A recent Forbes article reported that the average American has $65,100 in their savings account, but averages are skewed by outliers. A better representation of how much money Americans have in their savings account is the midpoint value, also known as the median. The median savings amount for American households is only $5,300.
Setting financial goals is one of the best ways to improve your financial health and have a secure financial future. If you’re closer to the median savings amount or have far less in your savings account, it may be time to start setting financial goals.
We’re here to provide you with a five-step plan to set financial goals that can help you increase your savings, plan for your retirement, and provide you with some extra funds to treat yourself.
Key takeaways:
Financial goals are personal and professional goals designed to improve your financial well-being.
Financial goals can be short-term, medium-term, or long-term goals.
Financial goals can help you build wealth, but it’s also important to set aside money to treat yourself every now and then.
What Are Financial Goals?
Financial goals can vary depending on who you ask, but essentially, they’re personal and professional goals you set to improve your financial well-being. Good financial goals will allow you to work toward a life with less stress about your finances. These goals also allow you to spend money on the things you enjoy without feeling guilty.
5 Steps for Creating Financial Goals
Getting your financial goals in order can seem overwhelming, which is why it’s a good idea to map it out and have some structure. Below, we provide five steps to help you design financial goals that work for you. These steps allow you to focus on what matters most while also keeping you motivated to stay on the right track.
1. Discover What Inspires Your Financial Goals
Financial goals can take some time, so it’s helpful to find something that will help keep you motivated throughout the process. To start, make a list of what you want to achieve and details for why these items are important to you. For example, you may include:
“I want to save enough money to have my dream wedding.”
“I want to build an emergency fund to afford to pay my bills should I lose my job.”
“I want to start a retirement fund so I can enjoy my retirement by finally traveling the world.”
“I want to pay off all of my debt so I can experience less stress and spend without feeling guilty.”
Reminding yourself of your goals and what inspires you are actions that psychologists recommend while pursuing what matters most to you. While vision boards may seem like pseudoscience, Tchiki Davis, Ph.D., explains, “Initial research suggests [vision boards] can help us more easily reach our goals. This may be due to how vision boards help us gain self-awareness and self-reflect on what is important to us.”
2. Make a Plan for Your Situation
The second step is to make a plan that’s specific to you because everyone’s financial situation is different. Take a look at where you currently are with finances to start making a plan. This will allow you to create a plan that will allow you to reach your short-term financial goals and ones that may take a little longer.
The following are some financial goal examples, along with an idea of how to prioritize them.
Create a Budget
Learning how to create a budget and then implementing it is a great short-term financial goal. A budget is how you give your financial goals a strong foundation. Your budget will help you monitor how much you’re spending and decrease the likelihood of overspending. It will also let you know if you have extra money to spend on other things.
Plan for Retirement
Planning for your retirement is a long-term financial goal, but you get the most value out of it by starting sooner rather than later. Experts at Vanguard recommend that you start investing in your retirement funds in your 20s if possible. When you start investing earlier, your money has more time to compound, giving you more retirement funds. If you start your retirement later, don’t worry. By putting a little more into your retirement, you may have the ability to catch up for lost time.
Start an Emergency Fund
Unfortunately, we don’t know when an emergency will happen, so a good financial goal is to start an emergency fund. Many financial planners recommend[1] saving at least three to six months’ living expenses. This can take some time, but it can provide peace of mind should an emergency arise. As part of your budget, you can save a set amount every month to get closer to your emergency fund goal.
Some expenses to consider:
Rent or mortgage
Utility bills
Groceries
Car payments
Credit card and other debt payments
Pay Off Debts
Having debt can restrict your ability to achieve your financial goals. Your personal situation should determine how you prioritize this within your budget and other goals. When you get out of debt or decrease it significantly, you can save money on interest fees and improve your credit. This will free up additional funds and help you pursue more of your financial goals.
Begin Investing
Investing outside of your retirement fund is one way to generate passive income or have more money for your other financial goals. Your investments will ideally grow over time. If you invest in dividend stocks, these pay out money each quarter based on company profits. You can also continue investing and holding onto your investments to sell later for additional funds.
Get a Higher-Paying Job
Finding a higher-paying job is one financial goal many people may overlook. When you make more money, you have more resources to achieve your short- and long-term financial goals. It’s something to consider if your current job doesn’t allow you to budget properly, save for retirement, pay off your debts, or pursue your other goals.
Before searching for a new job, it’s also helpful to consider how happy you are at your current job. One benefit of financial goals is that they can help decrease stress and increase happiness. Leaving a job that makes you happy may counteract the benefits of making more money.
3. Map Out S.M.A.R.T. Financial Goals
It’s easy to get off track with your financial goals, so it’s helpful to organize your individual goals to improve your chances of success. A popular strategy for creating and managing goals of all types is to make S.M.A.R.T. goals. S.M.A.R.T. stands for:
Specific
Measurable
Achievable
Relevant
Time-bound
If your goals are vague and unrealistic with no time frame, they will be much harder to achieve. Using the S.M.A.R.T. goal strategy helps you make a plan relevant to what you want to accomplish within a realistic amount of time.
Let’s say you want an emergency fund with $5,000. An example of turning this into a S.M.A.R.T. goal would be, “By next year, I’ll have an emergency fund of $5,000 by saving $416.66 each month.”
If these numbers are unachievable for your financial situation, that’s OK. Make adjustments and see what works for your financial situation and your budget.
4. Keep Track of Your Goals
Keeping track of your financial goals can help you stay on the right track while also keeping you motivated. The S.M.A.R.T. model includes measuring your progress, and this is where the motivation comes from. Whether it’s paying down your debts, adding to your emergency fund, or saving for retirement, seeing the progress can inspire you to continue.
5. Don’t Overshoot Your Financial Goals
People commonly overshoot their financial goals and leave no room for spending on themselves. Treating yourself as you pursue your financial goals is important because it can feel like a chore. Sometimes, it’s also difficult to maintain motivation as you pursue your long-term goals. Part of setting financial goals is having extra spending money to do something fun occasionally.
Maybe you want to save money for a big purchase like a relaxing vacation or new furniture. Be sure to include these as you create your goals. When creating your monthly budget, you can also create space for extra spending money to make sure you take the time to enjoy yourself each month.
Improving Your Credit Is a Financial Goal Priority
If you don’t have a good credit score, it can be difficult to achieve your other financial goals. Lower credit leads to additional interest fees, higher deposits, and potentially more debt. Making your credit a priority will improve your ability to pursue all your other financial goals.
Credit.com has a variety of credit tools and services to assist you while you work on your financial goals. You can start by getting your free credit report card to see where your credit stands. We also offer our ExtraCredit® service, which includes credit monitoring, rent and utility reporting, and more.
All sorts of retailers are attaching the name “Black Friday” to sales, says Jane Boyd Thomas, a professor of marketing at Winthrop University in South Carolina.
As the Black Friday sales go on longer and expand into more categories each year, you’ll find deals you might not have thought about. Here are six offbeat Black Friday buys.
