coffee, clothes, and other small luxuries so you can save the most money.
Here is a list of ways to save $10,000 in one year:
Cut your spending on coffee by 90%
Eliminate cable TV from your life for a month
Stop using taxis or public transportation when possible
Avoiding credit card debt.
Living with roommates instead of buying a house.
Get rid of all unnecessary subscriptions
Stop buying coffee at Starbucks or other coffee shops
Don’t buy anything with coupons unless it’s something you really need
Stop eating out
Cook your own food at home
Figure out what you spend the most on in a month and cut back by 20%
Sell any unused items you have in your home
Spend $5 per meal. Frugal meals are good!
Creates grocery list to limit eating out
Live like a thrifty person
Try a no spend challenge
Compare what is happening with your savings goals
Eliminate fees
Be careful with your money. Stop buying things that you don’t need and start living more simply. Do you really need that new iPhone?
Think about purchases over $25, specifically whether or not it’s worth it
Save for a set purchase instead of buying things as you go
Limit all impulse buys
For more ideas, check out our 200+ Frugal Living Tips.
There are some faster methods above that will get the job done quicker than just saving for 12 months.
Saving money isn’t as hard as you think it is. All it takes is some creativity and a little bit of willpower.
How to Save $10000 in a Year with Envelopes
Envelopes are a great way to save money. They allow you to collect interest on the cash you have saved in your account. Envelopes make it easy for people without much financial knowledge to save.
Since you are saving such a large amount of money, it is best to use an online budgeting app that works well with the envelope method.
To save money, you need to know how much you have saved with the 10k in 100 days challenge.
Tracking your progress is a good way of doing this and can be done by using envelopes with the amount inside that corresponds to what total savings count towards each goal.
Download Your 10000 Dollars Printable
Saving up $10,000 can be difficult and it’s not easy to know what to do. The tricky part is learning how to sustain those savings for the long run.
To help you show you how to save on a consistent basis, you can download one of our free $10000 printables.
When you sign up, you will have access to these free money saving challenge printables!
How to Save 10000 in 6 Months
Okay, you are determined to speed up your $10k savings!
That is awesome!
All you have to do is double how much you are saving each pay period.
To save $10,000 in 6 months, you must set aside an average of $1,666.67 per month for 6 months.
Daily:
$54.65
Weekly:
$384.62
Bi-Weekly:
$769.23
Monthly:
$1,666.67
Bi-Monthly:
$833.33
Quarterly:
$5,000.00
How to Save $10000 in 3 Months
Saving $10,000 in 3 months is a difficult task but not impossible. Here are some suggestions:
-Start saving money as soon as you can and work your way up to $10,000.
-House hacking is a must. Buy a house and rent out the rooms for extra income. Live with parents. Another great option is house sit and be paid for your housing!
-Rent out your car (or sell it) in order to save on gas costs.
If your goal is to aggressively save $10000 in three months, then you must drastically reduce all expenses.
To save $10,000 in three months, you must set aside an average of $3,33.33 per month for three months or in a period of 90 days.
Daily:
$111.11
Weekly:
$833.33
Bi-Weekly:
$1,666.67
Monthly:
$3,333.33
Bi-Monthly:
$1,666.67
Quarterly:
$10,000.00
How to Save $10000 in 2 Years
Saving 10000 dollars in a year is a little more aggressive than you believe possible. That is completely okay.
It does not matter how long it takes you to save $10000 as long as you complete the saving money challenge!
To save $10,000 in two years, you should start by saving at least 10% of your income every month. Then you can invest that money into index funds or other investment options to maximize your wealth.
To save $10,000 in 2 years you must set aside an average of $416.67 per month for two years or $5000 per year.
Daily:
$13.70
Weekly:
$96.15
Bi-Weekly:
$192.31
Monthly:
$416.67
Bi-Monthly:
$208.33
Quarterly:
$1,250.00
Are you Ready to Save 10000 Dollars?
A money saving challenge is a competition with the goal of finding ways to save money.
The best way to save money is through baby steps.
To start, you can take a look at your current financial situation and identify the areas of opportunity for savings. For example, if you’re struggling with debt or have an expensive monthly budget, then it’s time to find ways to reduce spending in these areas.
Once you’ve identified some opportunities for savings and created a plan accordingly, make sure that your progress doesn’t slow down by using tools like automatic saving plans and paperless billing.
Money saved in the long run will be worth it and you should participate in any of our money saving challenges.
The key point about saving money is not having too many goals as it will make it difficult to prioritize which ones are more important than others when trying to save more.
This is a simple guide for saving money, and it’s designed to help you save $10,000 in a year. Next up, is learning how to save 20000 in a year.
We have included tips on how to save money, but more importantly, change your finances for the long term.
Related Money Saving Challenges:
Source
Federal Reserve. “Changes in U.S. Family Finances from 2019 to 2022.” https://www.federalreserve.gov/publications/october-2023-changes-in-us-family-finances-from-2019-to-2022.htm. Accessed January 22, 2024.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
“MOASS,” or, the “Mother of All Short Squeezes,” was largely unknown to investors prior to 2021. But a saga involving so-called “meme stocks,” most notably GameStop stock, changed that, and MOASS entered the investing lexicon. In short, that specific scenario, bringing the Mother of All Short Squeezes, as a strategy, to investors’ attention, involved a rag-tag band of day traders taking on the hedge fund giants, with a short-sale “squeeze” that greatly impacted some of those giants.
Meme stocks, including GameStop and AMC Theatres, saw further short squeeze action in mid-May 2024, too. But the episode in 2021 shined a light on investors, short-sales, trading squeeze strategies, and digital trading on a massive scale, all of which fell under the MOASS umbrella.
Key Points
• MOASS stands for “Mother of All Short Squeezes,” a phenomenon where stock prices skyrocket due to mass buying.
• It gained prominence with the GameStop stock saga, where day traders challenged large hedge funds.
• The strategy involves a high volume of purchases to drive up stock prices, countering short sellers.
• Effective execution of MOASS can lead to significant profits for traders who initiate the squeeze.
• The approach carries high risks, especially for those who join late or cannot sell off at peak prices.
Table of Contents
Short Squeeze Basics
A short squeeze is an orchestrated effort to drive up shares of a stock that’s being heavily shorted. MOASS, meaning the Mother of All Short Squeezes, as noted, is a trading strategy in which a high volume of buyers drive up shares of stocks that were being “shorted” by other investors.
A short squeeze trading strategy needs two components to work — a short seller or, more preferably, several short sellers on one side and a group of disciplined contrarian investors who unroll a short squeeze and buy shares of the stock being shorted.
💡 Quick Tip: Investment fees are assessed in different ways, including trading costs, account management fees, and possibly broker commissions. When you set up an investment account, be sure to get the exact breakdown of your “all-in costs” so you know what you’re paying.
How the MOASS Works
In order to understand how a short squeeze — or a massive short squeeze — works, you first need to understand short selling.
Short sellers aim to profit from the fall in a stock’s price. They do so by borrowing and selling shares of a stock that they believe will decline in value. Then, when the stock price falls, a short seller buys the stock at the reduced price, returns the shares, and pockets the profit.
If the short seller makes the right call, meaning the price does fall, they earn the difference between the price when they entered the short position and the lower stock price at which they bought to cover.
If the short seller makes the wrong call, and the price goes up, the investor must buy the stock at a price higher than when they entered the short position, thereby losing money — and negating any potential for a profit.
As short sellers wind up leaving their short positions when they execute a buy order on the stock, those “short-squeeze” buy positions get noticed by other day traders, who also jump in to purchase the stock. That, in turn, drives the stock’s price even higher, since there are fewer shares of the stocks available to purchase.
Short-sellers, highly alarmed by the rising share price, also issue buy orders on the stock to exit the short sale strategy and reduce their investment risk, which completes the cycle and puts the short squeeze in full effect. This can result in the short sales losing money and the MOASS day traders making a profit on the rising stock price.
Recommended: Understanding Low Float Stocks
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GameStop: The Prime Example of MOASS
Perhaps the best example of MOASS in action is the GameStop saga in early 2021. At the time, several hedge fund firms had “shorted” GameStop stock, which essentially meant betting the share price of the stock would decline. That didn’t happen with GameStop shares. Some context is important to understand, too, as many retail stocks, like GameStop, had been heavily affected by the pandemic at the time.
But GameStop shares bucked the trend.
A group of day traders hanging out on a Reddit investing forum called “Wallstreetbets” banded together and started buying up shares of GameStop stock. The gambit worked, with GameStop shares skyrocketing from $19 per share to around $350 per share. The retail investors had successfully “squeezed” the short sellers, causing several hedge funds to lose hundreds of millions of dollars on their short positions on GameStop.
If the short squeeze works, the share price will continue to rise and the short investors, many of whom have fixed deadlines built into their short sales positions, will have to sell their shares and cut their losses, thereby driving the stock price even higher. That rewards the short squeeze investor, who profits from the rising share price, especially as other buyers enter the fray and drive the share price up even higher.
Once victory was declared with the GameStop short squeeze, the Reddit traders turned their attention to other so-called meme stocks where short selling activity was particularly high. That group included AMC Entertainment Holdings, Koss Corporation, and Blackberry, which all saw share volumes rise after the MOASS traders entered the fray.
Thus, a series of short squeezes that target more and more short sellers is really what MOASS is all about: squeezing enough short-sellers to achieve critical mass in the trading markets, and making huge profits in the process.
Also, as mentioned, a similar situation played out in May 2024, when certain stocks (including GameStop and AMC Theatres) were at the center of another short squeeze, though smaller in scale than the 2021 events.
Recommended: Pros and Cons of Momentum Trading
MOASS Trading Tips
Investors who want to participate in the next short squeeze effort should be careful. So-called “meme” stock trading can be fraught with risk, especially if you’re left holding the bag after other short-squeezers sell out of their positions before you do.
Take these risk considerations with you before participating in a mass short squeeze play.
Consider Minimal Purchases to Limit Losses
While the adrenaline level can be high when participating in a short squeeze trading event, tamp down emotions by limiting the amount of money you invest in a GameStop-type situation. As the old gambling adage says, never risk money you can’t afford to lose. That goes double when chasing the thrill of a MOASS scenario.
Should You Expect to Lose Money?
There’s a significant chance that you’ll lose money at some point with a short squeeze play.
Nothing is guaranteed in the stock market and that’s especially the case as short-sellers have learned their lesson after meme-stock related events in recent years, and grow more cautious about their investing habits. MOASS trading patterns can be something of a roller coaster ride for investors, and the odds that your ride will dip along the way are high. That can translate into days or even weeks of your short-squeeze buying strategy where your investment returns are written in red ink.
💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).
MOASS Tip: Have a Plan to Sell Quickly
Short squeeze investing isn’t exactly an orderly process and you need to put your interest first ahead of other MOASS investors. Why? Because volatility can be high and prices can swing at a moment’s notice when trading MOASS-themed stocks. Additionally, nobody really has any idea how high a price can go with a short squeeze in play, and nobody really knows if a stock will rise higher at all.
That’s why it’s a good idea to have a fixed “sell price” in mind when engaging in a short squeeze situation — a stop loss order to automatically sell the stock at a specific price can be a good idea in this scenario.
If you buy a targeted MOASS stock at $50 and it goes to $70, there’s no way of knowing if the stock will go any higher — it might and it might not. Worse, the price could slide back to $30 when buyers lose interest in the stock.
Having a good investment exit strategy in a short squeeze scenario, can help minimize investment losses and capitalize on a stock increase when and if it happens.
The Takeaway
“MOASS” means the “Mother of All Short Squeezes,” and perhaps the best example of it in action involved so-called “meme stocks” in 2021. Short squeeze trading strategies can bring a great deal of portfolio-shaking volatility to the investment table, and there are plenty of heavily shorted stocks that could be the next MOASS, but it’s impossible to know which one could trigger a squeeze.
