As a company, Turkish Airlines has much to boast about: It flies to the most countries, 129, of any airline in the world. It’s surprising, then, that the Turkish Airlines credit card is a lackluster product. The card just launched in July 2024, so it’s possible it could be revamped with better features over time — but for now, most travelers will find more value in another airline or general travel credit card.
Here are five things to know about the Turkish Airlines Miles&Smiles Premier Visa Signature, issued by First Electronic Bank.
1. It’s seriously lacking in perks
The Turkish Airlines card offers exactly none of these.
If you’re willing to pay an annual fee, there are plenty of superior options to the Turkish Airlines card. Consider the value of the United℠ Explorer Card. The annual fee is $0 intro for the first year, then $95. United Explorer cardholders get free checked bags for themselves and a companion, two lounge passes per year, trip insurance and 25% back on in-flight purchases.
2. The sign-up bonus can be valuable
New Turkish Airlines cardholders can get 40,000 miles after spending $3,000 within 90 days of opening an account. NerdWallet values Turkish Airlines miles at 1.1 cents each, so the sign-up bonus is worth about $440. However, it may be possible to get even more value out of each mile, especially for last-minute bookings.
Earning those 40,000 bonus miles would also elevate you into elite status within the Miles&Smiles loyalty program, the second-highest tier. But as noted earlier, simply having the Turkish Airlines card doesn’t automatically grant you status; you need to spend your way there. That’s not the case with other airline cards.
3. It earns rewards on flights, everyday spending
The card earns:
Unlimited 3x miles on Turkish Airlines flights and purchases.
Unlimited 2x miles on dining, groceries, entertainment and lodging.
Unlimited 1x miles on everything else.
Miles expire three years after they’re earned.
4. Redemption options include travel and travel add-ons
Miles earned with the Turkish Airlines card may be redeemed for the following:
Award tickets.
In-flight service.
Cabin upgrades.
Extra bags.
Goods from Shop&Miles, Turkish Airlines’ shopping portal.
Services from Turkish Airlines’ program partners.
Access to select airport lounges.
Because Turkish Airlines belongs to the Star Alliance, any miles earned with the credit card may be used to book flights on more than two-dozen airlines.
5. You don’t need the card to book award flights
It’s possible you already have a card in your wallet that can help you book award flights on Turkish Airlines. Turkish Airlines is a transfer partner for Capital One Miles, Citi ThankYou Points and Bilt Rewards, so those credit card programs’ proprietary currencies can be converted into Turkish Airlines miles.
A general travel card like the Bilt card also gives cardholders more redemption flexibility than a co-branded airline card.
Buying a house is a major step, and planning to purchase a home can be a lot of fun. You get to figure out where you’d hang your favorite artwork, plant a vegetable garden, put the PlayStation — and maybe contemplate taking on some DIY projects yourself.
But there’s another, more nuts-and-bolts aspect to your pursuit of the American Dream: how to budget for a house. Most people in the U.S. are homeowners, with the latest Census data revealing that 65.6% had attained this status in the second quarter of 2024. So that’s a good indicator that buying your own home is within reach.
Doing so will likely require you to be smart about your finances, both as you save and then take on the responsibility of owning a home. To help you be successful in this pursuit, read on for the intel you need, such as:
• How do I know how much house I can afford?
• What are the costs/fees to consider?
• What will my ongoing costs be?
• How can I budget for a house?
Up-front Expenses
First, consider how much you would have to fork over if you find that perfect center-hall Colonial or loft-style condo. Once an offer on a new home is accepted, there are certain costs the buyer needs to pay right off the bat and, in most cases, out of their own pocket. These are called up-front expenses. Here are a few to prepare for as you consider how to budget for a house:
Down Payment
You may have heard of the traditional 20% down payment guideline, which helps you avoid paying private mortgage insurance (PMI) on applicable loan programs. Additionally, a higher down payment can sometimes result in better mortgage loan terms (such as a lower interest rate) which may translate into lower monthly mortgage payments.
Yep, it’s a lot of money to try to save, but if you can swing it, in the long run, applying a 20% down payment will likely save you from paying thousands of dollars in additional mortgage interest over the life of the loan. Can’t pull together that big a chunk of change? Look into your options for a mortgage lender with lower or no down payment. Some options:
• The minimum down payment for a first-time homebuyer on a conventional loan can be as low as 3%. You may also need a certain credit score of, say, 620, to qualify for this kind of mortgage.
• An FHA government loan that is open to everyone typically requires a down payment of at least 3.5%.
• Veteran VA loans or government USDA loans may allow eligible borrowers to finance up to 100% of their home’s cost. In other words, no down payment is required.
It’s worth noting that, regardless of the size of your down payment, buying may still significantly reduce your overall monthly expenses, compared to your current rent and real-estate market conditions.
