Ignoring student loans can damage your credit score, lead to wage garnishment, and accrue interest and fees. It may also result in legal action, tax refund offsets, and impact co-signers, making it crucial to address repayment issues promptly with your loan servicer.
Student loan debt in the United States stands at $1.727 trillion as of 2023. The repayment process may seem overwhelming if you’re among the more than 43 million borrowers with outstanding student loan debt. When the bills start piling up, you may ask yourself, “What happens if I don’t pay my student loans?” Here, we’ll take a closer look at student loans and what happens if you ignore them.
What Happens If I Don’t Pay My Student Loans?
Technically, failure to make just one student loan payment could put you in default. However, the default period for federal student loans is generally 270 days, while the default period for private student loans depends on the terms of the loans.
Once you default on your loan, lenders can take steps to recover these funds. It’s essential to understand what could happen if your student loan debt goes into default.
Consequences of Not Paying Student Loans
If you’re struggling to meet all your financial obligations, you might consider not paying your student loans. However, ignoring this debt tends to lead to even more trouble. Below are several consequences you could face for not paying your student loans.
Drop in Credit Score
Depending on the student loan type, missing just one payment could damage your credit. Because payment history accounts for up to 35% of your overall FICO® credit score, having just one missed or late payment often hurts your credit. Unfortunately, these missed payments remain on your credit report for up to seven years.
Get matched with a personal
loan that’s right for you today.
Learn
more
Poor credit might impact your ability to purchase a car or a home, rent an apartment, or even land your dream job. It’s important to take action before you miss a payment.
Fall Deeper Into Debt
Ignoring your student loan debt won’t make it go away. In fact, it will only make matters worse. Failing to make your monthly payments only prolongs the time it takes to pay off your debt, and your loan continues to accrue interest during this time. The longer it takes to pay off your student loans, the more you’ll end up paying in interest.
Wage Garnishment
If you have federal student loans, it’s important to realize that the government has power to collect this money if you fail to pay. One of these powers is wage garnishment—the federal government can garnish up to 15% of your disposable income. This can be a huge hit to your budget and should be avoided if possible.
Loss of Tax Refund
Are you expecting a tax refund this year? If you default on your federal student loan, there’s a good chance you’ll lose it. Once in default, the federal government has the power to take all or a portion of your tax return until the amount due is paid.
Damage Cosigner’s Credit
You may not be the only one impacted by ignoring student loan debt. If a cosigner helped you get one or more of your student loans, they can be impacted by late loan payments. It’s critical to speak to your cosigner when you realize you may not have the funds to pay your student loans.
Go to Court
While the government doesn’t have to take you to court to collect federal student loan payments, private lenders do. Depending on the terms of your loan, you could be in default after missing just one payment. Private lenders can sue you to collect payments. If you’re sued, you may need to find an attorney who works with student loan debt cases to help you through the court process.
Debt Doesn’t Go Away
Student loan debt doesn’t disappear just because you ignore it. Instead, it could haunt you for the rest of your life. There’s no statute of limitations for collecting federal loans.
On the other hand, private lenders must adhere to state statutes of limitations. While this may limit the time they have to sue you in court, it doesn’t stop them from trying to collect this debt. This means debt collectors could hound you for the rest of your life.
What to Do If You Can’t Afford to Pay
If you simply don’t have funds to pay your student loans, the last thing you want to do is ignore the problem. There are several steps you can take to avoid making this situation worse.
Check Your Credit
Before you take any action regarding your student loans, take the time to check your credit report. Credit.com’s Free Credit Report Card can help you see what debt is already impacting your credit health.
Check the National Student Loan Database
If you have federal loans, you can use the National Student Loan Database to check the status of your loans. This database provides information about your payments and total debt amounts.
Switch or Update Your Repayment Plan
If you have federal student loans and you’re struggling to keep up with your current repayment plan, you may be able to change it. Start by contacting StudentLoans.gov and explaining your situation. They can help you switch or update your repayment plan to make the payments more affordable.
Contact Your Lenders
If you have private loans and are struggling to make your monthly payments, start by contacting the lender directly. If your situation is temporary, such as a loss of employment or medical condition, you can request a deferment of your payments. This step essentially pauses your payments for a set period, such as six months, to give you time to deal with your situation.
Consider Debt Consolidation
Making monthly payments on multiple student loans can be extremely difficult. If you’re in this situation, it may be time to consider debt consolidation. This strategy allows you to combine all your student loans into one. Rather than having several monthly payments to make, you’ll just have one.
Talk to an Attorney
If you simply can’t afford to pay your private student loans, bankruptcy is another alternative. However, filing for bankruptcy can negatively impact your credit for up to 10 years. You should only consider this step after trying all other methods.
Apply for Student Loan Forgiveness
Check your student loan forgiveness options if you haven’t done so already. Depending on your specific situation, you may qualify for student loan forgiveness, discharge, or cancellation of debt.
Be Proactive About Your Credit
Now that you know about the potential negative consequences of not paying your student loans, you know how important it is to be proactive about them. Start by checking your Free Credit Score with Credit.com to see how where you stand and how your student loans could impact your credit.
Should I save or pay off debt? It’s a tough financial choice. Prioritizing debt repayment can help you pay off what you owe faster, freeing up more money in your budget for saving. It can also help you spend less on interest charges. But that approach can also backfire. If you delay saving and get hit with an unplanned expense, you can end up with even more high-interest debt.
Whether it makes sense to pay off debt or save depends largely on the specifics of your financial situation. The right decision might actually be to try to do both.
When You Should Consider Paying Down Debt First
In certain situations, it makes sense to prioritize paying off debt over putting money into savings. This could be the best path forward if:
• You have high-interest debts. High-interest debt, such as credit card debt, can quickly accumulate and become overwhelming. The longer it takes to pay off, the more interest you’ll accrue, making it harder to escape the debt cycle.
• Your debt is causing you significant stress or anxiety. If having debt hanging over you keeps you up at night and you want to clear your balances as quickly as possible, putting debt repayment ahead of saving might make sense, provided you have at least some money in the bank for emergencies.
• A large portion of your income is going toward monthly debt payments. Having a high debt-to-income ratio (DTI) not only limits your financial flexibility, but can also negatively impact your credit score. A lower score could make it hard to secure loans at low interest rates or even rent an apartment in the future.
Strategies to Pay Down Debt
Once you commit to paying down your debt, you’ll want to come up with a plan for how to do it. Here are some strategies to consider.
• Avalanche method: With this approach, you list your debts in order of interest rate. You then funnel any extra money toward the balance with the highest rate, while paying the minimums on the other debts. Once the highest-interest debt is paid off, you move to the next highest, and so on. This strategy minimizes the amount of interest you pay over time.
• Snowball method: With the snowball method, you list your debts in order of size, ignoring the interest rate. You then funnel extra money towards the smallest debt, while paying the minimum on the rest. When the smallest balance is paid off, you move on the next-smallest debt, and so on. This can provide psychological benefits by giving you quick wins and motivating you to continue.
• Debt consolidation loan: A debt consolidation loan is a type of unsecured personal loan with fixed interest rates and repayment terms. If you have multiple debts, consolidating them into a single loan with a lower interest rate can simplify payments and reduce the total interest paid.
• Balance transfer: For credit card debt, a balance transfer to a card with a low or 0% introductory rate can help you save money on interest and pay off your debt faster. Just be sure that you’ll be able to pay off the balance before the promotional rate ends. If not, you could end up paying more in interest than you are now. Also be aware of transfer fees.
• Automate your debt payments: Setting up automatic payments ensures you never miss a payment, which helps avoid late fees and keeps you on track with your debt repayment plan.
When You Should Consider Saving First
Aggressively paying off debt isn’t always the best first choice, however. You may want to prioritize saving money over paying down debt if:
• You have little to no emergency savings. Without a cushion of savings in the bank, an unplanned expense or loss of income could result in racking up even more debt, putting you further in the hole.
• You have low-interest debts. If you have debts with relatively low annual percentage rates (APRs) and don’t feel unduly burdened by them, it’s fine to focus on saving, while paying off your loans according to schedule.
• Your employer offers a 401(k) match. If your employer offers a retirement savings plan along with a company match, it’s a good idea to try to contribute at least enough to get the maximum employer match. This is essentially free money you could be missing out on.
Recommended: 10 Ways to Save Money Fast
Determining How Much to Save
How much you should be saving will depend on your age and situation, but here are some general guidelines to keep in mind.
• Emergency fund: Experts recommend building an emergency fund of three to six months’ worth of expenses and stashing it in a high-yield savings account. If you’re self-employed or work seasonally, you may want to aim closer to eight or even 12 months’ worth of expenses.
• Retirement savings: If your employer offers a 401(k) match, you’ll want to contribute at least enough to get the full match, then build from there. One rule of thumb is to work up to saving at least 15% of your pretax income each year, including employer contributions.
• Other savings goals: For other savings goals, such as a vacation, large purchase, or down payment for a house, you’ll want to set a timeline and break down the total amount into manageable monthly savings targets. For savings goals that are five-plus years away, like paying for a child’s education, consider contributing to investment accounts that can potentially yield higher returns over time.
Recommended: How to Set and Reach Your Savings Goals
Tips on Balancing Paying Debt and Saving
If you have high-interest debt under control and already have some cash in the bank to cover a minor emergency (like a car or home repair), consider saving and paying down debt at the same time. Here are some tips to help you manage both.
• Create a budget: A basic budget can help you track your income, expenses, and savings. The key is to allocate specific amounts for debt repayment and savings to ensure both are addressed every month.
• Automate saving: Once you have target monthly savings amounts, it’s a good idea to set up automatic transfers to your savings accounts. This ensures consistent saving without the temptation to spend the money.
• Increase income: You might want to explore ways to boost your income, such as taking on a side gig, freelancing, or asking for a raise. You can then use the additional income to pay down debt faster and/or boost your savings.
• Cut unnecessary expenses: Review your expenses and identify areas where you can cut back. Redirect these funds toward debt repayment and saving.
• Use windfalls wisely: If you receive a bonus, tax refund, or any unexpected sum of money, consider using it to pay down debt or boost your savings rather than going on a shopping spree.
The Takeaway
Saving and paying down debt is a balancing act. Which is more important? There’s no one-size-fits all answer. Generally speaking, you’ll want to fund your emergency savings account and take advantage of an employer match on retirement savings before you aggressively focus on debt payoff. After that, you can focus on saving and knocking down debt at the same time.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.
FAQ
Is it better to pay off debt or have money saved?
You may want to prioritize saving over debt payoff if you don’t have an emergency fund, aren’t taking advantage of an employer’s 401(k) match, and/or have low-interest debts. If, on the other hand, you have a solid emergency savings fund, high-interest debts (like credit card debt), and no employer retirement match, you may be better off focusing your efforts on paying down debt over saving.
How much money should I save before paying down debt?
Before aggressively paying down debt, it’s a good idea to save three to six months’ worth of living expenses in an emergency fund in a high-yield savings account. If you don’t have any savings to draw on to cover an unexpected expense or event, you may have to rely on high-interest credit cards to get by, which would compound your debt.
What bills should I pay down first?
You generally want to prioritize paying down high-interest debt first, such as credit card balances and payday loans, as they accrue interest rapidly. Next, focus on any other unsecured debts, like personal loans, followed by secured debts (like car loans and mortgages), which tend to have lower interest rates.
Photo credit: iStock/malerapaso
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
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.
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.
This is definitely a tough topic to tackle. And the reason why is money is a very highly contested and debated issue, but on the same flip of the coin, it is a taboo subject and nobody talks about money. So the question remains is money everything in life.
I am going to be brutally honest in this post and highlight both sides of the coin. The hard part with money is money provides opportunities. Yet, money can also be the root of all evil.
Thus, is life all about making money?
In this post, we are going to outline everything that you would want to know about this topic – is everything about money. The reasons that you should care about money and the reasons that you need to forget about money.
Too many times, you want desperately to care about money. Yet, you are afraid of taking the right steps to get where you want financially. You are trapped in the vicious cycle of making poor decisions.
Everything is About Money
Everything is about money seems appropriate, right?
You roll out of bed each morning to go out and make money. You think about how you should save your money while you’re out buying a coffee or picking up groceries. Then, you began to think… all I do each and every day is go to work, make money, spend my money, rinse, and repeat. Or maybe you are sticking your head into the sand to ignore your financial situation.
Subsequently, you stress about money because there was not enough left over each and every week. Or maybe there’s a tiny bit leftover, but you are still not happy.
It seems like everything is about money. Life revolves around money. Every decision you make involves money.
That right there is the reason that managing money is so difficult for so many different people because you do not understand why money is good and why money is bad.
So, in your head, you must define good and bad.
Then, how money correlates to your belief system about finances, how you interact with money on a daily basis, and your definition of good / bad. This needs to happen to be able to move forward.
If you want to change how you feel about money and interact with it, then you must decide what steps you’re going to take.
Why is Money Everything?
Let’s go back a few 100 years.
In the times, people had to barter to be able to survive. They exchanged goods and services in order to get the things that they needed. They were able to help others with their services and in exchange get the supplies or services they needed in exchange. It was a basic system that worked for survival.
That is how the first marketplace was developed; it was a bartering system. You had to barter to buy and sell things.
As society became more advanced and industrialized, the concept of money came around. Instead of having to barter for goods and services, you were exchanging money for a good or service. That is how you made money and spent money.
Consequentially, at the basic form, money is almost everything because that is the basis of how we are able to survive and do the things that we need to do on a daily basis.
There is no possible way to go through life without money. Period.
Is Money the Only Important Thing in Life?
Honestly, the answer is no.
If you truly believe that money is the only important thing in life, then you need to think about your priorities. Even in the Bible, it states that money can be the root of evil, but that money itself is not bad.
Money can help others that are in need. It can help provide housing for your family and keeps you fed. It can provide a security blanket, aka an emergency fund in times of need.
So money is needed, but it is not the most important thing in life.
There are plenty of other things that are more important. Look around you and count your blessings.
But, you have to remember the bottom line is that money opens up the door for opportunities.
You Should Care About Money & What Money Can Buy
Is life only about money?
In this section, we are going to outline the exact reasons you should care about money.
Money can buy everything! Specifically a whole lot of things; it can buy you a new house, a new car, take you on that vacation, buy the organic food that you want.
Money can buy you absolutely anything!
The problem with money for the general population is that it is finite. You do not have unlimited access to do everything you want with the money. And that can be a very frustrating situation to find yourself in.
That is why you get caught up in this belief system, that nowadays money is everything.
You have to have money to be able to do anything, to go anywhere, or to buy anything.
But the difference and the key you must learn from this post is while money is important, money management is the critical lesson.
You Should Not Care About Money & What Money Cannot Buy
Why it is said that money is not everything in life?
In this section, let’s discuss the exact reasons why you should not care about money.
Money cannot buy you happiness.
Let me repeat that again, money does not equate to being happy.
Money will not change your depression; money will not make your relationships better. There are many things that money can do, but money cannot cover up the deeply hidden wounds and poor decisions that you made previously.
Those are things that money absolutely cannot buy. And that is the reason that most people say money is not everything.
You have to find happiness in other ways that do not involve your finances. You have to find joy in the simple things. You must find gratitude for what you have.
These are all things that a $100,000 check cannot buy you. Only your heart can buy you these things and that takes some deep soul searching in time and investment.
Can you find the things that make you happy? But money cannot be one of them. And that, my friend, is the reason that money is not everything.