That means MOASS may not be the best strategy for long-term investors or those with an aversion to risk. A short squeeze takes a significant amount of discipline, patience, and attention on the part of the investors, with continual risk in play until the squeeze is played out.
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Do you want to learn how to turn $10,000 into $100,000? Growing $10,000 into $100,000 might seem kind of impossible or far-fetched, but with the right mindset and plans, it could be a reality. Whether you want to make extra income, run a full-time business, or if you are just looking to learn how to…
Do you want to learn how to turn $10,000 into $100,000?
Growing $10,000 into $100,000 might seem kind of impossible or far-fetched, but with the right mindset and plans, it could be a reality.
Whether you want to make extra income, run a full-time business, or if you are just looking to learn how to turn your $10K into $100K quickly, there are many options that may interest you.
Best Ways To Turn $10,000 Into $100,000
Below are the best ways to turn $10,000 into $100,000.
Recommended reading: How To Turn $1,000 Into $10,000
1. Start an online business
Starting an online business could be a game-changer in growing your $10,000 to $100,000.
I started an online business years ago, and it has paid me well over $100,000 over the years, so I know that this is possible.
Here are some ideas for online businesses:
Here are some ideas for in-person businesses that you advertise for online but still get to work from home or on your own schedule:
Sell dog treats – Sell baked dog treats that you make. Learn more at How I Earned Up to $4,000 Per Month Baking Dog Treats (With Zero Baking Experience!).
Car detailing – Sell a mobile car-cleaning service where you go to the customer.
Meal prep – Help people eat healthily with pre-prepared meals that you deliver or they pick up.
Lawn care – Sell gardening or landscape services.
Dog walking – Take care of pets for busy owners. Learn more at 7 Best Dog Walking Apps To Make Extra Money.
Tutoring – Share your knowledge in a subject and teach others online or in person.
Local tour guide – Use your local knowledge to guide visitors around your town.
Starting a business doesn’t have to be expensive either. Typically, all you need for most of the businesses listed above is small affordable pieces of equipment or a few supplies (like a laptop or cleaning tools).
2. Start a blog
Starting a blog can be a great option if you’re looking to grow your $10,000 into $100,000.
A blog is a website where you can share your thoughts, knowledge, or experiences. You write posts that people can read, interact with, and share. And yes, you can make money from blogging!
I make money online by blogging, and I actually didn’t spend any money to start. It took me about 2 years to begin earning $10,000 every month.
And, I have now earned over $5,000,000 with my blog over the years.
I began my website, Making Sense of Cents, in 2011, and I started my blog without much planning, just wanting to share my own money journey, not even realizing that people could make money with websites.
So, how do you earn money through a blog? Here are some ways:
Ad revenue – Place ads on your blog and earn every time a reader clicks or views the ad.
Affiliate marketing – Recommend products and earn a commission if your readers buy through your links.
Selling products – Create and sell your ebooks or courses.
Services – Sell your expertise as a service such as consulting or coaching.
Blogging is a process that requires patience, but with consistent effort, making $100,000 from your blog may be possible.
You can learn how to start a blog with my free How To Start a Blog Course (sign up by clicking here).
3. Invest in real estate
There are many ways to turn $10,000 into $100,000 in real estate.
I’ve done some real estate side hustles myself, and I know many others who do too. Getting into real estate doesn’t have to cost a lot, and there are several side hustles in real estate that you can start even if you’re new or have limited money to work with.
These include:
House hacking – Buy a home, live in part of it, and rent out the rest. This could include renting out a duplex (and living in the other half) or even just a spare room in your house. This way, the rent you receive helps pay your mortgage. Look for multi-unit properties where you can live in one part and rent out the others.
Long-term rental property – You could buy a property and rent it out to long-term renters, such as for a year or longer.
REITs (Real Estate Investment Trusts) – Invest in REITs, which are companies that own and manage real estate properties. By investing in REITs, you can spread your money across different properties without having to manage them yourself.
Airbnb rentals – Rent out a spare room or your entire place to travelers through Airbnb. Make your space cozy and welcoming to attract guests. Make sure to check local laws about renting out your place and set a competitive price.
Rent out storage space – Rent out any unused land or space for storage. Whether it’s a parking spot, closet, basement, attic, or any unused area, people are willing to pay for storage. List your space on platforms like Neighbor to earn extra income.
Flip homes – While flipping homes usually requires more than $10,000 to start, it’s a popular way to turn a small investment into a larger profit. If you’re skilled and enjoy renovation projects, buy a house, fix it up, and sell it for a higher price.
Recommended reading: 23 Best Real Estate Side Hustles To Make Extra Money
4. Invest in the stock market
Investing in stocks means buying a piece of a company like Walmart, Apple, or Amazon. The price of individual stocks can go up or down, and if it goes up, you might turn $10,000 into $100,000.
I, for example, prefer long-term investing. I diversify my investment portfolio, meaning I spread it out across different companies. This way, if one company doesn’t do well, I don’t lose all my money.
One way to diversify is by investing in funds like exchange-traded funds or mutual funds. These are collections of stocks bundled together, which can lower your risk compared to investing in individual stocks.
How quickly you can turn $10,000 into $100,000 depends on the market and the stocks or funds you choose. It could take a year or decades. Patience is key.
This is a screenshot I took from Investor.gov of their compound interest calculator.
If you are wanting to invest in the stock market, with an average return of 8%, it might take about 30 years to reach $100,000 without additional contributions. You may be able to shave some years off that by automatically reinvesting dividends, though (if you are invested in dividend stocks). This is great, though, and shows the power of compound interest.
Note: Some people choose short-term investing to make money quickly in the stock market. However, this approach requires thorough research on your investment decisions, understanding various fees, knowing your risk tolerance, and more before opening a brokerage account. While the right strategy can sometimes lead to profits, the wrong one can mean that you lose a lot of money.
Recommended reading: How To Start Investing For Beginners With Little Money
5. Flip items for resale
Turning $10,000 into $100,000 might seem impossible, but one way to work toward this goal is by flipping items for profit. You can start by looking around your home for things you no longer use or even items that people are trying to get rid of.
You might be surprised by how much money you can make by selling items like old phones, laptops, clothes, and even furniture that you no longer need.
I’ve personally flipped many items for resale over the years, and it can be a good way to earn extra cash!
Here are some ideas:
Sell electronics and furniture – Websites like Craigslist and Facebook Marketplace are great for selling bigger items like furniture because you can arrange easy local pickups.
Fashion and accessories – Platforms like eBay or Facebook Marketplace are good for selling clothes, especially if they’re branded. These sites help you reach a wide audience and make shipping easy. For jewelry you don’t wear, sites like Worthy can help you find them a new home.
Yard sales – Yard sales can be a fast way to earn money, especially if you have many items to sell. While you might not make as much money for each item, the total can still add up nicely!
If you want to take it a step further, you can start buying items to flip for a profit. Look for furniture that needs a bit of cleaning, high-end clothing that needs repair, or appliances that need new parts. Fix them up and sell them for a higher price.
I have a friend who does this for a living, and some of their best flips include:
Buying an item for $10 and selling it for $200 just 6 minutes later.
Purchasing a security tower for $6,200 and selling it for $25,000 just one month later.
Buying a prosthetic leg for $30 at a flea market and selling it for $1,000 on eBay the next day.
They’ve even found a free chair and eventually did so many flips directly from that free chair and made over $100,000! You can learn more at How We’ve Turned A Free Chair Into $103,000.
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This free workshop will teach you how to get into the flipping business. It will teach you how to resell furniture, electronics, appliances, and anything else you can find.
6. Buy an established business
One way to possibly turn $10,000 into $100,000 is by buying a business.
Investing $10,000 in buying an existing business could potentially grow your investment to $100,000. When you buy a business, you’re entering into an established cash flow and you don’t have to start from scratch because the business already has customers, a recognized name, and ongoing operations.
And, you might find a business where you can see clear ways to improve it, which means that you can improve your investment.
This is actually close to the line of work I was in before I started Making Sense of Cents – I was an investment analyst and valued businesses (among other investments) for a living. So, I saw a lot of businesses be bought and sold over the years.
Here are some steps to start with when it comes to buying a business:
Look around – Search for businesses on sale.
Ask questions – Why is the owner selling?
Research – Look for businesses that match your interests and talents. You will do better in a business you like!
Talk money – See if the numbers make sense.
Get help – A business adviser can help you understand the details.
Make a deal – If it looks good, start the buying process.
Buying a business is a BIG decision, but with the right one, your $10,000 investment could turn into $100,000. I do highly recommend getting professional advice from a financial advisor before making a business or asset purchase to make sure you make a smart choice.
Recommended reading: Are Laundromats Profitable? How Much Do Laundromats Make?
7. Sell on Etsy
Etsy can be a great place for you to turn your $10,000 into $100,000 by selling items online.
You can start your own Etsy store with products you make or find. People love buying unique things like handmade crafts, vintage items, and custom art.
Selling digital products is one of my favorite ways to make money because it requires much less than $10,000 to start. Creating digital products is a way to possibly even earn passive income. By designing products that people can download and use, you enter a market with very low overhead costs.
Some digital product ideas include templates for social media branding, weekly routine printables, printable wall art, and more.
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.
8. Peer-to-peer lending
When you have $10,000 that you want to grow, you might want to consider peer-to-peer (P2P) lending. This is when you lend your money online and receive it back with interest. It’s similar to being a bank, but you’re lending to individual people instead.
Starting with peer-to-peer lending works like this:
Find a reputable P2P platform that suits your needs.
Deposit your $10,000 to fund loans.
Before committing, make sure to read and understand all terms and conditions, such as the potential earnings, risks, and interest rates.
The interest you earn from these peer-to-peer loans becomes your profit over time.
Remember, investing involves risks, and loans may not be repaid, which can affect your return.
9. Invest in crypto
Cryptocurrency, like Bitcoin, is not something that I personally invest in, but it can be a way to possibly grow your money.
Remember:
To use money you’re okay with risking
That there’s no guaranteed win
To always play it safe with your hard-earned cash
This digital money can sometimes be like a roller coaster – sometimes it goes up, sometimes it goes down. But if you make wise decisions, it could help grow your cash.
10. Flip websites for profit
Flipping websites can be a way to increase your $10,000 into a much larger amount. It’s similar to renovating and selling houses, but it’s done online.
I know several people who have bought websites with the goal to flip too!
You can start by searching for a website to purchase, such as by searching listings on Flippa. Look for sites with potential but require improvement. They should cover a solid topic but may need improvements in things like content, design, or improving page views.
Recommended reading: How I’ve Made $80,000 Selling Blogs
11. Start a YouTube channel
Starting a YouTube channel can be a fun and creative method to grow your $10,000 investment. It will most likely cost you less than $10,000 to start a YouTube channel, but there are ways to spend that amount of money to get started faster (such as buying a course on YouTube or buying expensive camera equipment).
Let’s simplify the process into easy steps:
Choose a topic – Pick something you love or know a lot about.
Create your channel – Sign up on YouTube and set up a channel for free.
Make videos – Use a camera or smartphone to record your videos.
Grow your channel – Post regularly, share your videos on social media, and more.
Monetize your channel – When you get 1,000 subscribers and 4,000 hours of watch time, you can apply for the YouTube Partner Program.
Recommended reading: 22 Ways To Make Money Online Without Paying Anything
12. Turn $10K into $100K through education
One great way to turn your money into more is to learn through higher education, whether that be college, a certificate, or learn a trade.
You can start by looking for jobs with a strong outlook and high salaries, and even by using online resources or talking to a career advisor to find the best fit for you.
Then, you’ll want to pick a reputable college or trade school. You’ll want to factor in the cost and the potential return on your investment. Community colleges or public schools can be more affordable, for example.