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3% to 5% Closing Costs
You can likely expect to pay an estimated 3% to 5% of your home price for closing costs, and should save accordingly. For example, if you buy a home that costs $300,000, you may be required to pay between $9,000 and $15,000 in closing costs.
Worth noting: Some costs are fixed and not tied to the price. In these cases, the percentage can be higher for the lower range and lower for the higher purchase price range.
What exactly comprises closing costs? This can be bank charges like origination fees and any points you may have purchased to buy down your interest rate. There are also costs like the appraisal fee, a title search, and others.
Keep in mind that there are alternatives to paying the closing costs out-of-pocket, such as requesting a seller credit, requesting a lender credit, or tapping an applicable down payment assistance program. These can help you minimize this expense.
Moving Costs
Don’t forget when budgeting for buying a house that you will need funds to actually move in. Unless you’re lucky enough to have a generous pal with a van, you are probably going to have to hire a moving company when it’s time to get settled in your new home. The average cost of moving the contents of a three-bedroom home 1,000 miles is $4,800 according to research by U.S. News & World Report.
These costs can vary widely, of course. If you are moving with just a bedroom’s worth of furniture versus a whole house, your price tag will be lower. It’s wise to comparison-shop for moving companies and factor this expense into your own budgeting for a home move.
If you are moving for work reasons, check with your company to see if it offers a relocation package to help cover some or all of the moving costs.
New Furniture and Appliances
Your new house may not have the same dimensions and style of your old house. That could mean that you need to buy new furniture and appliances. When budgeting for buying a house, you might want to talk to friends or relatives who have moved recently and inquire about unexpected expenses as well. For example, it’s not uncommon when you move to have to purchase such items as new locks, shower rods, and window treatments. These can add up quickly.
You might want to start a savings account for these types of purchases — some of them may be unexpected and costlier than you imagined.
Recommended: First-Time Homebuyer Guide
First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.
Ongoing Expenses
Now that you’ve figured out the details related to the actual purchase, consider the expenses that will accrue once you are a homeowner. This is a very important step when budgeting for buying a house. These recurring charges are a vital part of the calculations of how much home you can afford.
Monthly Charges
First, consider how much you’ll be spending every month on your monthly mortgage payment and related costs. PITIA (principal, interest, property taxes, homeowners insurance, and other assessments) is an acronym describing all the components of a mortgage payment. Here’s how it breaks down:
• P: The principal is the “meat” of the monthly payment amount — paying down the principal will reduce the loan balance.
• I: Interest is what you are charged for borrowing the money.
• T: Taxes refer to your property taxes.
• I: This “I” refers to insurance. This includes both your homeowners and mortgage insurance, if applicable.
• A: The other assessments refer to things that may be applicable to the home you purchase such as homeowners association dues, flood or earthquake insurance, and more.
HOA Dues
HOA stands for homeowners association. These dues usually apply to a condo, co-op, or property owned in a planned community.
The charge is usually monthly (but it could also be charged quarterly or annually), and it typically goes to maintaining the community (landscaping, garbage collection, repairs, and upgrades).
Before purchasing a property with HOA dues, it can be important to ask the Homeowners Association for a complete HOA questionnaire. With this in hand, you can view how healthy the association is, whether there is any outstanding litigation due to structural or other issues, etc. These could mean increased costs down the road.
Maintenance and Lawn Care
Your budgeting probably won’t stop once you’ve moved and settled into your new home. Expenses will likely continue to knock on your door — landscaping, roof repair, and water heater replacement are just a few items that might require ongoing financial consideration.
You may want to budget for 1% to 4% of the cost of your home in maintenance each year to pay for these expenses. However, deferred maintenance costs may require more funding, depending on the age, quality of construction, where you live, and more.
Pest Control, Security, Utilities
The cost of electricity, gas, water, and internet services differ from market to market. This is also true with pest control, and services that help ensure your home is secure and safe. You could find yourself paying more (or even less) for these services in your new home.
How Much House Can You Afford Quiz
Planning Ahead
So now that you understand the costs associated with homeownership, whether they are one-time or ongoing, you can get to work on how to budget for a house.
Ideally, you want to cover the homebuying costs and then be able to afford your monthly carrying costs without racking up debt. The standard advice is that your monthly housing expenses should account for up to 28% of your monthly pre-tax income. Given how expensive some housing markets can be, it’s not uncommon to find people spending more than that right now.
Here, some advice on figuring out what you can afford.
Target Mortgage Costs
Do your research on the different types of mortgage loan programs. Determine what your price range is given the current interest rates. Find the programs that may best suit you, so you’ll feel confident you can bid and afford a home once you have your down payment saved. Don’t forget to factor in those other PITIA expenses mentioned above as you think about your own monthly income and cash outflow when you’re a homeowner.
Build a Budget
Once you have these costs calculated, you can then start budgeting for buying a house. You’ll want to accumulate your down payment, while taking care of current bills and other financial obligations, of course.
