Estimating your retirement expenses well in advance can help ensure retirement bliss is in your future.
January 27, 2023
How much progress are you making saving for retirement?
According to a Bankrate survey, 52 percent of American workers said they were behind on their retirement savings goals. Meanwhile, 20 percent said they didn’t know where their retirement plan stood.
If you’re worried about falling behind, you may be wondering, “How do I know how much money I will need in retirement?”
Estimating retirement expenses can help you find the answer. Even if you’re still decades away from retirement, you can make a retirement budget to hone in on a savings target.
“Creating a budget is important since most people have two income sources for retirement: Social Security and whatever they have saved,” says Derek Mazzarella, a financial advisor in Needham, Massachusetts. “Projecting how much you’ll spend is critically important to know if you have enough money saved and if it will last long enough.”
If you’re ready to dig into the numbers, use this plan to learn how to estimate your retirement expenses:
Use your current spending as a budgeting model
Data from the Bureau of Labor Statistics puts the average household spending for Americans aged 65 to 74 at $54,997 annually. Average annual spending drops to $41,849 for those 75 and older. While these types of figures can be helpful benchmarks, you can more accurately estimate your retirement expenses by calculating what you’re spending now.
When making a retirement budget, Mazzarella says it’s helpful to divvy up expenses into two categories: fixed and variable. Fixed expenses are those you pay every month, such as housing, utilities, groceries and debt payments. Variable expenses are costs that can fluctuate (think entertainment or medical costs).
Once you break down your current budget, you can start estimating retirement expenses by considering what costs may increase, decrease or disappear altogether when you retire, as well as those that will remain the same. Your budget for family expenses might shrink, for example, once your children are out of the house and financially independent.
On the other hand, you might see health care expenses increase as you get older. According to the Bureau of Labor Statistics, a person 65 years or older spends around $6,802 per year on healthcare, not including the cost of long-term care. Learning how to make a retirement budget that accounts for those expenses while you’re still young and healthy can keep you from coming up short later.
Be realistic about retirement income
Once you’re done estimating retirement expenses, think about the sources of your retirement income. The list might include your 401(k), IRA, an employer pension plan, Social Security or business income if you own a business or have a side hustle.
The Social Security Administration offers a calculator that can help you determine your estimated benefits and make a retirement budget. You can also use an online retirement income calculator to estimate how much income your savings will generate once you retire. From there, you can create a plan for drawing down assets from different savings vehicles.
“In many cases, simply taking a proportionate amount of income from each type of account you own gets the job done,” says Byron W. Ellis, CFP®.
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Let’s say you hold 60 percent of your savings in an IRA and the remaining 40 percent in high-yield savings vehicles. Ellis says you could plan to follow that same 60/40 split for income as you make a retirement budget. Sixty percent of the income you need to meet your retirement expenses would come from your IRA, in this scenario, while the rest would come from those high-yield savings accounts.
Remember that with a traditional 401(k) or IRA, you’re generally required to begin making withdrawals once you reach age 70 1/2 if you attained that age prior to 12/31/2019 and age 72 after 12/31/2019. That can affect your yearly retirement income total.
“The amount required is based on how much is in the IRA and how old you are, so the larger the account balance and the older you get, the more you have to distribute,” Ellis says.
Consider your lifestyle goals and plan for emergencies
As you learn how to estimate your retirement expenses, consider what kind of lifestyle you plan to enjoy when you retire.
“It’s common for new retirees to spend more earlier on in retirement” since they tend to be the most active, says Mazzarella, the financial advisor. That can be especially true during the first two years of retirement.
Health care has already been mentioned as a budget buster, but spending more time traveling, taking up a new hobby or buying a vacation home should also be top-of-mind when determining how to estimate your retirement expenses.
While new experiences and adventures should be considered when estimating retirement expenses, you’ll also need to factor in unexpected expenses. Having an emergency fund of easily accessible cash can keep you from having to tap your retirement accounts to pay for something like a home repair or a medical bill. Mazzarella says to keep three to six months’ worth of expenses in emergency savings for retirement.
Time is on your side
Learning how to estimate your retirement expenses can help you figure out what you’ll need income-wise, but that will only get you so far. You still need to act to ensure you’re saving enough. Thanks to compound interest—when your interest starts earning interest of its own—the sooner you can start saving for retirement, the better.
If you’re not putting money into an employer-provided 401(k) plan or an IRA, make enrolling and setting up contributions your top priority. If you are enrolled in a company-provided plan, check your current contribution rate to see if you’re saving at least enough to get the company match.
Consider signing up for an automatic annual contribution rate increase if your plan offers that feature. Bumping up your savings by even 1 percent annually could make a significant difference in how much you’re able to save over the long run.
Finally, consider your various options when it comes to IRA accounts. For example, the Discover IRA CD offers guaranteed returns at fixed terms. The Discover IRA Savings Account allows for flexible contributions and withdrawals, and it provides a place for you to transfer your maturing IRA CD without locking in a fixed term. Keep in mind that there may be an IRS early withdrawal penalty depending on your plan type and the age at which you withdraw your funds. Consider consulting a tax advisor to discuss your specific situation.
Both of these accounts can help you add even more money to your retirement savings by locking in a competitive interest rate and allowing you to enjoy tax benefits along the way.
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Depending on the loan amount you need and where you’re buying a home in New Jersey, you may find it difficult to find financing beyond the conforming loan limits. If this is the case, you may need a jumbo loan.
What is a jumbo loan?
So, what exactly is a jumbo loan in New Jersey? It’s a mortgage loan that allows homebuyers to finance a property that exceeds the conforming loan limit set by the FHFA. In simpler terms, a jumbo loan is a specialized mortgage that enables you to borrow more money than you would be able to with a conventional loan. These loans are typically used to finance high-end or luxury properties in areas with high home prices.
If the loan amount needed is more than the conforming loan limit (CLL), you’ll need a jumbo loan. New Jersey jumbo loans allow you to borrow more money to buy a more expensive home, but they also come with higher interest rates and stricter requirements than conventional loans.
What is the jumbo loan limit in New Jersey?
In 2023, the conforming loan limit for a single-family home in most U.S. markets is $726,200. However, this limit can be higher in areas where the median home price is significantly above the national average.
$726,200 is the conforming loan limit in most New Jersey counties
$1,089,300 is the maximum limit in higher-cost counties
Keep in mind that the loan amount is what determines whether or not you’ll need a jumbo loan, not the price of the home you’re buying. So, if you were to put $50,000 down on a $750,000 home in Salem County, the loan would be $700,000, which is under the CLL for this area. In this case, your loan wouldn’t be considered a jumbo loan.
The following counties in New Jersey have a conforming loan limit beyond $726,200 for 2023:
County
FHFA Conforming Loan Limit
Bergen County
$1,089,300
Essex County
$1,089,300
Hudson County
$1,089,300
Hunterdon County
$1,089,300
Middlesex County
$1,089,300
Monmouth County
$1,089,300
Morris County
$1,089,300
Ocean County
$1,089,300
Passaic County
$1,089,300
Somerset County
$1,089,300
Sussex County
$1,089,300
Union County
$1,089,300
You can find the conforming loan limits for your county by using this FHFA map.
What are the requirements for a jumbo loan in New Jersey?
To qualify for a jumbo loan in New Jersey, borrowers must meet stricter requirements than they would for a conforming loan. The specific requirements can vary from lender to lender, but below are the typical requirements for borrowers seeking a jumbo loan.
