Known as Big Sky Country, Montana boasts breathtaking landscapes, including the Rocky Mountains, Yellowstone National Park, and vast prairies that stretch as far as the eye can see. The state is also rich in history, with a strong Native American heritage and a vibrant frontier past. Whether you’re browsing homes for sale in Billings, considering renting in Missoula, or exploring houses for rent in Bozeman, here’s what you need to know before moving to Montana.
Montana at a glance
Montana, known for its stunning landscapes and outdoor lifestyle, is home to several big cities. The largest cities include Billings, the state’s largest metropolitan area with a strong economy and diverse services; Missoula, known for its cultural scene and proximity to outdoor adventures; and Bozeman, which has a thriving tech industry and is a gateway to Yellowstone National Park. Major employers in the state include healthcare organizations like Billings Clinic, educational institutions such as Montana State University, and companies like D.A. Davidson & Co. and the Bozeman-based tech firm, Foundant Technologies.
Life in Montana is characterized by its wide-open spaces, a slower pace, and a close-knit community feel. The state’s cultural scene is rich with local arts, including numerous galleries, theaters, and music festivals that celebrate its western heritage. Residents enjoy a high quality of life with ample opportunities for outdoor activities such as hiking, fishing, and skiing. The weather varies significantly, with cold, snowy winters and warm, sunny summers, making it essential to be prepared for seasonal changes. Additionally, cities like Evergreen and Helena offer more affordable places to live while still providing access to Montana’s natural beauty and community amenities.
1. The people here are friendly
Montanans are known for their welcoming and laid-back attitude, often reflecting the state’s rural and outdoor lifestyle. This friendliness is evident in the local customs, such as the “two-wave salute,” where drivers passing each other on country roads wave as a sign of acknowledgment. Community events and gatherings, such as county fairs and local festivals, further exemplify the state’s tight-knit social fabric. Embracing these friendly interactions in the best places to live in Montana, such as Bozeman, Missoula, and Billings, can help newcomers quickly feel at home and integrate into the local culture.
2. You’ll need to keep your distance from wild animals
Montana’s vast wilderness is home to a variety of wildlife, including bears, moose, and mountain lions. It’s crucial for residents and visitors to maintain a safe distance from these animals to avoid dangerous encounters and to respect their natural habitat. Proper food storage, bear-proof containers, and staying alert during outdoor activities are essential for safety. Understanding and following local wildlife safety guidelines can prevent accidents and contribute to the conservation of Montana’s diverse ecosystems.
Insider scoop: When hiking in bear country, always carry bear spray and know how to use it; it’s a crucial tool for deterring aggressive bears and can be a lifesaver in an emergency.
3. The cost of living varies throughout the state
Montana offers a range of living costs, with median home sale prices and rental rates varying significantly between urban and rural areas. The median home sale price in Montana is $537,000, with higher prices in popular cities like Bozeman, where the median home sale price is $669,000. In contrast, more affordable housing options are available in smaller towns such as Great Falls, where the median home price is $345,000. Rental rates also differ widely; for example, a two-bedroom apartment in Bozeman might cost around $2,575 per month, while in a smaller town like Billings, average rents may be closer to $1,692 per month. Overall, Montana’s cost of living is generally higher in its urban centers but more affordable in rural areas, offering options for various budget levels.
If you’re planning on moving to Montana, you’ll want to consider the pros and cons of living in the Big Sky Country.
4. There’s plenty of things to do outdoors
Montana’s diverse landscapes offer a wide range of outdoor activities, from hiking and mountain biking to fishing and skiing. Iconic spots like Glacier National Park and the Bitterroot Mountains provide opportunities for exploring dramatic scenery and engaging in adventure sports. Seasonal activities, such as whitewater rafting in the summer and skiing at Big Sky Resort in the winter, cater to outdoor enthusiasts year-round. Embracing these outdoor opportunities can enhance your experience of living in Montana and connect you with its natural beauty.
Travel tip: Make sure to invest in high-quality outdoor gear suited for the varying weather conditions and rugged terrains, and always check local conditions before heading out for your adventures.
5. A lot of the state is rural
Much of Montana is characterized by its vast, rural expanses, with small towns and wide-open spaces defining the landscape. This rural character means that many services and amenities are concentrated in larger cities like Billings and Missoula, while smaller towns may have limited options. The wide distances between communities can impact travel times and access to resources. Adapting to rural living involves embracing a slower pace and preparing for the challenges of living in less densely populated areas.
6. Montana has long frigid winters
Winters in Montana can be particularly harsh, with temperatures often dropping well below freezing and significant snowfall common throughout the state. Areas like Bozeman and Missoula experience extended periods of cold weather, which can impact daily life and transportation. Investing in four-wheel-drive vehicles and winterizing your home are essential steps to handle the challenging conditions.
Insider scoop: Keep an emergency kit in your car, including essentials like blankets, food, water, and a shovel, to ensure you’re prepared for unexpected weather-related situations or roadside emergencies.
7. The craft beer scene is thriving here
Montana’s craft beer scene is lively, with numerous local breweries offering a diverse range of innovative and high-quality beers. Cities like Missoula, Bozeman, and Billings have a variety of taprooms and brewpubs that highlight local ingredients and brewing techniques. Events such as the Montana Brewers Festival celebrate the state’s growing craft beer industry and offer opportunities to sample a wide selection of brews. Engaging with the local craft beer community can be a delightful way to explore Montana’s culinary culture.
Insider scoop: Visit smaller, off-the-beaten-path breweries to discover unique, limited-edition brews that may not be widely available but offer a taste of local flavor and creativity.
8. Montana has great higher education opportunities
Montana is home to several respected higher education institutions, including Montana State University in Bozeman and the University of Montana in Missoula. These universities offer a range of academic programs and research opportunities, contributing to a vibrant student community. The state also supports smaller colleges and specialized schools, providing diverse educational paths.
9. Ranching is a big deal here
Ranching is a cornerstone of Montana’s economy and culture, with the state’s expansive grasslands providing ideal conditions for cattle and sheep farming. Many Montanans have deep roots in ranching, and it plays a significant role in local traditions and community events. The annual Montana Stockgrowers Convention and local rodeos celebrate this heritage and showcase the importance of ranching in Montana’s history. Those interested in agriculture or rural life will find ranching culture deeply embedded in the state’s identity.
10. Public transportation is very limited throughout the state
Public transportation in Montana is notably limited, especially in rural areas and smaller towns. While cities like Billings, Missoula, and Bozeman offer a few public transit options, such as buses and regional shuttles, these services are often limited in frequency and coverage. For instance, in cities like Great Falls or Helena, public transit may consist of only a few bus routes with infrequent service. In more remote areas, such as rural ranching communities or mountainous regions, public transportation options are minimal or non-existent, necessitating personal vehicles for commuting and accessing essential services.
Travel tip: Newcomers to Montana should be prepared to rely heavily on their own transportation and plan for long travel distances, especially if living outside major urban centers.
Methodology
Population data sourced from the United States Census Bureau, while median home sale prices, average monthly rent, and data on affordable and largest cities are sourced from Redfin.
Living frugally doesn’t mean giving up the things you love. It’s about making smart choices and finding ways to save money without sacrificing comfort.
In this post, you’ll find the top frugal living tips for around the house. These practical ideas will help you cut costs on everyday expenses, reduce waste, and make your home more efficient. Whether you’re looking to save on your utility bills, groceries, or household items, these tips will help you stretch your budget and make the most of what you have.
Adjust the temperature
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Turn down the heat or air conditioning at night to save on energy bills. It’s good for your wallet and your health.
Cut back cell phone plan
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Save money by reducing your cell phone plan’s data plan. Make sure it still meets your needs. This is especially true for preteen or teen cell phone plans.
Make clothes last longer
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Wash clothes less often and use gentle detergents to keep them looking new. This helps you spend less on clothes.
Shop for clothing on clearance
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Buy clothes on clearance to save money. I have found that shopping off-season can get you great deals. Plus only buy what you truly need.
Learn More: How to Shop for Clothes on a Budget
Eliminate cable or satellite TV
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Save money by streaming shows online instead of paying for cable or satellite TV. You may opt for monthly billing to binge watch shows.
Switch cell phones
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Consider switching to a cheaper cell phone provider. There are so many new providers to the market. Just check if they offer good service in your area.
Look into your energy usage
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Adjust your thermostat a few degrees to save money on energy. Invest in a comfy sweatshirt to stay warm.
Limit trips to the salon
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Save money by cutting your own hair or letting your natural color grow out. This was one of the ways we paid off debt faster!
Turn off unused lights
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Turn off lights when you leave a room to save on your electricity bill. This is a simple adage, but it still holds true.
Buy in bulk
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Save money by buying items like toilet paper and toothpaste in bulk. Be wise with what you buy that will you actually use the extra items.