• Create a line item budget. You’ll want to note how much money you have coming in and how much goes out toward your needs (housing, food, medical expenses, debt repayment). Then you’ll see what’s left for your wants (think travel, dining out, clothes, entertainment) and start saving it, whether for your future home or retirement.
Don’t skimp, though, on establishing an emergency fund. In a pinch, these funds can keep you from using your credit card and running up even more debt.
• Assess where you can save more. To ramp up your savings for your house, look for ways to economize. Could you drop a subscription or two to streaming channels, or perhaps eat out less often?
Also see what you can do to avoid high-interest credit card debt, which can take a bite out of anyone’s budget. You might want to take advantage of a zero-interest balance transfer credit card offer, or investigate whether a lower-interest personal loan could help you pay off your debt and save money.
• Use automatic transfers. Help yourself hit your savings goals by automating payday transfers from checking to savings. That way, you won’t see the cash in your account and be tempted to spend more.
• Bring in more moolah. If the numbers aren’t adding up to bring your homebuying plans within reach fast enough, consider using windfalls (a tax refund, a bonus at work, a birthday gift of cash from a relative) to plump up your savings. Also think about ways to bring in more income, whether by asking for a raise or pursuing a side hustle.
The Takeaway
Budgeting for buying a house requires thinking about both short-term costs, such as a down payment, closing costs, and moving expenses, as well as long-term costs such as homeowner’s insurance and maintenance expenses. It’s wise to look at both before you pursue a mortgage preapproval or make an offer on a home.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
How much money should you save before buying a house?
If possible, you should save enough money for a down payment on a house in the price range you’re thinking about. But you don’t need to make a 20% down payment — many homebuyers put down less, and some government programs will allow you to buy with no down payment at all. You’ll also want to have closing costs on hand (3% to 6% of the home’s price). And it’s wise to always have an emergency fund in case of an unexpected setback.
How much do I need to earn to afford a house?
How much you need to earn to afford a house depends on the housing market you’re looking in and the area’s overall cost of living. The national average salary is $63,795 and at that salary you may be able to afford a home priced at $180,000. Use a home affordability calculator to explore the numbers for your specific situation.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Do you want to know how to save for a baby in 9 months? Having a baby is exciting and joyful, but it also brings new costs. Getting your finances ready in the months before your baby arrives can make things easier. Saving for a baby in just nine months is possible if you plan…
Do you want to know how to save for a baby in 9 months?
Having a baby is exciting and joyful, but it also brings new costs. Getting your finances ready in the months before your baby arrives can make things easier. Saving for a baby in just nine months is possible if you plan and budget well.
To get ready for these changes, you might need to change how you spend money now and save up for future costs. It’s a good time to think about where you can save and how to use your money wisely for your growing family.
Best Ways To Save for a Baby in 9 Months
Below is how to save for a baby in nine months.
1. Set a budget
The very first thing you should do if you want to learn how to save for a baby in nine months is look at your budget.
Setting a budget involves taking a good look at your current finances and figuring out how much money you’ll need to save for baby-related expenses. This will help you plan and avoid any big financial surprises.
First, you need to know where your money is going. Track all your income and spending for a month or two. Include everything like rent, groceries, utilities, health insurance, life insurance policy, and entertainment. Also, don’t forget about annual or longer-term expenses, like possibly a car insurance payment that only comes up every six months or a property tax bill.
Use a spreadsheet or budgeting app to list all your expenses. And, break down your spending into categories like housing, food, transport, and bills.
Next, review your financial statements, such as bank accounts, credit cards, and any loans. Note any areas where you might be able to cut costs. For example, can you dine out less or cancel unused subscriptions? Can you negotiate any of your bills or shop around to get a better rate?
Finally, total up your monthly income and compare this with your total expenses. This will help you see if you need to make changes to save for baby expenses.
You can learn more at How To Create A Budget That Works.
2. Calculate baby-related expenses
Now, let’s figure out how much money you’ll need for the baby. As everyone knows, having a baby can be expensive!
You can start by listing one-time larger expenses for things like a crib, stroller, and car seat. Then, there are many smaller expenses, like blankets, changing table, diaper bag, swing, rocking chair, dresser, crib mattress, and more (you don’t need everything on this list, though).
Next, think about monthly expenses such as diapers, formula, and baby clothes. And, if you plan on breastfeeding, don’t forget that there may be higher costs with that as well (many people think that breastfeeding is free, but that’s not always the case). Even if you are breastfeeding, you may have costs related to creams, pads, a breast pump, a lactation consultant, and more.
Medical costs can also add up quickly, so you will want to check what your insurance covers for prenatal and postnatal care. You will want to think about what you may have to pay out-of-pocket when/if you go to the hospital for labor, any midwives you may use, and more.