Now, there are many costs when it comes to going back to school. There is tuition, books, lab fees, parking, and more. It most likely may end up costing you more than $10,000 to go back to school, but if you choose a solid career path and are smart with your college costs, then it could be a wise step.
Frequently Asked Questions
Below are answers to common questions about how to turn $10,000 into $100,000.
How long does it take to turn $10,000 into $100,000?
The time it takes to turn $10,000 into $100,000 depends on your investment strategy and the rate of return. If you are wanting to invest in the stock market, with an average return of 8%, it might take about 30 years to reach $100,000 without additional contributions. But, if you buy an existing business, go back to school and get a higher-paying career, or start your own business, then you may be able to turn $10,000 into $100,000 even quicker.
What is the fastest way to turn $10K into $100K?
The fastest way to multiply your money could be high-risk investments like day trading stocks or real estate flipping. Remember, high rewards come with high risks, so be careful with any fast-growing strategies.
How to turn $10K into $100K in a month?
Turning $10K into $100K in a month is extremely risky and unlikely. Most investments that promise such quick returns are highly speculative, so you could lose your money just as fast. I highly recommend that you be careful if someone tells you that they can help you turn $10,000 into $100,000 in one month.
How to turn $10K into $100K in a year?
Turning $10K into $100K within a year involves high risk and aggressive investment approaches as well, but it is possible. This may include buying an existing business and really putting in some hard work to improve it.
How to turn $10K into $100K in 2 years?
Yes, you can be able to turn $10,000 into $100,000 in 2 years. This could be through ways such as starting your own online business (such as by selling digital products or a blog), buying an existing business, or even going back to school to get a higher-paying job.
How to turn $10K into $100K in 5 years?
Yes, you can potentially turn $10,000 into $100,000 in 5 years. This could be achieved through different methods such as starting your own online business (like selling digital products or creating a blog), purchasing an existing business, or even furthering your education to find a higher-paying job.
Can you turn $10K into a million?
Yes, you may be able to turn $10,000 into $1,000,000, but this will most likely take a lot of time. So, patience is key!
How to Turn $10,000 into $100,000 – Summary
I hope you enjoyed this article on how to turn $10,000 into $100,000.
To make more money from your $10,000 investment, you may want to think about using the internet to start a business. Websites like Etsy can help you sell handmade items, or you can make money from a blog or YouTube channel. You can also try traditional ways of investing, like buying stocks or real estate. You can be very involved, like flipping houses, or less involved, like putting money into peer-to-peer lending or high-interest savings accounts.
As you can see, there are many different investment options and business models depending on your financial goals and risk tolerance.
Inside: Learn what 24 an hour is how much a year, month, and day. Plus tips to budget your money. Don’t miss the ways to increase your income.
You’re probably wondering if I made $24 a year, how much do I truly make? What will that add up to over the course of the year when working? Is $24 an hour good?
Is this wage something that I can actually live on? Or do I need to find ways that I can increase my hourly wage? How much more is $24.50 an hour annually?
When you finally start earning $24 an hour, you are happy with your progress as an hourly employee. Typically, this is when many hourly employees start to become salaried workers.
In this post, we’re going to detail exactly what $24 an hour is how much a year. Also, we are going to break it down to know how much is made per month, bi-weekly, per week, and daily.
That will help you immensely with how you spend your money. Because too many times the hard-earned cash is brought home, but there is no actual plan for how to spend that money.
By taking a step ahead and making a plan for the money, you are better able to decide how you want to live, make sure that you put your money goals first, and not just living paycheck to paycheck struggling to survive.
The ultimate goal with money success is to be wise with how you spend your money.
Knowing 24 dollars an hour is how much a year will help you manage money wisely.
If that is something you want too, then keep reading. You are in the right place.
$24 an Hour is How Much a Year?
When we ran all of our numbers to figure out how much is $24 per hour is as an annual salary, we used the average working day of 40 hours a week.
40 hours x 52 weeks x $24 = $49,920
$49,920 is the gross annual salary with a $24 per hour wage.
As of June 2023, the average hourly wage is $33.58 (source).
Let’s break down how that number is calculated
Typically, the average workweek is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, multiply the hourly salary of $24 times 2,080 working hours, and the result is $49,920.
That number is the gross income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
That is just under the $50000 salary threshold, but lower than the 60K salary, which is desired to become middle-income worker.
Work Part Time?
But you may think, oh wait, I’m only working part-time. So if you’re working part-time, the assumption is working 20 hours a week at $24 an hour.
Only 20 hours per week. Then, take 20 hours times 52 weeks and that equals 1,040 working hours. Then, multiply the hourly salary of $24 times 1,040 working hours, and the result is $24,960.
How Much is $24 Per Month?
On average, the monthly amount would average $4,160.
Annual Amount of $49,920 ÷ 12 months = $4,160 per month
Since some months have more days and fewer days like February, you can expect months with more days to have a bigger paycheck. Also, this can be heavily influenced by how often you are paid and on which days you get paid.
Plus by increasing your wage from $20 an hour, you average an extra $8320 per year. So, yes a few more dollars an hour add up!
Work Part Time?
Only 20 hours per week. Then, the monthly amount would average $2,080.
How Much is $24 per Hour Per Week
This is a great number to know! How much do I make each week? When I roll out of bed and do my job, what can I expect to make at the end of the week?
Once again, the assumption is 40 hours worked.
40 hours x $24 = $960 per week.
Work Part Time?
Only 20 hours per week. Then, the weekly amount would be $480.
How Much is $24 per Hour Bi-Weekly
For this calculation, take the average weekly pay of $960 and double it.
$960 per week x 2 = $1,920
Also, the other way to calculate this is:
40 hours x 2 weeks x $24 an hour = $1,920
Work Part Time?
Only 20 hours per week. Then, the bi-weekly amount would be $960.
How Much is $24 Per Hour Per Day
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x $24 per hour = $192 per day.
If you work 10 hours a day for four days, then you would make $240 per day. (10 hours x $24 per hour)
Work Part Time?
Only 4 hours per day. Then, the daily amount would be $96.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
$24 Per Hour is…
$24 per Hour – Full Time
Total Income
Yearly (52 weeks)
$49,920
Yearly (50 weeks)
$48,000
Monthly (173 hours)
$4,160
Weekly (40 Hours)
$960
Bi-Weekly (80 Hours)
$1,920
Daily Wage (8 Hours)
$192
Net Estimated Monthly Income
$3,176
**These are assumptions based on simple scenarios.
Paid Time Off Earning 24 Dollars an Hour
Does your employer offer paid time off?
As an hourly employee, you may or may not get paid time off.
So, here are the scenarios for both cases.
For general purposes, we are going to assume you work 40 hours per week over the course of the year.
Case # 1 – With Paid Time Off
Most hourly employees get two weeks of paid time off which is equivalent to 2 weeks of paid time off.
In this case, you would make $49,920 per year.
This is the same as the example above for an annual salary making $24 per hour.
Case #2 – No Paid Time Off
Unfortunately, not all employers offer paid time off to their hourly employees. While that is unfortunate, it is best to plan for less income.
Life happens. There will be times you need to take time off for numerous reasons – sick time, handling a family emergency, or even vacation.
So, let’s assume you take 2 weeks off without paid time off.
That means you would only work 50 weeks of the year instead of all 52 weeks. Take 40 hours times 50 weeks and that equals 2,000 working hours. Then, multiply the hourly salary of $24 times 2,000 working hours, and the result is $48000.
40 hours x 50 weeks x $24 = $48,000
You would average $192 per working day and nothing when you don’t work.
$24 an Hour is How Much a year After Taxes
Let’s be honest… Taxes can take up a big chunk of your paycheck. Thus, you need to know how taxes can affect your hourly wage.
Also, every single person’s tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Gross Annual Salary: $49,920
Federal Taxes of 12%: $5,990
State Taxes of 4%: $1,997
Social Security and Medicare of 7.65%: $3,819
$24 an Hour per Year after Taxes: $38,114
This would be your net annual salary after taxes. Less than $40000 per year!
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$38,114 ÷ 2,080 hours = $18.32 per hour
After estimated taxes and FICA, you are netting $18.32 an hour. That is $5.68 an hour less than what you thought you were paid.
This is a very highlighted example and can vary greatly depending on your personal situation. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
Plus budgeting on a just over $18 an hour wage is much different.
$24 an Hour Budget – Example
You are probably wondering can I live on my own making 24 dollars an hour? How much rent or mortgage payment can you afford on 24 an hour?
Using our Cents Plan Formula, this is the best-case scenario on how to budget your $24 per hour paycheck.
When using these percentages, it is best to use net income because taxes must be paid.
In this example, we calculated $24 an hour was $18.32 after taxes. That would average $3,819 per month.
According to the Cents Plan Formula, here is the high-level view of a $24 per hour budget:
Basic Expenses of 50% = $1588.08
Save Money of 20% = $635.23
Give Money of 10% = $317.62
Fun Spending of 20% = $635.23
Debt of 0% = $0
Obviously, that is not doable for everyone. Even though you would expect your money to go further when you are making double the minimum wage. So, you have to be strategic in ways to decrease your basic expenses and debt. Then, it will allow you more money to save and fun spending.
To further break down an example budget of $24 per hour, then using the ideal household percentages is extremely helpful.
recommended budget percentages based on $24 per hour wage:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$308
Savings
15-25%
$666
Housing
20-30%
$1,019
Utilities
4-7%
$208
Groceries
5-12%
$333
Clothing
1-4%
$42
Transportation
4-10%
$166
Medical
5-12%
$208
Life Insurance
1%
$17
Education
1-4%
$23
Personal
2-7%
$62
Recreation / Entertainment
3-8%
$125
Debts
0% – Goal
$0
Government Tax (including Income Taxes, Social Security & Medicare)
15-25%
$984
Total Gross Income
$4,160
**In this budget, prioritization was given to basic expenses. Thus, some categories like giving and saving were less.
24 an hour Salary
Many times, you don’t make exactly 24/hr. You may make $24.08 or $25.61. So, here is a handy calculator to figure out your exact hourly salary wage.
At this $24 hourly wage, you are more than likely double the minimum wage. Things should be easy to live off this $24 hourly salary.
Even though this is over $47000 salary, which means it can still be a tough situation.
Is it doable? Absolutely.
In fact, $24 an hour is higher than the median hourly wage of $19.33 (source). That seems backward, but typically salaried workers earn more per hour than hourly workers.
Can you truly live off $24 an hour annually?
You just have to have the desire to spend less than your income. Plus consistently save.
If you are constantly struggling to keep up with bills and expenses, then you need to break that constant cycle. It is possible to be smart with money.
You need to do is change your money mindset.
This is what you say to yourself… Okay, I have aspirations and goals to increase how much I make. This is the time to start diversifying my income into multiple streams and start investing. I am going to stretch my 24 dollars per hour.
In the next section, we will dig into ways to increase your income, but for now, is it possible to live on $24 an hour?
Yes, you can do it, and as you can see it is possible with the sample budget of $24 per hour.
Living in a higher cost of living area would be more difficult. So, you may have to get a little creative. For example, you might have to have a roommate. Move to a lower cost of living area where rent is cheaper.
Also, you must evaluate your “fun spending” items. Many of those expenses are not mandatory and will break your budget. You can find plenty of free things to do without spending money.
5 Ways to Increase Your Hourly Wage
This right here is the most important section of this post.
You need to figure out ways to increase your hourly income because I’m going to tell you…you deserve more. You do a good job and your value is higher than what your employers pay you.
Even an increase of 50 cents to $24.50 will add up over the year. An increase to $25 an hour is a milestone!
1. Ask for a Raise
The first thing to do is ask for a raise. Walk right in and ask for a raise because you never know what the answer will be until you ask.
If you want the best tips on how specifically to ask for a raise and what the average wage is for somebody doing your job, then check out this book. In this book, the author gives you the exact way to increase your income. The purchase is worth it or go down to the library and check that book out.