Save money on laundry
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Wash clothes at night and hang them up to dry. This saves money and keeps clothes in good shape. For U.K. folks, this is a normal practice.
Check out the Must Haves for a Frugal Home
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Incorporating these frugal living tips into your home can significantly reduce your overall costs. By embracing a minimalist approach, being mindful of your spending, and making smart choices, you can create a comfortable and budget-friendly living space that aligns with your financial goals. Remember, small changes can lead to big savings over time, so start implementing these frugal home essentials today for a brighter and more financially secure future.
To learn more: 25 Frugal Home Must Haves To Save Money for Clean and Organized Home
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In addition to spoiling them with toys and ice cream, many grandparents also want to help secure a solid financial future for their grandkids. That can mean setting up a custodial account, considering tax-advantaged savings options, and exploring other ways to start building a child’s wealth.
Below, you’ll learn about the different ways to save money for your grandkids, plus the pros and cons of each.
Why Open an Account for Grandchildren?
Sure, your grandkids might prefer a new video game or Lego set, but you’ll do them a favor, today and tomorrow, by opening a savings account for them. Here are a couple of good reasons to open a savings account for your grandchildren.
Teaching Financial Literacy Early
Money management skills are crucial, but personal finance education can be virtually nonexistent during school. It’s not typical for schools to teach kids how to balance a checkbook, how to invest in stocks, how to save for a down payment on a house, and how to file taxes.
Thus, it’s up to parents — and grandparents — to equip the next generation with financial literacy. Opening an account for your grandchildren can help teach them concepts such as interest, budgeting, and investing.
Getting a Head Start for College and Life
While teaching children how to manage money can give them a head start on the path to financial wellness, so too can providing them with a nest egg that can grow over time through various savings and investing accounts. Consider these options:
• When you open a savings account for grandchildren early on, they could wind up having a sizable chunk of cash in young adulthood to put toward their first car or even a house down payment.
• A 529 college savings plan could help them avoid taking on too much debt from student loans.
• Retirement accounts, such as a Roth IRA, can help them achieve their retirement goals, even if those are more than half a century away. Remember, the earlier someone starts investing, the more they stand to earn in the long run.
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Types of Accounts to Consider
Grandparents have many options when it comes to opening an account for their grandchildren, including:
Savings, CDs, and Bonds
Many banks and credit unions offer savings accounts designed for kids. Do a quick search for “best savings accounts for grandchildren” or you could start by seeing if your own bank offers such an account.
Having money in savings at an early age will let your grandkids benefit from compounding interest, especially if you find a high-yield savings account for kids.
You can also consider opening a certificate of deposit (CD) or purchasing savings bonds for your grandchildren. CDs are savings accounts that typically provide a higher interest rate than a standard savings account in exchange for keeping your money in the account for a fixed period of time. Savings bonds, issued by the U.S. Department of Treasury, are a very low risk, longer-term investment that provides interest in return for lending the government money.
With both of these options, the money is less liquid, but if the CD or bond matures when your grandchild is older, they stand to have a reliable source of funds they can use in future years.
Custodial Accounts (UGMA/UTMA)
Beyond savings accounts for grandchildren, you can consider helping your grandkids actually start investing with a custodial account, through the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). Once your grandchild is between 18 and 25 (the exact age varies by state), they’ll take control of the account.
These accounts are taxable (meaning you will owe taxes on interest earned) and have no contribution limits. They’re an easy way to purchase stocks, mutual funds, and other securities for your grandchild — and you can even transfer your own securities into the custodial account.
529 College Savings Plans
The cost of college tuition continues to skyrocket, meaning it’s never too early to start saving. There are several benefits of a 529 college savings plan: While the contributions to this qualified tuition plan aren’t tax-deductible, your grandchild’s distributions from the account tax-free at the federal level, as long as the money is used for qualifying expenses.
A 529 college savings may have “college” in the name, but your grandchild can also use it for other higher education programs, such as a trade or vocational school. You can also roll over 529 funds into a Roth IRA if your grandkids don’t use all (or any) of the funds.
Contributions to a grandchild’s 529 account are not deductible on your federal income tax return. However, close to 30 states offer either a deduction or credit for this kind of contribution. Another consideration: There’s an annual limit to how much you can give as a gift without triggering taxes. For 2024, for instance, the figure is $18,000 per giftee. If you were to put more than that into a 529 for a grandchild, you would have to pay a gift tax bill.
IRAs for Minors
Similar to custodial investment accounts, you can open custodial retirement accounts for your grandchildren, including a traditional IRA and a Roth IRA. While your grandkid won’t benefit from this account for decades, starting them early on the path to retirement savings means they could have considerably more money to work with when they reach retirement age.
However, it’s important to note that opening an IRA requires the child to have earned income in a given year. For teens, this can make sense. For a newborn, it is unlikely to be a viable option.
When making contributions to an IRA for a grandchild, note that the amount you deposit is subject to a gift tax exclusion before it becomes taxable. For 2024, this allows up to $18,000 per giftee. Funds given beyond that amount might mean you, the donor, are liable for taxes, though other factors will need to be considered to determine any tax burden.
Choosing the Right Account
Not sure how to choose the right savings account for your grandchildren? Here are some things to consider:
Comparing Interest Rates and Fees
If you’re opening a savings account, compare interest rates — you want an account with a high yield so that the money compounds more quickly over time. For example, currently the average interest rate for standard savings accounts is 0.45%, while the figure for high-yield savings accounts (often from online-only banks) can be several times that number.
For custodial accounts, you’ll want options with low or no fees. It can be wise to shop around and see what options you have from different banks and brokerage firms.
Recommended: How Old Do You Have to Be to Open a Bank Account?
Accessibility and Withdrawal Rules
Certain accounts allow your grandchildren to access funds sooner, while others (like IRAs) have strict rules about when they can withdraw funds and what the funds can be used for (as is the case with 529 plans). Think about the specific timeline and use case you envision for your grandchildren. Sometimes, opening more than one type of account makes sense, depending on how many goals you want to enable for your children’s kids.
Tax Implications and Benefits
Some accounts have tax-deductible contributions; others have tax-free withdrawals. For example, withdrawals from a 529 account are not usually taxable, provided they are used for qualified educational expenses. With a Roth IRA, withdrawals made after your child is older than 59 ½ (as hard as that may be to imagine) are not taxable. With a traditional IRA, taxes are paid when the money is withdrawn, usually in retirement, and are taxable.
Speaking with a financial advisor can help you understand the tax implications of each type of account you’re considering to better understand what you might pay — and what your grandchild might pay.
Setting up and Contributing to the Account
Ready to open a savings account for your grandchildren? Here’s how it works:
Opening and Funding the Account
Follow the bank’s or investment firm’s guidelines for opening the account. You will likely need some specific information from the grandchild’s parents to open the account. You’ll also need to deposit money into the account to start the nest egg. Custodial accounts may even let you transfer your own assets into the account.
Automatic Transfers and Recurring Contributions
If you’d like, you may be able to set up recurring transfers into the account. Perhaps you want a recurring transfer every holiday season or on your grandchild’s birthday. Work with the financial institution to set up these contributions — and perhaps find out how other loved ones might be able to contribute as well.
Monitoring and Managing the Account
After opening an account, it’s important to monitor it and see how the funds grow over time. Just as importantly, once your grandchild is a little older, it’s a good idea to sit down and review the account with them:
• If it’s a savings account, walk them through how compound interest works.
• If it’s a 529 plan, talk to them about college costs and how student loans work.
• If it’s a custodial account, talk to them about the basics of investing and the importance of saving for retirement.
The Takeaway
It’s never too early to start thinking about your grandchild’s future. Savings accounts, 529 plans, and custodial accounts offer several ways for you to give them money that will help them with college, general expenses, and even retirement.
While saving for grandkids is important, it’s also crucial that you take care of your own finances.
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FAQ
What are the contribution limits for custodial accounts?
There are no contribution limits for UGMA/UTMA custodial accounts, but you can only contribute up to a certain amount to avoid gift-tax implications (this changes each year). Contribution limits apply for custodial IRAs just as they would for regular IRAs.
Can grandparents open a 529 plan for grandchildren?
Yes, grandparents can open a 529 plan for grandchildren. If the grandchild’s parents have already set up a 529 plan, grandparents can also contribute to that plan directly. This will simplify account management and withdrawals for the recipient of the funds.
What happens to the account if the grandchild doesn’t need the funds?
If a grandchild doesn’t need funds from a 529 plan for college, they can still use them for trade or vocational schools or roll them into an IRA. Grandparents can also reassign the 529 plan to another grandchild.
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Indiana, known for its friendly communities and iconic Hoosier hospitality, is a state where you’ll find a mix of bustling urban centers like Indianapolis and serene rural landscapes. The state is rich in sports culture, home to the Indianapolis 500 and passionate basketball fans, and offers a diverse range of recreational activities. Whether you’re browsing homes for sale in Carmel, considering renting in Bloomington, or exploring houses for rent in Fort Wayne, here’s what you need to know before moving to Indiana.