Five Steps to Make Money Work For You (Without Controlling You)
As stated earlier, the critical lesson you must walk away from is proper money management.
You must know how to manage your money. So that money can do everything that you want it to do.
Money can provide you with those opportunities.
With poor money management skills, you are absolutely unable to make progress. You won’t be able to take any steps further.
1. Learn about Money
One thing that is not taught in our education system is how to manage money, why it is important to save, and how to stay out of debt. Our society is living paycheck to paycheck because we are not taught anything better.
You must take the time to learn how money works.
That right there is the reason most people fail with money.
Learning how to save or how to pay off your debt will not happen overnight. Most people quit quickly because they want instant success, instant gratification. And with money, it is a long-term game.
The choices that you make starting today will affect your future. The choices you made one year ago, three years ago, or ten years ago are affecting where you are at financially today.
2. Understand the Purpose Of Money
Money is a tool. Money is not an object.
Hence, let me define that a little bit deeper.
Money is a tool to help you accomplish what you want in life, and where you want to go by utilizing money correctly. You are able to reach your financial goals.
Whereas, money is not an object. That means when flashing your cash when out with friends, flashing that brand new car, or buying that house in a dream neighborhood just because you have something to show off.
That is an object. That is not what money is about; you are just showing off. That is when money is everything, specifically your ego. But, it doesn’t have the right meaning of money success.
3. Consequences of Poor Decisions
This is the reason people feel like money is everything. The past decisions that you have made might have cost you money, you may have lost money and you are still paying for those financial hits today.
Consequently, you feel like money is everything to be able to get out of your current situation.
You need more money to be able to advance your financial freedom. You need more money to be able to pay off the debt that you bought into your life.
The desire for more money and everything circles back to the concept of everything is about money.
There are no ways to move forward because your finances are holding you back. If you are stuck in this trap of past poor financial decisions, you have to recognize those mistakes and learn from them.
Write down your past mistakes, and list exactly what you have learned from them. Once you’ve done that, you have to let it go and let it be a lesson learned.
Focus on positive ways to change your habits.
Find a different community or a new group of friends that have the same values around money that you are striving towards. Then, the temptation of poor money decisions slips away with the bad influences.
Dedicate time to make your goals and values a priority.
4. Talk About Money
Money is a taboo subject in our society.
Because of that, wealth is not passed down from generation to generation. The older generation was taught that you don’t talk about money, so they’re not going to share the lessons that they learned over time. Yet, how many recipes are family favorites that everyone knows how to make because they’ve been passed down from generation to generation.
That needs to change.
You need to learn to talk about money. And that will help you set you up for money success, because like I said…
Money is a tool that can be talked about money. Objects are just showing off.
Kristy@ Money Bliss
While it can be hard to talk about money for the first time, set up a dedicated time with your spouse, significant other or a friend to just ask some questions and learn their money tips.
Maybe even reach out to your parents and ask, “what was your biggest financial failure? What was your biggest financial success?” Learn from their answers. If that is not an option, find a mentor that you believe has done well financially and ask them about making smart financial decisions in their life.
Ask them what they did to get there.
Ask what do they see that you are doing wrong, so that you can change today.
By talking about money, you will learn from other’s mistakes without making those same mistakes.
5. Prioritizing Money Is Not Greedy
If you have money, that does not mean you are greedy.
Unfortunately, money and greed are tied together in many ways.
The difference comes into play with how you view money. Is it a tool or an object?
Greedy with money is when money becomes all about you and your wants. You hold onto your money so tight and cannot use money to help others. It is all about money upholding your flashy lifestyle.
When you prioritize money as a tool in order to buy the things that you need in life. That prioritization leads to money success and you are able to open up doors of opportunity.
And that right there can lead to so many wonderful life choices for you.
That does not mean you are greedy about your money, it means you actively choose to prioritize what money can do for you as a tool.
Is It All About Money?
In this post, we discussed so many variables that can impact your money.
Overall, money is a belief system.
You can believe that it is a tool to help you succeed.
You can believe that it is an object to show off.
And that lies the difference of your perception of money.
Do you perceive whether life is going to be all about money, or are you going to use money as a tool to do things that there is no possible way you could do without that money?
You have to learn to not let money control you and to start controlling your money.
Is money everything or not? I will leave you to come to your personal conclusion.
In this post, we listed why money is a good thing. But, we also listed reasons why money can be evil.
You just have to remember the key to success is money management. In order to do the things that you want in life, you must decide how the income and cash assets will work in your favor.
Now for you, is everything about money or not?
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Becoming financially sound is the first step towards proper money management. Learn how do I get financially sound in the next 30 days.
One of the smartest moves that you can make with your money is to become financially sound.
This is the one concept that should be taught before you even move out of the house or start your first job.
However, most of us wonder what it truly means to be financially sound.
Before we dig in and answer that question, let’s discuss the benefits of being financially sound.
Being financially sound means that you are wise with your money.
You exercise proper money management techniques and consistently save for your future.
While these concepts are very simple in thought, many people struggle to become financially sound. Most of the reason why is people typically start in debt way before they even start to earn an income.
In this post, we will detail exactly what you need to do today to become financially settled. Plus, the good news for you is you can accomplish this quickly – specifically become financially sound in the next 60 days.
Are you ready to become financially sound?
Why is it Important to Be Financially Sound?
One of the things that we constantly stress here at Money Bliss is by having money, the doors of opportunity open up.
When you don’t have money, you are left either going into debt, full of stress, exhausted by worry, and constantly wondering if you can get out of your current situation.
You need to learn how to become financially sound.
Growing up, you may have lived in a household that was constantly broke and far from examples of proper financial management of money. So, the concepts of becoming financially sound are more intriguing to you and important to learn.
On the flip side, you may have had parents who manage their money so well, you never had to worry about it. Yet they never taught you those solid money principles.
The most important reason to be financially sound is to have the money you need to do the things that you need (and want) to do.
Whether that is paying your bills, going on vacation, or giving back to a charity.
The other reason is more is a feeling of being financially sound. By becoming financially sound, these types of situations will be your life:
Not constantly stressed about money.
Do not have to worry about stretching money to your next paycheck.
Actually have money at the end of the month.
You can sleep at night knowing your finances are in order.
To be financially wise with your money, you need to prioritize your personal finance situation.
Over time, you can slowly adapt and improve your money position over time.
How do I get Financially Sound?
The good news is you can become financially sound in less than 60 days.
Becoming financially sound helps you understand why things need to happen and what needs to be done, and then put the steps in place to accomplish them.
At this stage, it is more of a money mindset change than it is about reaching specific financial goals.
1. Emergency Fund in Place
An emergency fund is just that – money set aside for an unplanned, unknown, catastrophic event that you need money for.
Ultimately, the goal is to never touch your emergency fund. But you have money set aside, just in case.
The “just in case” you want a new pair of shoes, or you want to take that vacation with friends; that is not an emergency.
A true money emergency is when you have not established a sinking fund available and you need to have unplanned maintenance done on your car. Another example is one of your loved ones is sick, and you need to take time off work to help care for them.
An emergency fund is money set aside for an unplanned, unknown situation.
By having an emergency fund in place, you can weather the storm and get through it without hurting your monthly finances.
2. Stop Living Paycheck to Paycheck
Living paycheck to paycheck means you have to wait until the next paycheck to take care of your bills and obligations. That comes with a lot of stress and worry.
By quitting a lifestyle of living paycheck to paycheck cycle, you can get ahead of your bills by at least one month.
Can you imagine the possibilities if you break the cycle of learning how to stop living paycheck to paycheck?
One of the best ways to do that is to actually have a spending freeze and to track your spending. That will help you eliminate unnecessary expenses while you get your finances on track.
To be able to get ahead by one month of a paycheck will make you financially sound.
3. Spend Less Than You Make
This concept is very simple…
Your expenses are less than your income.
However, many of us live a bigger lifestyle than we can afford and this will cause you financial detriment.
You must learn how to live below your means! This is different from within your means.
When you live WITHIN your means, you are spending exactly what you bring home in pay.
By living BELOW your means, you can save money and increase your savings percentage each year.
If you spend more money than you make, you are absolutely financially unsound.
4. Insure Yourself Properly
One of the biggest financial mistakes is not having the proper insurance that you may need.
Yes, the purpose of insurance exists as a security blanket in case something were to happen; you never know when your insurance may come in handy.
For example, you might have a horrible windstorm come in and a tree falls over onto your car. Well, that would be covered under your car insurance policy (or possibly the homeowner’s property where the tree fell).
Maybe your loved one got sick unexpectedly and did not survive, there would be a life insurance policy in place to help the heirs financially move forward with that loss of income.
In order to be financially sound, you need to review your insurance policies at least yearly.
You need to make sure that you are properly covered with insurance. Various types of insurance you may need include home, auto, life, health, disability, or long term care.
Always review your policies to see if another carrier is cheaper, you need to increase your insured levels or see if there are any more discounts that you qualify for now that you have not qualified for before.
5. Invest Time in Learning More about Finances
You need to become a constant learner with money.
If you put learning about money on the back burner, you will never reach your money goals that you have for yourself and you are guaranteed to never have a net worth of millionaire dollars.
You must invest time and energy into learning about personal finances.
The great thing is free to go down to a local library, and check out some of the top all-time best personal finance books available. Make it a goal to read one book a month. And if that’s too much, then make a goal of reading one money management book every quarter.
Here are some of the best ways to become a constant learner:
Join our email list for Money Bliss. We constantly send out great tips to help you advance your situation.
Listen to a podcast.
Choose one of the best finance books and find unparalleled success with money.
Find somebody on YouTube that you want to watch and learn.
Invest in the top investing course and learn how to win in the stock market.
Here’s my challenge to you… If you are willing to spend an hour, two, or more hours entertaining yourself with Netflix, sports, or YouTube, then you have the time to invest in your financial future.
6. Eliminate Wasted Money Situations
One of the most common mistakes that I see happen over and over is the amount of wasted money that happens in our society.
If you were letting dollars slip between your fingers because you are too lazy to cut out expenses, then that means that you are not financially sound.
Being lazy with your money will leave you financially unsound.
Do you know how you spend your money? Are willing to pay a higher price for something knowing you should actually pay less for it? Do you continue subscriptions because you do not want to call customer service and cancel?
If so, then you are giving away your hard-earned cash.
Start with a money mindset change.You work hard for your hard earned cash.
So, you need to quit wasting money and start keeping as much of it as you possibly can. Learn how to save money fast on a low income.
7. Pay Yourself First
This is the best money management tip I got from financial experts.
Pay yourself first.
That means when you get paid, you instantly move money into a savings account, an investment account, or a retirement account.
Start planning for your future today. You don’t wait until tomorrow. You don’t wait until you have more money.
I can tell you from personal experience… my biggest money mistake was waiting until I thought I had enough money to start saving and paying myself first. And now, thanks to the compounding interest, I have to contribute WAY more than if I would have just started saving money at a younger age and started investing it more aggressively.
8. Get Out of Debt
Make a plan to get out of debt.
I am not saying right now that you need to get out of debt in the next 30 to 60 days. Specifically, start to craft a plan to help you get out of debt shortly.
You are unable to move forward financially if you have debt on your shoulders, it will constantly be dragging you behind. You will not be able to increase your bank account balance and net worth like you would want to when you are in debt.
Figure out ways to get out of step and stick to that plan to pay off that debt.
It may take you three months to pay off your debt, it may take you a couple of years to get out of debt. The amount of time that it takes to pay off your debt does not matter. It is the fact that you were making a plan to actually pay off your debt.
And then later on, when you move to become financially stable, that is when your debt is completely paid off.
If you are reading this and saying “well, I don’t have to worry about this, I don’t have any debt.” Stay that way to be financially sound by saying no to debt.
Don’t go into debt, any more than you already are today.
Debt Resources:
9. Increase Your Income
A great principle to help you with money management is to make more money.
The more money that you have in your income bucket, the more you are able to save. Then, you have money available for other things that you want to do in life.
Find ways to increase your income:
Whatever it is you need to do, you need to find ways to increase your income.
10. Make Smart Financial Goals
One of the steps to becoming financially sound is knowing where you want to go next. And not be satisfied where you are today.
You want to learn to be financially sound and then move towards becoming financially stable, and then, ultimately financially secure. It’s a three-step process to get to where you want to go.
You can start today by making your first smart financial goal.
For me, my first one was starting an emergency fund. Then, I moved on to getting out of debt. Currently, my goal is to increase my savings percentage each year.
My smart financial goals do not have to be yours. You have to do what you want to do and makes the most financial sense for you.
Financially Sound Means Proper Money Management
Money management is not taught. More often than not, it is learned typically through the case of hard knocks.
One of the concepts above that we consistently talk about is making learning about personal finances a priority.
And that’s because you can read everybody else’s stories and not make the same financial mistakes. That my friend is huge.
If you want to maximize your finances the best way possible, then learn from others and do not make the same financial mistakes.
Learn the concepts of money management:
How to save consistently
How to reduce your expenses
Stay clear of debt
Live within or below your means
Become a smart investor and so much more.
Here on our site, Money Bliss, you can find plenty of tips to help guide you.
Imagine Your Life as a Financially Sound Person
For just a moment, I want you to close your eyes and think how life is today for you.
Are you filled with stress, worry, and anxiety? Not sure if you can pay rent the next month or have enough for food? Maybe you aren’t making the progress financially that you want to.
If that is you, think about what your life would be like if you became a financially sound person.
Maybe you’re reading this and you’ve been blessed financially, but your spending is still out of control. Even though you make a six figure salary, you are still scraping by at the end of the month and waiting for your next paycheck.
Imagine what your life could be like if you were a financially sound person.
It all comes down to basic financial money management.
You have to spend less than you make and you have to save money for a rainy day.
You can accomplish anything as long as you put your mind to it.
Now, are you wondering…. When can you say that a person is financially stable?
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Learn what 21 an hour is how much a year, month, and day. Plus tips to budget your money. Don’t miss the ways to increase your income.
You’re probably wondering if I made $21 a year, how much do I truly make? What will that add up to over the course of the year when working? Is $21 an hour good?
Is this wage something that I can actually live on? Or do I need to find ways that I can increase my hourly wage? How much more is $21.50 an hour annually?
In this post, we’re going to detail exactly what $21 an hour is how much a year. Also, we are going to break it down to know how much is made per month, bi-weekly, per week, and daily.
That will help you immensely with how you spend your money. Because too many times the hard-earned cash is brought home, but there is no actual plan for how to spend that money.
By taking a step ahead and making a plan for the money, you are better able to decide how you want to live, make sure that you put your money goals first, and not just living paycheck to paycheck struggling to survive.
The ultimate goal with money success is to be wise with how you spend your money.
If that is something you want too, then keep reading. You are in the right place.
$21 an Hour is How Much a Year?
When we ran all of our numbers to figure out how much is $21 per hour is as annual salary, we used the average working day of 40 hours a week.
40 hours x 52 weeks x $21 = $43,680
$43,680 is the gross annual salary with a $21 per hour wage.
As of June 2023, the average hourly wage is $33.58 (source).
Let’s breakdown how that number is calculated.
Typically, the average work week is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, multiply the hourly salary of $21 times 2,080 working hours and the result is $43,680.
That number is the gross income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
Just above $43000 a year.
Work Part Time?
But you may think, oh wait, I’m only working part time. So if you’re working part time, the assumption is working 20 hours a week at $21 an hour.