2. Look for A New Job
Another way to increase your hourly wage is to look for a new job. Maybe a completely new industry.
It might be a total change for you, but many times, if you want to change your financial situation, then that starts with a career change. Maybe you’re stressed out at work. Making $24 an hour is too much for you and you’re not able to enjoy life, maybe changing jobs and finding another job may increase your pay, but it will also increase your quality of life.
3. Find a New Career
Because of student loans, too many employees feel like they are stuck in the career field they chose. They feel sucked into the job that they don’t like or have the potential they thought it would.
For many years, I was in the same situation until I decided to do a complete career change. I am glad I did. I have the flexibility that I needed in my life to do what I wanted when I needed to do it. Plus I am able to enjoy my entrepreneurial spirit.
4. Find Alternative Ways to Make Money
In today’s society, you need to find ways to make more money. Period.
There is no way to get around it. You need to find additional income outside a traditional nine-to-five position or typical 40 hour a week job. You will reach a point where you are maxed on what you can make in your current position or title. There may be some advancement to move forward, but in many cases, there just is not much room for growth.
So, you need to find a side hustle – another way to make money.
Do something that you enjoy, turn your hobby into a way to make money, turn something that you naturally do, and help others into a service business. In today’s society, the sky is the limit on how you can earn a freelancing income.
Must Read: 20 Genius Ways on How to Make Money Fast
5. Earn Passive Income
The last way to increase your hourly wage is to start earning passive income.
This can be from a variety of ways including the stock market, real estate, online courses, book sales, etc. This is where the differentiation between struggling financially to becoming financially sound.
By earning money passively, you are able to do the things that you enjoy doing and not be loaded down, with having a job that you need to work, and a place that you have to go to. And you still make money doing nothing.
Here is an example:
You can start a brokerage account and start trading stocks for $50. You need to learn and take the one and only investing class I recommend. Learn how the market works, watch videos, and practice in a simulator before you start using your own money.
One gentleman started with $5,000 in his trading account and now has well over $36,000 in a year. Just from practice and being consistent, he has learned that passive income is the way for him to increase his income and also not be a slave to his job.
Tips to Live on $24 an Hour
In this last section, grasp these tips on how to live on $24 an hour. On our site, you can find lots of money saving tips to help stretch your income further.
Here are the most important tips to live on $24 an hour. More importantly stretch how much you make, in case you are in the “I don’t want to work anymore” mindset. Highlight these!
1. Spend Less Than You Make
First, you must learn to spend less than you make.
If not you will be caught in the debt cycle and that is not where you want to be. You will be consistently living paycheck to paycheck.
In order to break that dreadful cycle, it means your expenses must be less than your income.
And when I say income, it’s not the $24 an hour. As we talked about earlier in the post, there are taxes. The amount of taxes taken out of your paycheck is called your net income which is $24 an hour minus all the taxes, FICA, Social Security, and Medicare is taken out. That is your net income.
So, your net income has to be less than your gross income.
2. Living Below Your Means
You need to be happy. And living on less can actually make you happier. Studies prove that less is better.
Finding contentment in life is one thing that is a struggle for most.
We are driven to want the new shiny toy, the thing next door, the stuff your friend or family member got. Our society has trained you that you need these things as well.
Have you ever taken a step back and looked at what you really need?
Once you are able to find contentment with life, then you are going to be set for the long term with your finances.
Here is our story on owning less stuff. We have been happier since.
3. Make Saving Money Fun
You need to make saving money fun. If you’re good, since you must keep your expenses low, you have to find ways to make your savings fun!
It could be participating in a no spend challenge for the month.
It could be challenging friends not to go to Target for a week.
Maybe changing your habits and not picking up takeout and planning meals.
Whatever it is challenge yourself.
Find new ways of saving money and have fun with it.
Even better, get your family and kids involved in the challenge to save money. Tell them the reason why you are saving money and this is what you are doing.
Here are 101 things to do with no money. Free activities without costing you a dime. That is an amazing resource for you and you will never be bored.
And you will learn that a lot of things in life you can do for free. Personally, some of the best ones are getting outside and enjoying some fresh air.
4. Make More Money
If you want if you do not settle for less, then find ways to make more money. If you want more out of life, then increase your income.
You need to be an advocate for yourself.
Find ways to make more money.
It could be a side hustle, a second job, asking for a raise, going to school to change careers, or picking up extra hours.
Whatever path you take, that’s fine. Just find ways to make more money. Period.
5. No State Taxes
Paying taxes is one option to increase what you take home in each paycheck.
These are the states that don’t pay state income taxes on wages:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming
It is very interesting if you take into account the amount of state taxes paid compared to a state with income taxes.
Also, if you live in one of the higher taxed states, then you may want to reconsider moving to a lower cost of living area. The higher taxes income tax states include California, Hawaii, New Jersey, Oregon, Minnesota, the District of Columbia, New York, Vermont, Iowa, and Wisconsin. These states tax income somewhere between 7.65% – 13.3%.
6. Stick to a Budget
You need to learn how to start a budget. We have tons of budgeting resources for you.
While creating a budget is great, you need to learn how to use one.
You do not have to budget down to every last penny.
You need to make sure your expenses are less than your income and that you are creating sinking funds for those irregular expenses.
Budget Help:
7. Pay Off Debt Quickly
The amount that you pay interest on debt is absolutely absurd.
Unfortunately, that is how many of these companies make their money is from the interest you pay on debt.
If you are paying 5% to even 20-21% or higher, you need to find ways to lower that debt quickly.
Here’s a debt calculator to help you. Figure out your debt-free date.
Make that paying off debt fast is your target and main focus. I can tell you from personal experience, that it was not until we paid off our debt that we finally rounded the corner financially. Once our debt was paid off, we could finally be able to save money. Set money aside in separate bank accounts and pay for cash for things.
It took us working hard to pay off debt. We needed persistence and patience while we had setbacks in our debt-free journey.
Here are resources now for you to pay off your debt:
Jobs that Pay $24 an Hour
You can find jobs that pay $24 per hour. Polish up that resume, cover letter, and interview skills.
Job Search Hint: Always send a written follow-up thank you note for your interview. That will help you get noticed and remembered.
First, look at the cities that require a minimum wage in their cities. That is the best place to start to find jobs that are going to pay higher than the federal minimum wage rate. Many of the cities are moving towards this model so, target and look for jobs in those areas.
Possible Ideas:
Virtual Assistant – Get free training NOW!
Freelance writer
Class A Truck Driver
Managers
Entry Level Marketing Jobs
Data Entry Clerks
Customer service managers
Bank tellers
Maintenance workers
Freight broker – Learn how easy it is to start!
Administrative assistants
Athletic Trainers
Event Planners
Security guard
Movers
Warehouse workers
Companies that pay more than $24 per hour: Costco, Wayfair, Amazon, Best Buy, Target, Wells Fargo, Disney World, Disney Land, Bank of America, JP Morgan, Cigna, Aetna, etc
$24 Per Hour Annual Salary
In this post, we detailed 24 an hour is how much a year. Plus all of the variables that can impact your net income. This is something that you can live off.
How much is 24 dollars an hour annually…
$49,920
In this post, we highlighted ways to increase your income as well as tips for living off your wage.
Use the sample budget as a starting point with your expenses.
You will have to be savvy and wise with your hard-earned income. But, with a plan, anything is possible!
Still thinking I don’t want to work anymore, you aren’t alone and need to start to plan for your early retirement.
Learn exactly how much do I make per year…
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Debt can be both beneficial and harmful. It can help you buy a home, pursue higher education, or start a business. However, excessive debt can lead to financial stress and mental health issues like depression and anxiety. This article will help you distinguish between good and bad debt to make informed financial decisions.
Key Takeaways
Good debt helps improve your financial future by investing in appreciating assets or enhancing your earning potential, such as through education, real estate, or starting a business.
Bad debt finances depreciating assets or unnecessary luxuries, such as cars, clothes, and other consumer goods, leading to financial strain due to high-interest rates and reduced value over time.
Some debts fall into a gray area and can be beneficial or detrimental depending on how they are managed, such as consolidating high-interest debt into a lower-interest loan or borrowing to invest with calculated risk.
Good Debt vs. Bad Debt
Good debt typically involves borrowing for investments that grow in value or generate income over time, like education or real estate. Bad debt usually involves borrowing for depreciating assets or unnecessary expenses, like luxury items or cars. However, accumulating too much debt, even if it starts as good debt, can become a problem if your monthly debt payments become unmanageable.
Isn’t all debt bad?
Not all debt is bad. Debt becomes problematic when it’s unnecessary or avoidable. The mindset of trying to ‘keep up with the Joneses’ or believing ‘only the best will do’ can lead to unwise borrowing.
However, some types of debt can provide significant benefits, such as financing a home or investing in education. These types of debt can offer a good return on investment and help you improve your financial situation. It’s crucial to understand the difference between beneficial and harmful debt.
What is good debt?
Good debt is debt that helps you make money or have a home to live in. It could be beneficial In a literal sense (a return on investment) or figuratively (enhancing your skills and earning potential). Either way, good debt allows you to invest in yourself and your future.
Here are a few examples of good debt.
Education
Investing in your education is a strategic move that can enhance your future success. By gaining knowledge and skills, you increase your chances of securing better jobs and advancing in your career.
Many people experience a return on their educational investment within a few years, though this varies by industry. Before committing to a college or secondary education, thoroughly research the field you wish to enter. Consider average salaries, potential for career advancement, and typical career ceilings.
The value of student loan debt hinges on the earning potential associated with the degree you pursue. Make informed decisions to ensure your educational investment pays off.
Starting a Business
It takes money to make money, and starting a business is a prime example of this principle. Most businesses require an initial investment, and often it’s substantial. You can use a loan to launch your business and facilitate its growth.
Starting a business involves risks, just like any other investment. Conduct thorough research on your industry to understand what strategies have succeeded or failed for others. Evaluate the risks and decide if taking out a loan is a wise choice for your situation.
Be cautious of high-interest loans, such as payday loans or unsecured personal loans, as they can lead to financial strain due to their high repayment costs. It’s important to know how much you’re borrowing. Loans come with an annual percentage rate (APR), which represents the interest rate as a percentage of the principal amount borrowed. This rate determines how much you will pay for the borrowed money over time.
Real Estate
A great example of good debt vs. bad debt is real estate because you’ll see a return on your investment directly. Borrowing money to invest in real estate earns you equity in the property. Equity is the difference between the property’s value and how much you owe in debt.
Typically, real estate appreciates, but there’s always the risk of losing value, such as what occurred during the 2008 housing crisis. As long as you pay down your mortgage as planned or even ahead of schedule, you’ll build equity faster.
Investing in real estate can be for personal use, such as a primary residence, or for investment purposes, such as commercial or rental properties.
Like any investment, do your research and make sure you’re making a good choice before taking on real estate debt. Investing in an area where the property values don’t appreciate or buying a rental home in an area that isn’t rented often can lead to bad real estate debt.
What is bad debt?
People tend to assume that all debt is bad, but bad debt specifically refers to debt used to finance depreciating assets. Unlike investments in appreciating assets, this type of debt involves spending on items that lose value over time.
Here are a few examples of bad debt:
Cars
You need a car to get from Point A to Point B. That’s a given. However, you don’t need a luxury car or a car you can’t afford to pay for without financing. It’s best to pay cash for a car if you can because it’s a depreciating asset.
When you borrow money to buy a car, you pay interest on the loan and lose money on the value of the car. Most cars lose 20% of their value during the first year after you drive them off the lot.
When you don’t have the money to buy a car outright or your money isn’t enough to buy a reliable car, look for the best financing terms. Many manufacturers offer low interest rates or 0% APR for borrowers with great credit.
If you anticipate buying a car soon, it’s time to work on your credit before taking out a car loan to get the best deal. Auto loans require you to factor in different things before taking them.