Indiana at a glance
Living in Indiana blends vibrant city life and peaceful rural landscapes, making it an appealing destination for diverse lifestyles. Indianapolis, the state capital, is a bustling metropolis known for its sports culture, including the legendary Indianapolis 500 and the Indiana Pacers. Other major cities like Fort Wayne and Evansville provide a mix of economic opportunities, cultural experiences, and educational institutions. The state’s affordable cost of living, particularly in smaller cities and towns, makes it an attractive option for those looking to settle down without breaking the bank.
Indiana’s job market is robust, with key industries including manufacturing, healthcare, education, and agriculture. Major employers headquartered in the state include Eli Lilly and Company, Cummins Inc., Anthem Inc., and Cook Group. The cultural scene is equally diverse, with numerous festivals, museums, and theaters enriching the community life. Residents can enjoy the state’s numerous parks, lakes, and trails, such as Turkey Run State Park and the Indiana Dunes National Park. With its friendly residents, strong job market, and a wide array of recreational activities, Indiana offers a welcoming environment for newcomers.
1. The Hoosier hospitality will make you feel right at home
Hoosier hospitality is a hallmark of life in Indiana, characterized by the warm and friendly demeanor of its residents. Whether you’re moving into a new neighborhood or just visiting, you can expect a welcoming atmosphere with people eager to help and make you feel at home. Local communities often come together for neighborhood events, fairs, and potlucks, reflecting the state’s strong sense of community. For instance, small-town events like the Lafayette Jefferson High School Football games or local farmers’ markets often have a friendly, inclusive feel, making newcomers feel like part of the community from day one.
2. The sports culture is a big deal
Indiana’s sports culture is deeply ingrained in its identity, with basketball and auto racing holding particular significance. The state is home to the Indianapolis Colts, a prominent NFL team, and the Indiana Pacers, a staple of NBA basketball. The Indianapolis 500, held annually at the Indianapolis Motor Speedway, is one of the most famous car racing events in the world, attracting fans from all over. High school basketball is also a big deal, with local tournaments and games drawing substantial community support and media coverage, reflecting the state’s passion for sports at all levels.
Insider scoop: Consider visiting during the annual Indy 500 Race Week to enjoy not only the main event but also the numerous pre-race festivities, parades, and fan activities that take over Indianapolis.
3. Indiana has a low cost of living
Indiana has a notably low cost of living compared to many other states, making it an attractive option for those seeking affordability. The median home sale price in Indiana is $271,800, which is significantly lower than the national median of $442,479 and offers great value compared to major metropolitan areas. For renters, average monthly rental prices in Indianapolis are $1,243 for a one-bedroom apartment, further displaying the affordability in larger cities. In fact, the cost of living in Indianapolis is 9% lower than the national average. This combination of low housing costs, reasonable rental prices, and moderate day-to-day expenses contributes to Indiana’s reputation as a budget-friendly place to live.
A lower cost of living is a major advantage of moving to Indiana. Explore additional pros and cons of living in Indiana to get a comprehensive understanding of what life in the state has to offer.
4. You’ll find great higher education options
Indiana is home to several esteemed higher education institutions, offering a range of academic programs and research opportunities. Indiana University in Bloomington is renowned for its strong business, law, and medical programs, while Purdue University in West Lafayette is highly regarded for its engineering and technology disciplines. The University of Notre Dame, located in South Bend, is known for its prestigious programs and vibrant campus life. Additionally, smaller colleges such as Butler University and DePauw University provide excellent liberal arts education and personalized learning experiences.
5. Indiana is a manufacturing hub
Indiana has long been a major player in the manufacturing sector, with a diverse range of industries contributing to its robust economy. The state is a leading producer of automobiles, with major companies like Cummins Inc. and General Motors having significant manufacturing facilities there. The state’s strong manufacturing base supports a wide array of jobs, from assembly line work to engineering and design, reflecting Indiana’s deep ties to industrial innovation and production.
6. The northern part of the state is flat with rolling hills in the south
The geography of Indiana varies significantly from north to south, influencing both the landscape and the lifestyle. Northern Indiana is characterized by flat terrain and extensive farmland, with regions like the Valparaiso Moraine and Lake Michigan shoreline offering expansive views and agricultural opportunities. In contrast, southern Indiana features rolling hills, forested areas, and more varied topography, exemplified by places like Brown County State Park. This geographic diversity impacts everything from local agriculture to outdoor recreational activities, with each region offering scenic and environmental characteristics.
7. Be prepared for the harsh winter weather
Indiana winters can be quite harsh, with temperatures frequently dipping below freezing and significant snowfall occurring from late November to March. The state averages around 25 to 30 inches of snow annually, but this can vary, with northern areas receiving more snowfall than the southern parts. Ice storms and cold snaps are also common, requiring residents to be prepared for winter driving conditions and potential power outages.
Insider scoop: To make winter more manageable, invest in a set of high-quality snow tires and keep an emergency kit in your car with essentials like blankets, food, and a flashlight.
8. Indiana is part of Tornado Alley
Indiana is located in the eastern part of Tornado Alley, making it susceptible to tornadoes, particularly in the spring and early summer months. The state experiences an average of 20 to 30 tornadoes annually, with varying levels of severity. Tornadoes in Indiana can range from relatively minor twisters to more destructive events, necessitating preparedness and awareness.
Travel tip: Residents should be familiar with tornado safety protocols, have an emergency plan in place, and stay informed through local weather alerts to protect themselves and their property during severe weather events.
9. Public transportation is sparse here
Public transportation options in Indiana are limited, especially outside of major urban areas. While cities like Indianapolis have some public transit services, including buses operated by IndyGo, many rural and suburban areas rely heavily on personal vehicles. This can be a challenge for those who do not drive or prefer public transit options. For instance, outside of Indianapolis, transportation options may be restricted to regional bus services or ride-sharing apps, making car ownership almost essential for daily commuting and errands.
10. Indianapolis is close to major cities
Indianapolis’s central location provides convenient access to several major cities in the Midwest, enhancing its appeal as a transportation and business hub. Located approximately 100 miles from Chicago, 200 miles from St. Louis, and 175 miles from Cincinnati, Indianapolis offers a strategic position for both business and leisure travel. This proximity allows residents to easily visit these cities for work, entertainment, or cultural events while enjoying the benefits of living in a less densely populated area.
11. The sugar cream pie is the state’s staple
Sugar cream pie is a beloved and iconic dessert in Indiana, known for its simplicity and rich, sweet flavor. Often referred to as “Hoosier Pie,” it features a creamy filling made from sugar, cream, and vanilla, with a flaky pie crust. The pie is traditionally made with ingredients readily available to early settlers, reflecting the state’s agricultural heritage. Popular in local bakeries and diners, sugar cream pie is often enjoyed as a comforting and nostalgic treat, especially during family gatherings and state fairs.
Insider scoop: For a true taste of Indiana, visiting local spots like the Vanilla Bean Bakery in Indianapolis can provide an authentic slice of this classic pie.
Methodology
Population data sourced from the United States Census Bureau, while median home sale prices, average monthly rent, and data on affordable and largest cities are sourced from Redfin.
It’s almost become a trope at this point. Your friend’s aunt bought some Apple stock way back when and now lives full-time on a yacht. Or your cousin knows somebody who knows somebody who bought some Microsoft stock for a few dollars a share in the ’80s, and now they’re a multimillionaire.
These stories are practically the stuff of urban legend. But if you’re looking to buy a first tech stock or want to add some diversity to your portfolio, you may find the reality to be slightly different from the stories. There are many kinds of tech stocks, each with its own performance trends, pros, and cons. Here are a few fundamental truths worth knowing about investing in tech stocks.
Why Investors Are Investing in Technology
Much of the recent growth in the stock market overall has been concentrated in the shares of technology companies. Technology stocks, as measured by the S&P Technology Select Sector Index, rose 129.8%, or 18.11% annually, during the past five years. In contrast, during that period, the broad S&P 500 Index grew by 60.2%, or 9.9% annually.
The top five most valuable companies in the S&P 500 are technology-related companies. These firms — Apple, Microsoft, Alphabet (the parent company of Google), Amazon, and Tesla — have an average market capitalization, or overall stock value, near $1 trillion or more. And during the past five years, the stocks of these companies have experienced substantial growth.
Five Largest Companies in the S&P 500 Index
Company
Ticker
Market Cap*
5-year growth*
Apple
AAPL
$2.5 trillion
302.5%
Microsoft
MSFT
$1.9 trillion
256.0%
Alphabet
GOOGL
$1.4 trillion
134.7%
Amazon
AMZN
$1.3 trillion
170.6%
Tesla
TSLA
$868.5 billion
1,104.6%
*As of Sep. 2, 2022
Investors flock to technology companies, especially the previously mentioned tech giants, because they’re often considered solid businesses.