Higher credit score: In order to be eligible for a jumbo mortgage, lenders generally expect applicants to have a credit score of at least 720. While some lenders may consider a score as low as 660, a credit score of less than that is typically not accepted.
Larger down payment: Jumbo loans typically require larger down payments than traditional mortgages. Generally, mortgage lenders require a down payment of at least 20% of the home’s purchase price to qualify for a jumbo loan. However, some lenders may require a higher percentage, depending on the borrower’s creditworthiness and overall financial situation. It’s worth noting that larger down payments can help to reduce monthly mortgage payments, as well as overall interest costs over the life of the loan.
More assets: During the asset review process, lenders typically request that jumbo loan borrowers provide evidence of sufficient liquid assets or savings to cover the equivalent of one year’s worth of loan payments.
Lower debt-to-income ratio (DTI): To qualify for a jumbo loan in New Jersey, lenders typically look for a debt-to-income (DTI) ratio of no higher than 43%, and ideally closer to 36%. The DTI is calculated by dividing the sum of all monthly debt payments by the borrower’s gross monthly income. This requirement ensures that borrowers have a strong ability to repay their loan and manage their debt.
Additional home appraisals: When you buy a home in New Jersey, a mortgage lender will require a home appraisal to confirm that the property’s value is equal to or higher than the loan amount. In some cases, a lender may require an additional appraisal for a jumbo loan. In cities with very few comparable property sales, the cost of the appraisal may be higher than in places with more frequent sales.
What Percentage of Your Income Should Safely Go to a Mortgage? – SmartAsset
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Buying a home is one of the biggest financial decisions many people will ever make. And it can also be one of the most complex. Even the simple question of what percentage of your income should safely go to a mortgage doesn’t have a single clear answer that applies equally to every situation.
A financial advisor can help you find ways to help you achieve your financial goals.
Mortgage Payments and Income
The people and organizations that make home loans naturally are interested in lending money only to people who have the means to repay the mortgage. To make this determination, they use a variety of methods, particularly debt-to-income ratios.
These metrics are well-suited to creating mortgages that can be packaged and sold to investors. And borrowers have to keep them in mind when they are applying for a loan. However, they aren’t always as useful to someone who is primarily concerned with their personal financial well-being.
People deciding how much of their own income they can safely devote to a mortgage payment can take a variety of approaches to making that important determination. Here are some of the approaches many have found useful.
Safe Mortgage Principles
There’s more than one way of calculating the safe percentage of your income you can plan to commit to making your mortgage payment. Some approaches are good for certain circumstances, while others fit different situations best.
Evaluate your own position and, if possible, use more than one of the following techniques in deciding how much of your income you can safely spend on a house payment. Here are some of the options:
Debt-to-income ratio (DTI)
Your lender generally will calculate your debt-to-income ratio (DTI) and look for a certain result to reassure themselves and the investors who will buy your mortgage that you can cover the payments while also staying current on car loans, student loans, credit cards and other debt payments.
After adding up all your monthly loan payments, including the mortgage, lenders typically want the total to be no more than 43% of your gross monthly income.
For example, say you have a $500 car payment, must pay a $175 minimum monthly toward your credit card, owe $225 a month toward a student loan and want to buy a home with a $2,000 mortgage payment. You will typically need approximately $6,744 in monthly gross income to qualify for a loan at most lenders.
To figure this out, add up all your debt payments like this: $500 + $175 + $225 + $2,000 = $2,900.
Now, divide that by 43: $2,900 / 43 = $6.74419. Multiply that result by 100 to get the required monthly gross income, $6,744.19, for a 43% DTI.
The 30% Rule
Another way to calculate the amount of your income you can devote to a mortgage is to simply multiply your gross income by 30%. This will produce a number that you can hypothetically afford to pay toward your mortgage every month.
For instance, if you make $5,000 per month, 30% of that is $1,500. The calculation looks like this $5,000 x 0.3 = $1,500.
This rule may also be stated as the 28% rule and calculated the same way. It differs from the DTI because it doesn’t specifically account for other debt payments you may have.
Income Divided by Two and a Half
You’ll get a slightly different number if you assume that your mortgage payment can be two and a half times your gross income. To do this, start with your gross income and divide it by 2.5.
For instance, if you make $5,000 per month, the calculation would be $5,000 x 2.5 = $2,000. This suggests that $2,000 is a safe amount you can commit to your monthly mortgage payment.
This is clearly a more liberal method than the 30% principle and, like it, may not adequately account for other payments you must make.
Limitations of Safe Mortgage Calculations
Every borrower and every mortgage are a little bit different. While these techniques for calculating the percentage of your income you should spend on a monthly mortgage payment are helpful heuristics, to generate a more reliable figure, you’ll need to account for some other variables.
Other important factors include the size of the down payment you make, the amount of closing costs, the type of mortgage, the interest rate, your credit score and other costs including homeowner’s association or condo fees, hazard insurance and property taxes.
It’s usually wise to bear in mind that the amount of money a lender will loan to you may be more than you can safely borrow.
Bottom Line
You can use more than one method to determine how much of your income you should devote to a mortgage. Lenders will often be satisfied with a certain debt-to-income ratio, but this doesn’t mean you will be comfortable making the payment. Typically, it’s advisable to use more than one approach to making this calculation and make an effort to include as many aspects of your personal situation as you can.
Mortgage Tips
You may want to consider talking to a financial advisor making highly consequential decisions such as buying a home. SmartAsset’s free tool matches you with up to three vetted financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
After deciding how much of your income you can devote to a mortgage it’s necessary to figure out what the mortgage payment on a given property is likely to be. You can do this with the help of SmartAsset’s Mortgage Calculator.
Mark Henricks
Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.
Save more, spend smarter, and make your money go further
The temptation to overspend is seemingly everywhere you go. Whether you’re at the grocery store, checking your email, or scrolling on Instagram, ads are everywhere you look. These days, targeted ads are getting better at stealing your attention and your budget. While shopping never goes out of style, you may be wondering how to stop spending money on unnecessary items. Luckily, we have a few tricks up our sleeve.
From becoming your own chef to creating and sticking to a budget, there are a few ways to avoid temptations to overspend. Not only does overspending impact your finances, it could hinder your chances of meeting your financial goals. Curb your temptation to spend money with our 13 budget savers below.
1. Know Your Weaknesses
While you’re gearing up to end overspending, first find out where you spend the most money. Look through your recent statements and highlight any unnecessary expenses. Where are you spending the most on items or services that benefit your finances, or steal from them? Once you’ve recognized your unnecessary expenses, limit your spending.
Bonus step: Create your ideal budget and set specific financial goals using the Mint app. Enable alerts to notify you anytime you’re nearing your budget’s limit.
2. Create a Budget and Stick to It
Now that you’ve identified where you overspend, it’s time to create a budget to keep your temptations at bay. As a general rule of thumb, you should follow the 50/30/20 rule — 50 percent of your income going to necessities, 30 percent towards extras, and 20 percent towards your savings.
After figuring out how much money comes in versus out, set your monthly budget goals. As each month may have different expenses, plan for the adjustments. Sit down at the end of each month to readjust your budget for the next month ahead.
Bonus step: Schedule budget check-ins once a month to hold yourself accountable.
3. Give Every Dollar a Purpose
When creating your budget, try budgeting to zero. When you have extra money laying around in your account, you may feel tempted to spend it on things you don’t need. Once you’ve accounted for your necessary expenses like rent, electricity, and WiFi, divide up your leftovers to put towards your savings, extra debt payments, and investments until you reach zero.
Bonus step: Set up automatic savings contributions to make sure your income is directly deposited where you want it to go.