Clothes and Other Necessities
Buying clothes is a necessity, but borrowing money for them is not advisable. Clothes often have inflated prices and do not increase in value, meaning you pay more than their actual worth. Consider shopping at overstock sales or second-hand stores, where items are often much cheaper than in retail stores.
Borrowing money for everyday expenses like food, household goods, and other consumer items is also not a wise financial decision. Using a credit card for convenience is fine, but it’s important to pay off the balance in full each month. Failing to do so can lead to accumulating high-interest debt, making it difficult to escape the debt cycle.
Luxury
You should not borrow money to purchase luxury items. Why not? Just look at the name—luxury. You don’t ‘need’ these items, but you buy them anyway.
There’s nothing wrong with spoiling yourself occasionally, but not at the expense of your future. Rather than racking up credit card debt to buy luxurious items, determine what you want and save for it. Set a timeline and divide the amount you’ll need by the number of months until you potentially buy it. Save that amount of money each month, and you should reach your goal within your desired timeline.
Yes, this requires a great deal of patience. But, when you purchase luxury items with debt, you rack up interest charges and end up paying much more for them than they’re worth.
What debts fall in the gray area?
Some debts don’t fit neatly into ‘good’ or ‘bad’ categories and depend on the circumstances. Here are a couple of examples.
Borrowing to Pay Off Debt
Paying off high-interest credit card debt with a low-interest loan can be a good idea, but here’s when it becomes a bad debt. If you consolidate your debt into a 0% or low-interest rate loan but do not allocate the “extra” money saved towards your debt, you’ll end up in the same situation.
The key is to pay the same amount of money to the debt but with a lower set monthly payment and interest rate. More of your payment will go towards the loan’s principal, paying it down faster. This means you’ll pay less interest over the life of the loan and have more money in your pocket in the future.
If you continue to make the minimum payments using your “saved” money, then it’s a bad debt, as it won’t benefit you.
Borrowing to Invest
Investing on margin may be possible for experienced investors with the right credentials. While leveraging in this way can be profitable, it’s not guaranteed. If the investment fails, you’ll lose more than you borrowed, resulting in significant debt.
However, if your investment performs well and generates profit after repaying the margin, then borrowing to invest can be considered a successful financial strategy.
Final Thoughts
Recognize the difference between good and bad debt. Use debt wisely by investing in appreciating assets, making timely payments, and avoiding high-interest loans. Develop a financial plan to manage debt and achieve your goals.
Managing debt wisely is essential for financial success. Prioritize timely payments, avoid high-interest loans, and focus on investments that enhance your financial health. By understanding and differentiating between good and bad debt, you can make informed decisions and achieve your financial goals.
Frequently Asked Questions
How can I determine if my education loan is good debt?
Education loans can be considered good debt if they lead to a degree or certification that significantly enhances your earning potential. Before taking out a loan, research the average salaries in your chosen field and the employment rates for graduates. If the potential income increase outweighs the cost of the loan, it can be considered good debt.
Are there any strategies for managing bad debt?
Yes, there are several strategies to manage bad debt. These include creating a budget to track and limit spending, consolidating high-interest debts into a lower-interest loan, prioritizing paying off high-interest debt first, and avoiding accumulating additional debt by making smarter spending choices.
What are some warning signs that my debt is becoming unmanageable?
Warning signs that debt is becoming unmanageable include missing payments, using one credit card to pay off another, maxing out credit cards, being unable to save money, and experiencing stress or anxiety about finances. If you notice these signs, it might be time to seek financial advice or consider debt counseling.
Can consolidating debt improve my credit score?
Consolidating debt can improve your credit score if it helps you make timely payments and reduces your overall credit utilization ratio. However, it’s essential to avoid accumulating new debt and to use the consolidation loan responsibly by sticking to a repayment plan.
Is it ever a good idea to borrow money for luxury items?
Borrowing money for luxury items is generally not advisable as it leads to bad debt. Luxury items do not appreciate in value and often result in high-interest payments if financed through credit cards or loans. It’s better to save up for luxury purchases and pay in cash to avoid unnecessary debt and interest charges.
How can I ensure that borrowing to start a business is good debt?
To ensure that borrowing to start a business is good debt, conduct thorough market research, create a detailed business plan, and have a clear understanding of your industry. Assess the potential return on investment and ensure that you can make loan payments without compromising your financial stability. Consider seeking advice from financial advisors or mentors in your industry.
What steps can I take to avoid falling into bad debt?
To avoid falling into bad debt, create and stick to a budget, live within your means, save for purchases instead of using credit, and avoid high-interest loans. Additionally, focus on building an emergency fund to cover unexpected expenses and regularly review your financial situation to make adjustments as needed.
Inside: Learn what 45 an hour is how much a year, month, and day. Plus tips to budget your money. Don’t miss the ways to increase your income.
You’re probably wondering if I made $45 a year, how much do I truly make? What will that add up to over the course of the year when working?
Is my $45 an hour take-home pay compared to others in my industry? Is $45 an hour paycheck a good salary?
First of all, this is a wage you can actually live on and should be able to thrive and reach your financial goals. Annually $45 an hour should help you to breathe easier with your finances. You might wonder how can I start to increase my hourly wage to $50, $55 or $60 per hour?
Most of the hourly jobs that pay over $45 an hour do not require a degree, which is great news! Those paid on a salary basis tend to have a college degree and do not even calculate their hourly wage.
In this post, we’re going to detail exactly what $45 an hour is how much a year. Also, we are going to break it down to know how much is made per month, bi-weekly, per week, and daily.
That will help you immensely with how you spend your money. Because too many times the hard-earned cash is brought home, but there is no actual plan for how to spend that money.
By taking a step ahead and making a plan for the money, you are better able to decide how you want to live, make sure that you put your money goals first, and not just living paycheck to paycheck struggling to survive.
The ultimate goal with money success is to be wise with how you spend your money.
If that is something you want too, then keep reading. You are in the right place.
$45 an Hour is How Much a Year?
When we ran all of our numbers to figure out how much is $45 per hour is as an annual salary, we used the average working day of 40 hours a week.
40 hours x 52 weeks x $45 = $93,600
$93,600 is the gross annual salary with a $45 per hour wage.
As of June 2023, the average hourly wage is $33.58 (source).
Let’s break down of 45 Dollars an Hour is How Much a Year=
Typically, the average workweek is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, multiply the hourly salary of $45 times 2,080 working hours, and the result is $93,600.
That number is the gross income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
At this salary, you are way above the average $65000 salary threshold and coming closer to a 6 figure salary.
Work Part Time?
But you may think, oh wait, I’m only working part-time. So if you’re working part-time, the assumption is working 20 hours a week at $45 an hour.
Only 20 hours per week. Then, take 20 hours times 52 weeks and that equals 1,040 working hours. Then, multiply the hourly salary of $45 times 1,040 working hours, and the result is $46,800.
How Much is $45 Per Month?
On average, the monthly amount would average $7,800.
Annual Amount of $93,600 ÷ 12 months = $7,800 per month
Since some months have more days and fewer days like February, you can expect months with more days to have a bigger paycheck. Also, this can be heavily influenced by how often you are paid and on which days you get paid.
This helps a financially stable person manage their finances without a bunch of stress. And if you are making above the average income worker and still stressing about money, then you need to learn to drastically cut your expenses.
Work Part Time?
Only 20 hours per week. Then, the monthly amount would average $3,900.
How Much is $45 per Hour Per Week
This is a great number to know! How much do I make each week? When I roll out of bed and do my job, what can I expect to make at the end of the week?
Once again, the assumption is 40 hours worked.
40 hours x $45 = $1,800 per week.
Work Part Time?
Only 20 hours per week. Then, the weekly amount would be $900.
How Much is $45 per Hour Bi-Weekly
For this calculation, take the average weekly pay of $1,800 and double it.
$1,800 per week x 2 = $3,600
Also, the other way to calculate this is:
40 hours x 2 weeks x $45 an hour = $3,600
If you are paid biweekly, here is a biweekly budget template to help you.
Work Part Time?
Only 20 hours per week. Then, the bi-weekly amount would be $1,800.
How Much is $45 Per Hour Per Day
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x $45 per hour = $360 per day.
If you work 10 hours a day for four days, then you would make $450 per day. (10 hours x $45 per hour)
Work Part Time?
Only 4 hours per day. Then, the daily amount would be $180.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
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$45 Per Hour is…
$45 per Hour – Full Time
Total Income
Yearly Salary (52 weeks)
$93,600
Yearly Wage (50 weeks)
$90,000
Monthly Salary (173 hours)
$7,800
Weekly Wage (40 Hours)
$1,800
Bi-Weekly Wage (80 Hours)
$3,600
Daily Wage (8 Hours)
$360
Net Estimated Monthly Income
$5,955
**These are assumptions based on simple scenarios.
Paid Time Off Earning 45 Dollars an Hour
Does your employer offer paid time off?
As an hourly employee, you may or may not get paid time off.
So, here are the scenarios for both cases.
For general purposes, we are going to assume you work 40 hours per week over the course of the year.
Case # 1 – With Paid Time Off
Most hourly employees get two weeks of paid time off which is equivalent to 2 weeks of paid time off.
In this case, you would make $93,600 per year.
This is the same as the example above for an annual salary making $45 per hour.
Case #2 – No Paid Time Off
Unfortunately, not all employers offer paid time off to their hourly employees. While that is unfortunate, it is best to plan for less income.
Life happens. There will be times you need to take time off for numerous reasons – sick time, handling an emergency, or even vacation.
So, let’s assume you take 2 weeks off without paid time off.
That means you would only work 50 weeks of the year instead of all 52 weeks. Take 40 hours times 50 weeks and that equals 2,000 working hours. Then, multiply the hourly salary of $45 times 2,000 working hours, and the result is $90,000.
40 hours x 50 weeks x $45 = $90,000
You would average $360 per working day and nothing when you don’t work.
$45 an Hour is How Much a year After Taxes
Let’s be honest… Taxes can take up a big chunk of your paycheck. Thus, you need to know how taxes can affect your hourly wage.
Also, every single person’s tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Gross Annual Salary: $93,600
Federal Taxes of 12%: $11,232
State Taxes of 4%: $3,744
Social Security and Medicare of 7.65%: $7,160
$45 an Hour per Year after Taxes: $71,464
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$71,464 ÷ 2,080 hours = $34.36 per hour
After estimated taxes and FICA, you are netting $34.36 an hour. That is $10.64 an hour less than what you thought you were paid.
This is a very highlighted example and can vary greatly depending on your personal situation. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
Plus budgeting on a just over $34 an hour wage is much different.
$45 an Hour Salary Calculator
Now, you get to figure out how much you make based on your hours worked or if you make a wage between $45.01-45.99.
This is super helpful if you make $45.30, $45.40, or $45.88.
Plus many of the best paying jobs in real estate investment trusts pay in this range.
You are probably wondering can I live on my own making 45 dollars an hour? How much rent or mortgage payment can you afford on 45 an hour?
Using our Cents Plan Formula, this is the best-case scenario on how to budget your $45 per hour paycheck.
When using these percentages, it is best to use net income because taxes must be paid.
In this example, we calculated $45 an hour was $34.36 after taxes. That would average $5,955.30 per month.
According to the Cents Plan Formula, here is the high-level view of a $45 per hour budget:
Basic Expenses of 50% = $2,977.65
Save Money of 20% = $1,191.06
Give Money of 10% = $595.53
Fun Spending of 20% = $1,191.06
Debt of 0% = $0
Can you Make This Salary Work?
For someone making over $90K gross annually, this should be completely doable assuming there is no debt involved. The risk most people find themselves in is lifestyle creep and keeping up with the Joneses.
You can be strategic with your saving and investing to quickly become the millionaire next door. Then, that will allow a level of time freedom you have never experienced.