You may also want to think about childcare costs, whether it’s daycare, a nanny, or a babysitter.
Don’t forget to include potential changes in income, especially if you or your partner plan to take time off work.
And then, there are bigger-picture expenses that you may eventually want to start thinking about as well, such as college savings and starting a college fund.
Remember to adjust your budget as needed. Babies grow fast, so your spending will change. Be flexible, and update your budget to meet your baby’s needs.
3. Cut unnecessary expenses
If you need to find more money in your budget and stretch your paycheck, then I recommend looking at your current spending and finding areas where you can cut back. Every dollar saved can go toward your new baby.
Here are some ideas:
Skip eating out frequently. Cooking at home saves a lot of money. Plus, you can make extra portions for leftovers.
Evaluate your subscriptions. Do you need all those streaming services? Cancel the ones you use the least.
Stop buying expensive coffee every day. Brew your coffee at home instead. It’s much cheaper and can be just as tasty (plus, it saves you valuable time).
Limit buying new clothes. See if you can make do with what you already have or shop at thrift stores.
Avoid impulsive buys. Always make a shopping list and stick to it. This helps you avoid buying items you don’t need.
Cut down on travel costs. Save on gas by combining errands into one trip and using public transportation when possible.
Reduce utility bills. Simple actions like turning off lights and unplugging devices can lower your electricity costs.
Look for deals and coupons for groceries and household items. Many stores offer discounts that can help you save a lot.
Now, of course, not everyone will want to do everything on the list. You may want to just try one or two, or you may decide to do them all. It is personal and it all depends on how much money you want or need to save.
Every little bit helps. By cutting unnecessary expenses, you’ll free up money that can go toward preparing for your baby’s arrival.
4. Meal plan and bulk cook
One smart way to save money and reduce stress is by meal planning and bulk cooking freezer meals before your baby is born.
This strategy allows you to prepare meals in advance and freeze them, so you’ll have ready-to-eat options when you’re too busy with the baby to cook.
By buying ingredients in bulk and preparing meals ahead of time, you can save a significant amount on groceries, avoid the temptation of takeout, and make sure you’re eating well during those hectic early days of parenthood.
Plus, having meals ready to go in the freezer means one less thing to worry about as you adjust to life with a newborn.
Some easy meals that you can make ahead include:
Lasagna – A classic dish that freezes well. You can make a big batch, portion it out, and freeze it. When you’re ready to eat, just pop it in the oven.
Stir-fry – Cook chicken and your favorite vegetables with a simple sauce. Freeze in portions and serve over rice or noodles.
Chili – A hearty and versatile meal that’s easy to freeze. Make a large pot, and freeze it in individual portions. It’s perfect for quick lunches or dinners.
Casseroles – Dishes like shepherd’s pie or chicken and rice casseroles are ideal for freezing. They can be made in bulk and heated up in the oven.
Soups and stews – These are some of the easiest meals to freeze. Options like vegetable soup, beef stew, or chicken noodle soup can be made in large batches and stored in the freezer for later use.
Burritos – Assemble burritos with fillings like beans, rice, chicken, or beef. Wrap them individually and freeze. They’re great for quick, handheld meals.
Meatballs – Cook and freeze meatballs in marinara sauce. They can be served with pasta, in a sub, or as a quick protein-packed snack.
Quiche – A versatile dish that can be filled with various vegetables, meats, and cheeses. Bake, cool, and freeze for a quick breakfast, lunch, or dinner.
These meals are easy to prepare in large quantities, freeze well, and can be reheated with minimal effort – perfect for those busy days after the baby arrives.
I really wish I would have done this before I had my daughter. I think it would have been a lifesaver! I have a friend who recently had a get-together (during her pregnancy) with all of her friends and they spent all day prepping meals for her. I thought this was a wonderful idea and so sweet.
I recommend reading 15 Delicious, Easy Freezer Meals For New Moms & Dads to see more ideas.
5. Use cash back apps
Cash back apps can be a great way to save money. These apps give you a percentage of your spending back in cash or rewards.
My favorite cash back apps are:
Fetch Rewards – This is my absolute favorite cash back app, and you can get points back on ANY grocery store receipt, and then eventually turn your points into gift cards.
Swagbucks – This is a rewards site that will give you cash back as well as help you make some extra money online.
Rakuten – This is my favorite cash back site for when shopping online as almost every store is listed on this website.
Upside – This app is a great way to get cash back on your gas purchases.
Honey – This app is great for online shopping and coupon codes.
Cashback apps can make a difference. Every little bit adds up when you are preparing for a baby.
6. Buy secondhand baby gear
One of the best ways to save money when preparing for a baby is to buy secondhand baby gear. Babies grow quickly and tend to use items for only a short time. This means you can find gently used gear at a fraction of the cost.