Only 20 hours per week. Then, take 20 hours times 52 weeks and that equals 1,040 working hours. Then, multiply the hourly salary of $21 times 1,040 working hours, and the result is $21,840.
How Much is $21 Per Month?
On average, the monthly amount would average $3,640.
Annual Amount of $43,680 ÷ 12 months = $3,650 per month
Since some months have more days and fewer days like February, you can expect months with more days to have a bigger paycheck. Also, this can be heavily influenced by how often you are paid and on which days you get paid.
Plus by increasing your wage from $15 an hour, you average an extra $1000 per year. So, yes a few more dollars an hour add up!
Work Part Time?
Only 20 hours per week. Then, the monthly amount would average $1,840.
How Much is $21 per Hour Per Week
This is a great number to know! How much do I make each week? When I roll out of bed and do my job, what can I expect to make at the end of the week?
Once again, the assumption is 40 hours worked.
40 hours x $21 = $840 per week.
Work Part Time?
Only 20 hours per week. Then, the weekly amount would be $420.
How Much is $21 per Hour Bi-Weekly
For this calculation, take the average weekly pay of $840 and double it.
$840 per week x 2 = $1,680
Also, the other way to calculate this is:
40 hours x 2 weeks x $21 an hour = $1,680
Work Part Time?
Only 20 hours per week. Then, the bi-weekly amount would be $840.
How Much is $21 Per Hour Per Day
This depends on how many hours you work in a day. For this example, we are going to use an eight hour work day.
8 hours x $21 per hour = $168 per day.
If you work 10 hours a day for four days, then you would make $210 per day. (10 hours x $21 per hour)
Work Part Time?
Only 4 hours per day. Then, the daily amount would be $84.
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.
$21 Per Hour is…
$21 per Hour – Full Time
Total Income
Yearly (52 weeks)
$43,680
Yearly (50 weeks)
$42,000
Monthly (173 hours)
$3,640
Weekly (40 Hours)
$840
Bi-Weekly (80 Hours)
$1,690
Daily Wage (8 Hours)
$168
Net Estimated Monthly Income
$2,779
**These are assumptions based off simple scenarios.
Paid Time Off Earning 21 Dollars an Hour
Does your employer offer paid time off?
As an hourly employee, you may or may not get paid time off.
So, here are the scenarios for both cases.
For general purposes, we are going to assume you work 40 hours per week over the course of the year.
Case # 1 – With Paid Time Off
Most hourly employees get two weeks of paid time off which is equivalent to 2 weeks of paid time off.
In this case, you would make $43,680 per year.
This is the same as the example above for an annual salary making $21 per hour.
Case #2 – No Paid Time Off
Unfortunately, not all employers offer paid time off to their hourly employees. While that is unfortunate, it is best to plan for less income.
Life happens. There will be times you need to take time off for numerous reasons – sick time, handling an emergency, or even vacation.
So, let’s assume you take 2 weeks off without paid time off.
That means you would only work 50 weeks of the year instead of all 52 weeks. Take 40 hours times 50 weeks and that equals 2,000 working hours. Then, multiply the hourly salary of $21 times 2,000 working hours, and the result is $42,000.
40 hours x 50 weeks x $21 = $42,000
You would average $168 per working day and nothing when you don’t work.
$21 an Hour is How Much a year After Taxes
Let’s be honest… Taxes can take up a big chunk of your paycheck. Thus, you need to know how taxes can affect your hourly wage.
Also, every single person’s tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Gross Annual Salary: $43,680
Federal Taxes of 12%: $5,242
State Taxes of 4%: $1,747
Social Security and Medicare of 7.65%: $3,342
$21 an Hour per Year after Taxes: $33,350
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$33,350 ÷ 2,080 hours = $16.03 per hour
After estimated taxes and FICA, you are netting $16.03 an hour. That is $4.97 an hour less than what you thought you were paid.
This is a very highlighted example and can vary greatly depending on your personal situation. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
Plus budgeting on a just over $16 an hour wage is much different.
$21 an Hour Salary Calculator
Now, you get to figure out how much you make based on your hours worked or if you make a wage between $21.01-21.99.
This is super helpful if you make $21.30 or $21.63, or $21.88.
You are probably wondering can I live on my own making 21 dollars an hour? How much rent can you afford at 21 an hour?
Using our Cents Plan Formula, this is the best case scenario on how to budget your $21 per hour paycheck.
When using these percentages, it is best to use net income because taxes must be paid.
In this example, above we calculated that $21 an hour was $16.03 after taxes. That would average $2,779 per month.
According to the Cents Plan Formula, here is the high level view of a $21 per hour budget:
Basic Expenses of 50% = $1389.50
Save Money of 20% = $555.80
Give Money of 10% = $277.91
Fun Spending of 20% = $555.83
Debt of 0% = $0
Obviously, that is not doable for everyone. Even though you would expect your money to go further when you are making double the minimum wage.
Learn how to budget on a low income.
So, you have to be strategic on ways to decrease your basic expenses and debt. Then, it will allow you more money to save and fun money.
To further break down an example budget of $21 per hour, then using the biweekly budget template is extremely helpful.
recommended budget percentages based on $21 per hour wage:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$218
Savings
15-25%
$510
Housing
20-30%
$983
Utilities
4-7%
$182
Groceries
5-12%
$291
Clothing
1-4%
$36
Transportation
4-10%
$146
Medical
5-12%
$182
Life Insurance
1%
$18
Education
1-4%
$36
Personal
2-7%
$67
Recreation / Entertainment
3-8%
$109
Debts
0% – Goal
$0
Government Tax (including Income Taxes, Social Security & Medicare)
15-25%
$861
Total Gross Income
$3,640
**In this budget, prioritization was given to basic expenses. Thus, some categories like giving and saving were less.
Can I Live off $21 Per Hour?
At this $21 hourly wage, you are close to double the minimum wage. Things should be easy to live off this $21 hourly salary.
However, it is still below the median income of over $60,000 salary. That means it can still be a tough situation.
Is it doable? Absolutely.
In fact, $21 an hour is higher than the median hourly wage of $19.33 (source). That seems backward, but typically salaried workers earn more per hour than hourly workers.
Can you truly live off $21 an hour annually?
You just have to be wiser (or frugal) with your money and how you spend the hard-earned cash you have been blessed with.
If you are constantly struggling to keep up with bills and expenses, then you need to break that constant cycle. It is possible to be smart with money.
You need to do is change your money mindset.
This is what you say to yourself… Okay, this is my season of life right now. I have aspirations and goals to change how much I make, but for now, I am going to make sure that I am able to live on my 21 dollars per hour. No going into debt for me. I will start saving money.
In the next section, we will dig into ways to increase your income, but for now, is it possible to live on $21 an hour?
Yes, you can do it, and as you can see it is possible with the sample budget of $21 per hour.
Living in a higher cost of living area would be more difficult. So, you may have to get a little creative. For example, you might have to have a roommate. Move to a lower cost of living area where rent is cheaper.
Also, you must evaluate your “fun spending” items. Many of those expenses are not mandatory and will break your budget. You can find plenty of free things to do without spending money.
5 Ways to Increase Your Hourly Wage
This right here is the most important section of this post.
You need to figure out ways to increase your hourly income because I’m going to tell you…you deserve more. You do a good job and your value is higher than what your employers pay you.
Even an increase of 50 cents to $21.50 will add up over the year. Even better $24 an hour!
1. Ask for a Raise
The first thing to do is ask for a raise. Walk right in and ask for a raise because you never know what the answer will be until you ask.
If you want the best tips on how specifically to ask for a raise and what the average wage is for somebody doing your job, then check out this book. In this book, the author gives you the exact way to increase your income. The purchase is worth it or go down to the library and check that book out.
2. Look for A New Job
Another way to increase your hourly wage is to look for a new job. Maybe a completely new industry.
It might be a total change for you, but many times, if you want to change your financial situation, then that starts with a career change. Maybe you’re stressed out at work. Making $21 an hour is too much for you and you’re not able to enjoy life, maybe changing jobs and finding another job may increase your pay, but it will also increase your quality of life.
3. Find a New Career
Because of student loans, too many employees feel like they are stuck in the career field they chose. They feel sucked into the job that they don’t like or have the potential they thought it would.
For many years, I was in the same situation until I decided to do a complete career change. I am glad I did. I have the flexibility that I needed in my life to do what I wanted when I needed to do it. Plus I am able to enjoy my entrepreneurial spirit.
It is important to uncover what should I do for a living.
4. Find Alternative Ways to Make Money
In today’s society, you need to find ways to make more money. Period.
There is no way to get around it. You need to find additional income outside a traditional nine to five position or typical 40 hour a week job. You will reach a point where you are maxed on what you can make in your current position or title. There may be some advancement to move forward, but in many cases, there just is not much room for growth.
So, you need to find a side hustle – another way to make money.
Do something that you enjoy, turn your hobby into a way to make money, turn something that you naturally do, and help others into a service business. In today’s society, the sky is the limit on how you can earn a freelancing income.
5. Earn Passive Income
The last way to increase your hourly wage is to start earning passive income.
This can be from a variety of ways including the stock market, real estate, online courses, book sales, etc. This is where the differentiation of struggling financially and becoming financially sound happens.
By earning money passively, you are able to do the things that you enjoy doing and not be loaded down, with having a job that you need to work, and a place that you have to go to. And you still make money doing nothing.
Here is an example:
You can start a brokerage account and start trading stocks for $50. You need to learn and take the one and only investing class I recommend. Learn how the market works, watch videos, and practice in a simulator before you start using your own money.
One gentleman started with $5,000 in his trading account and now has well over $36,000 in a year. Just from practice and being consistent, he has learned that passive income is the way for him to increase his income and also not be a slave to his job.
Related Question: How Fast Can you Make Money in Stocks? The Real Answer
Tips to Live on $21 an Hour
In this last section, grasp these tips on how to live on $21 an hour. On our site, you can find lots of money saving tips to help stretch your income further.
Here are the most important tips to live on $21 an hour. An increase to $22 an hour is even better!
Highlight these!
1. Spend Less Than you Make
First, you must learn to spend less than you make.
If not you will be caught in the debt cycle and that is not where you want to be. You will be consistently living paycheck to paycheck.
In order to break that dreadful cycle, it means your expenses must be less than your income.
And when I say income, it’s not the $21 an hour. As we talked about earlier in the post, there are taxes. The amount of taxes taken out of your paycheck is called your net income which is $21 an hour minus all the taxes, FICA, social security, and Medicare is taken out. That is your net income.
So, your net income has to be less than your gross income.
2. Living Below Your Means
You need to be happy. And living on less can actually make you happier. Studies prove that less is better.
Finding contentment in life is one thing that is a struggle for most.
We are driven to want the new shiny toy, the thing next door, the stuff your friend or family member got. Our society has trained you that you need these things as well.
Have you ever taken a step back and looked at what you really need?
Once you are able to find contentment with life, then you are going to be set for the long term with your finances.
Here is our story on owning less stuff. We have been happier since.
3. Make Saving Money Fun
You need to make saving money fun. If you’re good, since you must keep your expenses low, you have to find ways to make your savings fun!
Save $5k in cash with the trending 200 envelope challenge.
Use one of the popular saving money charts to help you!
It could be participating in a no spend challenge for the month.
It could be challenging friends not to go to Target for a week.
Whatever it is challenge yourself.
Find new ways of saving money and have fun with it.
Even better, get your family and kids involved in the challenge to save money. Tell them the reason why you are saving money and this is what you are doing.
Here are 101 things to do with no money. Free activities without costing you a dime. That is an amazing resource for you and you will never be bored.
And you will learn a lot of things in life you can do for free. Personally, some of the best ones are getting outside and enjoying some fresh air.
4. Make More Money
If you want if you do not settle for less, then find ways to make more money. If you want more out of life, then increase your income.
You need to be an advocate for yourself.
Find ways to make more money.
It could be a side hustle, a second job, asking for a raise, going to school to change careers, or picking up extra hours. There are so many legit ways how to make 300 dollars fast today!
Whatever path you take, that’s fine. Just find ways to make more money. Period.
Can you imagine life earning a $100k salary?
5. No State Taxes
Paying taxes is one option to increase what you take home in each paycheck.
These are the states that don’t pay state income taxes on wages:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming
It is very interesting if you take into account the amount of state taxes paid compared to a state with income taxes.
Also, if you live in one of the higher taxed states, then you may want to reconsider moving to a lower cost of living area. The higher taxes income tax states include California, Hawaii, New Jersey, Oregon, Minnesota, the District of Columbia, New York, Vermont, Iowa, and Wisconsin. These states tax income somewhere between 7.65% – 13.3%.
6. Stick to a Budget
You need to learn how to start a budget. We have tons of budgeting resources for you.
While creating a budget is great, you need to learn how to use one.
You do not have to budget down to every last penny.
You need to make sure your expenses are less than your income and that you are creating sinking funds for those irregular expenses.
Budget Help:
7. Pay Off Debt Quickly
The amount that you pay interest on debt is absolutely absurd.
Unfortunately, that is how many of these companies make their money is from the interest you pay on debt.
If you are paying 5% to even 20-21% or higher, you need to find ways to lower that debt quickly.
Here’s a debt calculator to help you. Figure out your debt free date.
Make that paying off debt fast is your target and main focus. I can tell you from personal experience, that it was not until week paid off our debt that we finally rounded the corner financially. Once our debt was paid off, we could finally be able to save money. Set money aside in separate bank accounts and pay for cash for things.
It took us working hard to pay off debt. We needed persistence and patience while we had setbacks in our debt free journey.
Here are resources now for you to pay off your debt:
Jobs that Pay $21 an Hour
You can find jobs that pay $21 per hour. Polish up that resume, cover letter, and interview skills.
Job Search Hint: Always send a written follow-up thank you note for your interview. That will help you get noticed and remembered.
First, look at the cities that require a minimum wage in their cities. That is the best place to start to find jobs that are going to pay higher than the federal minimum wage rate. Many of the cities are moving towards this model so, target and look for jobs in those areas.
Possible Ideas:
Virtual Assistant – Get free training NOW!
Customer service representatives
Bank tellers
Freelance writers
Restaurant Kitchen staff
Truck driver
Uber /Lyft driver
Security guard
Movers
Warehouse workers
Pharmacy Tech
Welder
Forklift operator
Merchandiser
Call center agent
Nursing Assistant
Companies that pay more than $21 per hour:
Bank of America
USAA
Nationwide
Costco
Wayfair
Amazon
Best Buy
Target
Wells Fargo
Disney World
Disney Land
JP Morgan
Cigna
Aetna
$21 Per Hour Annual Salary
In this post, we detailed 21 an hour is how much a year. Plus all of the variables that can impact your net income. This is something that you can live off.
How much is 21 dollars an hour annually…
$43,680
This is right between $43000 per year and $44k a year. In this post, we highlighted ways to increase your income as well as tips for living off your wage.
Use the sample budget as a starting point with your expenses.
You will have to be savvy and wise with your hard-earned income. But, with a plan, anything is possible!
Still thinking I don’t want to work anymore, you aren’t alone and need to start to plan for your early retirement.
Learn exactly how much do I make per year…
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: The exact habits you need to learn how to be financially stable. Financial stability is when you are in control of your finances. Make sure you have these money habits!
Are you ready to move from financially sound to financially stable?
Well, the good news is this is something you can easily accomplish and we are going to show you exactly how to do it in this post. Learn over thirty simple traits to prove to yourself that you are financially stable.