To further break down an example budget of $45 per hour, then using the ideal household percentages is extremely helpful.
recommended budget percentages based on $45 per hour wage:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$780
Savings
15-25%
$1,560
Housing
20-30%
$1,794
Utilities
4-7%
$234
Groceries
5-12%
$519
Clothing
1-4%
$31
Transportation
4-10%
$234
Medical
5-12%
$390
Life Insurance
1%
$23
Education
1-4%
$39
Personal
2-7%
$117
Recreation / Entertainment
3-8%
$234
Debts
0% – Goal
$0
Government Tax (including Income Taxes, Social Security & Medicare)
15-25%
$1,845
Total Gross Income
$7,800
**This is a sample budget. You can adjust your categories based on your personal situation.
Can I Live off $45 Per Hour?
At this $45 hourly wage, you are making more than $90K per year. Slowly climbing to 6 figures and you should live comfortably on this annual salary.
This is well over the median income of $60000 salary. That means you should be able to increase your savings percentage each year and live better than 80% of the world.
The question is, are you? Or are you straddled in debt? Struggling and living paycheck to paycheck?
Unfortunately, too many people are still struggling even though they are making nearly 4x the minimum wage.
Should living on $90K be doable? Absolutely.
Don’t be caught in a tough situation. You need to live below your means. If not, you are wasting too much of your hard-earned cash.
Can you truly live off $45 an hour annually?
Just like any wage… you must spend less than your income. Plus consistently save.
If you are constantly struggling to keep up with bills and expenses, then you need to break that constant cycle. It is possible to be smart with money.
You need to do is change your money mindset.
This is what you say to yourself… Okay, I am blessed to make more than the average worker. So, I must live on that paycheck or find ways to start diversifying my income into multiple streams and start investing. Then, I am going to give back to what helped me to get where I am today.
In the next section, we will dig into ways to increase and diversify your income, but for now, is it possible to thrive on $45 an hour?
Yes, you can do it, and as you can see it is possible with the sample budget of $45 per hour.
Living in a higher cost of living area would be more difficult. So, you may have to get a little creative. For example, you might have to have a roommate. Move to a lower cost of living area where rent is cheaper.
Also, you must evaluate your “fun spending” items. Many of those expenses are not mandatory and will break your budget. You can find plenty of free things to do without spending money.
5 Ways to Increase Your Annual Salary
This right here is the most important section of this post.
Even though, you are making good money. You might have reached a maximum ceiling of income in your field. You may need to change companies.
More often than not, you need to find ways to diversify your income. One type of income will get you far in your personal finance journey, but to truly see faster progress you need multiple streams of income.
Finding ways to increase your monthly pay by $500 or $1000 will add up over the year.
At this point, you want to look for at least a $1 increase to $46 an hour, $47 an hour, $48 an hour, $49 an hour, or $50 an hour.
1. Find Alternative Ways to Make Money
In today’s society, you need to find ways to make more money. Period.
There is no way to get around it. You need to find additional income outside a traditional nine-to-five position or typical 40 hour a week job. You will reach a point where you are maxed on what you can make in your current position or title. There may be some advancement to move forward, but in many cases, there just is not much room for growth.
So, you need to find a side hustle – another way to make money.
Do something that you enjoy, turn your hobby into a way to make money, turn something that you naturally do, and help others into a service business. In today’s society, the sky is the limit on how you can earn a freelancing income.
Must Read: 20 Genius Ways on How to Make Money Fast
2. Earn Passive Income
This can be from a variety of ways including the stock market, real estate, online courses, book sales, etc. This is where the differentiation between struggling financially and becoming financially stable.
By earning money passively, you are able to do the things that you enjoy doing and not be loaded down, with having a job that you need to work, and a place that you have to go to. And you still make money doing nothing.
Here is an example:
You can start a brokerage account and start trading stocks for $50. You need to learn and take the one and only investing class I recommend. Learn how the market works, watch videos, and practice in a simulator before you start using your own money.
One gentleman started with $500 in his trading account and now has well over $36,000 in less than a year. Just from practice and being consistent, he has learned that passive income is the way for him to increase his income and also not be a slave to his job.
Related Reading: How Fast Can you Make Money in Stocks? The Real Answer
3. Become a Freelancer
When you make $45 an hour, you are good at your job. You know what you are doing and people are willing to pay you for it.
Pick up side jobs and spend your free time as a freelancer.
This is one of the best ways to make extra money without a lot of upfront effort or costs.
I know plenty of people who make a living as freelance writers.
The options are endless if you are willing to think outside of the box.
4. Ask for a Raise
The first thing to do is ask for a raise. Walk right in and ask for a raise because you never know what the answer will be until you ask.
If you want the best tips on how specifically to ask for a raise and what the average wage is for somebody doing your job, then check out this book. In this book, the author gives you the exact way to increase your income. The purchase is worth it or go down to the library and check that book out.
If that does not pan out, then look for a new job. Maybe a completely new industry.
It might be a total change for you, but many times, if you want to change your financial situation, then that starts with a career change. Maybe you’re stressed out at work. Making $45 an hour isn’t worth it for you if you’re not able to enjoy life; maybe changing jobs and finding another job may increase your pay, but it will also increase your quality of life.
5. Find a New Career
Because of student loans, too many employees feel like they are stuck in the career field they chose. They feel sucked into the job that they don’t like or have the potential they thought it would.
For many years, I was in the same situation until I decided to do a complete career change. I am glad I did. I have the flexibility that I needed in my life to do what I wanted when I needed to do it. Plus I am able to enjoy my entrepreneurial spirit.
Tips to Live on $45 an Hour
In this last section, grasp these tips on how to live on $45 an hour. On our site, you can find lots of money saving tips to help stretch your income further.
Here are the most important tips to live on $45 an hour. More importantly stretch how much you make, in case you are in the “I don’t want to work anymore” mindset. Highlight these!
1. Spend Less Than You Make
First, you must learn to spend less than you make.
If not, you will be caught in the debt cycle, which is not where you want to be. You will be consistently living paycheck to paycheck.
To break that dreadful cycle, it means your expenses must be less than your income.
And when I say income, it’s not the $45 an hour. As we talked about earlier in the post, there are taxes. The amount of taxes taken out of your paycheck is called your net income which is $45 an hour minus all the taxes, FICA, Social Security, and Medicare is taken out. That is your net income.
So, your net income has to be less than your gross income. Learn more about gross pay vs net pay.
2. Living Below Your Means
You need to be happy. And living on less can actually make you happier. Studies prove that less is better.
Finding contentment in life is one thing that is a struggle for most.
We are driven to want the new shiny toy, the thing next door, the stuff your friend or family member got. Our society has trained you that you need these things as well.
Have you ever taken a step back and looked at what you really need?
Once you are able to find contentment with life, then you are going to be set for the long term with your finances.
Here is our story on owning less stuff. We have been happier since.
3. Make More Money
If you want if you do not settle for less, then find ways to make more money. If you want more out of life, then increase your income.
You need to be an advocate for yourself.
Find ways to make more money.
It could be a side hustle, a second job, asking for a raise, going to school to change careers, or picking up extra hours.
Whatever path you take, that’s fine. Just find ways to make more money. Period.
4. Make Saving Money Fun
You need to make saving money fun. If you’re good, since you must keep your expenses low, you have to find ways to make your savings fun!
Find new ways of saving money and have fun with it.
Even better, get your family and kids involved in the challenge to save money. Tell them the reason why you are saving money and this is what you are doing.
Here are plenty of things to do with no money. Free activities without costing you a dime. That is an amazing resource for you and you will never be bored.
And you will learn a lot of things in life you can do for free. Personally, some of the best ones are getting outside and enjoying some fresh air.
5. No State Taxes
Paying taxes is one option to increase what you take home in each paycheck.
These are the states that don’t pay state income taxes on wages:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming
It is very interesting if you take into account the amount of state taxes paid compared to a state with income taxes.
Also, if you live in one of the higher taxed states, then you may want to reconsider moving to a lower cost of living area. The higher taxes income tax states include California, Hawaii, New Jersey, Oregon, Minnesota, the District of Columbia, New York, Vermont, Iowa, and Wisconsin. These states tax income somewhere between 7.65% – 13.3%.
6. Stick to a Budget
You need to learn how to start a budget. We have tons of budgeting resources for you.
While creating a budget is great, you must learn how to use one.
You do not have to budget down to every last penny.
You need to make sure your expenses are less than your income and that you are creating sinking funds for those irregular expenses.
Budget Help:
7. Pay Off Debt Quickly
The amount that you pay interest on debt is absolutely absurd.
Unfortunately, that is how many of these companies make their money from the interest you pay on debt.
If you are paying 5% to even 20-21% or higher, you need to find ways to lower that debt quickly.
Here’s a debt calculator to help you. Figure out your debt-free date.
Make that paying off debt fast is your target and main focus. I can tell you from personal experience, that it was not until we paid off our debt that we finally rounded the corner financially. Once our debt was paid off, we could finally be able to save money. Set money aside in separate bank accounts and pay for cash for things.
It took us working hard to pay off debt. We needed persistence and patience while we had setbacks in our debt-free journey.
Jobs that Pay $45 an Hour
You can find plenty of jobs that pay $45 per hour. Polish up that resume, cover letter, and interview skills.
Job Search Hint: Always send a written follow-up thank you note for your interview. That will help you get noticed and remembered.
First, look at the cities that require a minimum wage in their cities. That is the best place to start to find jobs that are going to pay higher than the federal minimum wage rate. Many of the cities are moving towards this model so, target and look for jobs in those areas.
Possible Ideas:
$45 Per Hour Annual Salary
In this post, we detailed 45 an hour is how much a year. Plus all of the variables that can impact your net income. This is something that you can live off.
How much is 45 dollars an hour annually…
$93,600
That is right between $90000 a year and $100000 a year.
In this post, we highlighted ways to increase your income as well as tips for living off your wage.
Use the sample budget as a starting point with your expenses.
You will have to be savvy and wise with your hard-earned income. But, with a plan, anything is possible!
Still thinking I don’t want to work anymore, you aren’t alone and need to start to plan for your early retirement.
Learn exactly how much do I make per year…
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Get empowered with our popular Money Saving Challenges! From envelope challenge to monthly savings, become a finance guru today!
Do you want to save money? Obviously, if you are here checking out the money saving challenges from Money Bliss!
You all love the concept of saving money!
But, we may not have been as successful as we hoped in the past. And that is okay! Give yourself some grace and start afresh today.
Everyone knows that a penny saved is a penny earned.
By participating in one of our challenges, you can save money and have fun while doing it!
Let’s face it, we live in a world of economic struggle. With many people struggling every day to make ends meet and pay the bills, is there anything you can do to save money?
A simple solution: Start by paying yourself first with one of these money challenges.
We have rounded up all of the best money challenges on our site, so you have one resource to bookmark and come back each time to try a different challenge. All with one purpose in mind… save money to lead your best life.
One of the Money Bliss money saving challenges is the perfect way for you to save money every day, and become rich with your persistence and dedication.
Join our Money Saving Challenge today and start saving your pennies– we’re all in this together!
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What is a Money Saving Challenge?
A Money Saving Challenge is a challenge that lasts all year and you can repeat them as many times as you want.
This unique savings game is designed to strengthen your savings habit, transforming financial discipline into a fun and exciting adventure. There are a plethora of different money saving challenges, all tailored to prove you’re capable of achieving your savings goal.
You aren’t bound by any calendar restrictions; you can initiate the challenge at any period throughout the year to suit your convenience.
Even better, you can pick the savings game that aligns best with your income and lifestyle!
This savings commitment involves challenging you to live thriftily to accumulate more wealth and find joy at the successful completion!
Money saving challenges can be tracked easily with any of our printables. Throughout any challenge, you are able to track your progress and see how much money has been saved by following the predetermined rules for each challenge.
Why Complete a Money Saving Challenge?