1. Tires
Can you see the top of Lincoln’s head? Car nuts will know the penny trick for gauging tire wear. And if you’re due for a new set, tire retailers and manufacturers are ready to sell you some new rubber at a discount. Nationwide retailer Discount Tire’s website says it will drop Black Friday tire and wheel deals Nov. 23-29 this year.
Look for deals on batteries and filters too. Your local car wash may even run a Black Friday promotion. Car stuff on Black Friday. Who knew?
2. Big-ticket baby gear
After the baby shower, stuff gets expensive to replace without the help of family and friends. Black Friday could be a good time to get a discount on something you use a lot that may be wearing out.
Thomas, who’s about to be grandmother, says it’s a category she wouldn’t have thought about otherwise at this time of year. She’s seen an influx of digital ads for strollers and highchairs lately, some of which were marked down by 50% for early Black Friday, she says. The week of Thanksgiving should bring deals from all sorts of baby brands like Owlet and BOB Gear.
3. Furniture
Rather than roll the dice on a gift your mom or dad might not use, give them a comfortable place to sit for the next gathering at your house. Furniture isn’t the first thing that comes to mind for a Black Friday score, but deals on couches, chairs and tables are in full effect this November. You can get up to 35% off at LoveSac right now, and over at Macy’s, the popular Radley sectional couch is marked down 47% through Nov. 25.
Your relatives should appreciate the soft seating at holiday gatherings.
4. Amusement park tickets
You may not be thinking about theme parks at the moment, but there are deals worth cheering for this time of year. You can save up to 60% on tickets and annual passes to SeaWorld Orlando, for example, or up to 50% on tickets to Busch Gardens Williamsburg, Virginia. If a theme park visit is in your family’s future, look for a deal now.
5. Health and beauty supplies
Not everything has to be a big-ticket buy on Black Friday. You can also find good sales on smaller items like health and beauty products, for example. Thomas says it’s interesting to see how early retailers like Ulta Beauty have pushed out discounts.
Ulta deals are happening now and roll on through Nov. 25. Look for good discounts on items you need to restock, like shampoo and conditioner. Check the websites of your favorite brands for deals, too.
Also, look at your local drugstore on or around Black Friday for better-than-usual buys on toiletries and over-the-counter medicines.
6. Streaming services
Streaming services are getting pricey, and the cost of multiple subscriptions adds up. Last year’s Black Friday streaming deals included 50% off a Paramount+ annual plan and one year of an ad-supported Hulu subscription for $1.99 a month.
Check provider websites on Thanksgiving, Black Friday and Cyber Monday to make sure you don’t miss out. Note that offers may apply only to first-time subscribers.
Don’t let Black Friday break you
A great deal is still a bad reason to go into debt, offbeat buys notwithstanding.
NerdWallet’s 2023 holiday shopping report found that around half of Americans (52%) incurred credit card debt shopping for gifts last holiday season, and among them, nearly a third (31%) haven’t paid off these balances.
And if you’re taking on credit card debt to spend on a semi-discretionary item like a sofa, you may want to reconsider.
Even 50% off a $5,000 item is still a hefty $2,500 out of your budget, said Robert Finley, a certified financial advisor and founder of Virtue Asset Management in Chicago, in an email. Try not to be “seduced by a discount,” he added.
But let’s say you have the money saved for something you need — like tires — and you come in under budget on the purchase thanks to a holiday sale. Finley called what’s left over “found money,” and doesn’t recommend going shopping with it.
Instead, make sure to pay off credit cards to avoid interest, put savings toward student loans if you have them, and if anything is left, invest it, he said.
We won’t knock you if you still want to shop some, though. It’s Black Friday after all.
But while the masses are scrambling to save 20% on an air fryer, you might find something more useful on sale. Look around.
HelloFresh is a popular meal kit delivery subscription service that delivers weekly boxes filled with the pre-portioned ingredients needed to make a complete meal.
HelloFresh costs between $8.99 and $12.49 per serving, depending on how many meals you order. In addition, a shipping fee and potentially sales tax, depending on your location, will be added to the meal cost; the amount will vary from week to week, depending on box contents.
Meal kit services aim to reduce the headache of planning meals, grocery shopping and prepping ingredients. HelloFresh might even help you save money by reducing how often you eat out. But first, you’ll need to learn more about what HelloFresh costs to ensure it fits your budget.
Before you build a budget
NerdWallet breaks down your spending and shows you ways to save.
How much is HelloFresh?
HelloFresh costs vary based on how many meals per week you order and the number of people you want to feed. HelloFresh lets you order between two and six meals per week and choose kits for two or four people.
You can choose any of the following menu options:
Meat & Veggies.
Family Friendly.
Fit & Wholesome.
Quick & Easy.
Pescatarian.
The more recipe types you pick, the more diverse your boxes will be. However, the meal type does not impact per-meal pricing.
How much does HelloFresh cost for two people?
HelloFresh offers weekly boxes for two. When building your box, you can choose from two to six meals per week (4 to 12 servings).
The cheapest base price before shipping and tax is $49.96 and includes two meals for two people at a per-serving price of $12.49. Upping your order to three meals per week drops the per-serving price to $9.99, while the four-, five-, and six-meal options have a per-serving cost of $9.79.
The “Personalize your plan” page of the website will break down the per-serving cost, base price of the box and overall price once shipping and any taxes are applied.
How much does HelloFresh cost for four people?
Ordering more meals drives down your per-serving cost. For instance, if you order two meals per week for four people, the per-serving cost drops to just $9.79 rather than the $12.49 per serving for two meals for two people.
HelloFresh’s most expensive plan also offers the cheapest per-serving price. This box costs $215.76 before shipping and tax and includes 24 total servings at a per-serving cost of $8.99. It includes six meals for four people. Again, check the “Personalize your plan” display to understand per-serving, per-box and overall costs.
Is HelloFresh worth it?
Whether HelloFresh is worth it depends entirely on your budget, eating habits and meal preferences. Calculate how much you usually spend per meal to get a sense of whether HelloFresh would work for you.
For instance, let’s say you and your partner typically spend about $8 per serving on home-cooked dinners. (You can estimate this from your grocery receipts.) However, you find it hard to fit grocery shopping and meal planning into your busy schedules, and you end up getting expensive takeout several times per week. Average what you’re paying overall, then see whether subbing meal prep kits for some take-out meals might lower your costs.
How to work HelloFresh costs into your budget
You may be able to reduce your costs by watching for deals. Check the HelloFresh site for discounts and offers, which can cut the price of a delivery. For instance, the “Hero Discount Program” offers 55% off and free shipping for your first box, then 15% off subsequent boxes for a year. It’s open to military personnel and veterans, as well as medical providers, nurses and hospital employees.
You can also use discount and coupon apps to check for deals. Note that these often must be used when signing up initially and may not apply to established accounts.