And, you can often find high-quality brands that are built to last when shopping secondhand! Baby strollers, cribs, and high chairs are usually available in good condition if you shop around. Make sure you inspect these items carefully for any damage or missing parts.
Shopping for used baby clothes can also save you a lot of money. Babies outgrow clothes so fast that you can often find barely worn outfits at thrift stores or online marketplaces.
You can find secondhand baby items at places like thrift stores, online marketplaces, and even through friends and family.
Some of the most popular ways to find used baby gear include:
Once Upon a Child
Goodwill
Salvation Army
Poshmark
Facebook Marketplace
Buy Nothing groups on Facebook
Local parent groups on Facebook – I’m a part of a local mom group in my area, and moms are always giving away free things, such as strollers, clothes, diapers, and more.
7. Find ways to make extra money
There are many ways to make money while preparing for a baby.
Here are some ideas:
Freelancing – You can freelance in areas like writing, graphic design, proofreading, or social media management.
Selling unused items – Go through your home and sell items you no longer need, like clothes, electronics, or furniture. Platforms like eBay, Poshmark, and Facebook Marketplace make it easy to sell your items locally or online.
Taking online surveys – Answer online surveys through platforms like Swagbucks, Survey Junkie, or Branded Surveys. While not a huge income, surveys can help you make some extra cash or gift cards that can be used for baby-related expenses.
Providing babysitting or pet sitting services – If you have experience with kids or pets, you may want to babysit or pet sit. Websites like Care.com, local Facebook groups, and Rover can help you find clients.
Starting a side hustle – You may want to try starting a small side business, like selling printables on Etsy, blogging (this is what I do so that I can work from home!), or bookkeeping. A side hustle can grow into a steady source of income over time.
You can learn more at 16 Best Jobs for Pregnant Women.
8. Find cheap or free diapers
Diapers can be one of the biggest expenses for a new parent. Buying them on sale or even finding them for free is a smart way to save money.
Some ways to get free or cheap diapers include:
Ask in a Buy Nothing group on Facebook – Join local groups where people give away items they no longer need, including diapers.
Join rewards programs – Sign up for programs like Pampers Club or Huggies Rewards to earn points that can be redeemed for free diapers.
Sign up for diaper coupons – Register on diaper brand websites to receive coupons and promotions via email.
Check online marketplaces – Look for free diapers on Craigslist, Facebook Marketplace, and Freecycle.
Visit local diaper banks – Access free diapers through local community organizations or diaper banks.
Apply for government assistance – Explore programs like TANF that may offer diaper allowances.
Use the National Diaper Bank Network – Find a nearby diaper bank through this network’s resources.
Reach out to nonprofit playgroups – Connect with local playgroups that provide free diapers to families in need.
Add diapers to your registry – Include diapers on your baby registry or create a diaper fund for your baby shower.
Use cloth diapers – Save money by using reusable cloth diapers instead of disposable diapers.
I recommend reading How To Get Free Diapers: Free Diaper Boxes, Samples, Coupons to learn more.
9. Build an emergency fund
An emergency fund is a savings account for unexpected expenses. This might include medical bills, car repairs, or sudden job loss.
This is something that I highly recommend having because it will help to lessen your stress level a little bit once the baby comes. This money gives you peace of mind when life throws you a curveball.
I recommend that you aim to save enough to cover 3 to 6 months of living expenses. But, you should definitely start small if you need to. Setting aside $1,000 is a good first goal. Even a little cushion can prevent you from going into debt.
Then, save what you can each month. Even small amounts add up over time, and this makes your emergency fund grow slowly and steadily. If you get a tax refund, use it to increase your emergency fund. Extra money can help you reach your goal faster.
And, keep your emergency fund in a separate savings account. It should be easy to access but not too easy to spend.
I personally use Marcus by Goldman Sachs for my emergency fund as they have a very high rate. You can get up to 4.40% at the time of this writing through a referral link bonus. According to this high-yield savings account calculator, if you have $10,000 saved, you could earn $440 with a high-yield savings account in a year. Whereas with normal banks, your earnings would only be $46. That’s a big difference!
Building an emergency fund takes time, so be patient. Consistency is key and I recommend that you keep contributing whenever you can.
Frequently Asked Questions
Saving for a baby can be tough, but it’s doable with the right plan. Here are some common questions and helpful tips to guide you as you get your finances ready for your new family member.
What are the top ways to save money for my baby’s first year?
To save money for your baby’s first year, I recommend that you find ways to cut unnecessary expenses wherever you can. Try meal planning and bulk cooking to save on food, use cash back apps to get some money back on purchases, and find ways to make extra money.
How much to save for baby’s first year?
Deciding how much to save for your baby’s first year is hard. You can expect to spend on things like diapers, formula (or breastfeeding items), and baby gear. Diapers and wipes might cost around $50 to $100 per month. Formula can add another $100 to $150 each month. Also, include costs for clothes, toys, and medical bills.