4. Only Shop With a List
Write out a shopping list before you enter the store to ensure you get everything you need without any extras. While you’re shopping, only stick to what’s on your list. If it’s not on the list and you haven’t budgeted for it, put it down and just keep walking.
Bonus step: To avoid impulse purchases, unsubscribe from all your email newsletters and delete shopping apps from your phone.
5. Check Your Budget Before You Spend
If you do find yourself eyeing an item that you haven’t budgeted for (it happens!), check in on your bank account before making the purchase. If it fits your budget, ask yourself the hard questions. Do you really need this item? If so, how would it benefit you and your lifestyle? Could it save you time or money? If yes, follow through with the purchase while respecting your budget.
Bonus step: Wait three days before purchasing an unneeded item. After 72 hours, if you’re still interested and it fits your budget, go back and get it.
6. Invest In Multi-Use Products
While your monthly goal may be to save as much as you can, be open to higher-priced items that could help you reach that goal. For example, buying reusable paper towels means you’ll spend less on disposable ones over time. Another way to save on small expenses is to become your own barista, which can save you between $1,934 to $2,327 a year.
Bonus step: Consider adopting some minimalist lifestyle ideas to help spend less and declutter.
7. Ditch Food Delivery and Cook at Home
The average American spends $3,459 on eating out every year. Instead of ordering food for lunch every day, meal prep at home. You can work this into your weekly routine by designating a day for meal planning and a day for grocery shopping and cooking. Planning your meals saves you from overspending while still making your favorite gourmet meals. You can save eating out for special occasions.
Bonus step: Delete all your food delivery apps from your phone to avoid the urge to order a speedy, but expensive, meal.
8. Pack Leftovers the Night Before
When your calendar’s booked, you’re most likely looking for the easiest way to get food for lunch. Nix your takeout food budget and pack your leftovers from the night before. While some nights you may be booked with events or virtual get-togethers, meal prep once or twice a week to ensure you have food for lunch every day. Simple dishes like chicken and veggies are easy meals to make on a budget.
Bonus step: Organize a “lunch swap” with your coworker so you don’t get bored of eating the same meal.
9. Squash Sale Shopping
If items on your shopping list aren’t on sale, don’t go looking for unnecessary items on the sale racks. You may walk out of the store buying something you don’t need because “it was only five bucks!” Kick discount shopping to the curb unless the items you need are part of the sale.
Bonus step: Save time and money by avoiding discount catalogs and sale sections.
10. Opt For Generic Over Name Brand
While checking off your shopping list, see if there are any generic alternatives to big-name brands. Most big box stores make the same products at a discounted price in exchange for the branded packaging. Compare the ingredients of a generic item against name brand products to see if you can spot a difference. Purchasing generic food products alone could save you 30 to 60 percent.
Bonus step: Google online coupons at checkout to see if you can get an added discount.
11. Cancel Unnecessary Subscriptions
While your gym membership and TV streaming system may have served you a few years ago, it may not now. Audit your expenses each month to see what you’re able to cut out. Instead of paying for a gym membership that costs on average $696 each year, purchase weights and a yoga mat for your own home gym. Not only could it save you money year after year, it could save you the commute to the gym and back.
Bonus step: As 65% of people don’t keep track of their monthly spending, schedule budget audits on your calendar every three months.
12. Challenge Yourself to a No-Spend Challenge
Participate in daily, weekly, or monthly savings challenges to make penny-pinching more fun. Ask your friends and family to join in on a no-spend challenge to up the stakes. Spark some friendly competition while giving back to your bank account. Once the month has come to a wrap, treat yourself to your favorite snack in celebration of your achievements.
Bonus step: Set an alert on your phone for a no-spend day each week. One New Yorker saved $18,432 in six months from having one no-spend day a week.
13. Set New Budget Goals and Repeat
Challenges help keep your eyes on the prize. Set differentgoals as you audit your budget each month. One month you may want to focus on contributing to your emergency fund, while the other you may want to increase your student loan payments. Get creative with your goals and set up budget alerts to ensure you’re meeting them.
Bonus step: Tell your friends and family about your goals each month to increase your odds of meeting them.
Invest Your Time and Money On Things That Help You Save
What else could you do with your money to earn more? Simply investing a hundred dollars in home gym equipment could pay for itself (and more) instead of purchasing an annual gym membership. Below are a few more options that could save you time and money year after year.
Make your coffee at home: Buy yourself a coffee maker and cup that you love. Use your machine and reusable cup every day to save hundreds of dollars on takeout coffee.
Become a beautician: Order hair shears, at-home dye supplies, and nail kits to save on the tremendous beauty industry markup prices. Ask your friend to do your hair or take it upon yourself to learn.
Use reusable products: Reduce your waste and purchase reusable products. Swap your paper towels for reusable towels to save the earth and budget.
Shop quality over quantity: For instance, invest in staple clothing pieces over fast fashion. You could save money and time on constantly shopping for new clothes.
Create an at-home gym: Purchase a few weights, a yoga mat, and a water bottle and get a sweaty workout done at home. You may even feel less stressed about beating traffic to make it to your fitness class on time.
Track your spending on the fly: Download our free app to track your spending habits, even when you’re out and about. Set up alerts to ensure you’re always on track with your budget.
Divvy up time for your passion projects: Say no to events that don’t benefit you and use that time to create passive income projects that last a lifetime.
Even though you may be looking to save more and spend less, you don’t have to cut all your favorite things out of your budget. Instead, practice spending with a purpose. Your weekly dinners out on the town may not as mean as much as they do when you treat yourself to a nice steak made at home. If you’re frequently tempted to spend your money instead of saving, create a budget to ensure you’re always keeping up with and sticking to your savings goals.
Save more, spend smarter, and make your money go further
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I’m not exactly sure when it happened, but I’ve become obsessed with real estate — and by that, I mean looking at apartments on Zillow and Trulia, while daydreaming about all the possibilities of “my new home.” But as much as I would like to dip my toes into homeownership, I’m one of the 44.7 … [Read more…]
An investment property is real estate purchased with the intention of earning returns through rental income or profit at resale. Just over 70 percent of single-family rental properties are owned by individual investors, according to the latest Census data. If you’re looking to take the plunge and buy an investment property, here are some initial considerations to make.
Considerations when investing in rental property
Here are a few considerations to think through before you get serious about an investment or rental property.
Location matters
Remember, it’s easier to look in on a property across town rather than one that’s two or more hours away. True, you can always hire a local property manager to keep the home in tip-top shape, but that’ll eat into the passive income you hope to gain.
It’s also important to consider the location with an investor’s eye for what’ll net you the most return. When evaluating locations, it’s often best to avoid areas with lots of vacancies and instead look to neighborhoods close to amenities such as parks and shopping, as well as transit, says Trent Ellingford, an investor and co-founder of the Real Estate Knowledge Institute.
After researching promising neighborhoods, connect with a real estate agent experienced in the local rental property market.
“Don’t use just a real estate agent,” says Kathy Fettke, CEO of Real Wealth Network, host of “The Real Wealth Show” and “Real Estate News for Investors” podcasts and author of “Retire Rich with Rentals.” “It’s best to look for an agent who specializes in real estate investments. Ideally, look for someone who owns them nearby. Oftentimes, property managers have brokers in-office to help.”
Types of rental properties
The kind of property you buy is equally important. The three main types are:
Single-family homes: These are one-unit properties, typically for either long-term tenants or on a short-term basis through platforms like Airbnb or VRBO. If it appreciates in value, you might be able to make additional profit down the line when you sell. With a single-family home, your cash return will be lower than if you had purchased a rental property that can house multiple tenants. Compared to a condo, you’ll also be responsible for all the maintenance.