One of the great things about being money financially stable is it means that you are less worried about money. You are established with your finances and you are consistent on how you spend and save your money.
It is a great feeling to be financially stable because you know that your bills are taken care of and everything that you want to spend money on that you actually can!
The Money Bliss Steps for Financial Freedom is a guide to help you become financially independent. Along your path, you will go through many different journeys and many different seasons, but it is a great feeling to know that you are in a good place financially.
Becoming financially stable is something that anybody is capable of doing.
It just takes determination, a growth mindset, and a desire to be wise with your money.
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 does Financial Stability Mean?
Financial stability is when you are confident in your personal financial situation. You have money to pay monthly bills, set aside for big purchases, invest in your future, and be able to sleep at night.
When you can do these above things, that is when we can say that a person is financially stable.
When you define financial stability, the definition should motivate you to improve your money situation because the more you work towards becoming financially stable, the better the opportunities present themselves.
It is one step up from being financially sound and moving closer to financial security.
Another way of saying financially stable is of good financial standing.
Overall, the financially stable meaning is you have made wise decisions that will ultimately let you live the life you want. One step closer to financial freedom.
How to Be Financially Stable
The good news is you only need to do three steps to become financially stable plus they are not complicated.
This is exactly how do you become financially stable…
It is just a habit that you need to start doing.
If you have bad habits with money, then you are not going to have the success with money that you need. If you have good habits with money, then you will end up becoming financially stable.
Just a side note, If you need a good book on changing bad habits into good habits. I highly recommend Atomic Habits by James Clear. It is a great book to help you change the habits that need to change, and start to live the life that you want.
Now, back to the three steps to becoming financially stable.
If you want to learn how to become financially stable, then this is what you need to do.
1. Pay Yourself First
This is the most important habit that you can do to become financially stable.
Many times, I feel like I sound like a broken record about the importance of how you need to pay yourself first. It doesn’t matter if it is your very first job in high school, starting out at 21, or quickly approaching your 50s, you need to pay yourself first today.
Take your paycheck and automatically save a certain percentage.
If you have never saved before start with 10%.
If you know that your spending is out of control plus you have the income to save a higher percentage, then plan to save 20-25% ot your income.
When you first begin to save, the goal is not the amount you save; it is about the first time that you begin to save.
It is about proving to yourself that you are capable of saving and seeing that account, increase over time will continue to motivate you.
So, if you want to be financially stable, then you must pay yourself first. Set up a separate savings account or an investment account where you will put that money.
2. No Debt
Second, no debt. Period.
If you cannot buy something in cash, then wait until you have the cash available to make the purchase. Do not use debt just because you have access to credit.
If you want to be financially stable over the long term, that means you must eliminate consumer debts.
Now, before you freak out and say, “I can’t be financially stable because I have so much debt that is dragging behind me and holding me back.” Don’t freak out. You can make a plan to get out of debt.
By getting out of debt, you are proving that you are on the path to becoming financially stable.
In the meantime, you just don’t go into any more debt.
If you are in your 20s, steer clear from debt and do not get into the debt trap.
The Trickly Mortgage Debt Conversation….
Because owning a house comes with a price and it comes with a premium since there is a cost to upgrade it, pay property taxes, and so much more. Plus this varies greatly in an HCOL vs LCOL area.
Do your research and figure out is it more cost-effective for you to purchase a home and pay the mortgage payment or is it better to rent and not have the responsibilities of being a homeowner. This is a personal situation that you must determine what works best for you and it is very location and market driven.
For example, we bought in a high cost of living area before the prices skyrocketed. Thus, our mortgage is way less than the cost of rent. So for us, we are still financially stable because we have a mortgage because it is cheaper than rent (and by a lot).
On the flip side, if you are just starting out and trying to purchase a home, it may be more cost-effective for you to keep renting to stay out of debt and become financially stable quicker. Then you will be able to reach financial independence faster.
3. Invest Your Money
The last piece to becoming financially stable is you must invest your money.
This is not the time or place just to be stuffing money under the couch or in a savings account that is earning .02%. You need to invest your money in the stock market.
The best way to invest is on a consistent basis. Every paycheck you invest a certain amount consistently. It does not matter if the market is up or the market is down.
The returns from investing will be greater than doing nothing with your money.
Doing nothing with your money means that you are actually losing money when you account for the cost of inflation.
So, you must invest your money.
One of the types of income is passive income, and you can earn passive income through investing.
A huge step to becoming financially stable is to diversify your income. This may not be as important to you today, but if you are in that category of “I don’t want to work anymore” or retirement is on the horizon.
Your financial future can be secured through investing in your portfolio.
Recap – How to be Financially Stable at any Age
You can become financially stable at any age – 20, 25, 30s, without college, or even in your teens at 17 or 19. You can even be financially stable with a low income.
The formula is still the same for everyone.
These are the three things you must do for financial stability:
Pay Yourself First
No Debt
Invest
If you are serious about wanting to be financially stable, these are the three steps that you need to take. It is not rocket science.
It is very simple, clear steps to make sure that you are successful in the long term with money.
Now, let’s dig into the habits and traits of someone who is financially stable.
Learn:
Traits of someone who is financially stable
This is when we can say that a person is financially stable.
In this section, we are going to dive into the qualities, traits, and habits of people that are financially secure.
These are things that you can start working on today. Over time you will begin to make better solid money choices going forward.
These are solid money habits that will transform your financial future.
These are simple and easy ways for you to become financially secure.
1. Emergency Fund
An emergency fund is the backbone of financial security – there is absolutely no way around it.
The goal is for you to never use your emergency fund. But let’s be real, there will be a time or a place that you will have to dig into your emergency fund because an actual true emergency exists.
A financially stable person has an emergency fund to fall back on when times get tough.
Here is more information on how to build an emergency fund and the steps that you need to build one fast:
2. Plan to Be Debt Free
Like we said earlier, one of the basic steps of how to become financially free is to have no debt.
However, for too many people that would automatically say that is not in the cards for me. Paying off my debt is way too difficult. But, not for the financially stable person!
I am here to tell you that you can become financially stable by creating a plan to becoming debt free and actually stick to it.
That means your debt balance is going down each and every month. Plus you know your debt payoff date because that paying off debt is one of the best decisions that we ever personally made.
Also, it does not matter if good debt and bad debt – the concept promoted by many financial gurus. Debt is debt.
Debt means that you owe somebody else and you are going to have to pay it back at some point for a premium. So, the sooner you pay off your debt, the better of you will be.
3. Save 20% of Income
Do you save at least 20% of your paycheck? If so, then you know what financial stability means.
When you are financially stable, you are not living paycheck to paycheck and you automatically save money at the beginning of the month when your paycheck comes in.
The best place to start is to start saving at least 20% of your income.
If you are not quite there (yet), then look at one of our main money saving challenges. They are plenty of savings numbers to start small and then work on the bigger challenges. Prove to yourself that you save money.
Since saving money is easy for them, they work on increasing their savings percentage each year. Personally, I find it a better challenge to increase that savings percentage more than anything else.
4. Spend Less Than You Make
In order to make progress, your expenses are less than the money that is coming in.
That does not mean the amount of money coming in is the same amount that you can be spending. The reason why is you have to account for the money saved adn invested.
You learn how to live below your means.
This may mean giving up a coffee, a trip to the salon, happy hour, or something you do out of habit in order to start saving money.
Remember, the goal for this type of person who is financially stable is they spend less than they make. They may spend on the little luxuries here and there because they are able to do since they have set money aside and they are not overspending.
5. Mastering Money management Skills
The best trait of somebody that is financially stable is they understand the basics of money management.
This does not necessary mean the person is in love with spreadsheets, budgets, numbers, and reads money management books every single second. This means they understand the basics.
You earn, you save, you spend.
You save more, spend less, and you prioritize your money goals to make sure you are making the progress on your financial journey that you want to do.
Many times financially stable people start to enjoy learning about money management and tend to dive into their finances even further. Once they get started, they want to learn more about their money situation, and how they can improve their finances quicker by making a few more changes.
6. Their Finances are Exciting
You don’t have to be an Excel spreadsheet nerd to find that your finances are exciting.
This type of person enjoys waking up checking their balances and seeing a positive increase in their net worth.
They find it exciting, they find it motivating. It makes them realize all of their sacrifices is making a difference in the long term. They look at the greater picture and saying I’m not going to work till I am 65; I may look at retiring when I am 50.
They are working hard today and enjoy finding ways to improve their money situation; which they find exciting and fun. You love quoting these money mantras daily.
7. Month or More Ahead on Bills
A financially stable person uses their income from this month to pay for the next month. They are not living behind where the income coming in is going is paying for the current expenses.
They are actually a full month, maybe even two, maybe even three months ahead of their bills.
For example, their paycheck from July will be their August spending. For some that want an even bigger cushion, their money earned in July is actually going to be for their September spending.
That is a sign that somebody is financially stable and has the ability to avoid temptation and not to spend the extra money.
8. Sinking Funds are a Priority
A financially stable person sets aside money regularly for expenses in the future. These are called sinking funds.
These buckets of money is money allocated for a certain purpose.
One of the most popular sinking funds that most people have is for vacations, kids activities, home repair, or car repair. Those are probably the most common.
You can have as many sinking funds as you want as a financially stable person. Another option is just to have one big sinking fund that will cover whatever is needed in case something be happens. A wise person knows how much money they need to cover these expenses.
A financially stable person utilizes sinking funds to make sure they are able to meet unexpected expenses when they happen.
9. Invest in Stock Market Consistently
In the last two years, the stock market on average typically earns 13.9% each year (source).
The reason that this is important is your money can make you money without you doing anything.
Once you have your investment account set up and automatically contribute a slice of your paycheck, then you select a fund or a few stocks of companies you believe in. Starting your investing system is not as bad as you would think.
By investing in the stock market consistently, you are more likely to have higher returns than somebody who invest once a year, twice a year, or three times a year.
By investing either every week or every month, the likelihood that your account size will increase is greater than when you try and time the market.
I’ll be very honest…the average person has no idea how the stock market is going to react and even most experts. However, you can take an investing course, like Trade and Travel with Teri Ijeoma, and learn about buyers zones and seller zones. This is the best financial knowledge someone can have and you probably will not lose money by attempting to figure it out yourself.
This investing course is a great resource and something I highly recommend all of my readers to take. Read my Trade and Travel review.
Because the amount of the course is eye-opening, I can pretty much guarantee it will be less than the amount that you can lose in the stock market by yourself.
That is what a savvy person would do – invest in the course and then invest in the stock market.
10. Focused on Next Money Goal
A financially stable person knows exactly what they have done to get where they are today. Plus they know exactly where they are headed to in the future.
They don’t waver on their next money goal.
They have short term financial goals that they are determined to make happen. That is their number one or two priority in their life because they know that by reaching their money goals, they will have more time freedom in life.
At the end of the day, having money equates to freedom.
This is not the same as having money does not equate to success. There will always be the age-old debt on whether is money everything.
The answer may surprise you, but at the end of the day… money does equal freedom.
11. Saving for Retirement
If I don’t save for my retirement, then who else will help me in my older golden years? That is exactly what a financially stable person would ask.
They know that social security and all the government programs might run out of funding, so they are focused on saving for their retirement and most financial state. They are in control of what they are able to control. You cannot control future government programs or tax rates.
In addition, they are using a Roth IRA to get the maximum contributions that they can have each year for retirement. They are savvy enough to get the maximum contribution from their employer’s 401K match.
This type of person won’t be wondering… What Happens If you Don’t Save for Retirement?
12. Able to Vacation When They want
These are the people that you probably envy the most because they paid cash for the vacation that you financed.
A financially stable person is not worried about having to pay for the trip on the way home. They are savvy and use a vacation fund that they contribute to on a regular basis.
That right there helps them to go on vacation each and every year.
Don’t be jealous! Join the bandwagon and start traveling the world today.
13. Money Set Aside for a Rainy Day
As much as we like to think we can predict the future, in reality, we do not know what the next day, week, month, or even year can bring. And in many circumstances, you may be caught off guard when difficulties come.
If you have a loss of income and still have bills to pay today, that is where having a rainy day fund set aside will help you be prepared.
This is a step to becoming financially secure and a long-term habit to embrace.
A person who has a rainy day fund that will cover at least six months of living expenses is somebody that is financially secure.
They know that hopefully, they will not have to use that money, but in case they do, the money is available to them.
14. Don’t Cry When Something Breaks
When you’re financially secure, you know things that are going to break.
And as much as it sucks, you are not going to be in tears, trying to figure out how to pay to replace that item. You understand the concept of… It is what it is you move on.
Replace the item and you go on with your day.
Since you know you have money set aside for various purposes, there is no reason to cry. It may not be how you feel like spending money, but that is just part of life.
When you are financially insecure and a light comes on in your car, that is a red flag that something is wrong. Many people freak out because they don’t have the money set aside for a $500 or $1,000 repair.
So you know when you are financially secure when you can laugh it off, shake it off and move on with your day.
15. Fun Spending Can Happen
This is one of the best reasons for being financially secure…you can spend money!
When you decrease your other expenses, you can increase the amount of fun spending. There are great benefits to becoming aware of your financial situation.
Too many times, people give up to their money situation. Instead of saying, no, no, no all the time, you will get to a position where you can say yes yes yes! I want to do this and this!
You do not feel guilty about spending extra money!
At this point, you know you have earned whatever it is you want to spend money on.
16. You Can Sleep at Night
This is one of the best traits of a financially secure person! Their finances are NOT waking them up in the middle of the night wondering “oh my gosh, how am I gonna pay my bills, how am I going to pay my rent, how am I going to pay my car payment, I am sick of my job, etc.”
You quit worrying about do I have enough money to make it to the end of the month. That is financially security right there.
When you can sleep at night knowing all of your bills, expenses, and saving are taken care of. You know deep down that you are on track of your financial future.
That is financial security at its best.
If you are in a situation right now where you can’t sleep at night, then you need to learn how to drastically cut expenses. You must get a hold of your situation before it spirals any further out of control.
17. No Frivolous Spending
Financially, even though a financially secure person can spend money when they want. They have the money to be able to spend, right?
Most choose not to be frivolous with their money.
(Hint: that is why they stay financially stable.)
They tend to be a thrifty person knowing a good price to purchase an item. They know when something is overrated or overpriced.
Even if they can afford it, they are just not willing to spend money on it. That is okay because they are in the situation of being financially secure because of the solid money decisions they have made.
Spending frivolous money here and there can up quickly. Even something as low as $10 or $20 here or there may not impact your financial picture in one day. If you add it up over the course of a year, it can become $3,650 or $7,300. Just by frivolously spending a small amount each day.
18. Know Your FI Number
Your FI number will help you to make the jump to financial freedom.
You know what it will take for you to become financially independent – specifically, the dollar amount needed.
In the FIRE community, it is typically known as your FI number, which is your financial independence number. The number is the amount of your net worth and the amount saved up, so you can start living off of your investment income.
This number will vary from person to person.
It is based on your personal situation. The variables that impact your FI number include:
Your income today
How much you plan to spend today
The amount you save today
How much you plan to spend in the future
Your age now
Age you want to quit working (aka retire)
Typically, most couples with kids can start looking at FI number in the $1.5 million range. The first reaction is that the number is either WAY LOWER than they thought it would be. Yes, because we have been taught by “financial professionals” that you need so much more in assets in your retirement accounts than you actually do.
The time is now to become a financially secure person and learn your fi number today. Here’s a great resource to help you.