This challenge works because it helps you save money.
More explicitly, it helps you exercise control over your immediate spending and discourages detrimental behaviors such as making an impulse purchase.
The ultimate goal of completing a money saving challenge is to save as much money as possible within a certain time frame.
The best way to complete the task is to follow the instructions and then track your savings.
This is a great way to spend less money and save more money in the process.
And that’s precisely the reason you return every year for a renewed challenge!
A money saving challenge gives you the reins, allowing you to save as per your comfort and desire. You can design your goals and progress bars to always stay updated about your savings game advances.
While participating in one of our first money challenges, we noticed an enduring shift in our spending habits. Therefore, a savings commitment today can secure a financially healthy tomorrow!
Why a Huge Roundup of Different Money Challenges?
A myriad of different money challenges has been created for a variety of reasons. Many people participate in these challenges as an avenue to improve their financial situation, curb impulse buys, assist others and/or merely for enjoyment.
Since everyone is at a diverse place financially, we aim to equip you with as many viable alternatives as possible.
Another reason why there is such a huge variety of these types of challenges is that each one can help people at various stages. Such as needing to pay off debt, save up for vacations, build an emergency fund, or set aside extra funds during back-to-school shopping season so you don’t have any surprises when your kids come home with tons of new clothes.
My readers know first-hand, from their remarkable triumphs, that these money challenges work!
You need to pick one today that will work for your current financial situation, bookmark the page, and then revisiting to find the next money task is your action plan.
Money-saving challenges can be fun and effective, not just a game of numbers.
It’s not only fun but it also helps increase awareness about getting rid of unnecessary costs and saving up for future goals with this type of challenge!
The Best Money Saving Challenges
The best money saving challenges are the ones that allow you to save a lot of money and still accomplish your goals.
The best way to do this is by focusing on what your priorities are and what you want to accomplish.
We’ve compiled 20 money saving challenges that can help you save money. These are the best and most effective ways to make a difference in your life, no matter what budget or lifestyle you’re living on.
These challenges will help you take full control of your finances and change how much more cash is sitting around every month for yourself!
What are some money saving challenges?
Idea #1 – 52-Week Money Saving Challenge
The 52-Week Money Challenge is a financial goal created for those who want to save more money in the span of 52 weeks.
This savings commitment not only makes saving more manageable but also turns it into a fun savings game. Weekly challenges such as this are extremely popular since it makes you more likely to stick with it.
The weekly money saving challenge encourages you to save $1,378 by the end of the year by merely increasing your savings $1 more dollar every day. It’s a simple idea: every week, you put in $1 and at the end of 52 weeks, you have more money saved fairly easily.
Other alternatives for the Money Bliss 52-week money saving challenge can also include aiming to save $3000, $5000, or $10000 over the course of 52 weeks, much like the 100-envelope challenge.
Action Step: Learn more about the 52 week money saving challenge.
Idea #2 – Reverse 52-Week Challenge
The reverse 52-week challenge is a way for people to save money by starting with a bigger amount of money at $52 and working their way down by saving $1 less each week.
The reverse version of the 52-week challenge allows you to start by saving $52, and then work your way down by $1 each week. The goal is for people to help themselves out while they save money on their bills.
This is a great way to kickstart your saving money experience. If motivation wanes over the 365 days, you’ll be relieved to know that you have already saved a majority of the money.
Action Step: Learn more about the reverse 52 week money saving challenge.
Idea #3 – Envelope Money Saving Challenge
The 100 Envelope Money Challenge is an extremely popular and trending way to save money! And the premise to save is super easy!
Spanning 100 days, this savings habit involves selecting a fresh envelope, each marked with numbers between 1-100. The number you select determines the amount to be saved on that particular day.
Consider any of the Envelope Money Challenges (50 day, 100 day or 200 day) as an ideal option for anyone who wants to aggressively build up savings quickly.
These envelope challenges are not just about accumulating savings quickly but also inculcating a shrewd savings habit for future security. Specifically, it enables you to save $1275 in 50 days or $5050 in 100 days; a significant stride towards your savings goals.
Action Step: Engage your savings habit by getting involved in one of the envelope challenges.
Secure your future in a fun way! Download your free printable 100 envelope challenge template!
Idea #4 – The 26 Paychecks Challenge or Bi-Weekly
The 26 Paychecks Challenge is a bi-weekly money saving challenge. Consider it as a more structured version of saving since this is how most people are paid.
The great news is you can save the same amounts as the 52 week challenge, but the printables are created for your biweekly budget!
Also, you can modfidy the same printable tracker on the 52 week penny savings challenge by:
Choose to do it over a span of two years instead of one year.
Double up and save two weeks for each bi-weekly paycheck.
Either way, you are nurturing a crucial savings habit, which is definitely a win!
Action Step: Learn more about the bi-weekly money saving challenge.
Idea #5 – Monthly Money Saving Challenge
This popular monthly saving challenge allows you the chance to save money each month by participating in the monthly challenges.
This works well for those who budget on a monthly basis.
For these monthly challenges, you will save amounts like $1000, $3000, $5000, $10000, $15000, $20000, or $25000. Each presents plenty of options to find one that suits your income and budget.
Action Step: Learn more about the monthly money saving challenge.
Idea #6 – Twice per month Saving Challenge
If you are paid twice per month or 24 paychecks per year, this challenge is for you.
This bi-monthly saving habit encourages you to pay yourself first with each paycheck, allowing you to focus expenditure on things that matter most to you.
You’ll be setting aside a specific amount for each paycheck.
Although the freedom lies with you to decide how much you can save, it’s advisable to squirrel away at least 10% of your paycheck to kick start your nest egg. If you can strive for a 20% savings target, even better.
This is done twice per month and should help contribute to your overall savings goals.
Action Step: Learn more about the twice per month money-saving challenge.
Idea # 7 – Mini Saving Challenge
The importance of mini saving challenges for those on a low budget cannot be underestimated. They offer a manageable route toward improved savings habits and financial security, especially for those with limited resources.
More often than not, these mini challenges often involve tracking your spending. This process can help you understand your spending patterns and identify areas where you could cut back, translating into more savings.
These mini challenges are a stepping stone to increasing your financial literacy. As you navigate the challenge, you learn about budgeting, the importance of saving, the power of compound interest, and other financial concepts. This knowledge can empower you to make better decisions
Action Step: Find the right mini saving challenges and break financial objectives down into manageable, incremental targets.
Idea #8 – No Spend Challenge
The No Spend Challenge is a simple program that promotes saving money and living below your means.
You pledge to spend no money for a set period of time. There are different rules and guidelines depending on the type of challenge, but generally, the challenge period will be between 14-30 days.
The goal is to create an environment in which you are forced to think creatively about your spending habits and how you can better manage your finances.
For us, a no spend challenge gave us insight into our spending habits while also encouraging us to save more money in order to reach personal goals, which was to pay off debt.
Action Step: Learn more about theno spend challenge.
Idea #9 – Penny Challenge
The Penny Challenge is an incremental daily saving challenge that advocates for the mentality of ‘every penny counts’.
You begin by saving just one penny on the first day, two pennies on the second, and so forth, until you are saving $3.65 on the last day of a full year. This seemingly small act can accumulate to a substantial sum of $667.95 over the course of a year.
The challenge not only encourages saving but also instills the realization of how small, regular actions can lead to considerable achievements, helping participants understand the often overlooked value of pennies.
This challenge is a great initiative for those starting to save and can be made more enjoyable by involving friends and family, thus creating healthy competition and mutual motivation.
Idea #10 – Spare Change or Rounding Up Challenge
Spare change or rounding up challenge is another option that can help you save money.
With this spare change challenge, you can do it with coins or digitally!
Collect your spare change/coins and hold onto them for a big purchase later on!
Or use an app that automatically rounds up all of your purchases and starts investing for you.
For example, if you spend $15.26, you will save 74 cents by rounding up.
Action Step: Sign up to automatically save your spare change.
Idea #11 – 365 Day Nickel Saving Challenge
The Nickel Saving Challenge is a common, yet simple math problem to save nickels, and each day you double the number of nickels saved.
Simply put, with the Nickel Challenge, you save one nickel on day 1, two nickels on day 2, three nickels on day 3, and so forth throughout the year.
By day 100 of the nickel challenge, you will save $5.00 and accumulate $252.50. On day 200 of the nickel challenge, you will save $10.00 and accumulate $1005. By
Over the course of the year, you can save $3,339.75 with the simple 365-Day Nickel Challenge. Now, you know why it is popular!
Action Step: Pick your saving jar to hold all of your nickels!The perfect piggy bank!
Idea #12 – $5 Bill Challenge
The $5 Bill Challenge is a fun challenge that can help you learn to be more resourceful! It teaches you how to look for money anywhere, but also helps them spend less and save more!
The $5 Bill Challenge is a challenge to save money based on all of the five-dollar bills you receive or find. The person receiving the five-dollar bill must keep store it for a year to see how much they can save.
As an alternative, if you are feeling uncomfortable with $5, try the challenge with one-dollar bills. You can find out just how much money that is in your pocket!
A jar with $5 bills can be used as an extra savings boost. It is recommended to put the money in a clear jar so it is easier for you to see how much money there was before and after putting more money into it.
Action Step: Pick your saving jar to hold all of your dollars!
Idea #13 – 10K Money Saving Challenge
This money challenge is hands down the favorite among readers at Money Bliss.
It was created in order to help people save $10,000 in just one year.
For many people, saving five figures is a big deal and one that is difficult for many to overcome their money blocks on.
If you are serious about committing to a challenge, then the 10k money saving challenge is just for you.
Action Step: Start your journey to save 10000 in a year.
Idea #14 – 5K Saving Challenge
The 5k saving challenge is a savings plan that helps people to save $5,000 in 6 months or $5k in a year.
Five thousand dollars is the right amount of money to save for a vacation, Roth IRA, or many other big purchases. Thus, this is a popular amount for people to save.
Shift your thinking and begin to experience financial freedom while saving 5k in a short amount of time.
Action Step: Learn how to save $5000 in 6 months or complete it in one year.
Idea #15 – Flexible or Hacked 52 week Money Challenge
This allows you to be flexible and you can save different amounts each week.
For many people, this is a great way to sock away extra cash when they have it.
You can adjust the amount you save each week, but at the end of 52 weeks, you still have the same amount saved in your goal.
Action Step: Learn more about the flexible or hacked 52 week money saving challenge.
Idea #16 – 30 Day Money Challenge
The 30 Day Money Challenge is a challenge where each day you focus on creating better money management skills. Very likely, by the end of the 30 days you are in a better spot financially and starting to save more money.
The goal of the 30 Day Money Challenge is to save money. The challenge runs for 30 days and tasks users with saving as much as possible.
Action Step: Start the 30-day money challenge today.
Idea #17 – The Pantry Challenge
The Pantry Challenge is a recipe for how to stretch your food.
Instead of adding grocery items to your cart, you must first “shop” your pantry or freezer.
Typically, when we hold a pantry and freezer challenge, we cut our grocery bill in half. It forces us to be creative with the things that we have already spent money on.
The Pantry Challenge is a grocery shopping challenge that gives your wallet a break from going to the store for one week. It helps you achieve food savings and avoid wasting money on groceries.
Action Step: Learn to stock your house with cheap food.
Idea #18 – Challenge Yourself to Turn 100 into 1000
Money can take time to save. To increase the pace of saving money, look at ways to increase your money.
This is a great challenge to think outside of the box on how to turn 100 into 1000.
That would be nice, wouldn’t it?
Honestly, making money may be easier than trying to squeeze every last cent out of a dollar.
Action Step: Find the exact ways to turn 100 into 1000.
Idea #19 – Habit Jar
The Habit Jar is a money saving device that combines the idea of breaking or creating habits with money saving. Every time, you save money on a bad habit, the money goes into the jar.