Condos: Condos are generally more affordable upfront than single-family homes, and you could be spared many maintenance hassles thanks to the presence of an HOA. Keep in mind, however, some condo associations significantly restrict what you can do with the property, including renting it out, and mortgage lenders will factor in the monthly HOA fee when determining what size loan to extend to you.
Multifamily homes: Multifamily homes include duplexes (two units), triplexes (three units) and properties with four units or more. These allow you to rent to more tenants, generating more income, but also cost more than a single-family home or condo. You might have many more responsibilities as far as being a landlord, as well.
“Single-family homes are the most popular,” says Bruce Ailion, an attorney and Realtor with RE/MAX Town and Country in Georgia. “Some areas have a tradition of two- to four-family homes, while others do not. Multifamily properties of less than 100 units tend to be owned by individual owners or owner groups. Apartments over 100 units tend to be owned by institutions and professional real estate investors, and retail office and warehouse spaces tend to attract higher-income and more sophisticated investors.”
Consider the full financial commitment
How much money do you have on hand to make a down payment, or potentially pay for the home in full? Calculate your approximate return on investment (ROI) before you purchase a property. Estimate how much income you’ll get from the property and what your expenses will be. Subtract your expenses from your income to find your net operating income. A rental property’s expenses generally include:
Rental property insurance: Varies based on location; about 25 percent higher than standard homeowners insurance
Rental property taxes: Varies based on location; the average nationally for a single-family home was $3,785 in 2021, according to ATTOM
Utilities: Includes electric, gas, heating and water, some of which tenants might pay, but you’ll be on the hook for during vacant periods
Home maintenance and repairs: Varies; the average nationally was $3,018 for maintenance and $2,321 for “emergency spending” in 2021, according to Angi
Advertising costs: Includes real estate agent commission, typically 5 percent to 6 percent of the property’s purchase price; or vacation rental site service fees, typically 3 percent to 5 percent based on rent amount
Property management and other fees: Includes property management setup, management and maintenance fees, as well as tenant screening, eviction or other expenses; property managers typically charge between 6 percent and 10 percent of the rent for ongoing service, says Ailion
HOA fees (if applicable): Averages several hundred dollars
Rental income taxes: “Income taxes must be paid for all money made on the property,” says Ellingford. “Of course, everyone thinks of the monthly rent; however, income also includes any other money you collect, such as late fees, pet fees or even work by the tenant in lieu of rent.”
Keep in mind, while you’ll need to report all of your rental income to the IRS, you can typically deduct most or all of your expenses, along with depreciation and mortgage interest. Review IRS Publication 527 or consult with a trusted tax professional for more specifics pertaining to your rental property situation.
Understand differences between investment properties and second homes
A second or vacation home is different in many ways from an investment or rental property, and not just because of how it’s used. For one, your mortgage interest rate will likely be higher for a rental property because it’s not your primary residence, meaning the lender is taking on more risk. With mortgage rates going up, it’ll cost even more than it would have say last year.
Know the laws
Do you know what to do when your tenants won’t pay up? For example, certain states require a grace period when your tenant is behind on rent. In other words, you can’t evict a tenant until the grace period is over, but you can still charge late fees. Know the laws in your state before you rent out your property, including what constitutes a compliant lease agreement (including security deposit requirements), discriminatory practices and tenants’ right to privacy.
Determine your vacancy plan
You’re not always going to be able to rent out your property. You might have trouble finding renters, have to rip up carpet and patch drywall or provide a rent-free place for a family member to temporarily stay. There could be any number of reasons why income from your rental property might dry up. How will that impact your financial situation, and how will you cope?
Financing your rental property
A mortgage for a rental property isn’t the same as a home loan for a primary residence, or even a second or vacation home. Keep the following in mind:
Make a sizable down payment: You’ll typically need to put down at least 20 percent for a rental property, but if you want to look more attractive to a mortgage lender, you might want to put down more than that.
Be a strong borrower: You’ll also need a credit score of at least 640 and a debt-to-income (DTI) ratio of no more than 45 percent, based on Fannie Mae standards. The DTI ratio is your monthly debt payments divided by gross monthly income. (Need to improve your credit score? Learn some tips.)
Go outside of big banks: Big banks might not readily loan to you compared to a small bank, or offer you as desirable of loan terms. Compare options from both big and small banks, including community lenders, to find the best combination of rate, fees and customer service. It might help if you already have a relationship with the bank or lender.
Ask for owner financing: Owner financing means that the seller agrees to accept payments directly from you instead of requiring you to get a mortgage. This can benefit both you and the seller, but there are risks involved, so tread carefully; this arrangement isn’t for everyone.
Bottom line
A rental property could be a sound investment, particularly if the rent you collect offers you some extra income. Weigh all the aspects of purchasing a rental home, including financial implications, taxes you’ll have to pay, laws involved and how much extra time you have on your hands.
Save more, spend smarter, and make your money go further
So far in our home buying series, we’ve covered some of the basics that you need to know if you want to buy a home. In Chapter 2, we went over important resources for first time home buyers. In this third chapter, we’ll go over the basics of how to save for a house.
Buying a home can be a long and arduous journey, but having a stable place to live that’s all yours will make it all worth it. But before you can make an offer on a house, you need to learn how to start saving for a house.
When you buy a home, you’re making an investment in yourself and your future. You’re building financial stability, equity, and experience. You have a place to call your own and you can customize the space just how you want. Yet, you might be wondering how to get to that point
This is why saving up is so important.
There are some upfront costs to owning a home—primarily making a down payment. Find out how much you should budget using a home loan affordability calculator and figure out how to save the amount you need. After all, the best way to save for a house is to formulate a budget that helps you work towards your saving goals step by step. Soon enough, you’ll be turning the key and stepping into a home you love.
Step 1: Calculate Your Down Payment and Timeline
When figuring out how to save for a house, you may already have a savings goal and deadline in mind. For instance, you may want to save 20 percent of your home jumbo loan cost by the end of the year. If you haven’t given this much thought, sit down and crunch the numbers. Ask yourself the following questions:
What is your ideal home cost?
What percentage would you like to contribute as a down payment?
What are your ideal monthly payments?
When would you like to purchase your home?
How long would you like your mortgage term to be?
Asking yourself these questions will reveal a realistic budget, timeline, and savings goal to work towards. For instance, say you want to buy a $250,000 house with a 20 percent down payment at a 30-year loan term length. You would need to save $50,000 as a down payment and, at a 3.5 percent interest rate, your monthly payments would come out to be $898.
How much you need to save also depends on the type of loan that you use to purchase your home. For example, conventional loans and FHA loans require you to make a down payment, but some government sponsored loans do not. Before you can buy a house, it’s important to educate yourself on the differences between FHA vs. conventional loans. FHA loan requirements are different from conventional loan requirements, so you need to figure out which is a better option for you.
Step 2: Budget for the Extra Expenses
Just like a new rental, your home will have fees, taxes, and utilities that need to be budgeted for. Homeowners insurance, closing costs, and property taxes are a few examples of cash expenses. Not to mention the cost of utilities, repairs, renovation work, and furniture. Here are a few more expenses you may have to save for:
Appraisal costs: Appraisals assess the home’s value and are usually ordered by your mortgage lender. They can cost anywhere from $312 to $405 for a single-family home.
Home inspection: A home inspection typically costs $279 to $399 for a single-family home. Prices vary depending on what you need inspected and how thorough you want the report to be. For instance, if you want an expert to look at your foundation, there will likely be an additional cost.