The products of technology companies — especially software companies — are relatively cheap to reproduce but can be quite expensive to buy. Apple, for example, prices iPhones ahead of their competitors, sells a lot of them, and then operates an ecosystem of apps and services that generate steady revenue. Amazon’s success is attributed to the effectiveness of its operations and low prices. For Alphabet, the sheer scope of its networks and the popularity of its services allows them to sell more ads than its competitors.
Aside from the giants that have established business models, many investors pour money into tech companies due to the promise of future earnings. Even when tech companies are not profitable or see regular cash flows, investors will still support the stocks because of the potential for future earnings. Companies like Amazon and Tesla took years before they turned steady profits.
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Popular Technology Stocks to Own
The technology industry is incredibly diverse. Beyond the five companies mentioned above, these are some of investors’ most widely held technology stocks.
Companies in the S&P Technology Select Sector Index
Company
Ticker
Technology Sector
Market Cap*
5-year growth*
Nvidia
NVDA
Semiconductors
$539.4 billion
233.8%
Broadcom
AVGO
Semiconductors
$198.7 billion
104.7%
Adobe
ADBE
Software
$219.7 billion
137.0%
Cisco Systems
CSCO
Communications Equipment
$187.5 billion
41.6%
Salesforce
CRM
Software
$153.5 billion
59.9%
*As of Sep. 2, 2022
How Can You Invest in Tech Stocks?
At the most basic level, you can invest in tech stock by buying the individual stocks of an appealing company.
Another way to invest in tech is by trading technology-focused exchange-traded funds (ETFs) or mutual funds. Tech ETFs and mutual funds allow investors to diversify their investments in a single security, which may be less risky than buying a specific company’s stock.
If you are interested in a particular tech sector — like artificial intelligence or green tech — you can invest in more targeted funds rather than broad-based technology-focused ETFs.
Different Sectors for Technological Investment
The technology industry is vast, filled with companies specializing in different areas of the market. For an investor, this means it’s possible to diversify, investing in tech stocks across various sectors.
Artificial Intelligence
Artificial intelligence (AI), which refers to ways that computers can process data and automate decision-making that humans would otherwise do, is a burgeoning tech sector. Many companies are operating in this sector, using new technologies to support fields like finance and healthcare. Artificial Intelligence, along with the related field of Machine Learning (ML), has long been one of the most exciting technology areas.
Transportation
Another bustling sector of the industry is transportation. Tech underlies all transportation, and some of the most exciting companies are building electric cars, creating the batteries and software that support the navigation and operational systems in automobiles, or using software to connect drivers and passengers.
💡 Recommended: Investing in Transportation Stocks for Beginners
Streaming
Streaming companies have completely revolutionized the entertainment industry. These companies offer direct-to-consumer content, including shows and movies, that is bundled in a monthly subscription. There are standalone streaming companies, companies that include streaming as an ever-growing part of their business, and companies that build digital and physical infrastructure to support streaming services.
Information Technology
Information technology (IT) is one of the broadest and most valuable sectors of the technology industry. It typically refers to how businesses store, transmit, and use information and data within and between networks of computers.
Semiconductor Technology
Semiconductors are arguably the foundation of all technology. Semiconductor companies make components found in phones, computers, and other electronic devices. The manufacturing process for semiconductors is incredibly precise and expensive, making the industry ruthlessly competitive.
Web 3.0
In recent years, cryptocurrency, blockchain technology, and Web 3.0 have been the focus of many investors. That’s because computer engineers and companies are now developing new technologies that will allow users to interact with the web in a more interactive, personal, and secure way. These new technologies, like blockchain, crypto, and the metaverse, may usher in new opportunities for investors.
💡 Recommended: Web 3.0 Guide for Beginners
Evaluating a Tech Stock Before Investing
When investing, you must carefully evaluate the stocks you’re interested in.
Technology companies, in particular, tend to have high price-to-earnings (P/E) ratios, meaning that the company’s profits may seem low compared to the price of their shares. This is often because investors are expecting rapid future growth.
Other key metrics include price-to-sales, which compares the stock price to the company’s revenue. This is something to consider in the case of a fast-growing company that doesn’t yet have substantial profits.
Another critical factor is the company’s overall revenue growth — the pace at which revenue increases year-over-year or even quarter-over-quarter.
A more detailed metric that can be useful for tech companies is “gross margins,” which is the difference between a company’s revenue or sales and the cost of generating those sales, divided by total revenue. The resulting percentage indicates whether the company can make money on the actual product it sells and how much. If the company’s other costs can go down as a percentage of total revenue, profits can grow more quickly.
💡 Recommended: The Ultimate List of Financial Ratios
Pros of Adding Tech Stocks to a Portfolio
There are many benefits to investing in tech stocks, most notably attractive returns. With artificial intelligence, blockchain, and Web 3.0 technologies on the horizon, there are increasing opportunities to invest in this sector. These are some possible benefits of adding tech stocks to a portfolio.
• There are many blue chip tech companies. Blue chip stocks typically refer to stocks from long-established companies with good returns. Today’s blue chips include huge tech companies like Apple, Alphabet, and Amazon.
• Some tech stocks pay dividends. There can be benefits to dividend-paying stocks, including consistent earnings, which might indicate that the company is positioned to deliver strong performance.
• Investors can buy shares in things they use. Most people use some tech in their daily routines. You might have a smartphone, or a laptop, hop on a social network, or order groceries or clothing online. With a tech stock, investors can buy a little piece of the companies they know and like.
• It’s easy to diversify in tech. Tech stocks aren’t a monolith. Investors can add diversity to their portfolio by purchasing different aspects of the tech sector, for example, buying stock in social media companies, smartphone glass manufacturers, hardware makers, software companies, and even green tech companies.
A great thing about the tech sector investing space is that there’s so much of it out there, and investors should be able to find something that works for their goals, ambition, and knowledge base.
💡 Recommended: How to Invest in Web 3.0 for Beginners
Cons of Investing in Technology
All stocks come with their own risks and potential downsides. Tech stocks are no different. As with any stock purchase, it’s helpful to do a good amount of research before buying a stock. Take these considerations into account before deciding to pull the trigger on a tech stock.
• The potential for tech backlash. Some experts think increased regulation and government scrutiny could lead to a backlash against tech stocks that could affect their prospects. They cite 2018’s passage of the European Union’s General Data Protection Regulation (GDPR) and Facebook’s hearings before Congress as evidence that even more regulation might be coming in the future. But like many other sectors of the stock market, various tech stocks react differently in the face of volatility.
• Buying what you know can be complicated. You might have a solid grasp on some social media giants, for example, but some of the nuances of emerging semiconductor firms might be a little harder to wrap your head around. You may have to ask yourself if you want to invest in a company that you might not fully understand.
• Stocks may be priced too high. Some tech companies, like Amazon and Google, often have shares that venture into the four figures, so for a first-time tech stock investor, those companies may feel out of reach. However, many tech companies occasionally engage in a stock split to decrease their share prices.
Do You See the Most Returns When Investing in Tech Stocks?
Most returns when investing in tech stock can vary depending on the specific company and the current market conditions. Nonetheless, many investors believe that tech stocks generally have a higher potential for growth than other types of stocks, making them a good choice for those looking to generate returns. During the past five years, technology stocks rose a total of 129.8%, while the broad S&P 500 Index grew by 60.2%.
But just because tech stocks have outperformed other industries, it doesn’t mean that it will always be that way. During 2022, for example, tech stocks have declined 22.7% through Aug., while the S&P 500 fell 16.8% year-to-date.
💡 Recommended: Lessons From the Dotcom Bubble
How Frequently Should You Invest in Tech Stocks?
The frequency you invest in tech stocks will depend on your individual investment goals and risk tolerance. Some investors may choose to trade tech stocks monthly or quarterly to take advantage of any short-term price fluctuations. Others may invest in tech stocks on a more long-term basis, holding onto their shares for several years to benefit from any potential long-term growth.
What Percentage of Your Portfolio Should Be Tech Stocks?
The percentage of a portfolio allocated to tech stocks differs for every investor. Some experts recommend that investors allocate no more than 20-30% of their investment portfolio to tech stocks, but this percentage may be higher or lower depending on the investor’s risk tolerance, investment goals, and other factors.
Mistakes to Avoid When Investing in Tech Stocks
Many investors are drawn to tech stocks because of the potential for a significant return. But the allure of large gains may cause investors to take on too much risk or lose sight of their overall investment goals.
For example, you don’t want to invest in a tech stock just because it’s popular. It’s easy to fear you are missing out when you see a particular stock’s price skyrocket. You may hear about a tech stock lot in the financial media, and you know many people who say they own it, but that doesn’t mean it’s a good investment.