What to do if not financially ready for a baby but pregnant?
If you are not financially ready for a baby, but you are currently pregnant, there are things that you can do. I recommend that you reach out to community resources or government assistance programs for help as many areas give free or low-cost baby supplies. You can also ask friends and family for hand-me-downs. Start saving whatever you can now; even small amounts help.
Is 9 months enough time to prepare for a baby?
Yes, nine months can be enough time to prepare for a baby. Start by making a plan and budget right away. Cut back on unnecessary spending, use this time to save as much as you can, and look for deals on baby items.
How expensive is having a baby?
Having a baby can be expensive. The first year alone can cost several thousand dollars. Baby gear, diapers, formula, and medical bills add up quickly. Planning, budgeting, and finding ways to save can make these costs more manageable.
How To Save for a Baby in 9 Months – Summary
I hope you enjoyed this article on how to save for a baby in nine months.
Getting ready financially for a baby in nine months might feel like a lot, but with some planning, it can be doable.
By making a budget, cutting out extra spending, and thinking ahead about baby costs, you can save a good amount of money before your baby comes. You can save even more by planning meals, cooking in bulk, using cash back apps, and buying used baby items.
Every bit of savings helps, and by starting now, you’ll be more prepared to welcome your baby without worrying about money.
What do you think are the best ways to save for a baby in 9 months?
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn expert tips and tricks for saving money on holiday travel booking, from the best time to book to when you should use rewards points.
When should you book your holiday travel? How can you save money on travel during the busiest travel season? Hosts Sean Pyles and Meghan Coyle talk to travel rewards Nerd Sam Kemmis about how to save money when booking holiday travel, with tips and tricks on using companion fares, the optimal time to book holiday flights, and understanding the fine print of airline programs. They also discuss the challenges and benefits of standby flights, the value of subscribing to flight deal newsletters, and the advantages of using credit card points and transferring them to partner airlines. By exploring these topics, the hosts aim to provide listeners with actionable advice to make holiday travel more affordable and less stressful.
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Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
Over the river and through the woods, to Grandmother’s house we go. And if you don’t want that to break the bank, have we got an episode for you — and Grandma. Today, tips and tricks for saving money on holiday travel booking.
Sam Kemmis:
Because changing and canceling flights for most airlines is a lot easier now than it used to be, and there aren’t as many change and cancellation fees, that actually is a pretty good strategy.
Sean Pyles:
Welcome to NerdWallet’s Smart Money podcast. I’m Sean Pyles.
Meghan Coyle:
And I’m Meghan Coyle.
Sean Pyles:
And this is episode two of our Nerdy deep dive into holiday travel and the costs therein. And Meghan, I know you and I are both in the camp of avoiding holiday travel if at all possible. As much as we love our families, sometimes the hassle of getting to them just isn’t worth a wing and a leg of, you know… turkey.
Meghan Coyle:
Yeah. I heard what you did there, Sean. As we know, plenty of people do brave the crowds and the lines and the delays to see their loved ones over the holidays, so we are here to help smooth that process as best we can, especially when it comes to what you’re spending on that travel.
Sean Pyles:
The holidays are infamous for higher prices, especially on airfares, and there are definitely ways to save money if you’re willing to be a little flexible.
Meghan Coyle:
Sean Pyles:
Ooh, I love secrets, and we’re going to share lots of them today. So listener, perk up your ears like you’re listening for sleigh bells in the distance because we’re going to drop a lot of insider knowledge on you today. It’s our holiday gift to you.
Meghan Coyle:
That’s right, wrapped up all pretty and nice.
Sean Pyles:
We want to hear what you think too, listeners. To share your ideas and experiences around holiday travel with us—the good, the bad, and the insanity—leave us a voicemail or text the Nerd hotline at 901-730-6373, that’s 901-730-NERD, or email a voice memo to [email protected]. So Meghan, who are we hearing from today?
Meghan Coyle:
Today, our guest is our Nerdy colleague, Sam Kemmis, and we’re going to explore all the ways you can save yourself some cash when you’re booking holiday travel, and you don’t necessarily need to redeem your points to do it.
Sean Pyles:
That’s coming up in a moment. Stay with us.
Meghan Coyle:
Hey, Sam. So great to have you back on the show.
Sam Kemmis:
It’s so great to be here.
Meghan Coyle:
What are your travel plans for the holidays?
Sam Kemmis:
They’re not the most exciting, but I’m going to go home to Montana, where I’m from, with my kids to see family.
Meghan Coyle:
Aw, that sounds really sweet.
Sam Kemmis:
Meghan Coyle:
Is it going to be cold there?
Sam Kemmis:
Oh, yeah. It’s always cold. I always go for the cold snap. It always gets into the negative temperatures while we’re there.