19. Diversify Your Income
Just as with as above and knowing your FI number, financial independence becomes more likely to happen once you start diversifying your income.
A financially stable person earns all three types of income.
Most people rely on earned income only. If you only rely on earned income, then you reach a max threshold of what you are able to earn.
So a financially secure person has multiple buckets of income; they are diversified in investments, real estate, or side hustle. The key to long term success is finding ways to make passive income.
20. Budget isn’t AS Important
A trait of a financially secure person is they know how much they are able to spend, how much they need to save, and the amount of money that they come in every single month.
They do not need to budget down to the very last line item. (thank goodness for many of you reading this!)
A financially secure person has an overall sense that income exceeds their spending and saving goals.
That is financial security.
While a budget may help them stay focused and a more detailed budget may help them reach their longer term goals.
It does not mean that a budget is necessary. You can still have a loose budget and know that you are still making ends meet because they have a system set up and a system set in place.
Budgeting is not as important as it was previously.
21. Splurging is Okay
This is one of the best feelings as a financially secure person is knowing that it is okay to splurge. It is okay to spend extra money. It is okay to stop cutting corners at every single turn.
You remember back to the days when each month was a struggle to make ends meet. That is not the life that you live anymore; you live a completely different life. And now, it is okay to splurge.
And to be very honest, for most people, once they become financially secure, it is actually really, really hard for them to loosen that tight fist on their money and start spending it.
22. Same Page with Finances with Spouse or Significant Other
They share the same money vision and together they set smart financial goals. All of their decisions are made together.
Did you get that keyword??? Together. Meaning with the other person.
While they may not agree on every single line item of their budget or how they spend money individually, they still set aside money for each of them to spend as they please. Around here at Money Bliss, we call this money a slush fund.
Because at the end of the day, as a couple, they know they are still making progress in the right direction for the long term. So, these couples do not worry about the short term of how you spend your $100 each month if you are reaching your goals and that happens once financial security sets in.
23. Net Worth Grows Significantly Each Year
If your net worth does not grow significantly each year, then you got a problem.
A financially secure person knows their net worth and has systems in place to keep it growing significantly each and every year.
It’s not just one or two percentage points typically, you can expect a much higher rate of growth of 8-10%. Once your net worth increases, the bigger the bucket for the percentage of growth.
24. Credit Cards are Paid in Full
Financial security means you were able to pay your credit card bill in full each and every month without blinking. This is a mantra of a financially secure person.
They chose to use their credit cards wisely so they can get points, cash back, and travel benefits.
But, they are also cognizant that each and every month that credit card is paid off in full; this type of person will not carry a credit card balance for any reason. Period.
25. Prepared for Large Purchases
Nothing states financial security more than being able to go out and replace $5000- $10,000 worth of appliances or home repairs or something similar.
A financially secure person realizes that they have to be prepared for large purchases since they are going to happen.
It is only a matter of when a big purchase will happen.
This person is consistently setting money aside in a sinking fund for those large purposes. In our house, we like to call it the big murph fund.
We know that it may be a small remodel project, an appliance that needs to get fixed or looking at replacing a car. Many items can fall under this big murph fund umbrella. For us, we do not set aside money for each of those purposes in their own sinking funds because then we would not able to maximize our investments.
Instead, we estimate how much money is likely needed and set aside for large purchases that are likely to happen in the next one to two years.
Ways to Save $5000:
26. Your Health Matters
Financial stability means that you are able to spend money on your health and it is a priority for you and your household.
You start realizing the benefits of taking care of your body, eating properly, and managing your health in better ways.
The light bulb starts going off and says slaving at my work for 60 to 80 hours a week may not be worth it. While the income may be great, a financially stable person may feel like they are killing themselves inside for the benefit of others.
A financially secure person knows that their health matters more than money does.
You are more likely to spend money on organic produce because you know it is better for your body. You consistently review to see if you are spending your time in ways that benefit your overall health.
27. Bad Money Habits Are a Thing of the Past
We have all had them.
We have all made stupid money mistakes.
And the best part is a financially secure person has learned from their bad money habits and made changes so they never happen again.
All of the things that they used to do, they don’t do anymore. Bad habits are something that happened in the past. While they may regret it, which is absolutely okay and part of working through the process to make further progress.
Their past mistakes are not going to hold them back from their future self and build solid money habits.
28. Giving Money is Generous
When you are able to give 10% of your income and not be panicked about making ends meet, that is when you know that you have reached a higher level of financial security.
Giving money is generous.
It is something that helps society come together and as a community making the world a better place.
By you being able to give money will help somebody else become a better version of themselves. We have all had others that have helped us.
By giving money, you can pay it forward. It can be something as simple as paying for the people behind you. It could be something grand like having a building named after you because you made a massive donation.
The size of the giving does not matter. It is the fact that you decided and made the conscious decision to start giving your money.
29. People Ask You about Money Questions
When others start looking towards what you have accomplished in your financial journey, that is when you know you have created an environment of solid money management skills.
People will start coming to you asking questions on how they can improve their money situation. And that is fabulous!
That means that others view you as being financially secure and stable in your personal finances. You deserve a pat on the back and motivation to keep up the hard work.
30. Happy With Your Financial Path
Remember that saying, “If you are happy and you know it, clap your hands.” Well, as a financially secure person, it is when you wake up and look at your overall financial picture and say, “You know what, I’ve got this, I’m on the right path,” and you put a big grin on your face. And you pat yourself on the back.
As a financially stable person, you are proud of what you have overcome, the difficult challenges you faced, and now you are excited about where the next step is going to take you and your future.
It is not roses and happiness the entire way; there are ups and downs along your path that got you to a financially stable place.
But deep down you know that you are on a stable future with a solid path.
31. You Know You are In Control of Your Money
This type of person knows exactly where their money goes.
They are in control of their money; their money doesn’t control them.
They make the decisions on how, when, why, and where they spend money.
They are not told by outsiders how to manage their money. A financially stable person has control over their money and in the long run, it opens up the doors of opportunity.
This is a sign of financial independence.
How Much Money is Financially Stable?
How much money do you need to be financially stable?
This will depend on everybody’s personal situation.
If you are single and only providing for your one household, the amount of money that you need is much less than a family of six to eight people. In view of that fact, the more people that you’re responsible for, the more money that you need to become financially secure.
Let’s put some number on the question of how much money is financially stable.
3-6 months of expenses
Positive net worth
No debt (or a solid plan to get out of debt)
Able to give 5% of your income
Saving at least 20% of your income
$100k of F-you money (read JL Collins book for terminology)
Increasing saving percentage each year
At a bare minimum, you could estimate to need at least $25,000 for a single person or $100,000 for a family of four.
These assumptions include you continuing to live below your means and not regressing from the progress you made.
However, most people feel more financially secure when their net worth hits $250,000 or $500,000. Once you hit millionaire status, you are financially secure.
Are you Ready to Move from Not Financially Stable to Financial Stability?
You are in charge of your destiny.
You are able to go from one place to another, but you have to be willing to take the jump, take the risks, and seize opportunities.
So if you are not sure that you are ready to move on to financially stable, you need to be financially sound first. For now, save this post and come back once you are ready to move to the next step of becoming financially stable.
If you are ready to move to financial stability, then you need to start today and make all of these habits of somebody who is financially stable a part of your life.
There is no “Oh, I’m gonna wait till tomorrow.” Because then you are just going to keep putting it off. Tomorrow needs to become today.
The sooner that you can become financially stable, the better off that you will be.
Procrastination is just like having a plan, but not setting it into motion. You actually need to take action and start today. Enough planning, enough procrastination.
Start slow with easy habits. A good habit here and there. Keep building on those habits and you will slowly step-by-step learn how to become a financially stable person.
It does not take a huge monumental stream of income to achieve financial stability. All it takes is perseverance to make better yourself.
You can become the next millionaire with no money!
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Learn what 17 an hour is how much a year, month, and day. Plus tips to budget your money. Don’t miss the ways to increase your income.
You’re probably wondering if I made $17 a year, how much do I truly make? What will that add up to over the course of the year?
Is $17.00 a living wage?
Is this wage something that I can actually live on? Or do I need to find ways that I can increase my hourly wage?
In this post, we’re going to detail exactly what $17 an hour is how much a year. Also, we are going to break it down to know how much is made per month, bi-weekly, per week, and daily.
Then, you will know how much is 17 dollars an hour annually.
That will help you immensely with how you spend your money. Because too many times the hard-earned cash is brought home, but there is no actual plan for how to spend that money.
By taking a step ahead and making a plan for the money, you are better able to decide how you want to live, make sure that you put your money goals first, and not just living paycheck to paycheck struggling to survive.
The ultimate goal with money success is to be wise with how you spend your money.
If that is something you want to do, then keep reading. You are in the right place.
$17 an Hour is How Much a Year?
When we ran all of our numbers to figure out how much is $17 per hour is annually as a salary, we used the average working day of 40 hours a week.
40 hours x 52 weeks x $17 = $35,360
$35,360 is the gross annual salary with a $17 per hour wage.
As of June 2023, the average hourly wage is $33.58 (source).
Let’s breakdown how that number is calculated.
Typically, the average work week is 40 hours and you can work 52 weeks a year.
Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, multiply the hourly salary of $17 times 2,080 working hours, and the result is $35,360.
Just between $35000 and $36000 is the salary for 17 dollars an hour is how much a year.
That number is the gross income before taxes, insurance, 401K or anything else is taken out. Net income is how much you deposit into your bank account.
Work Part Time?
But you may think, oh wait, I’m only working part time. So if you’re working part time, the assumption is working 20 hours a week at $17 an hour.
Only 20 hours per week?
Then, take 20 hours times 52 weeks and that equals 1,040 working hours. Then, multiply the hourly salary of $17 times 1,040 working hours, and the result is $17,680.
How Much is $17 Per Month?
On average, the monthly amount would average $2,947.
Annual Amount of $35,360 ÷ 12 months = $2,947 per month
Since some months have more days and fewer days like February, you can expect months with more days to have a bigger paycheck.
**Also, this can be heavily influenced by how often you are paid and on which days you get paid.
Work Part Time?
Only 20 hours per week. Then, the monthly amount would average $1,473.
How Much is $17 per Hour Per Week
This is a great number to know!
How much do I make each week? When I roll out of bed and do my job, what can I expect to make at the end of the week?
Once again, the assumption is 40 hours worked.
40 hours x $17 = $680 per week.
Work Part Time?
Only 20 hours per week. Then, the weekly amount would be $340.
Here are jobs that pay weekly.
How Much is $17 per Hour Bi-Weekly
For this calculation, take the average weekly pay of $680 and double it.
$680 per week x 2 = $1,360
Also, the other way to calculate this is:
40 hours x 2 weeks x $17 an hour = $1,360.
Work Part Time?
Only 20 hours per week. Then, the bi-weekly amount would be $680.
How Much is $17 Per Hour Per Day
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x $17 per hour = $136 per day.
If you work 10 hours a day for four days, then you would make $170 per day. (10 hours x $17 per hour)
Work Part Time?
Only 4 hours per day. Then, the daily amount would be $68.
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.
Virtual Savvy
If you’ve ever wanted to make a full-time income while working from home, you’re in the right place!
This intensive training combines thousands of hours of research, years of experience in growing a virtual assistant business, and the power of a coach who has helped thousands of students launch and grow their own businesses from scratch.
Swipe our exact methods to start earning a living from anywhere as a VA – no experience needed!
Learn More
Download Free Checklist
$17 Per Hour is…
$17 per Hour – Full Time
Total Income
Yearly (52 weeks)
$35,360
Yearly (50 weeks)
$34,000
Monthly (173 hours)
$2,947
Weekly (40 Hours)
$680
Bi-Weekly (80 Hours)
$1,360
Daily Wage (8 Hours)
$136
Net Estimated Monthly Income
$2,250
**These are assumptions based on simple scenarios.
Paid Time Off Earning 17 Dollars an Hour
Does your employer offer paid time off?
As an hourly employee, you may or may not get paid time off.
So, here are the scenarios for both cases.
For general purposes, we are going to assume you work 40 hours per week over the course of the year.
Case # 1 – With Paid Time Off
Most hourly employees get two weeks of paid time off which is equivalent to 2 weeks of paid time off.
In this case, you would make $35,360 per year.
This is the same as the example above for an annual salary making $17 per hour.
Case #2 – No Paid Time Off
Unfortunately, not all employers offer paid time off to their hourly employees. While that is unfortunate, it is best to plan for less income.
Life happens. There will be times you need to take time off for numerous reasons – sick time, handling an emergency, or even vacation.
So, let’s assume you take 2 weeks off without paid time off.
That means you would only work 50 weeks of the year instead of all 52 weeks.
Take 40 hours times 50 weeks and that equals 2,000 working hours. Then, multiply the hourly salary of $17 times 2,000 working hours, and the result is $34,000.
40 hours x 50 weeks x $17 = $34,000
You would average $136 per working day and nothing when you don’t work.
$17 an Hour is How Much a year After Taxes
Let’s be honest… Taxes can take up a big chunk of your paycheck. Thus, you need to know how taxes can affect your hourly wage.
Also, every single person’s tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Gross Annual Salary: $35,360
Federal Taxes of 12%: $4,243
State Taxes of 4%: $1,414
Social Security and Medicare of 7.65%: $2,705
$17 an Hour per Year after Taxes: $26,997
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$26,997 ÷ 2,080 hours = $12.98 per hour
After estimated taxes and FICA, you are netting $12.98 an hour. That is $4.02 an hour less than what you planned.
This is a very highlighted example and can vary greatly depending on your personal situation. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
Plus budgeting on $12 an hour is much different.
$17 an Hour Salary
Now, you get to figure out how much you make based on your hours worked or if you make a wage between $17.01-17.99.
This is super helpful if you make $17.25 or $17.75.
You are probably wondering can I live on my own making 17 dollars an hour? How much rent can you afford at 17 an hour?
Using our Cents Plan Formula, this is the best-case scenario on how to budget your $17 per hour paycheck.
When using these percentages, it is best to use net income because taxes must be paid.
In this example, we calculated that $17 an hour was $12.98 after taxes. That would average $2,947 per month.
According to the Cents Plan Formula, here is the high-level view of a $17 per hour budget:
Basic Expenses of 50% = $1,124.89
Save Money of 20% = $449.96
Give Money of 10% = $224.98
Fun Spending of 20% = $449.96
Debt of 0% = $0
Obviously, that is not doable for everyone when living above the poverty line.
So, you have to be strategic in ways to decrease your basic expenses and debt. Then, it will allow you more money to save and fun spending.
Let’s further break down an example budget of $17 per hour using the ideal household percentages. This is extremely helpful and insightful for comparison.
recommended budget percentages based on $17 per hour wage:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$147
Savings
15-25%
$442
Housing
20-30%
$796
Utilities
4-7%
$147
Groceries
5-12%
$236
Clothing
1-4%
$29
Transportation
4-10%
$118
Medical
5-12%
$147
Life Insurance
1%
$15
Education
1-4%
$29
Personal
2-7%
$55
Recreation / Entertainment
3-8%
$88
Debts
0% – Goal
$0
Government Tax (including Income Taxes, Social Security & Medicare)
15-25%
$697
Total Gross Income
$2,947
**In this budget, prioritization was given to basic expenses. Thus, some categories like giving and saving were less.
A great way to lower your transportation costs is to buy a beater car.
Can I Live off $17 Per Hour?