Additionally, you should avoid investing in a stock just because the company is a household name. While sometimes the stocks of well-known companies do well, there are other cases of these companies not being well run and thus not being a good investment.
The Takeaway
The tech sector is vast and getting bigger by the moment as blockchain, artificial intelligence, and other technologies push boundaries. New founders are working on startups in garages and basements, potentially developing the next new thing that could change the world. Investors looking to invest in tech stocks can find a stock or ETF out there that could meet their needs. For instance, SoFi ETFs can remove some of the headache from picking individual stocks by allowing you to invest in a bundle of companies all at once.
SoFi makes it easy to invest in tech stocks and more with an online brokerage account. With the SoFi app, you can trade stocks, ETFs, and fractional shares with no commissions for as little as $5. You’ll also get real time investing news, curated content, and other relevant data for the stocks that matter most to you. For a limited time, funding an account gives you the opportunity to win up to $1,000 in the stock of your choice. All you have to do is open and fund a SoFi Invest account.
Get started trading technology stocks and ETFs with SoFi Invest® today
FAQ
Why is investing in tech stocks so popular?
Tech stocks are popular because they are some of the largest and best performing assets in the financial markets. As a whole, the technology sector is one of the fastest growing sectors in the economy. This means that there are a lot of new and innovative companies that are constantly coming out with new products and services. This provides investors with a lot of growth potential.
How can you start investing in tech stocks today?
You can start investing in tech stocks by trading individual stocks, invest in a tech-focused mutual fund or ETF, or invest in a more general stock market index fund that includes a mix of tech and non-tech companies.
SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
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Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
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Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
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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.
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Want to know how to make $2,000? Here’s how you can make extra money online and offline. Whether you’re a stay-at-home parent looking to bring home more money or saving up for a large purchase, making $2,000 can make a big difference. In this post you’ll learn: Making an extra $2,000 can seem like a…
Want to know how to make $2,000? Here’s how you can make extra money online and offline. Whether you’re a stay-at-home parent looking to bring home more money or saving up for a large purchase, making $2,000 can make a big difference.
In this post you’ll learn:
Ways to make $2,000 fast
How to make $2,000 per day
How to make $2,000 online
Making an extra $2,000 can seem like a big goal, but it’s definitely achievable with the right approach. Whether you’re looking to pay off debt, save for a vacation, or just make more money, there are many ways to reach your goal.
How To Make $2,000 Fast
Here’s a list of ways to make $2,000.
1. Freelancing
If you have skills like writing, editing, programming, bookkeeping, digital marketing, data entry, SEO, graphic design, or transcribing, you can find jobs online. You can also find jobs if you know how to use software like Adobe, Canva, WordPress, or email marketing tools.
I recommend checking out UpWork to see which skills you have (you may be surprised to see what’s listed there) and start applying for jobs.
I’ve done quite a bit of freelancing and have found jobs on UpWork, Fiverr, and FlexJobs. This is a great way to make money since it’s flexible and usually done on your own schedule. There are many other freelance platforms as well!
Recommended reading: 16 Best Freelance Jobs & How To Get Started
2. Blogging
I started a blog back in college and it’s still one of my favorite ways to make semi-passive income. I currently make between $2,000-$4,000 a month on my blog and it’s entirely passive, meaning I no longer do any work on it.
There are tons of ways to make money blogging including affiliate partnerships, sponsored posts, ad revenue, and selling your own goods or services.
You can create your own blog here with this easy-to-use tutorial. Michelle also has a Free How To Start and Launch A Money-Making Blog Course you can join, and it will help you start and launch a successful blog! Once you start a blog, you can learn how to monetize it with affiliate income and sponsored posts.
You can learn how to start a blog with the free How To Start a Blog Course (sign up by clicking here).
3. Proofreading
If you have an eagle eye for detail, love finding spelling or punctuation errors, and want to learn how to make $2,000 online, you may want to become a proofreader. Working as a proofreader is generally quite flexible and you can work from anywhere in the world since your job is done from a computer.
You can find jobs proofreading for authors, law firms, blogs, and more. This is a great way to make a side hustle income or a full-time living as proofreaders can make around $50,000 a year.
Here is a FREE 7-day course just for people who want to stop wasting time and start making more money with their proofreading skills. I definitely recommend that you check it out.
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This free 76-minute workshop answers all of the most common questions about how to become a proofreader, and even talks about the 5 signs that proofreading could be a perfect fit for you.
4. Flip items for resale
You’ve likely seen TikToks where people flip stuff for profit. In case you don’t know what a flipper is, this is someone who buys something at a lower price and sells it at a higher price for a profit. This can also sometimes mean fixing up the item in order to sell it at a higher cost.
This is a great side hustle that can turn into a full-time job and is perfect if you want to know how to make $2,000 without a job (well, a traditional 9-5 job!).
A ton of people do this full-time!
This job is quite flexible because you can find stuff to flip on your own schedule. If you have kids, you can even take them along to garage sales and flea markets to score items to flip. This side hustle takes about 5-10 hours a week for beginners which can earn you up to $1,000 a month in the beginning.
Here is a free webinar, Turn Your Passion For Visiting Thrift Stores, Yard Sales & Flea Markets Into A Profitable Reselling Business In As Little As 14 Days, that will help you learn how to make money by flipping items as well.
5. Transcription
A transcriptionist is someone whose job is to turn files into text documents. You listen to what is being said in the file and type it into a text format. Transcriptionists usually make between $15-$30 an hour on average.
This job is flexible because you can choose to work part-time as a freelancer or full-time with an agency. As a transcriptionist, you must have good typing skills and a fast typing speed. You need excellent listening skills since you’re listening to files and having to type them up quickly.
A great free resource to take is FREE Workshop: Is a Career in Transcription Right for You? You’ll learn what transcription is and why it’s a highly in-demand skill, who hires transcriptionists, what it takes to become one, and more.
Recommended reading: 18 Best Online Transcription Jobs For Beginners
6. Pet sitting
One of my favorite side hustles is pet sitting. I’ve found all of my pet-sitting jobs on Rover, but you can also check out other dog-walking apps like Wag, Care.com, PetSitter, and more. Finding jobs can be hard at first if you don’t have experience, so it is usually important to set your rates lower than your competitors (this way you can get some reviews!).
Once you get jobs and reviews, you can slowly increase your rates and build your clientele. This is a great way to make a few hundred a week on top of a full-time job or other side hustles.
Recommended reading: 7 Best Dog Walking Apps To Make Extra Money
7. Sell crafts
If you have a hobby or craft you enjoy, you may want to try selling your items on Etsy. With almost 100,000,000 active Etsy buyers, Etsy is a great website to sell your handmade goods to people all around the world.
Here are some things you can sell on Etsy:
Printables
Stickers
Rugs
Soaps
Bath bombs
Crocheted and knitted items
Jewelry
I shop on Etsy all the time, and I love it!
Recommended reading: 16 Best Things To Sell On Etsy
Do you want to make money selling printables online? This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.
8. Virtual assistant
A virtual assistant is in charge of all kinds of tasks including:
Email management
Customer support
Graphic design
Social media management
I’m currently a virtual assistant and love it. The pay is high and I get to work on my own schedule. To find jobs, I recommend checking out UpWork, FlexJobs, and Fiverr. Type in “virtual assistant” on any of these job boards and you’ll quickly find tons of job listings with details including pay, benefits, work tasks, hours, and more.
9. Writing
If you have any kind of writing experience, try finding writing jobs online. There are thousands of online writing jobs out there from companies that need help creating blog posts and content for their company.
Even if you don’t have writing experience, I still recommend checking out job board sites and applying for low-paying jobs. This will get you experience as you build up your portfolio and help you land more jobs down the line.
I have been a freelance writer for years, and it’s a great way to make extra money. In fact, I’m writing this article as a freelancer!
10. Find Craigslist gigs for extra money
Craigslist is still quite popular in cities and there are always new jobs popping up. You’re most likely to find jobs in:
Labor (construction, warehouse work, landscaping)
Customer service (call centers)
Tutors
Short-term freelancing gigs
Moving
Always remember to be careful on any website, especially Craigslist. If anything ever feels suspicious or off, listen to your gut.
11. Delivering food
One of the easiest ways to make money is by delivering food with DoorDash. This is because they are always in need of new DoorDashers.
With DoorDash, your job is to deliver meals to customers. You can work on your own schedule and work as little or as many hours as you want to. Depending on where you live, you can deliver food by bike, scooter, or car.
How much you earn depends on each delivery, how much you earn in tips, and how fast you deliver items. The DoorDash app makes it convenient to accept delivery jobs, find out where to go, and how to get there.
12. Invest in real estate
Though it’s not a quick way to make money, you can make money in the long term by investing in real estate. When done right, real estate investing can be a lucrative way to make passive income and help diversify your investment portfolio.