Meghan Coyle:
Sam Kemmis:
This is always the question, and I wish I had that silver bullet where I’m like, “Here’s the one weird trick to saving money on holiday travel,” but the truth is it’s hard to do. But I do have a few tricks up my sleeve. So one of them is using companion fares. My partner and I both have the Alaska companion fare, which is great because we have two kids, and it lets us book a second ticket for just a little over $100 no matter how much the first ticket costs. Because you’re spending the same amount on that second ticket no matter what, the more expensive your first ticket is, the more value you’re getting from it. Holiday travel tends to be pretty expensive, so I usually save that companion fare for the holiday so I can kind of maximize that difference between the $100 and whatever I end up paying for the actual fare.
Meghan Coyle:
So it’s kind of like you’re almost using your companion fare as a kid discount, a child discount on your airfare for the holidays.
Sam Kemmis:
I wish my oldest was still young enough that I could put her on my lap. That’s the real discount for the holidays. In a pinch, I use companion fares. Alaska has a great one, but there’s also one from Delta. Southwest has its sort of famous one. There are some companion fare options out there.
Meghan Coyle:
And tell us how Alaska’s companion fare works. I believe you get that through a credit card, is that right?
Sam Kemmis:
Yes. You get it through its co-branded credit card and you get one of them to use every year.
Meghan Coyle:
Is this an annual tradition of yours to use the companion fare on the holidays?
Sam Kemmis:
Yeah, I guess it is becoming one as my kids get older. It used to be I would try to just book the most ludicrous flight that would still qualify with stopovers and multi-cities and going to Costa Rica and whatever I could do. But for one thing, Alaska has sort of changed the terms of it so it’s not so easy to do that. And now, yeah, not as exciting and my most expensive trip is usually home for the holidays.
Meghan Coyle:
Makes sense. Yeah. And I know some of the other companion fares have different terms and things like that, but Southwest’s companion pass lets you get flights for a discount for the entire year, so the holidays are also a great time to use that for a really high value.
Sam Kemmis:
Just no blackout dates on those, as far as I know.
Meghan Coyle:
That’s what we’re looking for for holiday travel because the travel companies know that these are such high demand times. You have to be really careful with the deals. Let’s talk about when you book your holiday travel. Have you done that already?
Sam Kemmis:
I have not. I have learned from covering this beat for so long that it’s actually usually better to wait until the fall to book, and maybe even a little later in the fall. So that’s easy for me because I’m a procrastinator, but I know there are a lot of people who want to book as early as possible. But the data show that booking months in advance doesn’t actually save you money. One piece of data I got from Google Flights that they shared with me showed that the lowest prices for the holidays usually happen between 80 and 20 days before departure, so about one to two months before departure, and that’s true for both Thanksgiving and the December holidays. If I’m booking for Christmas, that will put it somewhere in October, likely, that I’m booking. That’s a rule of thumb, but every year is different. It could be that if you wait until that 20-day cutoff that prices will actually go up, or that may be when prices are actually lowest. Just like anything that revolves around supply and demand, there’s no way to really play the market. Booking way in advance is usually not a great idea.
Meghan Coyle:
Okay, that makes me feel a lot better because I haven’t even started thinking about it yet.
Sam Kemmis:
I know. It’s like 95 degrees here. It’s hard to imagine.
Meghan Coyle:
I know we’re talking a bit early about holiday plans, and one thing I wanted to float out there is that you could book something now and kind of lock in a lower rate, and then you might be able to rebook it or change it or cancel it if something happens, your travel plans change, or even the price goes down. Can you talk a little bit about that and why that might be a good option for the holiday travel?
Sam Kemmis:
Yeah, because changing and canceling flights for most airlines is a lot easier now than it used to be, and there aren’t as many change and cancellation fees, that actually is a pretty good strategy. If you’re just one of those people that doesn’t want to wait and you see a decent price right now, you can always book it now and, like you said, either change the ticket when you see a better price and you might get a refund on that difference, or just cancel your ticket outright and rebook the lower price. So that’s not a bad idea.
You want to be a little careful, though, to make sure that you’re actually booking a refundable flight. And that doesn’t mean a fully refundable fare, but usually basic economy flights and flights with budget airlines like Spirit and Frontier do not have full cancelability. They won’t offer a full refund, especially those basic economy tickets. You want to watch out booking those. You probably won’t be able to get your money back. The same thing applies for hotels. Hotels are usually a lot easier. They’re usually much more flexible in terms of letting you rebook and even cancel last-minute. You can always book some hotel rooms in advance as long as you’re checking that fine print and making sure that you can cancel it later.
Meghan Coyle:
Something I used to do in college as well was I would take advantage of same-day changes and standby to help save a bit of money on holiday travel. I’ll tell you how this worked and then you can tell me if that was a good strategy or not to use.
Sam Kemmis:
Yeah, I want to hear about this.