Even living above the minimum wage by $5-6 can be a very difficult situation.
Is it doable? Absolutely.
You just have to be wiser (or frugal) with your money and how you spend the hard-earned cash you have been blessed with.
A lot of times when people are making under near the minimum wage mark or slightly above, they feel like they are in this constant cycle that they can never keep up.
They are not good enough to make more money.
Feel like they are constantly struggling to keep up with bills and expenses.
And things just keep adding on top.
You need to do is change your money mindset.
This is what you say to yourself… Okay, this is my season of life right now. I have aspirations and goals to change how much I make, but for now, I am going to make sure that I am able to live on my 17 dollars per hour. No going into debt for me.
In the next section, we will dig into ways to increase your income, but for now, is it possible to live on $17 an hour?
Yes, you can do it, and as you can see it is possible with the sample budget of $17 per hour.
Living in a higher cost of living area would be more difficult. So, you may have to get a little creative. For example, you might have to have a roommate. Move to a lower cost of living area where rent is cheaper.
Also, you must evaluate your “fun spending” items. Many of those expenses are not mandatory and will break your budget. You can find plenty of free things to do without spending money.
5 Ways to Increase Your Hourly Wage
This right here is the most important section of this post.
You need to figure out ways to increase your hourly income because I’m going to tell you…you deserve more. You do a good job and your value is higher than what your employers pay you.
Even an increase of 50 cents to $17.50 will add up over the year. An increase to $18 an hour is even better!
1. Ask for a Raise
The first thing to do is ask for a raise. Walk right in and ask for a raise because you never know what the answer will be until you ask.
If you want the best tips on how specifically to ask for a raise and what the average wage is for somebody doing your job, then check out this book.
In this book, the author gives you the exact way to increase your income. The purchase is worth it or go down to the library and check that book out.
2. Look for A New Job
Another way to increase your hourly wage is to look for a new job. Maybe a completely new industry.
It might be a total change for you, but many times, if you want to change your financial situation, then that starts with a career change. Maybe you’re stressed out at work.
Making $17 an hour is too much for you and you’re not able to enjoy life, maybe changing jobs and finding another job may increase your pay, but it will also increase your quality of life.
Maybe pick up an early morning job?
3. Find a New Career
Because of student loans, too many employees feel like they are stuck in the career field they chose. They feel sucked into the job that they don’t like or have the potential they thought it would.
For many years, I was in the same situation until I decided to do a complete career change. I am glad I did. I have the flexibility that I needed in my life to do what I wanted when I needed to do it. Plus I am able to enjoy my entrepreneurial spirit.
It is important to uncover what should I do for a living.
4. Find Alternative Ways to Make Money
In today’s society, you need to find ways to make more money. Period.
There is no way to get around it. You need to find additional income outside a traditional nine to five position or typical 40 hour a week job.
You will reach a point where you are maxed on what you can make in your current position or title. There may be some advancement to move forward, but in many cases, there just is not much room for growth.
So, you need to find a side hustle – another way to make money.
Do something that you enjoy, turn your hobby into a way to make money, turn something that you naturally do, and help others into a service business. In today’s society, the sky is the limit on how you can earn a freelancing income.
5. Earn Passive Income
The last way to increase your hourly wage is to start earning passive income.
This can be from a variety of ways including the stock market, real estate, online courses, book sales, etc. This is where the differentiation between struggling financially and being financially sound.
By earning money passively, you are able to do the things that you enjoy doing and not be loaded down, with having a job that you need to work, and a place that you have to go to. And you still make money doing nothing.
Here is an example:
You can start a brokerage account and start trading stocks for $50. You need to learn and take the one and only investing class I recommend. Learn how the market works, watch videos, and practice in a simulator before you start using your own money.
One gentleman started with $5,000 in his trading account and now has well over $36,000 in a year. Just from practice and being consistent, he has learned that passive income is the way for him to increase his income and also not be a slave to his job.
Tips to Live on 17 an Hour Salary
In this last section, grasp these tips on how to live on $17 an hour. On our site, you can find lots of money saving tips to help stretch your income further.
Here are the most important tips to live on $17 an hour. Highlight these!
1. Spend Less Than You Make
First, you must learn to spend less than you make.
If not you will be caught in the debt cycle and that is not where you want to be. You will be consistently living paycheck to paycheck.
In order to break that dreadful cycle, it means your expenses must be less than your income.
And when I say income, it’s not the $17 an hour.
As we talked about earlier in the post, there are taxes. The amount of taxes taken out of your paycheck is called your net income which is $17 an hour minus all the taxes, FICA, Social Security, and Medicare are taken out. That is your net income.
So, your net income has to be less than your gross income.
2. Living Below Your Means
You need to be happy. And living on less can actually make you happier. Studies prove that less is better.
Finding contentment in life is one thing that is a struggle for most.
We are driven to want the new shiny toy, the thing next door, the stuff your friend or family member got. Our society has trained you that you need these things as well.
Have you ever taken a step back and looked at what you really need?
Once you are able to find contentment with life, then you are going to be set for the long term with your finances.
Here is our story on owning less stuff. We have been happier since.
Learn how to live below your means.
3. Make Saving Money Fun
You need to make saving money fun. If you’re good, since you must keep your expenses low, you have to find ways to make your savings fun!
It could be participating in a no spend challenge for the month.
Participate in the 100 envelope challenge.
It could be challenging friends not to go to Target for a week.
Maybe changing your habits and not picking up takeout and planning meals.
Whatever it is challenge yourself.
Find new ways of saving money and have fun with it.
Even better, get your family and kids involved in the challenge to save money. Tell them the reason why you are saving money and this is what you are doing.
Here are things to do with no money. Free activities without costing you a dime. That is an amazing resource for you and you will never be bored.
And you will learn a lot of things in life you can do for free. Personally, some of the best ones are getting outside and enjoying some fresh air.
4. Make More Money
If you want if you do not settle for less, then find ways to make more money. If you want more out of life, then increase your income.
You need to be an advocate for yourself.
Find ways to make more money.
It could be a side hustle, a second job, asking for a raise, going to school to change careers, or picking up extra hours.
Whatever path you take, that’s fine. Just find ways to make more money. Period.
5. No State Taxes
Paying taxes is one option to increase what you take home in each paycheck.
These are the states that don’t pay state income taxes on wages:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming
It is very interesting if you take into account the amount of state taxes paid compared to a state with income taxes.
Also, if you live in one of the higher taxed states, then you may want to reconsider moving to a lower cost of living area.
The higher taxes income tax states include California, Hawaii, New Jersey, Oregon, Minnesota, the District of Columbia, New York, Vermont, Iowa, and Wisconsin. These states tax income somewhere between 7.65% – 13.3%.
6. Stick to a Budget
You need to learn how to start a budget. We have tons of budgeting resources for you.
While creating a budget is great, you need to learn how to use one.
You do not have to budget down to every last penny.
You need to make sure your expenses are less than your income and that you are creating sinking funds for those irregular expenses.
Budget Help:
7. Pay Off Debt Quickly
The amount that you pay interest on debt is absolutely absurd.
Unfortunately, that is how many of these companies make their money is from the interest you pay on debt.
If you are paying 5% to even 20-21% or higher, you need to find ways to lower that debt quickly.
Here’s a debt calculator to help you. Figure out your debt free date.
Make that paying off debt fast is your target and main focus. I can tell you from personal experience, that it was not until we paid off our debt that we finally rounded the corner financially. Once our debt was paid off, we could finally be able to save money. Set money aside in separate bank accounts and pay for cash for things.
It took us working hard to pay off debt. We needed persistence and patience while we had setbacks in our debt free journey.
Here are resources now for you to pay off your debt:
Jobs that Pay $17 an Hour
You can find jobs that pay $17 per hour. Polish up that resume, cover letter, and interview skills.
Job Search Hint: Always send a written follow-up thank you note for your interview. That will help you get noticed and remembered.
First, look at the cities that require a minimum wage in their cities. That is the best place to start to find jobs that are going to pay higher than the federal minimum wage rate. Many of the cities are moving towards this model so, target and look for jobs in those areas.
Possible Ideas:
Administrative assistant
Customer service representatives
Housecleaning specialist
Delivery drivers
Warehouse workers
Companies that pay more than $17 per hour: Charter Communications, Wells Fargo, Bank of America, JP Morgan. (there are more in HCOL areas only)
$17 Per Hour Annual Salary
In this post, we detailed 17 an hour is how much a year. Plus all of the variables that can impact your net income.
17 dollars an hour is how much a year…
$35,360
This is just above $35,000 per year. In this post, we highlighted ways to increase your income as well as tips for living off your wage.
Use the sample budget as a starting point with your expenses.
You will have to be savvy and wise with your hard-earned income. But, with a plan, anything is possible!
Learn exactly how much do I make per year…
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Learn what 25 an hour is how much a year, month, and day. Plus tips to budget your money. Don’t miss the ways to increase your income.
You’re probably wondering if I made $25 a year, how much do I truly make? What will that add up to over the course of the year when working?
Is $25 an hour good?
Is this wage something that I can actually live on? Or do I need to find ways that I can increase my hourly wage? How much more is $25.50 an hour annually?
When you finally start earning $25 an hour, you are happy with your progress as an hourly employee. Typically, this is when many hourly employees start to become salaried workers.
In this post, we’re going to detail exactly what $25 an hour is how much a year. Also, we are going to break it down to know how much is made per month, bi-weekly, per week, and daily.
That will help you immensely with how you spend your money. Because too many times the hard-earned cash is brought home, but there is no actual plan for how to spend that money.
By taking a step ahead and making a plan for the money, you are better able to decide how you want to live, make sure that you put your money goals first, and not just living paycheck to paycheck struggling to survive.
The ultimate goal with money success is to be wise with how you spend your money.
Knowing 25 an hour salary is helpful for budgeting and allocating your spending.
If that is something you want too, then keep reading. You are in the right place.
$25 an Hour is How Much a Year?
When we ran all of our numbers to figure out how much is $25 per hour is as an annual salary, we used the average working day of 40 hours a week.
40 hours x 52 weeks x $25 = $52000
$52,000 is the gross annual salary with a $25 per hour wage.
As of June 2023, the average hourly wage is $33.58 (source).
Let’s break down how that number is calculated.
Typically, the average workweek is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, multiply the hourly salary of $25 times 2,080 working hours, and the result is $52,000.
That number is the gross income before taxes, insurance, 401K or anything else is taken out. Net income is how much you deposit into your bank account.
That is just above the $50000 salary threshold, but lower than the 60K salary, which is desired to become middle-income worker.
Work Part Time?
But you may think, oh wait, I’m only working part-time. So if you’re working part-time, the assumption is working 20 hours a week at $25 an hour.
Only 20 hours per week. Then, take 20 hours times 52 weeks and that equals 1,040 working hours. Then, multiply the hourly salary of $25 times 1,040 working hours and the result is $26000 per year.
How Much is $25 Per Month?
On average, the monthly amount would average $4,333.
Annual Amount of $52,000 ÷ 12 months = $4,333 per month
Since some months have more days and fewer days like February, you can expect months with more days to have a bigger paycheck. Also, this can be heavily influenced by how often you are paid and on which days you get paid.
Plus by increasing your wage from $20 an hour, you average an extra $866 per month. So, yes a few more dollars an hour add up!
Work Part Time?
Only 20 hours per week. Then, the monthly amount would average $2,167.
How Much is $25 per Hour Per Week
This is a great number to know! How much do I make each week? When I roll out of bed and do my job, what can I expect to make at the end of the week?
Once again, the assumption is 40 hours worked.
40 hours x $25 = $1,000 per week.
Work Part Time?
Only 20 hours per week. Then, the weekly amount would be $500.
How Much is $25 per Hour Bi-Weekly
For this calculation, take the average weekly pay of $1,000 and double it.
$1,000 per week x 2 = $2,000
Also, the other way to calculate this is:
40 hours x 2 weeks x $25 an hour = $2,000
Work Part Time?
Only 20 hours per week. Then, the bi-weekly amount would be $1,000.
How Much is $25 Per Hour Per Day
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x $25 per hour = $200 per day.
If you work 10 hours a day for four days, then you would make $250 per day. (10 hours x $25 per hour)
Work Part Time?
Only 4 hours per day. Then, the daily amount would be $100.
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.
$25 Per Hour is…
$25 per Hour – Full Time
Total Income
Yearly (52 weeks)
$52,000
Yearly (50 weeks)
$50,000
Monthly (173 hours)
$4,333
Weekly (40 Hours)
$1,000
Bi-Weekly (80 Hours)
$2,000
Daily Wage (8 Hours)
$200
Net Estimated Monthly Income
$3,308
**These are assumptions based on simple scenarios.
Here are the jobs that pay $25 an hour.
Paid Time Off Earning 25 Dollars an Hour
Does your employer offer paid time off?
As an hourly employee, you may or may not get paid time off.
So, here are the scenarios for both cases.
For general purposes, we are going to assume you work 40 hours per week over the course of the year.
Case # 1 – With Paid Time Off
Most hourly employees get two weeks of paid time off which is equivalent to 2 weeks of paid time off.
In this case, you would make $52000 per year.
This is the same as the example above for an annual salary making $25 per hour.
Case #2 – No Paid Time Off
Unfortunately, not all employers offer paid time off to their hourly employees. While that is unfortunate, it is best to plan for less income.
Life happens. There will be times you need to take time off for numerous reasons – sick time, handling a family emergency, or even vacation.
So, let’s assume you take 2 weeks off without paid time off.
That means you would only work 50 weeks of the year instead of all 52 weeks. Take 40 hours times 50 weeks and that equals 2,000 working hours. Then, multiply the hourly salary of $25 times 2,000 working hours, and the result is $50,000.
40 hours x 50 weeks x $25 = $50,000
You would average $200 per working day and nothing when you don’t work.
$25 an Hour is How Much a year After Taxes
Let’s be honest… Taxes can take up a big chunk of your paycheck. Thus, you need to know how taxes can affect your hourly wage.
Also, every single person’s tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Gross Annual Salary: $52,000
Federal Taxes of 12%: $6,240
State Taxes of 4%: $2,080
Social Security and Medicare of 7.65%: $3,978
$25 an Hour per Year after Taxes: $39,702
This would be your net annual salary after taxes. Less than $40000 per year!
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$39,702 ÷ 2,080 hours = $19.09 per hour
After estimated taxes and FICA, you are netting $19.09 an hour. That is $5.91 an hour less than what you thought you were paid.
This is a very highlighted example and can vary greatly depending on your personal situation. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
$25 an Hour Budget – Example
You are probably wondering can I live on my own making 25 dollars an hour? How much rent or mortgage payment can you afford on 25 an hour?
Using our Cents Plan Formula, this is the best-case scenario on how to budget your $25 per hour paycheck.
When using these percentages, it is best to use net income because taxes must be paid.
In this example, we calculated that $25 an hour was $19.09 after taxes. That would average $3,208 per month.
According to the Cents Plan Formula, here is the high-level view of a $25 per hour budget:
Basic Expenses of 50% = $1654.25
Save Money of 20% = $681.70
Give Money of 10% = $330.85
Fun Spending of 20% = $661.70
Debt of 0% = $0
Obviously, that is not doable for everyone. Even though you would expect your money to go further when you are making double the minimum wage. So, you have to be strategic in ways to decrease your basic expenses and debt. Then, it will allow you more money to save and fun spending.