There are many ways to invest in real estate including:
Buy REITs (real estate investment trusts)
Buy a house and flip for profit
Buy a house, live in one room, and rent out the rest of the rooms
Use an online real estate platform like Fundrise or Crowdstreet
Recommended reading: 23 Best Real Estate Side Hustles To Make Extra Money
13. Develop apps
There are a few ways to make money developing apps including in-app purchases, in-app subscriptions, advertising, affiliate links, and sponsorships.
You can test and research ideas that might do well in app form. Ask yourself what people need help with and how your app can solve their problems. Then, validate your idea by having people fill out a survey to get a better idea of what kind of app you should create.
You also need to figure out how you’ll market your app and get new customers. This might require you to reach out to blogs in your app’s niche, influencers, and media outlets to get coverage for your app.
Also, there is a side hustle related to this – you can test and try out new apps with Freecash. You can get paid from $1.00 to $75 per app. Some apps listed on Freecash (these numbers may change) include TikTok, which pays $8 if you’re a new user, and Upside, a gas cash back app, which currently pays $24.01 to new users. HBO pays $3.96 for new users subscribing to a free trial. There are many other apps you can earn from as well. Click here to sign up for Freecash (it’s free!).
14. Online surveys
Getting paid for surveys is not going to get you rich, but it’s an easy way to make money in your spare time. Companies pay people to fill out surveys because they need opinions on products and services. Once you finish filling out a survey, these survey sites typically pay you with cash, via PayPal, or gift cards.
Surveys aren’t full of hard questions that take hours to complete. The questions are usually short and straight to the point. Companies are trying to better their products and services, and surveys help them do this.
Here are some of the top surveys that pay in cash and free gift cards to sign up for:
Swagbucks
Survey Junkie
Branded Surveys
American Consumer Opinion
InboxDollars
Pinecone Research
Prize Rebel
User Interviews
Recommended reading: 21 Best Free Surveys That Pay Cash Instantly
15. Social media management
Working as a social media manager is a job that seems to be always hiring. I did a quick search on Fiverr and found many job listings pop up. This is because companies look to hire out for their social media management.
To find jobs in social media management, go to job boards like UpWork and type in “Social Media Management.” You’ll see posts from entrepreneurs and companies looking to hire a social media manager. These job listings will tell you what they need, like scheduling posts on Instagram and Facebook, creating visuals using Canva, and responding to comments from followers.
16. Babysitting
One of the easiest and quickest ways to make money is babysitting. I’ve found all of my babysitting and nannying jobs on Care.com, but you can also check out SitterCity, UrbanSitter, or Babysits. People are always looking for babysitters for date nights, errands, and special events.
To increase your chances of landing jobs, make sure to get a background check on the website (Care.com has this option) as this will make you stand out from other candidates. If you have previous experience babysitting, ask for references so hiring parents can see that you’re a good candidate for their job listing.
17. Bookkeeping
Becoming a bookkeeper can be a great way to learn how to make $2,000 from home.
A bookkeeper is someone whose job is to maintain clean and organized financial records for a business. Some tasks can include sending invoices on your client’s behalf, running payroll for your clients and their team, preparing state tax filings, and helping the client make business decisions for future expenses.
A bookkeeper’s income can vary depending on how many clients they have, how much experience they have, and how much they charge. On the low end, bookkeepers can earn $2,000 a month, while on the high end bookkeepers can earn $16,000 a month. Bookkeepers are in demand. According to the Department of Labor and Statistics, about 200,000 new jobs open in the US for bookkeepers each year.
Here is a free training – How to start a profitable bookkeeping side hustle, that can generate $2,000 to $16,000 a month (part-time)!
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This free training will show you how to start a profitable bookkeeping side-hustle in the next 30 days—even if you have no prior experience!
18. Online tutoring
An online tutor is a teacher or expert who helps someone in a particular subject through the internet. This is done through video calls on a computer. Online tutors can make between $15 an hour to well over $100 an hour. Tutors are most often in needed in subjects like math, science, and foreign languages.
Many sites are hiring online tutors such as Tutor.com, Varsity Tutors, and Outschool.
19. Sell old electronics
Before throwing away your old electronics, consider selling them or trading them in.
Best Buy and Amazon both have trade-in programs and many other places are always looking to buy electronics. Electronics that are most easy to sell include smartphones, tablets, laptops, gaming consoles, smartwatches, digital cameras, and e-readers like Kindles.
You can sell electronics on sites like:
Decluttr
Facebook Marketplace
eBay
Gazelle
If you want to learn how to make $2,000 in 3 days, I usually recommend finding stuff to sell!
20. Photography
There are many ways to make money with photography including freelance photography, portraits, real estate, and product photography. You can also sell your photos to stock agencies like Shutterstock or Unsplash if you want to run an online business that makes $2,000.
To get started selling your photography, build an online portfolio of your work. This is going to help you attract new clients and customers. Always keep your customers satisfied and happy as word of mouth makes a big difference in the photography business.
It’s important to market your services on social media and have a professional website so people can get in contact with you easily.
Recommended reading: 18 Ways To Get Paid To Take Pictures
21. Rent a room
If you have a spare bedroom you’re not using, renting out that spare room is an easy and convenient way to make extra income.
It’s important to do a few things including cleaning and decluttering the room, researching market rates, taking high-quality, well-lit images of the room, and checking local laws to see if it’s legal to rent out a room where you live.
You can potentially rent out your room short-term on sites like Airbnb or find someone who is looking for a room for the long-term. If you find someone renting out a room for the long-term, it’s important to get a security deposit, a contract in place, and references from the renter.
My sister (the owner of this site) has rented out spare rooms in the past, even to me!
22. Rent your car
Renting your car can be a great way to earn extra income, especially if you’re not driving it that often.
First, you’ll want to check with your insurance to see if you’re allowed to rent out your vehicle. You’ll also need to see if you need a special license to rent your car. Once you have those things dialed down, choose a rental platform.
There are many platforms including Turo, GetAroundUSA, and HyreCar.
23. Work overtime
Working overtime is one of the best ways to make the most money. This is because employers usually pay a higher hourly wage for overtime hours. There are tons of jobs that pay extra for overtime including working as a plumber, pilot, home health aid, electrician, automotive technician, and so many other jobs.
Frequently Asked Questions
Below are answers to common questions about how to make $2,000.
How to make $2,000 in passive income?
There are many ways to make $2,000 in passive such as blogging (via affiliate marketing or ad revenue), selling crafts like printables on Etsy, investing in real estate, and renting out your room or car.
How to make $2,000 a week online?
To make $2,000 a week, you need to make about $285 a day. Breaking it down this way makes the number seem less daunting and more achievable. To make $2,000 a week, you’d need to pick up quite a few freelancing or Craigslist gigs, flip high-profit items, or rent out a room on Airbnb or your car on Turo. Doing multiple things will increase your odds of making $2,000 a week online.
How to make $2,000 per day?
Making $2,000 per day is going to require a lot of work and even then it’s not always possible. After all, $2,000 a day would be $60,000 each month! Working gigs won’t be enough and instead, you’ll have to get lucky by flipping a high-profit item (like real estate) or starting your own business.
How to make $2,000 online?
There are many ways to make $2,000 online, such as with freelancing gigs, blogging, virtual assisting, social media management, and selling crafts on Etsy.
Best ways to make $2,000 – Summary
I hope you enjoyed this article on the best ways to make $2,000 fast.
Making $2,000 can seem tough at first, but once you start trying out different side hustles and get into a groove, making extra cash gets easier.
You don’t have to pay capital gains tax on investment profits while they are held in a traditional or a Roth IRA account. In most cases, the question of taxes comes into play when you withdraw money from a traditional or Roth IRA.
Each type of IRA is subject to a different set of tax rules, and it’s essential to know how these accounts work, as the tax implications are significant now as well as in the future.
IRAs, Explained
An Individual Retirement Account (IRA) is a tax-advantaged account typically used for retirement savings. There are two main types of IRAs — traditional IRAs and Roth IRAs — and the tax advantages of each are quite distinct.
Generally speaking, all IRAs are subject to contribution limits and withdrawal rules, but Roth IRAs have strict income caps as well as other restrictions.
Contribution Limits
For tax year 2024, the annual contribution limits for both Roth and traditional IRAs is $7,000, and $8,000 for those 50 or older.
It’s important to know that you can only contribute earned income to an IRA; earned income refers to taxable income like wages, tips, commissions. If you earn less than the contribution limit, you can only deposit up to the amount of money you made that year.
One exception is in the case of a spousal IRA, where the working spouse can contribute to an IRA on behalf of a spouse who doesn’t have earned income. Like ordinary IRAs, spousal IRAs can be traditional or Roth in style.
Traditional IRAs
All IRAs are tax advantaged in some way. When you invest in a traditional IRA, you may be able to take a tax deduction for the amount you contribute in the tax year that you make the contribution.