Realtor fees: In some states, the realtor fee is 5.45 percent of the home’s purchase price. Depending on the market, the seller might pay for your realtor fee. In other places, it might be more common to contract a lawyer to look over your purchase agreement, which is usually cheaper than a realtor.
Closing costs: Closing costs are typically about 3% to 6% of the house’s price. Some closing costs may be negotiable with the seller but others will fall solely on your shoulders as the buyer.
Step 3: Maximize Your Savings Contributions
Saving for a new home is easier said than done. To stay on track, consider creating a savings account that has a high yield if possible. Then, check in on your monthly savings goal to set up automatic contributions. By setting up automatic savings payments, you may treat this payment as a regular monthly expense.
In addition to saving more, spend less. Evaluate your budget to see what areas you could cut down or live without. For instance, creating your own workout studio at home could save you $200 a month on a gym class membership.
Step 4: Work Hard for a Raise
One of the simplest ways to boost your savings is to increase your earnings. If you already have a job you love, put in the extra time and effort to earn a raise. Learning new skills by attending in-person or virtual training seminars or learning a new language could increase your earning potential. Not only could you land a raise, but you could add these skills to your resume.
Sometimes, putting in the extra effort doesn’t always land you a raise, and that’s okay! When getting a raise is out of the question, consider looking at other opportunities. Figure out which industry suits you and your skillset and start applying. You may end up finding your dream job, along with your desired pay.
Step 5: Create More Streams of Income
Establishing different income streams could help your house savings budget. If one source of income unexpectedly goes dry, having other sources to cut the slack is helpful. You won’t have to worry about the sudden income change when paying your monthly mortgage.
For example, creating an online course as a passive income project may earn you only $5 this month. As traffic picks up, your monthly earnings from this project could surpass your regular monthly income. To create an abundant financial portfolio, there are a few different steps you can take:
Create an online course: Write about something you’re passionate about and share your skills online. Sell your digital products on Etsy or Shopify to earn supplemental income.
Grow a YouTube channel: Start a YouTube channel and share your skills to help others within your industry of expertise. For instance, “How to start a YouTube channel” could be its own hit.
Explore low-risk investments: From CD’s to money market funds, there are a few types of investments that could grow your cash with minimal risk.
Step 6: Pay Off Your Biggest Debts
Another way that you can start saving for a home is by paying off your debts. Before taking on more debt like a mortgage, it’s important to free up your credit usage. Credit utilization is the percentage of available credit you have open compared to what you have used. If you have $200 in debt, but $1,000 available on your credit card, you’re only using 20 percent of your credit utilization.
A higher credit utilization could potentially hinder your credit score over time. Not only can paying off debt feel satisfying, but it could also increase your credit score and prepare you for this next big purchase.
To pay off your debts, create an action plan. Write out all your debt accounts, how much you still owe, and their payment due dates. From there, consider increasing your payments on your smallest debt. Once you pay off your smallest debt in full, you may feel more motivated to pay off your next debt account.
Keep up with these good habits as you take on your mortgage account.
Another factor that mortgage lenders will look at when determining your eligibility for a loan is your debt-to-income ratio. Your debt-to-income ratio measures your gross monthly income compared to your total monthly debt payments. This number will affect how lenders determine how much house you can afford because it will tell them whether you have enough income to cover your new mortgage payments and any existing debts.
So before you consider buying a home, make sure you calculate your debt-to-income ratio.
In addition to your debt-to-income ratio, lenders will also look at your residential mortgage credit report, which is a comprehensive study of all your credit reports. You should look at your credit report before you apply for a mortgage so you can figure out if you need to increase your credit score.
Step 7: Don’t Be Afraid to Ask for Help
Whether you’re touring homes or want help adjusting your budget, don’t hesitate to ask for help. If you’re trying to figure out what your budget should look like, research budgeting apps like Mint to build a successful financial plan.
If you’re curious about additional mortgage expenses, your budget, or investment opportunities, reach out to a trusted professional or utilize government resources. Not only are they able to help you prepare for your next big step, but they could also help you and your finances in the long term.
Getting help, whether it’s from a realtor or a financial professional, can help you secure your dream home at a price you’re comfortable with. Realtors can help with everything from finding you a home to negotiating the price of the home, so don’t be afraid to ask for help. You probably need it more than you think.
Saving for a house can be an intimidating process, so you also shouldn’t be afraid to ask questions. There are many important questions to ask your mortgage lender, like the difference between pre-qualified and pre-approved or the credit score you need to buy a house. Asking the right questions could end up saving you thousands of dollars with your mortgage, so go ahead and ask away.
Step 8: Store Your Savings in a High Yield Saving Account
While you may have a perfect budget and a home savings goal, it’s time to make every dollar count. Before you add to your account, research different savings accounts and their monthly yields. The higher the yield, the more your savings could grow as long as your account is open.
Also consider the effects of inflation on home prices, home appreciation, and interest rates. As inflation rises, so do home prices. This means it’s even more important to have a sufficient amount of money saved up so you can manage a bigger down payment and pay less in interest over time.
In Summary: Set Your Goals and Get Started
When saving for a house, you may want to consider having a plan in place. By following the above tips for saving for a house, you can be more prepared to buy your dream home. To summarize, here are some of the key elements to remember when it comes to saving for a home:
First, set a savings goal to match your estimated down payment and mortgage monthly payments. Then consider adding your contributions to a high yield savings account to grow your money over time.
Don’t forget to budget for extra mortgage expenses like appraisal costs, home inspections, realtor fees, or closing costs. Keep in mind, your monthly utilities and fees may also be more expensive than your current living situation.
Prepare for the additional costs by increasing your earning potential and optimizing additional income stream opportunities.
Free up your credit utilization by paying off as much debt as possible before buying a house. Keep up these good habits throughout the length of your mortgage term.
When you purchase a home, you’re building a piggy bank for your future. Every month you pay your mortgage, you pay part of it to yourself because you own the home. Instead of paying rent to someone else, you reap your own investment when you sell. Most importantly, though, you’ll have a place that’s truly your own.
So now that we’ve covered various tips for saving for a house, you hopefully feel more prepared going into your home buying journey. In this series, we’ll be going over first time home buying resources, steps to buying a house, and more. If you’re interested in learning more about the home buying process, continue reading on to Chapter 4 in the series, which covers what credit score is needed to buy a house.
Save more, spend smarter, and make your money go further
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Inside: Learn how to invest $100 and make $1000 a day using these proven strategies. Find out the best ways to invest 100 dollars. Many from the comfort of your own home.
One of the biggest mistakes that people make with money is not investing.
You see, if you invest $100 and earn 10% interest a year, in just 12 months your investment would be worth $120!
It takes money to make money.
We all have heard that before.
Many people want to make some extra money, and that is why they are turning their attention to investments. There are a lot of ways to invest your money safely, but most importantly it should be done with a goal and for the long term.
The article will help you to invest $100 now to start making $1000 a day. Will this happen overnight? Nope. That would be some get-rich-quick scheme.
You must be willing to invest the time, resources, and money to start making $1000 a day.
If you are looking to invest $100, this guide will help provide you with the knowledge and strategies to generate a constant stream of income of $1000 a day.
Is Investing $100 To Make $1,000 A Day Possible?
There is no one-size-fits-all answer to this question, as the success of any investment depends on a number of factors. But, yes, many people have found ways to invest $100 to make $1000 a day.
There are a few strategies that investors can use to increase their chances of reaching $1,000/day. That is the part that takes commitment.