Using discounts to cut the cost could help you fit HelloFresh or another meal kit service into your budget for discretionary purchases. Under the popular 50/30/20 approach to budgeting, 50% of spending goes toward needs (rent, utility bills, etc.), 30% goes toward discretionary purchases (such as eating out or meal delivery), and 20% goes toward savings.
The holiday season is here and you probably don’t want to spend a small fortune on shipping costs when it comes to sending gifts. Three major carriers dominate the U.S. market for shipping packages: UPS, FedEx and the U.S. Postal Service. You can ship a package with any of the three shipping carriers, but how do you choose the best, most cost-effective one?
Here’s what you need to know about the various services offered by UPS, FedEx and the Postal Service, and how to save money when shipping packages.
Which shipping carrier should you choose?
When it comes to selecting among carriers, price and the shipping options offered are two top factors. For example, one shipping carrier may be better for sending perishable items and another may be better for sending pricey holiday gifts.
Other factors, like proximity to you and delivery date options, also matter when choosing a shipping carrier. Here are some pros and cons of UPS, FedEx and the Postal Service.
UPS
UPS allows you to ship heavier packages (up to 150 pounds), which is great for sending large items like furniture. Note that there may be fees for large or heavy packages; follow the carrier’s “Tips for packages over 70 pounds” guidance.
UPS offers UPS Express Critical, an emergency delivery service that lets you send emergency or high-value items the same day, which are typically delivered in 2 to 12 hours.
There is a delivery area surcharge for shipping to addresses that UPS deems to be rural or remote.
UPS imposes a number of surcharges on packages.
FedEx
FedEx offers three next-day delivery options for Monday-Friday deliveries: FedEx First Overnight (morning delivery), FedEx Priority Overnight (midmorning to noon delivery), FedEx Standard Overnight (afternoon to evening delivery). These delivery options are available throughout the U.S., although delivery times to some ZIP codes in Alaska and Hawaii may vary.
FedEx offers discounts when you sign up for a personal or business account, and has a rewards program that may be especially helpful for business owners.
FedEx offers several options for shipping perishable items that require temperature control, along with add-on services like monitoring your cold perishable shipment and liability protection for health care products that ship from April to November and have a freeze point at or below 32 degrees Fahrenheit.
FedEx restricts next-day deliveries to Monday through Friday, and Saturday delivery options are more limited.
U.S. Postal Service
When you use a flat-rate envelope through the Priority Mail service you don’t have to weigh items that are under 70 pounds as long as they fit the envelope.
Its Click-N-Ship service lets you pay for postage and print a shipping label at home.
You can schedule package pickup from your home or office.
You can send military or diplomatic mail to your loved ones, and pay domestic rates regardless of where they are stationed.
The Priority Express and Priority Mail services give an estimated delivery date, but there are exceptions and there’s no money-back guarantee.
Before you build a budget
NerdWallet breaks down your spending and shows you ways to save.
Which shipping carrier is more affordable?
When it comes to which carrier has more affordable shipping costs among UPS, FedEx and the Postal Service, the short answer is that it varies.
Your shipping costs will depend on several variables like packaging costs and shipping and handling fees, which include delivery speed and the item’s type, weight, dimensions and destination. It pays to take a close look at the shipper’s website for exclusions, conditions, extra fees, etc.
Each of the three major shipping carriers offer their own shipping cost calculators, which you can use to compare costs before choosing one:
Ways to save money on shipping costs
Opt for smaller packaging when possible
Shipping carriers generally charge more when you ship items in large packaging. Make sure that you ship your packages in the smallest packaging possible after accounting for padding or other protection.
Shop around for the best rate
Instead of being loyal to the same shipping carrier, you may be able to lower your shipping costs if you shop around each time you ship an item. While your ability to try a different carrier may depend on your location, consider looking in to who has the best rate for the kinds of items you want to ship and to which locations. Also consider whether it’s easier to send something like a holiday gift via Amazon; if you’re a Prime member, your shipping is likely already covered.
Choose standard shipping
Slower shipping speeds cost less. Unless you are sending something that is time-sensitive, it’s cheaper to send it via standard shipping instead of expedited.
As the holidays approach, however, keep in mind the many carriers extend their delivery times due to the volume of business. Check the carrier websites for holiday delivery guidelines or guarantees.
Don’t throw out your packaging
Materials that you use to ship stuff can be pricey — save things like boxes, bubble wrap and mailers when you receive packages and then reuse them when it’s time to ship something. You may also be able to stock up on packaging materials by asking your neighbors or joining an online Buy Nothing group.
Ask about discounts
You may be eligible for discounts at the major shipping carriers by signing up for an account, joining a rewards program or being a member of certain groups or associations. For example, being an AAA or AARP member gets you 5% off domestic and international UPS shipping.
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations.
One of the best ways to grow your wealth is to take advantage of a high-yield savings account and make money from the interest. Depending on your age, the average savings in America can vary, but those who start younger can build more wealth because they have more time.
Use our free simple savings account calculator to see how your money can make money over time from interest payments.
Simple Savings Calculator
Total Savings
$
Breakdown of Savings
Starting Deposit
Total Contributions
Earned Interest
Simple Savings Account Calculator Help
The simple savings account calculator helps you easily calculate the annual percentage yield (APY) and accurately show how your investment can grow. Below, we go over each aspect of the calculator and how it works.
Starting deposit: When you open a savings account, this is your initial deposit. This first deposit plays a big role in how much your wealth will grow over time.
Monthly contribution amount: It’s beneficial to continue depositing into your savings account monthly. Adjust this amount in the savings account calculator to see how much your money can grow and benefit from compound interest.
Number of years: Giving your money time to grow is the ideal strategy due to compound interest.
Annual interest rate: Interest rates can vary depending on the bank and type of account. You can use certificates of deposit (CDs), a high-yield savings account, or money market accounts. Be sure to shop around to find the best interest rates before you decide.
How Much Should You Save Each Month?
How much you save each month is unique to your financial situation. However much you choose to deposit into your savings account, the important thing is to be consistent. One way to do this is by setting up automatic transfers from your checking to your savings each month after a payday.
You’ll also want to ensure you’re budgeting properly so you don’t fall behind on other expenses like bills or debt payments. A monthly budget template can help you create a strategy and see what amount works for you.
How Do You Calculate APY?
To calculate the simple interest amount in a savings account, multiply the account balance by the annual percentage rate. For example, if you save $10,000 in a year and have a high-yield savings account with a 4% interest rate, the calculation is:
$10,000 x 0.04 = $400
How Savings Can Improve Your Financial Well-Being
Having a savings account is not only helpful for building your wealth, but it also provides you with some security in an emergency. By finding a savings account with a high interest rate, you will make money by simply storing your savings in the account.
Improving your credit score can also help your financial well-being. A good credit score lets you benefit from lower interest fees and access to additional loans and lines of credit. If you want to know where you stand with your credit, sign up for your free credit report card. You can also utilize Credit.com’s ExtraCredit® service to get credit monitoring alerts, additional credit reporting, and more.
Helpful Links to Start Saving
Check out some of our other articles for more tips and strategies for saving and growing your wealth.