To further break down an example budget of $25 per hour, then using the ideal household percentages is extremely helpful.
recommended budget percentages based on $25 per hour wage:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$217
Savings
15-25%
$650
Housing
20-30%
$1,213
Utilities
4-7%
$217
Groceries
5-12%
$329
Clothing
1-4%
$22
Transportation
4-10%
$195
Medical
5-12%
$217
Life Insurance
1%
$22
Education
1-4%
$33
Personal
2-7%
$65
Recreation / Entertainment
3-8%
$130
Debts
0% – Goal
$0
Government Tax (including Income Taxes, Social Security & Medicare)
15-25%
$1,025
Total Gross Income
$4,333
**In this budget, prioritization was given to basic expenses. Thus, some categories like giving and saving were less.
25 an hour Salary
Many times, you don’t make exactly 25/hr. You may make $25.18 or $25.66. So, here is a handy calculator to figure out your exact hourly salary wage.
At this $25 hourly wage, you are more than likely double the minimum wage. Things should be easy to live off this $25 hourly salary.
Yet, it is still below the median income of over $60,000 salary. That means it can still be a tough situation.
Is it doable? Absolutely.
In fact, $25 an hour is higher than the median hourly wage of $19.33 (source). That seems backward, but typically salaried workers earn more per hour than hourly workers.
Can you truly live off $25 an hour annually?
You just have to have the desire to spend less than your income. Plus consistently save.
If you are constantly struggling to keep up with bills and expenses, then you need to break that constant cycle. It is possible to be smart with money.
You need to do is change your money mindset.
This is what you say to yourself… Okay, I have aspirations and goals to increase how much I make. This is the time to start diversifying my income into multiple streams and start investing. I am going to stretch my 25 dollars per hour.
In the next section, we will dig into ways to increase your income, but for now, is it possible to live on $25 an hour?
Yes, you can do it, and as you can see it is possible with the sample budget of $25 per hour.
Living in a higher cost of living area would be more difficult. So, you may have to get a little creative. For example, you might have to have a roommate. Move to a lower cost of living area where rent is cheaper.
Also, you must evaluate your “fun spending” items. Many of those expenses are not mandatory and will break your budget. You can find plenty of free things to do without spending money.
5 Ways to Increase Your Hourly Wage
This right here is the most important section of this post.
You need to figure out ways to increase your hourly income because I’m going to tell you…you deserve more. You do a good job and your value is higher than what your employers pay you.
Even an increase of 50 cents to $25.50 will add up over the year. Even better $26 an hour!
1. Ask for a Raise
The first thing to do is ask for a raise. Walk right in and ask for a raise because you never know what the answer will be until you ask.
If you want the best tips on how specifically to ask for a raise and what the average wage is for somebody doing your job, then check out this book. In this book, the author gives you the exact way to increase your income. The purchase is worth it or go down to the library and check that book out.
2. Look for A New Job
Another way to increase your hourly wage is to look for a new job. Maybe a completely new industry.
It might be a total change for you, but many times, if you want to change your financial situation, then that starts with a career change. Maybe you’re stressed out at work.
Making $25 an hour is too much for you and you’re not able to enjoy life, maybe changing jobs and finding another job may increase your pay, but it will also increase your quality of life.
3. Find a New Career
Because of student loans, too many employees feel like they are stuck in the career field they chose. They feel sucked into the job that they don’t like or have the potential they thought it would.
For many years, I was in the same situation until I decided to do a complete career change. I am glad I did. I have the flexibility that I needed in my life to do what I wanted when I needed to do it. Plus I am able to enjoy my entrepreneurial spirit.
4. Find Alternative Ways to Make Money
In today’s society, you need to find ways to make more money. Period.
There is no way to get around it. You need to find additional income outside a traditional nine-to-five position or typical 40 hour a week job. You will reach a point where you are maxed on what you can make in your current position or title. There may be some advancement to move forward, but in many cases, there just is not much room for growth.
So, you need to find a side hustle – another way to make money.
Do something that you enjoy, turn your hobby into a way to make money, turn something that you naturally do, and help others into a service business. In today’s society, the sky is the limit on how you can earn a freelancing income.
Must Read: 20 Genius Ways on How to Make Money Fast
5. Earn Passive Income
The last way to increase your hourly wage is to start earning passive income.
This can be from a variety of ways including the stock market, real estate, online courses, book sales, etc. This is where the differentiation between struggling financially to becoming financially sound.
By earning money passively, you are able to do the things that you enjoy doing and not be loaded down, with having a job that you need to work, and a place that you have to go to. And you still make money doing nothing.
Here is an example:
You can start a brokerage account and start trading stocks for $50. You need to learn and take the one and only investing class I recommend. Learn how the market works, watch videos, and practice in a simulator before you start using your own money.
One gentleman started with $5,000 in his trading account and now has well over $36,000 in a year. Just from practice and being consistent, he has learned that passive income is the way for him to increase his income and also not be a slave to his job.
Tips to Live on $25 an Hour
In this last section, grasp these tips on how to live on $25 an hour. On our site, you can find lots of money saving tips to help stretch your income further.
Here are the most important tips to live on $25 an hour. More importantly stretch how much you make, in case you are in the “I don’t want to work anymore” mindset. Highlight these!
1. Spend Less Than You Make
First, you must learn to spend less than you make.
If not you will be caught in the debt cycle and that is not where you want to be. You will be consistently living paycheck to paycheck.
In order to break that dreadful cycle, it means your expenses must be less than your income.
And when I say income, it’s not the $25 an hour. As we talked about earlier in the post, there are taxes. The amount of taxes taken out of your paycheck is called your net income which is $25 an hour minus all the taxes, FICA, social security, and Medicare is taken out. That is your net income.
So, your net income has to be less than your gross income.
2. Living Below Your Means
You need to be happy. And living on less can actually make you happier. Studies prove that less is better.
Finding contentment in life is one thing that is a struggle for most.
We are driven to want the new shiny toy, the thing next door, the stuff your friend or family member got. Our society has trained you that you need these things as well.
Have you ever taken a step back and looked at what you really need?
Once you are able to find contentment with life, then you are going to be set for the long term with your finances.
Here is our story on owning less stuff. We have been happier since.
3. Make Saving Money Fun
You need to make saving money fun. If you’re good, since you must keep your expenses low, you have to find ways to make your savings fun!
It could be participating in a no spend challenge for the month.
It could be challenging friends not to go to Target for a week.
Maybe changing your habits and not picking up takeout and planning meals.
Whatever it is challenge yourself.
Find new ways of saving money and have fun with it.
Even better, get your family and kids involved in the challenge to save money. Tell them the reason why you are saving money and this is what you are doing.
Here are 101 things to do with no money. Free activities without costing you a dime. That is an amazing resource for you and you will never be bored.
And you will learn that a lot of things in life you can do for free. Personally, some of the best ones are getting outside and enjoying some fresh air.
4. Make More Money
If you want if you do not settle for less, then find ways to make more money. If you want more out of life, then increase your income.
You need to be an advocate for yourself.
Find ways to make more money.
It could be a side hustle, a second job, asking for a raise, going to school to change careers, or picking up extra hours.
Whatever path you take, that’s fine. Just find ways to make more money. Period.
5. No State Taxes
Paying taxes is one option to increase what you take home in each paycheck.
These are the states that don’t pay state income taxes on wages:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming
It is very interesting if you take into account the amount of state taxes paid compared to a state with income taxes.
Also, if you live in one of the higher-taxed states, then you may want to reconsider moving to a lower cost of living area. The higher taxes income tax states include California, Hawaii, New Jersey, Oregon, Minnesota, the District of Columbia, New York, Vermont, Iowa, and Wisconsin. These states tax income somewhere between 7.65% – 13.3%.
6. Stick to a Budget
You need to learn how to start a budget. We have tons of budgeting resources for you.
While creating a budget is great, you need to learn how to use one.
You do not have to budget down to every last penny.
You need to make sure your expenses are less than your income and you are creating sinking funds for those irregular expenses.
Budget Help:
7. Pay Off Debt Quickly
The amount that you pay interest on debt is absolutely absurd.
Unfortunately, that is how many of these companies make their money from the interest you pay on debt.
If you are paying 5% to even 20-21% or higher, you need to find ways to lower that debt quickly.
Here’s a debt calculator to help you. Figure out your debt-free date.
Make that paying off debt fast is your target and main focus. I can tell you from personal experience, that it was not until we paid off our debt that we finally rounded the corner financially. Once our debt was paid off, we could finally be able to save money. Set money aside in separate bank accounts and pay for cash for things.
It took us working hard to pay off debt. We needed persistence and patience while we had setbacks in our debt-free journey.
Here are resources now for you to pay off your debt:
Jobs that Pay $25 an Hour
You can find jobs that pay $25 per hour. Polish up that resume, cover letter, and interview skills.
Job Search Hint: Always send a written follow-up thank you note for your interview. That will help you get noticed and remembered.
First, look at the cities that require a minimum wage in their cities. That is the best place to start to find jobs that are going to pay higher than the federal minimum wage rate. Many of the cities are moving towards this model so, target and look for jobs in those areas.
Possible Ideas:
Virtual Assistant – Get free training NOW!
Freelance writer
Class A Truck Driver
Managers
Entry Level Marketing Jobs
Data Entry Clerks
Customer service managers
Bank tellers
Maintenance workers
Freight broker – Learn how easy it is to start!
Administrative assistants
Athletic Trainers
Event Planners
Security guard
Movers
Warehouse workers
Companies that pay more than $25 per hour: Costco, Wayfair, Amazon, Best Buy, Target, Wells Fargo, Disney World, Disney Land, Bank of America, JP Morgan, Cigna, Aetna, etc
$25 Per Hour Annual Salary
In this post, we detailed 25 an hour is how much a year. Plus all of the variables that can impact your net income. This is something that you can live off.
How much is 25 dollars an hour annually…
$52,000
This is right between $51000 per year and $53k a year.
In this post, we highlighted ways to increase your income as well as tips for living off your wage.
Use the sample budget as a starting point with your expenses.
You will have to be savvy and wise with your hard-earned income. But, with a plan, anything is possible!
Still thinking I don’t want to work anymore, you aren’t alone and need to start to plan for your early retirement.
Learn exactly how much do I make per year…
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: The 100 Envelope Challenge is a popular money saving challenge that has gained widespread popularity in recent years. The envelope money challenge is a fun and creative way to save money as it can be tailored to suit different budgets and financial goals.
Let’s be honest… sometimes you just have to make saving fun because saving money for another day can get kind of boring after a while.
Here at our site, Money Bliss, we have plenty of fun money saving challenges to help you find the perfect one for you.
Today, we are going to bring you one that is very unique.
Have you seen the popularity of this money saving challenge with envelopes taken off on TikTok? If not, then you are missing out.
This saving hack has been going viral and does not seem to be going away anytime soon. There is so much interest in this information!!
In this article, we will break down everything you need to know to start saving money today.
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 is the 100 Envelope Challenge?
The 100 day envelope challenge is a straightforward hack to start saving money.
You start with 100 envelopes and label them with the numbers 1 through 100. Then place all of the envelopes in a special place like a container box, basket, file folder, or bag.
Each day, you will choose a new envelope, and you must put that amount of money in the envelope.
Real Life Example For With 100 Day Envelope Challenge
For example, if you draw the number 33, then you would put $33 into that envelope and seal it.
Then the next day, if you draw the number 72, you would put $72 into that envelope and seal it. Then, continue this challenge for over 100 days.
And the best part is by the end of the 100 envelope challenge, the goal is to save $5,050.
Now, after 100 days, I would call saving $5,000 a huge win. Now, do I have your interest?
Is the 100 envelope Challenge worth it? My Personal Experience
I recently started the 100 day envelope challenge because I wanted to save more money. This was a great way to kickstart my short term goal.
My kids loved to pull out the envelope for that day and stuff it with cash. Once I was done I would close the envelope and stamp it with a sticker.
As a very visual person, I found that this challenge was incredibly rewarding and gave me a sense of accomplishment.
I was able to see my progress as I went along, and it was nice to have a visual reminder of how far I had come.
I was also able to stay on track with my saving goals and could adjust if needed.
On the downside, we don’t have cash around as much.
So this was the hardest part of the envelope saving method. Consequently, I opened a separate savings account, and I could easily make a transfer from my checking account. This allowed me to stay on top of my savings without worrying about having enough cash.
When I was a waitress, this challenge would have been a fun way to save money with my tips! Oh, what an inspiring money-saving journey that would have been!
100 Envelope Challenge Chart
How much money do you save with the 100 envelope saving challenge?
You need to the numbers behind everything so you truly understand how the 100 day money challenge is set up.
Let’s break down how the math works with this 100 envelope challenge chart. See the image below for a visual layout of the information.
At the end of the 100 day money challenge, you will save $5,050!!
How the 100 day Envelope Savings Challenge Works:
This is how to do the 100 envelope challenge. The premise of the 1-100 day envelope saving challenge is simple.
The 100 day envelope challenge is a savings challenge in which you are challenged to save a specified amount of money within 100 days.
Step #1 – Gather your supplies
Step #2 – You will write the numbers 1-100 on blank envelopes.
Step #3 – Each day or whenever you choose to pick an envelope, you will stuff the envelope with that much cash.
Step #4 – Track your progress.
Step #5 – Save $5050 in 100 days or 100 envelopes.
Pretty easy, right?
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.
Envelope Challenge Math
Are you a little worried about having to save a lot in one week? Need to know how to calculate 100 envelope challenge, here you go.
Here is the math if you randomly pick an envelope each day:
Most you save in one week: $679
The least you save in one week: $371
Even if you do not finish the entire 100 days and quit on day 50, you will save at least $950. More than likely, it will be a higher amount (unless you are great at just picking numbers under $50).
This challenge is great for somebody who gets paid with cash consistently, like servers, bartenders, drivers, caddies, etc – any tipped employee.
Find more money saving charts.
Is the 100 envelope challenge hard?
In fact, the 100 envelope challenge is extremely simple – just number the envelopes and shake them around to randomize their order.
You can use this method to save for anything – a vacation, a new car, or even your retirement!
This is a great way to exercise your brain and challenge yourself.
Raisin
Simply select one of the high-yield savings products offered by their network of federally insured banks and credit unions to begin your savings journey.
You can open a free Raisin account in just a few minutes!
Compare Rates
Advantages of 1-100 Envelope Challenge
Most importantly, the 100 envelope challenge is a great way to save money.
This 1-100 saving plan is simple and easy to follow. You can save a lot of money in a short period of time with this challenge.
1 – Save Money for a Purpose
The challenge is a great way to save for your emergency savings, pay off your debt, or save for a vacation.
You can start the challenge at any time and with any amount of money. All you need is 100 envelopes and some willpower!
2- Makes Savings A Habit
One of the advantages of building good habits is that they become easier and more automatic with time – this is proven by my favorite book, Atomic Habits.
Habits are a helpful thing, as they can make our lives a lot easier. When we build good habits, we’re more likely to do the same things in the future without having to think about them.
That is why the 100 envelope challenge is amazing. With each envelope, you are building a habit of saving money and paying yourself first.
3- Improve your Cash Situation in 3 Months!
This challenge helps you save money in a short period of time.
For 100 days (or envelopes), you are focused on saving money. A little bit at a time.
Also, it helps you become more mindful of your spending. That is a win-win!
In fact, you can use this how to save 5000 in 3 months chart.
4 – Easy to Follow with No Excuses
No advanced math skills are needed for this one.
The plan is simple to follow and the cash is easy to access.