Best Ways to Invest 100 Dollars
There are a lot of different things you can invest your $100 in. You could put it into stocks, bonds, or even real estate. Those are the most effective strategies with the least amount of time commitment.
However, there are other options as well, which we will go into detail shortly.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What should I invest $100 in right now?
Whatever route you decide to take, remember that investing is a good way to learn and make money.
Not only will you likely see an increase in your overall wealth by investing your money, but you’ll also be happier because of the positive impact it has on your life!
How to Invest $100
You can take your $100 and invest it into the stock market or a savings account. Something that immediately starts paying you to make a return.
The other way is you could use that money to buy books and courses on how to make money with any of the ideas below.
Another option would be to invest in a service that others might not have thought of. This could be something like a start-up business or an online course that teaches you how to make money through investments.
There are plenty of ideas on how to invest $100 it just depends on your short-term and long-term goals.
In fact, learning how to make money online for beginners is a hot topic!
The step-by-step guide to making money with this simple trick
If you’re looking for a step-by-step guide on how to make money with this simple trick, look no further! In this ultimate guide, we’ll cover everything you need to know about the process.
The first step is to invest $100 per month in order to get started. By doing this, you’ll be setting yourself up for a lifetime of financial security.
In order to make money with this simple trick, you’ll need to follow these simple steps:
Decide How You Plan to Make $1000 a day
Invest in Learning How to Do It
Invest your $100
Stay Persistent
Start making profits!
Will everything work out as simply as that? No, but you have to commit to a plan in order for it to happen!
Once you’ve invested in your future, it’s time to learn how to be successful and start making some serious profits!
Invest $100 Make $1000 A Day – Strategies for Success
People have different strategies for success, and the best way to succeed is by figuring out what works for you.
A strategy that might work well for one person may not be suitable or acceptable in another’s situation.
In this article, we’ll explore a few different strategies for success and how they can help you make money from home or on the job. In fact, many of them I implement to make money.
Idea #1: Savings Account
The best way to start investing is to open a savings account. For every $100 you deposit in a savings account, you will earn about a small amount of interest. This may not seem like a lot, but it can add up over time.
In reality, investing $100 into a savings account is a habit that will continue to lead to saving higher amounts of money. While you may not be able to make $1000 a day off your first 100 dollars, your efforts will multiply as your saving percentage increases.
In addition, many banks offer special promotions for new customers, such as a $500 bonus for signing up.
To get the most out of your savings account, be sure to shop around and compare rates at different banks. CIT Bank offers some of the highest interest rates available, so be sure to check them out!
Idea #2: Retirement Accounts (401k or Roth IRA)
Investing in your 401(k) is a great way to secure your financial future. Not only do you get matched contributions from your employer, but the tax benefits make it easy for employees to invest. Contributions are tax-free until retirement, so it’s a good place to put money while you’re working a side hustle or contract gig.
A solo 401(k) is a great way to take advantage of these benefits if you don’t have an employer.
In addition, investing in a Roth IRA is a smart idea as well.
Idea #3: Invest in Cryptocurrency
Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009.
Cryptocurrencies have experienced a wild ride over the past year! In the past five years, bitcoin prices have swung from a high of $68,000 in November 2021 to the lowest dip of $3236 in December 2018 (source). Many experts believe that crypto will be adopted widely in the future, and some predict that one Bitcoin will be worth $200,000 or more.
Investors can purchase a range of cryptocurrencies through reputable platforms such as Coinbase and Bitstamp. The most common crypto are Bitcoin, Ethereum, Litecoin, and USDC (a stablecoin pegged 1:1 with USD).
Idea #4: Invest In The Stock Exchange
Like an active trader – either as a day trader or swing trader.
When you invest in the stock market, this is a way to make money on your investments.
In fact, you can make money fast in stocks. But, you need to have a solid trading plan first.
My favorite course is Trade and Travel with Teri Ijeoma. In fact, check out my Trade and travel review and begin your journey to making $1000 a day.
Idea #5: Peer-to-Peer Lending
If you’re looking for a solid investment opportunity, peer-to-peer lending may be a good option for you.
Peer-to-peer (P2P) lending service that connects borrowers and investors. Because it’s a peer-to-peer platform, it can be more profitable for the investor.
Both Lending Club and Prosper are examples of investment platforms in this space.
Idea #6: Become an Entrepreneur
There are many options for entrepreneurs to make money. You can start a restaurant, retail store, or offer your services for a fee.
Another great way to make money is by investing in something you’re passionate about. For example, if you love cars, you could open a car detailing business. This requires some planning and dedication but can be very rewarding.
As an entrepreneur, your goal is to invest in ways that have the potential to turn over $1000 per day.
Idea # 7: Invest in Yourself
When you think about it, the best investment you can make is in yourself.
If you have 100 to invest, find what you are missing and fill it with new knowledge. Learning never stops – it’s a continuous process that will help you grow as an individual and stay ahead of the competition.
This is one area where you have the possibility to make well beyond just $1000 a day.
In fact, many of the best millionaire quotes focus on investing in yourself.
Idea #8: Invest Money in Index Funds
Outside of retirement accounts, many people overlook investing in the stock market as an individual.
Index funds have been a popular choice for investment managers for many years. They are a type of mutual fund that tracks the movements of an index, such as the S&P 500 Index. Because these types of funds follow an index, they provide diversification and typically come with lower fees than actively managed funds.
For these reasons, investors may want to consider using index funds when building their taxable investment portfolio.
Idea #9: Enroll in a Course or Certification
There are many different courses and certifications you can take to improve your skills.
This “new skill” could help you transition into a different career. A “certification” might help you get promoted in your current position, or it might allow you to begin working in a new field.
Either way, you are investing $100 or more today to make 10x your money in the future. Consider what skill can be useful in your professional or personal life and invest in a course.
Idea #10: Clear Your Debt
Paying off debt is a guaranteed return on investment.
This may seem a little backward but hear me out…
If you add an additional $100 to paying off your debt consistently, that means you are that much closer to freeing up a huge amount of debt payments to go somewhere else.
In this case, your overall debt payment can be invested in other ways and you will quickly improve your rate of return.
Idea #11: Work As A Sales Person
Commission payments are a large part of income for salespeople. In fact, US News reports that the average sales professionals earn an average salary of $73,500 in 2020.
This is a competitive field, but it can be very rewarding for those who are driven to succeed.
You probably will have to invest in a business degree to make this career field worth it.
Idea #12: Write A Book
Books are a great way to make money. They are one of the few investments that can be made with the intent to generate passive income. In other words, you put in some work at the beginning and then receive payments over an extended period of time without having to do anything else.
Writing a good book is an easy way to make money in 2023. As an independent self-publisher, if your book sells 100 copies per day at $10 each, you will make $1000 on every copy sold.
Publishing companies can help pay an advance for your work and handhold you throughout the process. You might need skills beyond writing if you want your book published at one of the larger publishing companies.
If you are serious about becoming an author, it is best to go through a publishing company and have them edit your work for you. This will ensure that your book is high quality and likely to sell more copies.
Remember: publishing a book is not cheap! It takes a lot of hard work and dedication, but if done correctly it can be an excellent way to make 1000 dollars a day or more.
Idea #13: Become a Book Nerd to Build Skills
Investing in books is a way to improve your knowledge and increase productivity. It’s impossible to become an expert in every field, but it’s possible to become one by reading about them. Books can change the way you view life and give you fresh perspectives on how to handle finances, as well as other aspects of life.
An investment of $100 in 2023 would yield $1000 or more depending on the non-fiction niche books you choose.