The contributions you make may be fully or partially tax-deductible, depending on whether you or your spouse are covered by a workplace retirement plan. If you’re not sure, you may want to check IRS.gov for details.
The money inside the account grows tax-deferred, meaning any capital appreciation of those funds is not subject to investment taxes, i.e. capital gains tax, while held in the account over time. But starting at age 59 ½ , qualified withdrawals are taxed at regular income tax rates.
If you think about it, this makes sense because you make contributions to a traditional IRA on a pre-tax basis. When you take withdrawals, you then owe income tax on the contributions and any earnings.
With some exceptions, early withdrawals from a traditional IRA prior to age 59 ½ are subject to income tax and a 10% penalty.
Recommended: IRA Tax Deduction Rules
Roth IRAs
Roth IRAs follow a different set of rules. You contribute to a Roth IRA with after-tax money. That means you won’t get a tax deduction for contributions you make in the year that you contribute.
Your contributions grow inside your Roth IRA tax-free, along with any earnings. When you reach retirement age and start to make withdrawals, you won’t owe income tax on money you withdraw because you already paid tax on the principal (i.e. your original contribution amounts) — and the earnings are not taxed on qualified withdrawals.
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What Are Capital Gains Taxes?
Capital gains refer to investment profits. In a taxable investment account you would owe capital gains tax on the profits you made from selling investments: e.g., stocks, bonds, real estate, and so on.
You don’t owe capital gains tax just for owning these assets — it only applies if you profit from selling them. Depending on how long you held an investment before you sold it, you would owe short- or long-term capital gains.
Retirement accounts, however, are subject to their own set of tax rules, and traditional and Roth IRAs each handle capital gains taxes differently.
Are Gains Taxed in Traditional IRAs?
Traditional IRA plans, as noted above, are tax-deferred, which essentially means that investment profits are not subject to capital gains tax while they remain in the account. Given this, the sale of individual investments like stocks inside an IRA is not considered a taxable event.
However, with tax-deferred accounts like traditional IRAs, you do have to pay ordinary income tax on withdrawals (meaning, you’re taxed at your marginal income rate).
So when you take withdrawals from a traditional IRA, you will owe income tax on the amount you withdraw, including any investment gains (i.e., earnings) in the account.
Are Gains Taxed in Roth IRAs?
The same principle applies to Roth IRAs, even though these are after-tax accounts: You don’t have to pay taxes on investment income or any assets that you buy or sell inside your Roth IRA.
Because you contribute to a Roth IRA with after-tax money, your money grows tax-free inside your IRA. Also, the earnings in the account grow tax-free over time and those gains are not taxed within the account.
In addition, qualified withdrawals of contributions and earnings from a Roth IRA are tax free. But remember: early or non-qualified withdrawal of earnings from a Roth IRA would be subject to taxes and a penalty (with some exceptions; for details see IRS.gov).
Roth IRA Penalties
Because you contribute to a Roth IRA with after-tax money, you can always withdraw your contributions (meaning your principal) without paying any tax or penalties.
If you wait to withdraw money from your Roth IRA until you reach age 59 ½, you can also withdraw your earnings without tax or penalties — as long as you’ve had the account for at least five years.
If you withdraw Roth IRA earnings before age 59 ½ or before you’ve held the account for five years, you may be charged a 10% early withdrawal penalty, though there are IRA withdrawal rules that may help you avoid the penalty in certain situations.
Are Gains Taxed in 401(k)s?
An IRA and a 401(k) work in a similar way when it comes to capital gains tax. Just as there are traditional and Roth IRAs, there are also traditional and “designated” Roth 401(k) plans, and they work similarly to their corresponding IRA equivalents.
So, generally speaking, you do not owe any capital gains tax on the sale of any investments held inside either type of 401(k) account.
Opening an IRA With SoFi
Most people are familiar with the basic tax advantages of using an IRA to save for retirement. Traditional IRAs are tax-deferred accounts and may provide a tax deduction in the years you make contributions. Roth IRAs are after-tax accounts that can provide tax-free income in retirement.
But the fact that you don’t have to pay capital gains tax is also worth noting. With both a traditional IRA and a Roth IRA, buying and selling stocks or other investments is not considered a taxable event. That means that you will not owe capital gains tax when you sell investments inside your IRA.
Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
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FAQ
Are Roth IRAs subject to capital gains tax?
No, buying and selling stocks or other investments inside a Roth IRA is not considered a taxable event. This means that you will not owe capital gains tax for buying or selling investments inside your Roth IRA. And because contributions to Roth IRAs are made with after-tax money, you also won’t owe income tax on qualified withdrawals.
Do you have to pay taxes if you sell stocks in a Roth IRA?
Selling stocks inside a Roth IRA is not considered a taxable event. So whether you regularly buy and sell stocks inside your Roth IRA, or just have unrealized gains and losses, you won’t need to worry about capital gains tax.
What happens when you sell a stock in your Roth IRA?
Buying and selling stocks inside an IRA is not considered a taxable event. So you won’t owe capital gains tax on stock you sell, but you also won’t be able to offset gains with a loss you capture from a stock sale inside your IRA.
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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. 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.
Managing your money wisely starts with understanding how you spend it. Let’s break down the common habits that can make or break your budget. Whether you want to save more, spend less, or just be more mindful of your finances, knowing these key habits is essential.
This guide will help you identify and change spending patterns that can impact your financial future. Let’s dive in and see how you can take control of your money.
Budget your money
Image Credit: Karolina Grabowska from Pexels.
Budgeting helps you decide how to spend your income wisely. It ensures you have enough for essentials and don’t overspend. It’s a smart way to meet your financial goals.
To learn more: How to Budget Money and Still Enjoy Life
Cancel bills you can’t pay
Image Credit: Caliphoto from Getty Images Signature.
If you can’t pay a bill, contact your creditors to ask for cancellation. If that fails, explain why you missed the payment. With many unpaid bills, you may look at debt consolidation, but stop using debt as a form of payment.
To learn more: How to Get Out of Debt in 5 Easy Steps
Switch Banks
Image Credit: Baloncici from Getty Images.
Don’t pay for banking services. If you do, it’s time to switch to a credit union. They often offer better deals and lower fees.
To learn more: This is the Simple Answer…How Many Bank Accounts Should I Have
Insurance bundles
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Insurance bundles include different coverages like home, auto, life, and disability insurance. They often come with riders for income loss and medical expenses, providing comprehensive protection.
Switch banks to one with high APY
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Not investing in a high-interest account means losing money. Look for banks with a high APY (annual percentage yield) on deposits. This is a smart place to keep your rainy day fund.
Learn More: Breaking Down the Purpose of a Rainy Day Fund
Increase income
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Increase your income by finding a new job or starting a business. More income means more money to save or invest for your future.
To learn more: Explore the Many Ways to Make Money
Cut your bills
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The average person spends about $150 monthly on bills like electricity and gas. Cutting these expenses where possible can save you a lot of money each month. Look for others you can trim.
To learn more: What Are Fixed Expenses? How to Budget for Fixed Costs
Earn cash back on purchases
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Earn cash back on things you already buy using a credit card, debit card, or other means. It’s an easy way to get some money back on your regular purchases.
Learn More: 15 Most Effective Credit Card Hacks and Rewards
Make money on things you own
Image Credit: Nikom1234 from Getty Images.
Sell items you no longer need on eBay, Craigslist, or other sites instead of throwing them away. It’s a good way to make extra money.
Avoid unnecessary spending
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When you’re out, avoid places that tempt you to buy things you don’t need. Staying away from these places helps you save money and avoid impulse purchases.
Don’t buy things on credit
Image Credit: 89Stocker.
If you can’t afford it, don’t buy it on credit. This way, you won’t end up paying more than what the item is worth due to interest and fees.
To learn more: 7 Simplistic Habits Needed for Debt Free Living
Save your spare change
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Save your spare change in jars. Over time, it adds up and can become a nice amount of money that you didn’t even miss.
To learn more: The Penny Challenge Will Easily Save More Than $650
Automate your budget
Image Credit: Alexander’s Images.
Automate your budget to know what you have to spend. It helps keep your shopping in check and prevents impulse buying, making it easier to manage your finances.
To learn more: How to Budget Your Money With Percentages – Cents Plan Formula
Avoid fees from simple transactions
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Be aware of fees from credit cards, debit cards, and electronic check transactions. Avoid unnecessary charges by knowing what fees apply to your transactions and finding ways to minimize them.
Then Become Financially Sound
Image Credit: Dean Drobot.
These money management habits are solid and emphasize the benefits of saving money, spending less, and maintaining financial stability. This is how you want to live.
To learn more: How Quick can you Become Financially Sound?
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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.