As such, it would be difficult to come up with reasons why you are unable to complete this 100 day money envelope challenge.
5 – Restart if needed
Too many times, one thing happens and it completely derails our plans.
If your financial situation changes, you can stop and restart the challenge when you can. This makes it a great option for people who want to save money but are nervous if their finances change.
Drawbacks of the 100 Day Money Challenge
There are a few drawbacks, just like there are with any money saving challenge.
1 – Access to Cash
The first one is if you do not have access to cash readily. This can cause a problem to stuff your numbered envelopes with a dollar each day.
If you manage your finances digitally and don’t carry various dollar bills around, then it is much harder for you to find ways to actually physically stuff those envelopes with cash.
2- Figuring out the Budget with High Number Days
Another drawback of the challenge is what would happen if you picked #98 and # 99 on back-to-back days, you must save $197. That may be a challenge to have the extra cash available to do so. Especially if you pick #97 on day 3!
For instance, even for a tipped employee as a server who maybe makes $160 in a shift. That means over half of their cash would have to go straight to the envelope challenge.
Change to 200 Envelope Challenge – A Spin to Save at Least $5K!
3 – Concept of Finding Money to Save
Another drawback of this challenge is if you are struggling to live paycheck to paycheck, then attempting this challenge may just get you down and defeated. There is a possibility you may get behind on stuffing the envelopes, as you would randomly pick them.
Instead of being disappointed, you need to change the frequency of picking up an envelope every day to maybe picking envelopes one to three times a week; thus, stretching out the 100 days further.
100 Envelope Savings Challenge will Be Helpful
Even if you only make it, thirty percent of the way through the challenge… guess what, you have 30% more saved now than you did without doing the challenge.
Overall, I truly believe that any way to make saving money fun is well worth the effort.
If you make it to 65% of the way, then you are saving more than you would without the challenge.
How does envelope savings work?
With any of the envelope challenges, they are just a money saving challenge. A fun way to save money! A plan to follow to keep you accountable. A target to achieve!
Envelope savings is a tried and true way to save money.
It’s simple, it’s straightforward, and it works. You put your money in an envelope and don’t spend it until the challenge is complete. This challenge can be a fun way to get to know your spending habits better while saving money.
The savings are real, and you will be surprised at how much you can save by following this challenge for even just a few months!
Plus if you put the money in a high interest saving account, then you are adding more interest and dollars on top!
Many people prefer one of these challenges instead:
Shop for Supplies Needed for the 100 Day Envelope Money Saving Challenge
The supplies needed for the 100 Day Challenge are not complicated and you should have most of them around your house. If not, you can make a list and shop for them.
Supplies Needed:
Envelopes – Plain old white envelopes work, but colored envelopes make everything more fun.
Sharpie or Marker Pens – You need something to write with in order to keep track of those envelopes.
Cash – You need to figure out where you have the extra cash to stuff those envelopes. You may need to run to the bank quite a few times.
Stickers or Rubber Stamps – To make sure you don’t cheat and reopen a finished envelope.
Box or Container – Just make sure you have enough space for your envelopes!
Or Just Shop for this handy dandy premade Money Saving Box!
Related Read: Best Cash Envelopes – Pick Your Favorite
DIY 100 envelope challenge tracker
Also, it is super helpful to have a free printable 100 day challenge to keep you accountable! Don’t worry… we have you covered!
At the bottom of the post, you have the opportunity to download the image of the free 100 envelope challenge PDF.
Printable 100 envelope challenge
The 100 Envelope Challenge is a printable tracker chart you can download and print. Go to our resource library (for our email subscribers) to print the image.
It details how to set up an envelope challenge with your friends, family members, or co-workers.
The idea is that in the course of six months you will have earned $5,050 in savings by doing this challenge!
This 100 envelope challenge tracker is a useful tool for tracking the progress of your endeavor. You want to use a 100 envelope challenge tracker to keep you motivated during the next six months and reach your goal.
It can be printed or colored digitally and allows you to stay on top of how much money you need each day or each week.
100 Envelope Challenge App
As of right now, there is no $100 envelope challenge app developed to make this cashless. However, you can do this challenge digitally and we will show you how to do it virtually.
In case you utilize a cashless envelope system, you may be wanting to do this challenge, but are not sure the best way to do it.
Here is how to do the 100 day challenge digitally:
Instead of using 100 envelopes, you could write on 100 pieces of paper, fold them up, and put them into a bag or box.
Every day you would draw out a new number (just like the normal challenge).
Make sure you have a separate savings account for the challenge.
Instead of placing cash into the envelopes, you will move money from your checking account to that separate savings account.
For example, on the first day, you pull out the number 53. Well, that means you would move $53 from your checking account into your newly open 100 envelope challenge savings account.
You are taking money from your normal spending and moving it away and into a savings account.
That way you are setting aside money, virtually into a different account.
100 Envelope Challenge Variations
Not everyone can complete the 100 envelope saving challenge as we discussed in this post.
So, here are some alternatives to still save money using a concept similar to envelopes and still target saving $5000:
100 envelope challenge weekly – Pull envelopes each week instead of daily.
Save $50 for every envelope.
Give yourself an hour and see how long it takes before opening your last envelope.
10k in 100 days envelope challenge (detailed below).
50 envelope challenge is a variation on the 100 envelope challenge.
Pull envelopes on payday.
It’s up to you how long it takes to get there and if you want to take some time off in between while continuing to spend less than your original budget.
Higher income? Then check out the 10k in 100 days envelope challenge. This accelerated saving challenge is perfect for you.
Honestly, the goal is to save $5000. How you use this information and reach your target dollar amount is completely up to you!
100 Day Envelope Challenge FAQs
If you’re looking for a free printable version of the 100 envelope challenge chart, you can find it in our free resource library.
This section provides our readers with plenty of printables they can enjoy.
Make sure you subscribe to our email newsletter.
Yes, you can do the 100 envelope challenge twice a week.
Instead of picking an envelope each day, you would pick an envelope two times a week. Then, you would finish the challenge in one year.
The premise of the 100 envelope challenge is a money making challenge that allows you to save money and stay motivated.
Yes, you can complete the 100 envelope challenge biweekly. You will have more time to complete the challenge this way.
Instead of completing the challenge in 100 days, it will take you 200 weeks. To shorten the time, you can pick multiple envelopes with each biweekly paycheck.
Find more biweekly money saving challenges.
The 1-100 envelope challenge is a social media trend where participants are asked to create an envelope with a specific number of envelopes inside of it.
At the end of the challenge, you will save $5050.
This assumes you follow the traditional 1-100 day envelope challenge with no variations.
The 100 Day Envelope Challenge will take 14 weeks and 2 days to complete.
Or about 3.5 months.
The goal of the challenge is to prove you can save money and to see how far you can push yourself.
When you complete the 100 day envelope challenge in its entirety, you will have $5,050.
Yes, you can complete the 100 envelope challenge UK, Africa, or any other country.
You can live wherever you want to participate. Since you complete this challenge on your own, you can adjust the challenge as you see fit.
Are You Ready for these Envelope Saving Challenges?
All in all, this is the one great thing that social media can offer – maybe even providing information that can change the dismal data on saving money.
It brought around a brand new challenge for you new hack for you to start saving money.
The 100 day envelope challenge is a fun goal to kickstart your money saving journey.
The 100 day money envelope challenge may be too aggressive for what you can do right now, so here are great options to build those saving habits:
If you like the idea of this challenge here are some other money saving challenge ideas that you may enjoy more:
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Some credit cards offer a promotional interest rate, as low as 0% APR, for purchases and/or balance transfers. Often, these promotional interest rates are offered for a limited period of time when you apply for a new card, though some issuers offer promotional rates for existing cardholders as well.
If you have a large purchase coming up, or an existing credit card balance that you want to transfer over, these cards can save you a significant amount of interest. You’ll just want to make sure to pay off the full balance by the end of the promotional period, as your interest rate will likely jump significantly when your promotional APR expires.
What Are Credit Card Promotional Interest Rates?
A credit card promotional interest rate is an interest rate that is offered for a limited amount of time, as a promotion. During the promotional period, you’ll be charged a lower interest rate than your typical interest rate.
It’s common for credit cards to offer these introductory promotional interest rates for new members when you open a credit card account. However, it’s also possible for issuers to offer promotional interest rates to existing cardholders.
Recommended: How to Avoid Interest On a Credit Card
How Credit Card Promotional Interest Rates Work
One common scenario for how credit card promotional interest rates work is that an issuer might offer a 0% promotional interest rate on purchases and/or balance transfers for a certain period of time. When you’re using a credit card during the promotional interest period, you won’t pay any interest.
It’s important to note that there are two major types of promotional interest rates, and they vary slightly. With a 0% interest promotion, you won’t pay any interest during the promotional period. If there’s any balance remaining at the end of the promotional period, you’ll begin paying interest at that time. With a deferred interest promotional rate, on the other hand, you’ll pay interest on any outstanding balance back to the date of the initial purchase.
Benefits of Credit Card Promotional Rates
As you may have guessed, there are certainly upsides to taking advantage of credit card promotional interest rates. Here’s a look at the major benefits.
Low Interest Rate During the Promotional Period
One benefit of credit card promotional interest rates is the ability to take advantage of a low or even 0% interest rate during the promotional period. Having access to these promotional rates can give you added flexibility as you plan your financial future.
Ability to Make Balance Transfers
One possibility to maximize a credit card promotional rate is if you have existing consumer debt like a credit card balance. By using a balance transfer promotional interest rate, you can transfer your existing balance and save on interest. This can help lower the amount of time it takes to pay off your debt.
Can Pay For a Large Purchase Over Time
If your credit card has a 0% promotional interest rate on purchases, you can take advantage of that to pay for a large purchase over time. That way, you can spread out the cost of a large purchase over several months rather than needing to pay it off within one billing period.
Just make sure to pay your purchase off completely before the end of the promotional period to avoid paying any interest.
Drawbacks of Credit Card Promotional Rates
There are downsides to these offers to consider as well. Specifically, here are the drawbacks of credit card promotional interest rates.
Deferred Interest
You need to be careful if your credit card promotional rate is a deferred interest rate, rather than a 0% interest rate. Because of how credit cards work with a deferred interest rate promotion, you’ll pay interest on any outstanding balance at the end of the promotional period — back to the date of the initial purchase. This amount will get added to your existing balance, driving it higher.
Penalty Interest Rates
You still have to make the minimum monthly payment on your credit card during the promotional period. If you don’t make your regularly scheduled payment, the issuer may cancel your promotional interest rate. They may even impose an additional credit card penalty interest rate that’s higher than the standard interest rate on your card.
May Encourage Poor Spending Habits
Establishing good saving habits and living within your means is an important financial concept to live by. While it may not always be possible, it’s generally considered a good idea to save up your money before making a purchase. While a 0% interest promotional rate means you won’t pay any interest, it can contribute to a mindset of buying things you don’t truly need.
Recommended: Tips for Using a Credit Card Responsibly
How Long Do Credit Card Promotional Interest Rates Last?
By law, credit card promotional interest rates must last at least six months, but it is common for them to last longer. You may see introductory interest rates lasting 12 to 21 months, or even longer.
Regardless of how long your promotional period lasts, make sure you have a plan to pay your balance off in full by the end of it. Credit card purchase interest charges will kick in once your promotional period is over.
Zero Interest vs Deferred Interest Promotions
Both 0% interest rates and deferred interest rates are different kinds of promotional rates where you don’t pay any interest during the promotional period. However, they come with some key differences:
Zero Interest
Deferred Interest
Often marketed with terms like “0% intro APR for 21 months””
Often marketed as “No interest if paid in full in 6 months”
No interest charged during the promotional period
No interest charged during the promotional period
Interest charged on any outstanding balance starting at the end of the promotional period
At the end of the promotional period, interest is charged on any outstanding balance, back-dated to the date of the initial purchase
What to Consider When Getting a Card With a Zero-Interest or Deferred Interest Promotion
One of the top credit card rules is to make sure you pay off your credit card balance in full, each and every month. But if you’re carrying a balance with a promotional credit card rate, you’ll want to make sure you understand if it’s a 0% rate or a deferred interest promotion.
With a 0% promotional rate, you’ll start paying interest on any balance at the end of the promo period. But with a deferred interest promotional rate, you’ll pay interest on any balance, back-dated to the date of the initial purchase.
In either case, the best option is to make sure that you have a plan in place to pay off the balance by the end of the promotional period.
Paying off Balances With Promotional Rates
You’ll want to have a gameplan for how to pay off your balance before the end of the promotional period. That’s because at the end of the promotional period, your credit card interest rate will increase significantly.
If you still are carrying a balance, you will have to start paying interest on the balance. And if you were under a deferred interest promotional rate, that interest will be calculated back from the initial date of purchase.
Watch Out for High Post-Promotional APRs
Using a 0% promotional interest rate can seem like an attractive option, but it can lull you into a false sense of financial security. You should always be aware that the 0% interest rate won’t last forever. Your interest rate will go up at the end of the promotional period, and if you’re still carrying a credit card balance, you’ll start paying interest on the balance.
Exploring Other Credit Card Options
There are some other credit card options besides getting a card with a promotional interest rate. For instance, you might look for a credit card that offers cash back or other credit card rewards with each purchase.
Before focusing on credit card rewards or cash back, however, you’ll want to make sure that you first focus on paying off your balance. Otherwise, the interest that you pay each month will more than offset any rewards you earn.
If you’re carrying a balance, you can also attempt to get a good credit card APR by making on-time payments and asking your issuer to lower your interest rate. By simply securing a good APR, you won’t have to worry about it expiring and then spiking like you would with a promotional APR.
The Takeaway
Some credit cards offer promotional interest rates to new and/or existing cardholders. These promotional interest rates could be a 0% interest rate for a specific period of time, or a lower interest rate to encourage balance transfers.
While taking advantage of promotional interest rates can be a savvy financial move if you have existing consumer debt or need to make a large purchase, you’ll want to make sure you have a plan to pay off your balance in full before the promotional period ends. That way, you avoid having to pay any interest.
Whether you’re looking to build credit, apply for a new credit card, or save money with the cards you have, it’s important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
Will my interest rate spike after a promotional deal ends?
Yes, generally credit card promotional interest rates last only for a specific number of months. The way credit cards work is to charge interest on balances that are not paid off. So, while your credit card may charge 0% or a lower promotional rate for a period of time, the interest rate will rise once the promotional period is over and will apply to any outstanding balance on the card.
How does promo APR work?
Promotional APR offers are generally put forward by credit card companies as a way to entice new applicants. Cards may offer a 0% introductory APR for a certain number of months on purchases and/or balance transfers. Once the promotional period is over, your interest rate will rise to its normal level.
Should you close a credit card with a high interest rate?
Having a credit card with a high interest rate will not negatively impact your credit or your finances if you’re not carrying a balance. So, simply having a high interest rate is not a reason, in and of itself, to close a credit card. But if you have a balance on a credit card with a high interest rate, you might want to consider doing a balance transfer to a card with a promotional 0% interest rate while you work to pay it off.
Is my credit card’s promotional rate too good to be true?
Promotional interest rates are a legitimate marketing strategy used by many credit card companies. While you shouldn’t treat them as a scam, you also need to make sure that you are aware of the terms of the promotional rate and how long the rate is good for. Make a plan to completely pay off your balance by the end of the promotional period before your interest rate increases.
Photo credit: iStock/Jakkapan Sookjaroen
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.