So, what are you waiting for? Start reading!
Idea #14: Online Flipper
So you want to flip 100 bucks to 1000? Well, it’s not as hard as you might think. In fact, with a little bit of effort and some basic knowledge, you can turn that hundred into a thousand in no time at all! Here are a few tips to help get you started:
Find something to flip. This could be anything from furniture to clothes to electronics. Keep an eye out for items at local retailers that are on sale and look like they could be resold for more online.
Know your market. What is the average price for the item you’re looking to sell? Knowing this information ahead of time will help make sure that you don’t sell your product for too little (or worse, too much).
Have the proper tools ready before starting your flipping business. This includes having a good camera or phone with which to take pictures of your products, a computer or laptop with which to list them online, and PayPal or another payment processing system set up and ready to go.
Be prepared for some work! Flipping isn’t always easy–you may have to spend time researching what items are selling for how much online, traveling long distances to find good deals or dealing with frustrating customers.
A great way to get started is to learn more from the Flea Market Flippers! They are very successful and teach others how to flip items
If you’re willing to put in the effort, flipping can be a great way to make some extra money on the side.
Idea #15: Invest in Real Estate
There are a number of great reasons to invest in real estate in 2023. In fact, real estate is one of the best investments for making money.
To start investing today, set aside a few hundred dollars each month and invest in real estate over time. This will help you build your wealth slowly and steadily.
Ways to Invest in Real Estate:
Rental Properties: Investing in rental properties can prove profitable with monthly renters and appreciation from rental income or capital gains as a property is worth increasing over time. However, rental properties require more upfront money and more work to maintain than other types of real estate investments.
Flip Houses: Another option is buying properties at low prices, fixing them, and selling them for a quicker profit.
REITs: Real estate investment trusts are a great way to access real estate much like mutual funds. These are highly regulated. However, learn about the best paying jobs in REITs.
Crowdfunded Options: Crowdfunded real estate can be accessed by anyone with a little bit of money – you don’t need to be a millionaire to get started! The returns tend to be more significant than the stock market so it’s a good choice for beginners. Plus, EquityMultiple lets you invest in real estate without worrying about managing a property yourself. It’s possible to make $1000 per day through EquityMultiple, depending on the time frame and market conditions.
Between crowdfunded real estate, rental properties, and REITs – there are plenty of options to choose from when it comes to investment vehicles. Each has its own unique advantages and disadvantages, so it’s important to do your research before settling on an option.
Overall, though, investing in real estate is a great way to grow your wealth and secure your financial future!
Idea #16: Get a New High Paying Job
There are many high paying jobs in the world, but the skill necessary to get one of those jobs is managing people. People who manage other people are able to get paid more because their skills are rare and in high demand.
Management positions are typically the highest paying, but there are also many other responsibilities as well. other lucrative options to consider.
This will help you find more money to invest on a regular basis and start making more money each day.
Idea #17: Affiliate Marketing / Influencer
Affiliate marketing is a great way to make money online. In fact, many affiliate marketers earn six figures or more per year. So what is it?
Affiliate marketing is the practice of advertising a company in exchange for payment. Affiliate marketers work with blogs to post about products and services, which makes them eligible for receiving payment when someone clicks on the link and purchases something from the company they’re advertising for.
It’s not likely that you’ll make this kind of money right away, but as your influence grows, you can certainly make some good cash through affiliate marketing programs.
The costs associated with getting started are relatively low–you can probably get started for less than $100–and it takes about the same amount of time to build up your blog’s audience and reader base from scratch. So if you’re looking for a solid way to generate some extra income online, give affiliate marketing a try!
Idea #18: Start Your Own Blog
With just $100, you can start your own blog and make money.
Blogging is a great way to make money and requires little in the way of cash or startup costs. In fact, many bloggers start their sites for free and then upgrade to more expensive hosting plans as their blogs grow in popularity. The cost of starting a blog is minimal and you’ll need to find your topic to write about first, but it’s possible over the course of years.
There are many different types of blogs that can be started with their own benefits – from personal finance advice to cooking tips – so finding the right one for you is essential.
To monetize your blog, consider offering services or digital products to consumers interested in what you have to say on the topic of your blog’s content. For example, if you’re a great cook, you could start a cooking blog and sell recipes through an online store; or if you’re an expert on personal finance, you could create e-courses teaching people how to save money and invest for their future.
Blogging is a long game; SEO traffic requires patience, but the payoff will be worth it in time. It can take anywhere from 6 months to over 18 months for bloggers to start seeing results. However, those who stick with it and reinvest their profits back into their sites can make $1,000/day from their blogs.
So what are you waiting for? Start blogging today!
Idea #19: Charity
Philanthropy is an excellent investment, so donating to charity is a wise choice.
Not only do you help others in need, but you may also be rewarded with tax breaks or other benefits.
Additionally, many charity works are good investments because of the promise of reward. For example, building a well in a developing country can provide access to clean water for years to come.
Look for ways to give where your donation can be matched.
Idea #20: Save For College
You can invest $100 and make $1000 a day by saving it.
One way to save for college is to invest in a 529 plan. A 529 plan allows you to save money for college tax-free. In addition, many states offer tax deductions or credits for contributions made to a 529 plan. Another benefit of a 529 plan is that the money invested grows tax-deferred. This means that you don’t pay taxes on the earnings from your investments until you withdraw them from the account.
Many parents find it difficult to save for college because they face high tuition costs and other expenses associated with sending their children to school. However, if they start early and contribute small amounts on a regular basis, they can accumulate enough savings overtime to cover most or all of their child’s education costs.
Idea #21: Use Gig Economy Apps to Earn Money Fast
Now, it’s easier than ever to find work. There are a number of apps and websites that can help you find short-term or long-term work. These include apps like:
These apps provide a new way for people to make money when they’re not working traditional jobs.
How can I invest $100 and make money everyday?
There are a variety of different ways that you can invest your money in order to make a profit.
The most hands off approach for many is investing in index funds. As a buy and hold strategy, you are likely to earn 6-8% plus on your investment.
As you hold onto the index fund for the long term, you are able to participate in any upside should the stock prices go up.
Invest $100 to Make $1000 a day is possible!
It’s true–you can make a lot of money by investing just a small amount at first. For example, if you invest $100, you could earn up to $1000 in profits! This is possible by following the strategies outlined in this article.
When you need to know how to make 2000 fast, this is how you do it!
Of course, it’s important to remember that investing isn’t limited to those who have a lot of money. In fact, anyone can benefit from this type of activity financially and make more money in the process.
So don’t be discouraged if you don’t have much saved up already. You can start by investing $100 into the stock market and then reinvesting your profits as soon as possible, in order to grow that initial investment. And who knows? With a little bit of hard work and patience, you could be making thousands of dollars per day before you know it!
This is how you can double $10k quickly.
Don’t delay in investing. You have to start at one point to start making money.
Then your next goal will be how to turn 10k into 100k.
Know someone else that needs this, too? Then, please share!!
Save more, spend smarter, and make your money go further
While Financial Literacy Month may be over, we at Mint live for sharing personal finance tips and tricks all year long!
MintLife readers recently joined a group of consumer finance experts during our #Money411 Twitter chat to discuss better money habits. Did you miss it? Not to worry: we couldn’t pass up sharing some of our favorite chat highlights and money saving tips.
Q: What are the first steps to take when establishing a budget?