Rising prices and inflation are driving worries that money doesn’t go as far as it used to. But rest assured that $120,000 is considered a good salary, especially if you’re single and have no dependents. And by developing sound money habits now, you can help make the most of your income, no matter what it is.
Here’s a closer look at an annual salary of $120,000.
Is $120K a Good Salary?
A salary of $120,000 is nearly double the national average salary in the U.S. of $63,795, per the latest data available from the Social Security Administration. But how comfortably you’re able to live on that money depends on a number of factors, including how much debt you have, your family size, and how much your lifestyle costs in the area where you live.
A money tracker can help you with budgeting, monitoring spending, and keeping tabs of your credit score.
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Average Median Income in the US by State in 2024
The average pay for a worker in the U.S. varies by state, though no state comes close to $120,000. For reference, here’s a chart of the median household income in each state, according to the U.S. Census Bureau.
State
Median Household Income
Alabama
$59,609
Alaska
$86,370
Arizona
$72,581
Arkansas
$56,335
California
$91,905
Colorado
$87,598
Connecticut
$90,213
Delaware
$79,325
Florida
$67,917
Georgia
$71,355
Hawaii
$94,814
Idaho
$70,214
Illinois
$78,433
Indiana
$67,173
Iowa
$70,571
Kansas
$69,747
Kentucky
$60,183
Louisiana
$57,852
Maine
$68,251
Maryland
$98,461
Massachusetts
$96,505
Michigan
$68,505
Minnesota
$84,313
Mississippi
$52,985
Missouri
$65,920
Montana
$66,341
Nebraska
$71,772
Nevada
$71,646
New Hampshire
$90,845
New Jersey
$97,126
New Mexico
$58,722
New York
$81,386
North Carolina
$66,186
North Dakota
$73,959
Ohio
$66,990
Oklahoma
$61,364
Oregon
$76,362
Pennsylvania
$73,170
Rhode Island
$81,370
South Carolina
$63,623
South Dakota
$69,457
Tennessee
$64,035
Texas
$73,035
Utah
$86,833
Vermont
$74,014
Virginia
$87,249
Washington
$90,325
West Virginia
$55,217
Wisconsin
$72,458
Wyoming
$72,495
Related: Highest Paying Jobs by State
Average Cost of Living in the US by State in 2024
The average cost of living in the U.S. will affect how you feel about your $120,000 salary. And, like salary, it varies by state. Here’s a look at what a typical resident in each state spends on basic necessities, such as housing, food, and transportation.
State
Personal Consumption Expenditure
Alabama
$42,391
Alaska
$59,179
Arizona
$50,123
Arkansas
$42,245
California
$60,272
Colorado
$59,371
Connecticut
$60,413
Delaware
$54,532
Florida
$55,516
Georgia
$47,406
Hawaii
$54,655
Idaho
$43,508
Illinois
$54,341
Indiana
$46,579
Iowa
$45,455
Kansas
$46,069
Kentucky
$44,193
Louisiana
$45,178
Maine
$55,789
Maryland
$52,651
Massachusetts
$64,214
Michigan
$49,482
Minnesota
$52,849
Mississippi
$39,678
Missouri
$48,613
Montana
$51,913
Nebraska
$37,519
Nevada
$49,522
New Hampshire
$60,828
New Jersey
$60,082
New Mexico
$43,336
New York
$58,571
North Carolina
$47,834
North Dakota
$52,631
Ohio
$47,768
Oklahoma
$42,046
Oregon
$52,159
Pennsylvania
$53,703
Rhode Island
$52,820
South Carolina
$46,220
South Dakota
$48,997
Tennessee
$46,280
Texas
$49,082
Utah
$48,189
Vermont
$55,743
Virginia
$52,057
Washington
$56,567
West Virginia
$44,460
Wisconsin
$49,284
Wyoming
$52,403
Source: U.S. Bureau of Economic Analysis
How to Live on a $120K Salary
Chances are, $120,000 can easily cover an individual’s basic expenses with some money left over for entertainment and saving. But if you live in a pricey area or are trying to pay down debt, you may need to be more mindful about how you’re managing your money. The following tips can help.
Live below your means
You‘ve heard it before, but the most important part of living well at your salary is to make sure your expenses are less than your salary. Try to find housing and transportation that fits within your budget, use a budget to plan for expenses, and manage lifestyle creep as much as you can.
Have a contingency fund
Be sure you’re planning for the unexpected. Building an emergency fund can go a long way toward preserving your finances when tough times come.
Make a plan for your money
Making a budget — yes, even on a $120,000 annual salary — can help you use your money more effectively and make progress toward financial goals.
How to Budget for a $120K Salary
There are a number of budgeting methods you may want to try.
• 50/30/20 method: With a 50/30/20 budget, 50% of your money should go toward needs (housing, transportation, food, etc.); 30% to wants (spending money, self-care, eating out, and vacations); and 20% to savings and debt payments.
• Zero-based budgeting: In this type of budgeting, you give a job to every dollar you earn so that your income minus your expenses ends at zero.
• Envelope method: You specify how much money is allotted to a specific category; say, $300 for gas for the month. You can spend the designated funds until they’re gone. If you’re really disciplined, you won’t spend in that category again until the next month, when the money in the envelope is refreshed.
Of course, the best budget is the one you will follow. A budget planner app can help you stay on track and reach your goals.
Maximizing a $120K Salary
Making the most of a $120,000 salary depends on what your financial goals are and your stage of life. Do you want to:
• Save more money?
• Grow your net worth?
• Provide for a family?
• Enjoy eating out and/or nightlife?
• Afford a nice car and house?
To maximize a $120,000 salary, invest in the areas of your life that are important to you. Make a plan to spend money according to your values and be more frugal in the areas that are not as important to you.
Quality of Life with a $120K Salary
According to the World Health Organization, quality of life is about a person’s perception of their culture and value systems in relation to their goals, concerns, expectations, or standards. Translation: Your quality of life on a $120,000 salary may depend, in large part, on your perception of how good it is. If you’re able to feel optimistic with the amount of money you have, you’ll likely have a good quality of life.
Is $120,000 a Year Considered Rich?
Yes, $120,000 is a six-figure salary — and a good one for a single person — but is it enough to qualify you as “rich”? The truth is, rich is a relative term. Living well depends on how satisfied you are with your lifestyle and how much you’re able to save for a future self.
Recommended: How to Calculate Your Net Worth and Wealth
Is $120K a Year Considered Middle Class?
Middle class is determined by incomes that range from two-thirds to double the median income. It is also adjusted for family size. In the U.S., the median income is $74,580, which puts the range for the middle class between $49,745 and $149,160.
However, when adjusting for family size, a $120,000 salary for a single person puts you squarely in the upper class in every metro area in the United States.
Example Jobs that Make About $120,000 a Year Salary
According to data from the U.S. Bureau of Labor Statistics (BLS), there are a number of occupations whose salaries sit at or above $120,000 — some which could be a good fit for introverts.
Some examples include:
• Software Developer: $132,270
• Physician Assistant: $130,020
• Nurse Practitioner: $126,260
• Information Security Analyst: $120,360
• Actuary: $120,000
Recommended: What Is a Good Entry-Level Salary?
The Takeaway
Is $120,000 a good salary for a single person? Generally speaking, yes. It’s more than what a typical American worker earns and, depending on where you live, can provide you with a comfortable life. But even with a six-figure salary, you may want to consider ways to maximize your money. Sound financial habits like building up an emergency fund, saving for short- and long-term goals, and creating a budget are all good places to start.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
FAQ
Can I live comfortably making 120k a year?
Living comfortably on $120K a year depends on various factors, such as where you live, how much debt you have, your family size, and how you live. Many singles will find $120K enough to live on in many areas of the country, but may need to be more mindful about their spending if they live in pricier areas like Los Angeles or New York City.
What can I afford with a $120K salary?
If you’re looking to buy a home with a $120K salary, your best bet is to talk to a lender and run some numbers. In addition to your income, your level of debt, down payment amount, loan type, and interest rate can all impact how much house you can afford. For a rough estimate, a 120K salary would give you $10,000 of gross income each month, which would mean you’re looking at a mortgage payment between $2,500 and $3,600 if you have no other debt. With interest rates at 7.00%, that translates to a mortgage of around $415,000.
How much is $120K a year hourly?
A $120K salary comes out to approximately $57.69 per hour.
How much is 120K a year monthly?
A salary of $120,000 per year works out to roughly $7,706 per month, after federal income taxes are taken out.
How much is $120K a year daily?
If you earn $120,000 per year, you would be paid around $462 per day.
Photo credit: iStock/Delmaine Donson
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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.
Dunlap has been living – and renting – in Seattle where the average housing price was $779,900 as of December 2023, Moneywise reported, citing Realtor.com data. Because of rising housing costs, these young millionaires opted to rent instead since it is more affordable. Moneywise, citing a RentCafe report, said that the number of millionaires who … [Read more…]