The moment you receive a job offer can be so exciting. It might feel like a relief if you really need a job. But don’t move too quickly to accept.
Take these steps to iron out the details of your new position.
First steps: Before you accept a job offer
1. Ask for time to consider the offer
You don’t have to accept a job offer immediately. In fact, it’s in your best interest that you don’t, says Kathryn Wieland, director of business career services at Iowa State University’s Ivy College of Business.
“The most significant error that I see is that candidates are too hasty,” Wieland says.
Ask for time to consider the job offer and do any additional research. Taking one to three days before making your decision gives you a chance to check in with yourself about whether this is the right job for you. It also provides an opportunity to ensure you’re getting the best offer.
2. Seek out additional information
At this stage, you’ve successfully sold yourself as the best candidate, Wieland says. But do you have everything you need to decide if it’s the right position for you?
If you have lingering questions about the role or the company culture, Wieland suggests asking to meet with other employees at the company who could give you a different perspective than the hiring manager or recruiter.
This is also the time to clarify any information that isn’t spelled out in the offer, such as when you’d start the job or whether the company allows hybrid or remote work arrangements, Wieland says. Email the person who offered the job and politely request whatever extra information you need.
Also consider what information you’ll need to gather on your own, suggests the Princeton University Center for Career Development. For starters, compare salaries for the same job at other companies and calculate the cost of living for the area in which the job is located.
3. Negotiate the offer
If you want to take the job but some element of the offer would prevent you from accepting it, your next step is negotiating.
Career experts generally advise prioritizing the most important elements of the offer when you want to counter it. So be selective and don’t try to negotiate everything just for the sake of it.
Your first step is to clarify what you want to negotiate. While salary comes to mind most readily when talking about job offer negotiations, you also could request changes to other aspects of the offer. The Princeton career development center says other terms could be negotiable. For example:
Start date
Work-from-home days
Relocation assistance
Immigration support or work authorization
For each element you plan to negotiate, be prepared to explain why you want to make the change. Backing up your request with data will be your surest way to make your case, the Princeton career center says.
Once you’ve done your research, schedule a call to talk about the offer.
During the call, keep the conversation positive and professional. This is your chance to cooperate with the employer, Wieland says. They want you to take the job and you’re telling them what’s standing in your way.
Be gracious as you hear their response, whether they agree to your counter offer, turn you down or tell you they need time to review it internally.
You don’t need to give your answer right away if there’s new information to consider, according to several university career service offices. Before you end the call, agree on a timeline for delivering your decision about the job offer.
How to accept a job offer
4. Verbally accept the offer
When you’re ready to accept the job, send a note asking to set up another phone call. Big decisions like accepting a job offer are best communicated directly, rather than simply over an email, Wieland says.
On the phone, thank the hiring manager or recruiter for the opportunity and for being willing to make changes to the offer, if they accepted any aspects of your counter offer. You could reiterate the details to make sure everyone is on the same page.
Then, tell them you’re ready to accept the position.Follow up by asking them to outline your next steps.
5. Follow up with an email
After you’ve verbally accepted the offer, draft an email that seals the deal. According to the Columbia University Center for Career Education, your email should include the following elements:
Gratitude: Verbalizing your appreciation and enthusiasm for the job offer you’ve just accepted will go a long way in building rapport with the person who has worked hard to get you on board.
Terms of the offer: Spell out the terms of the offer you’re accepting in the email, especially those aspects of your counter offer that were accepted. This is your chance to make sure everyone is on the same page about the conditions of your job.
Start date
Lingering questions: For example, if you’ve been working with a recruiter, ask for your hiring manager’s contact information so you can reach out with questions or information ahead of your start date.
Final steps: What to do after you accept a job offer
Once you’ve accepted a job offer, turn your attention to transitioning into the new role. Here are three final steps to follow.
6. Bow out of other job searches
If you were interviewing for multiple jobs, it’s time to withdraw from the interview process, the Princeton career center says. Write a professional note telling the recruiter or hiring manager that you’ve accepted another position.
7. Give notice at your former employer
Now that you have a start date with a new gig, you can pick the end date at your old job and hand in your resignation. Ideally, you’ll give enough notice to finish projects or pass them off.
Two weeks’ notice is common across most industries, but you could give more or less, depending on your level of responsibility and how much time you have before your first day at your next job.
Sometimes, circumstances require you to quit a job without notice. While it’s not ideal, try not to feel guilty about it. Stay professional and be clear with your former employer as you resign.
8. Stay in touch with your new employer
Ahead of your start date, your new employer may have paperwork for you to fill out or other tasks related to onboarding you should be available for. Respond to any requests promptly and professionally.
Job offer acceptance email example
Here’s an example showing one way you could write an email accepting a job offer.
Dear Peter,
It was great talking with you. Thank you for sending over the written offer and discussing the details with me. I’d like to formally accept your offer for the Associate Accountant position at Great Accountants.
As we discussed, my starting annual salary will be $54,200, with three weeks of paid vacation and 15 holidays. I understand that my health, dental and vision plans will begin immediately on my start date, and I will be eligible for a 401(k) retirement account with 100% matching up to 4% after 30 days.
I’m excited to join the team in three weeks, on Dec. 1. Please let me know if you have any paperwork or other onboarding documents for me to review before then. You can reach me at this email address. You can also call me at 555-1234.
The average American net worth varies due to many factors, with some people making far more than others. If you’re behind the national average, it may seem difficult to catch up, but whether you have bad credit or a lot of debt, you can still begin building your net worth by learning how to generate passive income.
Passive income is a great way to generate more income, pay down your debt, and start saving and investing for your future. Here you’ll learn what passive income is, as well as different ways to make passive income online and offline. With 25 passive income ideas, there is something for everyone.
25 Passive Income Ideas:
Write an E-Book
Start a YouTube Channel
Try Affiliate Marketing
Create a Blog
Sell Stock Photos and Videos
Create an Online Course
Make Sponsored Content
Invest in Dividend Stocks
Invest in REITs
Invest in Index Funds and ETFs
Try Peer-to-Peer Lending
Stake Cryptocurrency
Utilize High-Yield Savings Accounts
Buy Government Bonds
Invest in Art
Buy Property to Rent
Rent Out a Room in Your Home
Buy Domain Names
License Your Music
Design Custom Products
Rent Out Your Vehicle
Use Your Vehicle as Ad Space
Create an App
Flip Unique Items
Rent Out Your Parking Space
What Is Passive Income?
Passive income is a type of income that comes from sources other than your regular employment, and involves a more hands-off approach. Passive income isn’t a “get rich quick” scheme, though some companies make big claims about generating passive income without any work. Passive income does take work to set up, but the goal is that you can make money without managing it on a day-to-day basis.
You’ll generally do most of the work by setting up your source of passive income. While it may require some upkeep every now and then, like updating a product or maintaining a rental property, you’ll earn the majority of your income while pursuing other endeavors.
Like other sources of additional income, passive income is taxable, but when done correctly, you can make enough passive income to surpass your tax bill.