Write or type it down. Seeing it will help you see what you are missing. Don’t forget the small stuff either. – @DebbiKing
Start by adding up monthly expenses and subtract from monthly income, then plan how to spend remaining $$ – @hperez
Realize that sticking to a budget does not happen right after you make one. You have to live it. Try it out for 3-6mo. – @dougboneparth
Q: What are your #tips for first time young investors?
DON’T ignore your first job’s 401(k) plan, if they have one, even if you put in just a little bit of each paycheck. – @OurKidsandMoney
Make sure you’ve covered your expenses (include CC bills) and are saving for emergencies before you start investing. – @sharon_epperson
Q: What is more important: paying down #debt or #saving?
The sooner you pay off debt, the sooner you’ll have additional income you can dedicate to saving – @hperez
It’s hard to save when your extra income is going toward debt payments. If you have debt with high interest rates, focus on that. – @TeamFSINC
Remember, certain types of debt like mortgages and student loans (dep on your income) are deductible. If interest on a loan is deductible, it costs you less…so factor that in when prioritizing paying down hi to low debt. – @BethKobliner
Q: How can you teach your kids about the value of money? And at what age?
Kids as young as 3 years old can understand basics like making choices and delaying gratification! Important 2 start early – @BethKobliner
It’s never too early to teaching kids about #money and #finance. Financial literacy is paramount. Classroom it! – @dougboneparth
The topic of the tooth fairy is a time to talk to your children about money. Ask how much they plan to spend and encourage to save. – @TeamFSINC
Kids learn by example (any age) Show ’em anything acquired is earned not given. Make ’em feel pinch of spending their earned $ – @PurpleSky2002
Q: What is the best approach to tackling student loans?
#1 Priority. Try to refinance all of your loans into one lower rate loan. Sacrifice a new car, an expensive vacation. – @Reit_NotWrong
Don’t buy the stuff that your peers buy out of college. (Houses, cars etc.) I paid down $40,000 in a year and a half that way. – @GenYMoneyMan
Aggressively! They are not an asset & you do not need to hold on to them. Sacrifice and get rid of them as soon as possible – @DebbiKing
To catch the entire Twitter chat, just plug #Money411 in your Twitter search bar and get started on better money habits.
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Does it seem as if the second you earn money, it goes flying off to pay for food, gas, utility bills, dining out, student loans, and everything else on your plate?
It can be hard to track where your hard-earned cash goes, and that’s where a budget can help. A budget provides a framework to see how much is coming in and what it’s being spent on, and it gives you the chance to recalibrate so you can, say, put more into savings.
Zero-based budgeting is one method that can help you account for every collar so you better understand your cash flow situation. This in turn can help you better manage your money and hit your financial goals.
How Zero-Based Budgeting Works
When building a zero-based budget, your income minus your expenses should equal zero. In other words, with zero-based budgeting, every dollar of your income has purpose.
This doesn’t mean you won’t have any money in your bank account, since you might want to allocate some of your budget to savings. Rather, using this method could help you know exactly how much you will spend, save, and invest in any given month. And depending on your monthly needs, these figures may change or stay the same.
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How to Build a Zero-Based Budget
As with most budgeting techniques, you might want to start the zero-based budgeting process by making a list of your expenses. Start with your fixed and necessary expenses first, such rent, utilities, groceries, transportation, insurance payments, and debt payments.
You know that these payments have to be covered each month, so you could allocate income to each necessary expense. Tally these expenses and subtract them from your total income. The resulting figure could be the amount available for discretionary expenses.
Next, you could allocate those remaining discretionary funds. These expenses could include money that you pay to yourself to save for short-term goals such as an emergency fund.
Or you might target longer-term goals such as stocking an online retirement account, or other farther-along savings goals, such as a down payment on a house.
Other expenses might include entertainment, clothing, and non-essential items.
Keep in mind that some expenses might be seasonal, such as vacations or holiday gifts. You might want to determine how you’d like to save for these expenses. You may choose to allocate funds in a single month, or it may make sense to set aside a small amount over each monthly period. It might take a little bit of extra planning to figure out how much you’ll need and how to divide up the cost.
Some expenses may also be variable — for example, say you’re hit with an unexpected bill when your car needs a new transmission — and these can be tricky to deal with. One way you could build them into the budget is to have a line item such as “savings for variable expenses” to help you cover them. This line item would be different from your other savings.
A simple example of a zero-based budget for someone who makes $6,000 a month might look like this:
Rent/Housing
$3,500
Utilities
$200
Car payment
$300
Gas
$200
Groceries
$400
Savings
$750
Eating out
$200
Entertainment
$150
Student loan payments
$200
Credit card payments
$100
Total
$6,000
In this example, the person’s income less their total expenses — $6,000 minus $6,000 — equals $0. As mentioned above, every dollar has a job to do.
Finally, remember that with a zero-based budget every dollar should have a purpose. So if at the end of figuring out your expenses, you find yourself with some extra cash, it needs to go somewhere. You might want to put a little extra toward savings or pay off some debt quicker.
But if you don’t allocate the funds, they might get spent. The problem is you may not know where you spent that money, and keeping track of it is the whole point of this exercise.
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Tracking Your Budget
You might want to keep an eye on your spending throughout the month to make sure you’re sticking to your budget. This process could be dynamic. If you find that you don’t need to spend as much on one budget item one month, you could shift that extra cash into another category the next month.
If you find yourself needing extra money to cover an expense, you could look for places to save. If you find yourself with little wiggle room in your budget and need to add to or boost your existing expenses, you might want to increase your budget with extra sources of income, like a side hustle.
A Zero-Based Budget on an Irregular Income
Many people earn a variable income, whether that means being a seasonal worker or a freelancer whose earnings ebb and flow. A variable income can pose some challenges to building a zero-based budget, but they’re not insurmountable. First, you could consider maintaining a buffer of cash, or a cash cushion, to help cover your expenses as your income expands and contracts.
You could then use your previous month’s budget as a base for the current month, using the buffer to cover any shortfalls. You might want to replenish this buffer when you have extra money in a month. You may also try building your budget based on a low estimate of your monthly income to increase the odds that you’ll be able to stay within your budget.
An irregular income means that you might spend more time adjusting your budget as you income fluctuates.
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Other Budgeting Strategies to Consider
There are other budgeting methods that may be worth a try. One rule of thumb, called the 50-30-20 rule, allocates percentages of your income to different categories. When using this rule, 50% of income goes to necessities, like housing, utilities, and food. The next 30% of income goes to discretionary spending, and the final 20% is allocated to retirement accounts and savings.
You may also consider a budgeting system known as reverse budgeting, in which you focus on savings goals rather than expenses. To use this method, you might want to determine your short- and long-term savings goals, such as a downpayment on a house, paying down student loan debt, and retirement.
You could figure out how much you need to save for those goals and then automate the savings. The money could be taken from your checking account and put into a savings account each month. You might use the money left in your checking account to pay for necessary expenses first, and the rest you could use however you’d like.
The Takeaway
Budgeting can help you take a closer look at how you’re spending your money and how you want to be spending it. By taking time to work through a budget, you could make sure that your money is going exactly where it needs to go.
Budgeting can also help you stop spending on things that aren’t important to you (things you may not even realize you are spending money on) and can help you fund the things you care about most.
It’s a good idea to find a budgeting strategy that works for you and that you’ll stick with. Budgeting apps can be a good solution to help you track your purchases, and some financial institutions offer excellent ones. An online account like SoFi Checking and Savings is one example: You spend and save in one convenient place and can keep track of your money on the dashboard. What’s more, your money earns a competitive annual percentage yield (APY) and you pay no account fees, both of which can help your money grow faster.
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SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. SOBK0223046