Plus the habit jar is an easy way to track your progress in achieving habits. Some people use them as a way to keep track of their personal goals, such as saving money or stopping bad habits.
When you reach your goal, take out the money as a reward!
Action Step: Pick up the book Atomic Habits to truly excel at making changes.
Idea #20 – Weather Savings Challenge
This weather saving challenge is purely fun and a great way to save money that is outside of our control.
Each day or once a week, deposit money that equals the average high temperature in your city.
For example, if it was 65 degrees out, you would move $65 into your savings account. If you live in a hotter climate you will be saving much quicker than those dealing with frigid temperatures.
This is a fun way to save for vacations to escape to somewhere else!
Action Step: Open up your savings account to start that vacation fund.
Idea #21- Christmas Money Challenge
This is how you afford Christmas without all of the stress.
Throughout the year, you save money each month to be used during the holiday. This Christmas money challenge is super simple to do.
By saving $50 per month, you will have $600 when Christmas rolls around. Want to save more, do it!
Action Step: Start a Christmas Saving Fund today. up your savings account to start that vacation fund.
Idea #22 – My Favorite Money Saving Challenge
For the last money saving challenge, I want to share with you my personal favorite.
The reason is simple.
It is easy to track year over year and make sure you are on track to reach financial independence.
Did you know? The more you save today, the less you have to save tomorrow.
That is why I love calculating my savings percentage.
This is a great personal finance ratio to know.
You can increase your saving percentage each month and then work on increasing it, even more, each year.
For example, if you are saving 10% or $6000 this year, by increasing your saving percentage by 1% for a year, you now save $6,600.
This is a great way to tailor your savings by how much you make.
Action Step: Begin to increase your saving percentage each year.
Money Saving Challenges Success Stories
Still not optimistic?
Here is a tidbit from a reader, E.P.:
“I completed the $10,000 challenge in 2019! It goes to show that if you can scrape the money together to meet weekly targets it’s possible to put that much aside without having a 6 figure job 🙂
I just remember that progress isn’t linear and not to get too down on myself.”
That is just one story.
All you have to do is visually see yourself saving in 2024.
Which Money Saving Challenge will you Choose?
If you are looking for the Money Saving Challenge, it is the one that doesn’t start with “Old” or “New Year.”
The perfect money saving challenge is the one you start today.
Hopefully, this money saving challenge post has inspired you to start saving today.
We know we have inspired thousands of other readers.
For now, we cannot wait to hear your success story like the one above.
Are you ready to save money in 2024!?!?!
Make sure to grab your money saving challenge printable – exclusive for our mailing list only.
Start saving with our Money Saving Challenge today!
If you are serious about wanting to learn how to FI, then it starts with saving money.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Mutual funds provide a collection of many investments in a single basket, while stocks allow you to own shares in individual companies.
Either type of asset can help you reach your investing goals — and of course it’s possible to own mutual funds shares as well as stocks. But there are advantages and disadvantages to mutual funds vs. stocks.
Key Points
• Mutual funds offer a diversified portfolio in a single investment, whereas stocks are shares in individual companies.
• Mutual funds can be actively or passively managed, with some tracking market indexes.
• Stocks provide direct ownership in a company, offering potential for higher returns and greater risk.
• Mutual funds are managed by professionals, making them a good option for those who prefer not to manage their investments.
• The choice between mutual funds and stocks depends on individual financial goals, risk tolerance, and investment strategy.
What’s the Difference Between Mutual Funds and Stocks?
The biggest difference between a mutual fund and a stock lies in what you own: a mutual fund is a type of pooled investment fund, and a stock refers to shares of ownership in a single company.
Mutual funds can hold multiple investments in a single vehicle (e.g. stocks, bonds, or other assets). Sometimes a mutual fund can hold a mix of stocks, bonds, and short-term debt; these are called blended funds.
Different Types of Mutual Funds
Another difference between mutual funds vs. stocks: Mutual funds can be structured in a variety of ways. Often, a mutual fund manager is responsible for choosing the investments the fund holds, according to the fund’s objectives and investment strategy. But not all funds are actively managed funds; some are passively managed and track a market index (see bleow).
Some types of mutual funds include:
• Equity funds: These funds can hold the stocks of hundreds of companies. An equity fund typically has a specific focus, e.g. large-cap companies, tech companies, and so on.
• Bond funds: These provide access to various types of bonds. Similar to equity funds, bond funds can offer exposure to different sectors, e.g. green bonds, short-term bonds, corporate bonds, etc.
• Target-date funds: Often used in retirement plans, target-date funds use algorithms to adjust their holdings over time to become more conservative.
• Index funds: Index funds are designed to track or mirror a specific market index, e.g. the S&P 500, the Russell 2000, and so on. These are considered passive vehicles vs. mutual funds that are led by a team of portfolio managers.
• Exchange-traded funds (ETFs): ETFs are similar to mutual funds in that they hold a variety of different securities, but shares of these funds trade throughout the day on an exchange similar to stocks.
What Are Stocks?
Simply put, a stock represents an ownership share in a single company. There’s no fund manager here; you decide which stocks you want to buy or which ones you want to sell, often using a brokerage account. You might buy 10 shares of one company, 50 shares of a second, and 100 shares of a third — it’s up to you.
Just as there are different types of mutual funds, there are different types of stocks that reflect the underlying company. For example, your portfolio might include:
• Value stocks: Companies that are trading lower than their potential value, based on fundamentals.
• Growth stocks: Companies with a track record of steady growth.
• Dividend stocks: Companies that payout a portion of their earnings to shareholders in the form of dividends. Note that value stocks often pay dividends, but growth stocks tend to reinvest their profits (per their name) toward growth and expansion.
Here’s another way to think of the differences between mutual funds and stocks. If a mutual fund is a carton of eggs, a stock is one egg in that carton.
💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.
Get up to $1,000 in stock when you fund a new Active Invest account.*
Access stock trading, options, auto investing, IRAs, and more. Get started in just a few minutes.
*Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.
Pros and Cons of Mutual Funds
Investing in mutual funds can be a good option for beginners who are ready to wade into the market but aren’t savvy about individual stocks just yet. There are, however, some downsides to keep in mind.
Pros
Cons
Diversification is simplified
Some funds may underperform
Easy access to the markets
Higher minimum investments
May be cheaper than stocks
Not all funds are low-cost
Pros of Mutual Funds:
• Mutual funds make portfolio diversification easier. Diversifying your portfolio can help manage risk. When you buy a mutual fund, you get immediate diversification since the fund may hold a variety of securities or alternative investments.
• Someone else makes the decisions. Choosing the right investments for a portfolio can be complicated for many investors, but a mutual fund takes care of the selection process. In the case of an active fund, the fund manager is in charge of buying or selling investments within the fund. A passive fund tracks an index, as mentioned above. Either way, all you have to do is invest your money.
• Costs may be lower. When you invest in mutual funds, you’ll pay what’s called an expense ratio. This is a fee that represents the cost of owning the fund annually. While some funds are more expensive than others, there are plenty of low-cost options which means you get to keep more of your investment earnings.
Cons of Mutual Funds:
• Performance isn’t guaranteed. While some actively managed mutual funds attempt to beat the market, others are structured to match the performance of an index. The main thing to know, however, is that results are never guaranteed, and your fund investments may fall short of expectations.
• Minimum investments may be high. Some mutual funds have a low barrier to entry, and you can get started with a relatively small amount of money, especially if you invest via automatic deposits. Others, however, may require you to have a high minimum investment requirement (e.g. $5,000), which could be challenging if you’re a beginner. With stocks, on the other hand, it’s possible to buy fractional shares with as little as $1.
• Potentially higher costs. Mutual fund expense ratios can vary widely, and some can be much more expensive than others. In general, active funds charge higher fees. In addition, some brokerages charge load fees to buy or sell funds which can add to your overall costs. It’s important to understand what you’re paying for your investments, as fees can eat into returns over time.
Pros and Cons of Individual Stocks
Investing in stocks might appeal to you if you’d like more control over where your money goes. But just as with mutual funds, there are some potential drawbacks to consider.
Pros
Cons
High return potential
Higher risk
Greater flexibility
More difficult to diversify
Low costs
More time-consuming
Pros of Individual Stocks:
• Potentially earn higher returns. Owning individual stocks could lead to better results in your portfolio compared with mutual funds. It’s important to remember, however, that not all stocks offer the same rate of return, and performance of any stock (or any investment) is never guaranteed.
• You’re in control. Investing in stocks means you have total control of what to buy and sell, and when to make trades. You’re not relying on a fund manager to make decisions for you. That’s something you might appreciate if you prefer a DIY or active approach to investing.
• Trading costs may be low. When you buy and sell stocks, your brokerage can charge a commission fee each time. However, more brokerages are moving to a $0 commission-fee model for stock trades which can cut your investing costs down dramatically.
Cons of Individual Stocks:
• Stocks are volatile. Mutual funds are often viewed as being less risky than stocks since you’re diversified across a range of securities. If you’re putting a large chunk of your portfolio into a smaller pool of stocks or just one company, you could be at risk of a major loss if volatility hits that part of the market.
• Diversification is harder. When you invest in individual stocks, you may have to buy more of them to create a diversified portfolio. With a mutual fund, you don’t have to do that since you’re getting exposure to multiple investments in one fund.
• Stock trading can be time intensive. Taking a buy-and-hold approach to stocks means you don’t have to pay as much attention to your portfolio. You can buy stocks, and then hang onto them for the long term. However, if you’re more interested in active trading then you’ll need to spend more of your day keeping up with stock trends and monitoring the markets so you don’t miss any opportunities to make gains.
💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.
Choosing Between Mutual Funds and Stocks
There’s no rule that says you must choose between mutual funds vs. stocks. Deciding which one to invest in can depend on your time horizon for investing, risk tolerance, and goals. And you might decide that both make sense in your portfolio.
Here’s a simple breakdown of how to compare the two when deciding where to invest.
Consider mutual funds if you…
Consider stocks if you…
Want a simple way to build a portfolio under the guidance of an experienced fund manager who knows the market.
Prefer to have more control of which companies you invest in, and when you buy or sell those investments.
Are more comfortable with the idea of generating returns over time vs. chasing the highest rewards of the moment.
Want to leverage investments to produce the highest returns possible, even if it means taking a little more risk in your portfolio.
Don’t have the time or inclination to spend hours researching different investments or conducting in-depth market analyses.
Are comfortable researching stocks on your own, and understand how to apply different types of technical analysis to evaluate them.
The Takeaway
Investing is one way to build wealth, but both mutual funds and stocks can help investors realize their financial goals — but in different ways. Weighing the pros and cons of mutual funds vs. stocks as well as your personal preferences for investing can help you decide how to build a portfolio that meets your needs.
Ready to expand your portfolio’s growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi’s easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it’s important to consider your portfolio goals and risk tolerance to determine if they’re right for you.
Invest in alts to take your portfolio beyond stocks and bonds.
FAQ
Which is riskier, stocks or mutual funds?
Both stocks and mutual funds expose investors to the risk of loss, though the degree of risk can vary by investment. Mutual funds may help to distribute risk thanks to a diverse mix of underlying investments, while individual stocks can concentrate risk. However, it’s important to remember that you can lose money with either.
Which investment is best for beginners, mutual funds or stocks?
Mutual funds can be a good place for beginning investors to get started since they offer basic diversification. The key to choosing a mutual fund as a beginner is to consider the underlying investments in light of your own asset allocation, the fund’s track record, and the fees you’ll pay.
Are mutual funds worth it?
Mutual funds can be a worthwhile investment because they provide a cost-effective way to access a range of sectors that may align with your goals. For example, if you want to invest in big companies in the U.S., you can buy shares of a large-cap fund. If you want to invest in the environment, you can invest in a green bond fund or green tech equity fund.
Photo credit: iStock/Eva-Katalin
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Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
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.