1. Write an E-Book
Whether you’re a writer or not, an e-book can be a fantastic way to generate passive income. We no longer live in a world where publishers are the gatekeepers of books, so you can self-publish a book that can generate passive income. Various websites let you self-publish books, like Amazon’s Kindle Direct Publishing, Apple Books, and Barnes & Noble. Some of these sites also offer print-on-demand services for customers who want physical copies.
You can write a nonfiction book if you’re knowledgeable about a certain subject, or you can write fiction if you have an interesting story idea. Although this can generate passive income, self-publishing can require a bit of an investment. You’ll need to pay for an editor and book cover designer, and you may also want to pay for advertisements. But if you can do the cover art and marketing on your own, you may be able to save some money.
2. Start a YouTube Channel
There are many ways to make money using social media, but YouTube is one of the best ways to make passive income. YouTube pays content creators to run ads on their videos. In order to qualify for the YouTube Partner Program, you’ll need at least 500 subscribers, three new videos within the last 90 days, and 3,000 watch hours within the last year. Previously, you needed 1,000 subscribers and 4,000 watch hours, but the policy was updated in June 2023 with lower requirements.
Like other sources of passive income, making money from YouTube will require an up-front investment of time and money. You need a stable internet connection, camera, microphone, computer, and editing software. You also need to make consistent videos to qualify for the partner program. You can eventually generate passive income by making evergreen videos, because people will watch old videos that bring in revenue—and the more videos you have on your channel, the more money you can make.
3. Try Affiliate Marketing
Affiliate marketing is when you share a link to a product or service, and the company gives you a percentage of any sales made through that link. You can share these links on your social media pages, blog, newsletter, or anywhere else that allows you to post a link. Affiliate marketing is one of the best online passive income opportunities, and you can combine it with any other online method we mention in this article.
One of the most popular affiliate link programs is Amazon Associates. Let’s say you have a YouTube channel where you review electronics, and you make a video reviewing a new TV or laptop. If you link to that product on Amazon with your affiliate link, you’ll receive a percentage of the sale each time someone uses your link.
This isn’t only limited to Amazon, either. Many companies offer affiliate links, so it can be advantageous to reach out to companies for products and services you use regularly to see if they have an affiliate program.
4. Create a Blog
There are a variety of ways to make money from writing a blog. Like YouTube, old blog posts can generate passive income even if people read the post months or years after you wrote it. If you create your own website to host your blog, you can integrate Google Ads and use affiliate links to make money online.
Platforms like Substack combine blogs and newsletters, so every time you write a new post, subscribers receive an email. You can have paid subscriptions on Substack, so users pay a monthly fee to read your posts, and you can have free posts that go out to non-paying subscribers as well.
5. Sell Stock Photos and Videos
If you’re a photographer or videographer, you can earn money for your photos and videos. There are many different websites that buy stock photos and videos, like Shutterstock, iStock, and Getty Images. One thing to consider is that the website gets exclusive rights to your images or videos, but on some sites you can make between 15% and 45% in royalties.
6. Create an Online Course
Many people have expertise in a certain area, and utilizing your knowledge and skills to create an online course is a great way to make passive income online. For example, you can create a course for how to knit, how to take amazing photos, or how to program an app. Websites like Kajabi and Teachable allow you to host and sell your courses.
You may need to invest some time and possibly money in marketing your course to ensure you find the right audience. Some course-hosting platforms like Skillshare also categorize courses by topic for better discoverability.
If you start gaining a following on social media platforms or through a blog, you may get the opportunity to do sponsored content. Companies want to ensure they target the right audience, so if you have followers who may buy their product or service, they’re more likely to sponsor a piece of content. This typically means you discuss their product in a video or write about it in a caption.
In order to generate passive income from a sponsored opportunity, the company will give you an affiliate link. This allows you to make money up front for the sponsored content as well as passive income from anyone who uses your link to buy the product or service.
This route for passive income may take some time because companies typically want people to have a decent following before sponsoring content.
8. Invest in Dividend Stocks
Stocks can be a great way to make money while also investing in your future. When you buy a stock, you buy a small portion of a company. If the stock price rises and you sell it at a higher price, you make a profit, but the stock can also drop in price and lose you money. Some, but not all, stocks offer dividends, which pay investors a dividend per share if the company has a profitable quarter.
When the stock pays out dividends, you can receive the payment directly from your brokerage or reinvest the dividends by buying more of the stock. Like other investments, this can compound and turn into a lot of money over time if the company continues to profit. As you invest in dividend stocks, keep in mind the companies can raise or lower the dividend percentage at any time.
Use MarketBeat’s dividend calculator to look up specific stocks and estimate dividend returns.
9. Invest in REITs
Real estate investment trusts (REITs) are another investment opportunity. Rather than investing directly in a property, you can invest in a REIT, which is a company that owns and manages real estate.
Similar to other investments, there is risk that comes along with investing in REITs. For example, there’s a possibility your REIT investments will lose money if there’s a drop in the housing market.
10. Invest in Index Funds and ETFs
Index funds and exchange-traded funds (ETFs) are some of the safest investments because they offer diversification. Rather than investing in one company, index funds and ETFs allow you to invest in multiple companies simultaneously.
Legendary investor and founder of Vanguard John Bogle was a major advocate for index fund investing. More specifically, he advised people to invest in the S&P 500, an index of the 500 largest companies in the United States. ETFs are slightly different because there are higher fees, but they allow you to invest in a group of stocks for a specific industry. For example, ARKK is an ETF that holds shares for companies that work on innovative technology.
There is still a risk when investing in index funds and ETFs, but they are often lower risk than other forms of stock investing.
11. Try Peer-to-Peer Lending
Another way to make passive income is to become your own type of “bank” by doing peer-to-peer lending, sometimes called P2P lending. Banks make money on loans by charging interest to customers, and P2P lending allows you to do the same thing. Websites like Prosper and Funding Circle allow everyday people to lend and borrow money with various interest rates.
12. Stake Cryptocurrency
Cryptocurrency investing is a highly volatile form of investing, making it especially high risk. Some cryptocurrency platforms allow you to “stake” your crypto, which is when you allow the platform to hold your crypto and lend it to other people. Similar to P2P lending, you make money off the interest.
Cryptocurrency lending and trading is also high risk because there is little to no regulation. Crypto platforms like Voyager have been known to offer extremely high returns and then go bankrupt, preventing them from paying back their users. In extreme cases, there are stories of fraudulent activity from crypto platforms. But if you have a high risk tolerance, this form of investing can be incredibly lucrative.
13. Utilize High-Yield Savings Accounts
A safer way to make passive income is to open up a high-yield savings account, which allows you to make money simply by holding it in your account. Banks use customer funds to lend out money, but unlike crypto staking, bank funds are backed by the U.S. government via the FDIC. This means that if, for some reason the bank doesn’t have the money when you want your funds, the government would provide the bank with the money to pay you up to $250,000.
Many banks and financial institutions offer high-yield savings accounts, with some offering an annual percentage yield (APY) of over 4%. So if you opened an account with a 4.5% APY and deposited $1,000, you would have $1,045 after a year.
People maximize their passive income by not touching this money because it compounds each year. So using that same example, in the second year, you would then earn 4.5% of the $1,045 rather than the original $1,000. And if you add to the savings account each month, you can make quite a bit of money over time.
14. Buy Government Bonds
Perhaps the safest way to earn passive income from investing is to buy government bonds. A government bond is basically a loan to the federal government that pays you back the original amount with interest over a certain period. The reason government bonds are so safe is because the government backs them. When buying a stock, it’s possible to lose your money if the company goes out of business. Bonds are safer because as long as the government exists, you’ll make your money back.
Although government bonds are very low risk, they also offer low returns. Depending on various factors, government bonds may offer a 3–5% return over two to 30 years. To put that into perspective, S&P 500 index fund investing offers an average return rate of over 7.5%[1] .
15. Invest in Art
Similar to stocks, you can also invest in artwork. One way to do this is to buy works of art that you believe will increase in value later. If you’re knowledgeable about art and can find pieces selling for below their value that you can sell later for a profit, you can make a bit of money. Websites like Masterworks allow you to buy shares of artwork with other investors so you take on less risk.
16. Buy Property to Rent
Many people generate passive income by purchasing properties to rent. If you can afford the initial investment of buying a single-family home or condo, you can then rent them out to tenants for a profit. For example, if you buy a house and your mortgage is only $1,000, you can make a profit by charging any amount over your mortgage cost.
In order to take advantage of the passive income aspect of renting, you may benefit from hiring an individual or company to manage the property. Property managers collect the monthly rent and take care of maintenance issues for a fee. Should you decide to invest in rental properties, it’s helpful to factor in the cost of potential home repairs before, during, and after tenants live there.
17. Rent Out a Room in Your Home
If you don’t have the money for a down payment or don’t want to take on the risk of purchasing a rental home, you can always make some extra income by renting out a room. If you have a spare room in your home, you can rent it out for a monthly fee. This is a great option for families whose children recently moved out.
You can use websites like Airbnb and VRBO to connect you with renters. Although many people use Airbnb for short-term rentals during vacations, you can also offer long-term rentals through the website. These sites also let you vet renters before they move in, so you have control over who rents the room.
18. Buy Domain Names
Buying domain names is a sort of investing, so it does come with some risk. People and businesses buy domain names to host their websites, so you can purchase a variety of inexpensive domain names in hopes of people buying them from you later for more. You can typically buy domain names for less than $10 through websites like GoDaddy, but if they don’t sell, you’ll need to pay the annual cost to keep the name.
While this may be a risky investment, people have made a lot of money flipping domain names. It was a big money-maker during the “dot com boom” in the 1990s, Help.com sold for $3 million and NFTs.com sold for $15 million in 2023. Many domains don’t sell for millions, but you may still be able to make a decent profit off domain names in high demand.
19. License Your Music
If you’re a musician, you can license your music in a similar way to selling stock photos and videos. Some websites like Music Vine pay musicians 30% for nonexclusive deals or more for an exclusive license. There are also websites like Epidemic Sound that market to YouTubers and filmmakers by offering a subscription service for royalty-free music.
20. Design Custom Products
For those who are artistically inclined, you can make money creating designs and selling them on websites that sell custom products. Websites like Redbubble, Teespring, and Society6 offer print-on-demand services for your artwork. These websites sell a wide range of products like T-shirts, coffee mugs, phone cases, and more. You get a percentage of the sale every time a customer goes to the website and chooses your design for any of these products
If you have old artwork you created in the past or simply feel like creating in your spare time, you can generate passive income as long as your art is hosted on these types of websites.
21. Rent Out Your Vehicle
Services like Uber and Lyft are popular side hustles, but you can make passive income by renting out your vehicle instead. When people are traveling or have their car in the repair shop, they often need a vehicle to get around. Rather than going to a rental car company, they can rent a vehicle through other websites like Turo or Getaround.
22. Use Your Vehicle as Ad Space
In addition to renting out your vehicle, you can make passive income by using your vehicle as ad space.
Websites like Wrapify connect businesses and drivers, and depending on how much of your car you’re willing to cover with ads, Wrapify will pay you between $181 and $452 per month. There are also sites like FreeCarMedia.com that pay you for wrapping your vehicle or simply advertising on your rear window.
23. Create an App
If you’re a programmer who can create an app, this may be the best way for you to make passive income. Whether it’s a fun game or an app that provides value and convenience, use your creativity and skills to generate income. Apple and Google allow developers to submit their apps, giving you a percentage of the sale each time someone buys the app.
24. Flip Unique Items
One of the oldest ways to generate passive income is to buy unique items, hold them, and sell them at a later date for a profit. If you’re knowledgeable about a certain type of item or are willing to learn, you can make a decent amount of money by buying and holding items.
This is ideal for people who like shopping at thrift stores or going to garage sales. You may find antique toys, memorabilia, sports trading cards, comic books, or other items for a low price that are either worth a lot of money now or will be in the future.
To sell the items or see how much items are selling for, you can use websites like eBay, OfferUp, Craigslist, or Facebook Marketplace.
25. Rent Out Your Parking Space
Some people are willing to pay for a good parking spot. If you have a space you’re not using or don’t mind giving up, you can make money renting it out—especially if you live in an urban area. Websites like SpotHero allow you to list your space.
What’s the Best Source of Passive Income?
The best source of passive income is unique to each individual. There are many options on this list, and some allow you to capitalize on different skill sets. For example, if you have expertise in certain subjects, the best sources of passive income may be online courses and e-books. If you have knowledge about stocks or are willing to learn, investing may be the best option.
When deciding which passive income sources are right for you, it may be beneficial to weigh out the pros, cons, and risks of each one. Remember that many of these options require an initial investment of money and time to get started. Consider your own risk tolerance and financial situation before going all in on any of these methods.
Do You Need Money to Make Passive Income?
While you’ll need money to get started with many passive income ideas, this isn’t the case for every method. For example, if you own a vehicle or have an extra room in your home, you can start renting them out. If you have a computer and internet connection, you have even more options.
Many people who make passive income succeed because they are willing to learn and can invest time into researching these topics. There’s a wealth of information online where you can learn how to excel at specific passive income opportunities like writing an e-book, succeeding as a YouTuber, or using affiliate links.
The Benefits of Multiple Streams of Income
Depending on your specific situation, you may want more than one source of passive income. Whether you’re already in a healthy financial situation or are trying to build your personal wealth and credit score, more income streams means more financial freedom.
The primary benefit of passive income is that you can make money with minimal effort. This means once you get one source of passive income rolling, you can begin adding others so you have multiple income streams that don’t require too much time or attention.
How Passive Income Can Help Improve Your Credit Score
A poor credit score can lead to many challenges—like making it difficult to get approved for new lines of credit, loans, and rental applications—and cost you a lot of money in interest in the long run. Passive income can help you fix your credit by allowing you to pay off your debts. Lenders also look at your total income, so making additional income can help with approvals for new lines of credit, which can also help improve your score. It’s important to know the current state of your credit health. You can get a free credit report card on Credit.com which breaks down your credit score factors and assigns a letter grade for each area, or sign up for our ExtraCredit® subscription for additional credit tools.
Severance pay is a lump sum that an employer might offer to employees who are terminated from their jobs, which may be due to a layoff or by being fired.
In exchange for severance pay, an employee typically has to agree to waive their right to sue their employer for wrongful termination, discrimination or other employment-related claims.
The amount of severance pay an employee is offered varies by person and employer, and it’s often just one part of a larger severance package. Here’s a deeper look at what severance pay is and how it works.
Are employers required to pay severance?
Employers in the U.S. aren’t required to pay severance. There aren’t any federal laws guaranteeing that employees will be offered additional pay or benefits when they suddenly lose their jobs.
Exceptions exist where employment contracts, such as a bargaining agreement between an employer and a union, are in place, says Denise Clark, an employment and employee benefits attorney who founded Clark Law Group in Washington D.C. Those contracts can include provisions requiring the employer to pay severance to terminated employees.
Who gets severance pay?
Some companies offer severance only to workers with certain types of jobs or levels of responsibility in the company or who have been employed a certain number of years. Generally, people ranked higher in a company’s hierarchy are more likely to be offered severance, according to the 2021 Guide to Severance and Workforce Transition survey conducted by Randstad RiseSmart, a careers development services company.
But the survey found that severance may be becoming more common. A growing share of companies included in the report — 64% in 2021 compared to 44% in 2019 — offer severance to all employees, regardless of how many years they’ve been on the job and their role in the company.
Do you get severance if you’re fired?
If you’re fired, you could still be offered severance pay. Under those circumstances, the employer still wants assurances the employee that’s leaving won’t come back with a lawsuit, Clark says.
However, if you’re fired for another, more serious reason, “the offer of severance is unlikely,” Clark says. She listed absenteeism and failing a drug test among the discipline issues that could prevent someone who is fired from being offered severance.
The Randstad RiseSmart survey indicated receiving severance when you’re fired could be more rare. About a third (31%) of human resource professionals included in the Randstad RiseSmart survey said severance pay is offered to someone who is fired because of poor performance.
What’s included in a severance package
The Randstad RiseSmart survey found benefits in a severance package most commonly include:
A cash payout.
Bonuses that the employee was previously eligible for.
Outplacement services.
Outplacement services are meant to help laid off or terminated employees get a new job by helping them craft resumes and cover letters, look for jobs and prepare for interviews.
A severance package should go above and beyond any benefits you’re entitled to any time you leave your job. For example, some states require employers to payout unused vacation time.
Additionally, employees who were covered by their employer’s group insurance are eligible for COBRA when they resign or are terminated.
How much is severance pay?
Most employers offer severance pay that equals between one and six months’ salary, according to the Randstad RiseSmart survey. The amount can vary between individuals at the same company, depending on how severance pay is calculated.
How is severance pay calculated?
Typically, severance pay is calculated based on the employee’s current salary and the number of years they’ve worked at the organization, according to the Randstad RiseSmart survey.
Here’s an example: Let’s say a company offers one week of pay at the employee’s basic salary rate for each year they’ve worked for the company.
An employee who has been with the company for five years would be offered severance pay totaling five weeks of earnings — or a little more than a month’s pay. So, if they earn $2,000 per week (which is an annual salary of about $104,000), they would be offered $10,000 in severance pay.
Though it’s less common, some companies base severance pay on a person’s earnings or tenure alone. Here’s how that severance would be calculated.
Earnings only: Returning to the example above, let’s say the company offers three months (about 13 weeks) of pay to all employees who are let go during a layoff. The employee earning $2,000 per week would be offered $26,000 in severance pay.
Tenure only: Rather than referencing an individual workers’ salary to calculate severance pay, a company could decide to pay a fixed amount to its workers based on years of service, such as $15,000 to anyone who has worked at the company for two to seven years.
Can you negotiate severance?
Clark says some companies will follow a “take it or leave it” approach to severance and won’t negotiate the terms. But others will be more open.
“Not every employer will necessarily know what employee might walk out the door and file a lawsuit,” Clark says.
That means an employer that’s motivated to ensure a departing employee won’t bring a lawsuit against the company could be open to increasing the payout as the employee exits.
The White House released its first-ever standards aimed at reducing a bevy of safety and security concerns raised by artificial intelligence.
The order is sweeping and addresses potential risks AI technology poses to consumers, workers, national security, privacy, innovation and immigration.
“One thing is clear: To realize the promise of AI and avoid the risk we need to govern this technology,” said President Joe Biden during a press conference on Oct. 30. “There’s no other way around it, it must be governed.”
The executive order includes an emphasis on the development of new standards, tools and tests across the board. There are eight parts to the order:
Safety and security. Create new safety and security standards for AI, with an emphasis on national security.
Consumer privacy. Protect consumer privacy in AI systems.
Advancing equity. Avoiding algorithmic discrimination in the workplace; by federal contractors; and landlords. It also calls for best practices for using AI in the judicial system.
Health care and education. Advance the use of AI in the development of affordable and life-saving drugs. Provide educators with the resources to deploy AI-enabled educational tools.
Mitigate risks to workers. Collect information on how AI could impact the labor market while developing principles and best practices to maximize the benefits of AI while addressing potential risks like job displacement.
Promote innovation and competition. Expand grants for AI research in key areas like health care and climate change. Expand the ability of highly-skilled immigrant workers with expertise in critical areas to remain in the U.S.
Collaborate with other nations. Establish international frameworks for the use of AI worldwide.
Ensure effective government use of AI. Develop guidance for agencies’ use of AI systems; helping agencies acquire AI products and services; and accelerate the hiring of AI professionals in the federal government.
Biden said during the press conference that the order is the “most significant action any government anywhere in the world has ever taken on AI safety, security and trust.” At the conclusion of the press conference, Biden also called on Congress to pass legislation on AI.
What’s in the Blueprint for an AI Bill of Rights?
On Oct. 5 the White House released its “Blueprint for an AI Bill of Rights” outlining five principles to guide the creation and distribution of automated systems. Recommendations under each of the principles include continuous risk identification and mitigation, as well as testing and evaluation during all phases of the creation of AI systems.
Safe and effective systems. Automated systems should be designed to proactively protect users from harm.
Algorithmic discrimination protection. Automated systems should be used and designed in a way that avoids discriminatory treatment of people based on protected classifications such as race, sex, religion and disability.
Data privacy. Automated systems must include built-in protections to protect users from abusive data practices and users should have agency over how their personal data is used.
Notice and explanation. People should be notified when an automated system is being used and should be provided with plain language explanations of outcomes from that system.
Human alternatives, consideration and fallback. People should be able to opt out of an automated system and have access to a human alternative, when it’s appropriate — based on “reasonable expectations in a given context.”
More AI news
Aug. 9: The White House announced a two-year competition called the “AI Cyber Challenge” that challenges competitors to identify and fix software vulnerabilities using AI. It includes collaboration with AI companies like Anthorpic, Google, Microsoft and AI. The competition includes $20 million in prizes and is intended to drive the development of new improved computer code security technology.
May 4: The White House announced it secured voluntary commitments from 15 of the top leaders in AI to have their systems publicly evaluated to find out how they align to the AI Bill of Rights. The companies include Amazon, Anthropic, Google, Inflection, Meta, Microsoft and OpenAI.
April 25: A joint statement made by the Federal Trade Commission, Department of Justice, Consumer Financial Protection Bureau and the Equal Employment Opportunity Commission reaffirmed its commitment to enforcing existing discrimination and bias laws among those who use AI to conduct business including social media platforms, banks, landlords, employers and other businesses.
Additional coverage of artificial intelligence from NerdWallet:
Small business
Personal finance
(Photo by Chip Somodevilla/Getty News via Getty Images)
Not only are SUVs spacious, but many are also family vehicles, so they come with high-end safety features. These features make some SUVs cheaper to insure than other popular vehicles on the market. The Subaru Outback takes the top spot on this list, and it’s also rated one of the safest midsize vehicles by the Insurance Institute for Highway Safety.
SUV
Average Annual Premium
Subaru Outback
$1,603
Honda CR-V
$1,635
Honda Pilot
$1,726
Ford Escape
$1,734
Honda Odyssey
$1,735
What Factors Make a Vehicle Expensive to Insure?
The primary factor that makes a vehicle more expensive to insure than another is the risk. Insurance companies calculate the risk for different vehicles based on how many claims people file for those vehicles, plus the cost of the repairs. While this data can’t predict the likelihood of someone getting into an accident, the data gives insurers a rough idea.
Insurance providers look at how much a vehicle costs to repair and the likelihood of the vehicle being in an accident. For example, insurance rates are higher for sports cars because people who buy sports cars are more likely to speed and drive recklessly, based on the data.
Some of the most common factors that make vehicles more expensive to insure include:
Vehicle age: An older vehicle may not have the newest safety features, but premiums may be lower on some older vehicles if the average repairs cost less.
Vehicle value: When cars are more expensive, they’re often more expensive to insure as well.
Cost of parts: Some vehicles have more expensive and specialty parts, which cost more to replace if the vehicle is in an accident. Various trim features in a vehicle can also raise the price of premiums.
Safety rating: Many insurance policies also cover physical injuries to you or another driver, which is why safety ratings play a major role in determining the cost of insurance.
Size: Although a larger vehicle may be safer, it can also cause more damage if it’s involved in an accident.
Most Expensive Cars to Insure
If you’re thinking about purchasing a new or used vehicle, it’s helpful to know which types of vehicles typically have the highest rates. They include:
Sports cars
High-end luxury vehicles
Electric vehicles
Cars that attract thieves
These vehicles are more expensive than others primarily due to the overall cost of repairs. For example, while electric vehicles may save you money on fuel, the cost of the battery can range from $4,000 to $20,000. There are also certain vehicles that thieves commonly target. A recent article from MoneyGeek[1] listed the following as the top 10 most stolen vehicles in America:
Chevrolet trucks
Ford trucks
Honda Civic
Honda Accord
Toyota Camry
GMC trucks
Nissan Altima
Honda CR-V
Jeep Cherokee and Grand Cherokee
Toyota Corolla
5 Tips to Get Cheaper Car Insurance
Whether you want cheap insurance for your new vehicle or to lower the rate for your current vehicle, these five tips may help.
Be a good driver. This sounds obvious, but it’s a must. When you’re a good driver, you save money on insurance. This means avoiding car accidents, DUIs, and other major violations.
Consider the insurance cost when buying a new vehicle. A vehicle’s make and model alone can make car insurance more expensive. Remember this when you’re buying a new vehicle, because not only will you have monthly car payments when financing a car, but you’ll also have insurance premiums.
Shop around. Like many other expenses and purchases, it’s a good idea to get multiple quotes before settling on an insurance company.
Look for discounts. Some insurance providers offer discounts, so be sure to ask. You may also receive discounts for bundling your auto and home insurance through one provider.
Improve your credit score. Your credit score may impact your car insurance rate, so make sure you watch for derogatory marks on your credit report that can lower your score.
FAQ
Here, we go over some of the most common questions people have about car insurance rates.
What Type of Car is the Least Expensive to Insure?
Subaru holds the top two spots for the cheapest cars to insure: the Subaru Outback and the Subaru Crosstrek.
Why Are Some Cars Cheaper to Insure?
Some cars are cheaper to insure because they’re cheaper to repair, have better safety features, and are a low-risk for insurance providers based on their data.
Is Insurance Cheaper for Older Cars?
Insurance for older cars is not necessarily cheaper than newer cars. If an older vehicle is more expensive to repair or has poor safety features, it may have higher rates. on the other hand, older vehicles that meet current safety standards and are inexpensive to repair may have lower rates than some newer vehicles.
What’s the Most Expensive Car to Insure?
Out of the top 25 most popular vehicles in the United States, the Tesla Model Y is the most expensive car to insure, and the Tesla Model 3 is the second most expensive.
How Your Credit Score Affects Your Car Insurance Rate
Many people don’t realize that not only does your credit score affect the cost of your vehicle, but it can also affect your insurance rates. If you have derogatory marks on your credit report from late payments, missed payments, or collections, you may face higher insurance premiums.
Before you shop for auto insurance, it’s helpful to know your credit score. You can receive a free credit report card at Credit.com, and our ExtraCredit® subscription offers even more credit management tools.
Methodology
Data was sourced from Quadrant Information Services and provided to NerdWallet[1] and Bankrate[2] . Both studies analyze data from ZIP codes throughout all 50 states and Washington, D.C., and are weighted based on geographic region and population.
NerdWallet’s research used data from Kelley Blue Book for the top 25 best-selling models, along with rates from different ZIP codes in the United States. NerdWallet based its data on both male and female drivers 35 years old with good credit and clean driving records using the following coverage limits:
$100,000 bodily injury liability coverage per person
$300,000 bodily injury liability coverage per crash
$100,000 property damage liability coverage per crash
$100,000 uninsured motorist bodily injury coverage per person
$300,000 uninsured motorist bodily injury coverage per crash
Collision coverage with $1,000 deductible
Comprehensive coverage with $1,000 deductible
The Bankrate study analyzed rates for a 40-year-old female and male who have clean driving records and good credit. Rates are for full coverage and are based on the following limits for a 2021 Toyota Camry that drives five days per week and roughly 12,000 miles per year:
$100,000 bodily injury liability per person
$300,000 bodily injury liability per accident
$50,000 property damage liability per accident
$100,000 uninsured motorist bodily injury per person
$300,000 uninsured motorist bodily injury per accident