Meghan Coyle:
I went to school out of state, so I had to fly home for the holidays. The cheapest flights were usually these super early morning, 6:00 AM flights, or maybe they would have some stops or I would take the red eye. I mean, these were just awful flights I was booking. But if you look into some of the same-day change policies and standby policies, you might actually be able to sometimes call your airline ahead of time, like the day before, or even look in the app and see if there was any availability on a better flight. As long as your departure airport and your arrival airport didn’t change and you were still taking off on the same calendar day, you can save a lot of money by just taking any of those extra seats on a better-timed flight. Something I would do is I would book maybe the earliest flight back on the Friday after Thanksgiving, and then I wouldn’t actually get up at 6:00 AM after eating tons of turkey the day before. I would just check on Thanksgiving and change it, sometimes for free if you have elite status, or there’s some type of policy that’ll let you change for free, or I would pay a pretty nominal fee, like $75, and fly back at a much more normal time. What did you think about that strategy?
Sam Kemmis:
That’s not bad, and I’ve definitely done things like that. I think it’s for sure a good college student strategy because it works as long as you’re pretty flexible on what actually ends up happening. You can have this great plan and, “Oh, I’m going to change it to a better flight,” and there may just not be better flights available. Or you could sort of go on standby, that fills up, and then you’ve got to get over to your actual flight or onto another standby. You could kind of end up in this purgatory where you’re not on any flight.
Meghan Coyle:
Sam Kemmis:
Obviously, I’m speaking in generalities because every airline is going to have different policies for this.
Meghan Coyle:
Sam Kemmis:
I love it. I love that kind of thing. I’ve done that with red eyes where I’ve booked a red eye that’s way cheaper and then just said, “Oh. Actually, could I just fly a normal flight?” and it works out. Totally a possibility if you’re willing to put in a little extra uncertainty work.
Meghan Coyle:
That’s a good call out. And probably wouldn’t work if you have multiple people traveling, like your family, so that would make it a bit more difficult.
Sam Kemmis:
Yeah, I think my kids would break up with me.
Meghan Coyle:
So where should people look for deals, whether on hotels or airlines, for holiday travel?
Sam Kemmis:
Airline deals themselves can be tough for the holidays. You might see airlines promote different sales, but usually those have blackout dates that are actually around the holidays. And so unless you’re willing to fly quite far off from the holiday itself, that’s probably not going to apply. That said, it might be worth subscribing to some flight deal newsletters or social media accounts. You can find those on Instagram or TikTok, and email newsletters are all over the place. And every once in a while, those will have deals around the holidays, especially internationally, especially around Thanksgiving. Because other places don’t celebrate our Thanksgiving, you can find deals around then for sure. Hotels also might have some deals around the holidays depending on how popular that particular property is around that particular holiday, so it’s worth going to the hotel’s website to see if they have any packages that might be a good deal.
Meghan Coyle:
I know we talked about this earlier in the episode—your credit card can come in handy for saving cash on travel purchases. Yours was through a companion fare through your Alaska co-branded card. What are some other situations where you should maybe look at your credit card and see how it can save you cash for holiday travel?
Sam Kemmis:
There’s a few options. One is using your credit card points. The most obvious way to do that is through the booking portal that the credit card has, so Chase Travel or AmEx Travel, whatever it is. Then you’re basically using the points for a fixed value, so you’re essentially buying cash tickets and using the points to pay for those cash tickets. If you’ve got a big pile of points and you want to use them up and you’re going to book a flight anyway, that’s not a bad way to do it. But there is another way to do it, which is to transfer those credit card points to a partner airline, and then book award travel through the partner airline. For instance, you might transfer them to American Airlines and then book using miles through American. So I say that’s another option. We’ve looked into the data and have seen that those bookings don’t usually offer a better cent-per-point value than booking at any other time, but they’re also not much worse. If a flight is twice as expensive as it normally is around the holidays, it will probably be about twice as expensive using miles. So again, there’s no free lunch here, there’s no way to game the system, but you might be able to find a little bit more value by transferring those credit card points to an airline and then booking through the airline.
Meghan Coyle:
Okay. Yeah, that makes sense. And you could also do half points, half cash in a lot of cases if you’re booking through the portal, right? So that might be a way to save some cash as well.
Sam Kemmis:
Yeah, it’s all relative. Do we call our credit card points cash? Are they their own thing? What is it?
Meghan Coyle:
Now we’re getting super nerdy. Are they cash?
Sam Kemmis:
Yeah. Yeah. Sometimes, also, your credit card might have cash back offers on certain hotels or other travel opportunities. Chase offers or AmEx offers might give you 10% back on a statement credit, so you could add that offer to your travel card before you book. Some travel credit cards offer statement credits on travel purchases either booked through the issuer’s travel portal or booked directly with a certain airline or a hotel. That’s a way to offset both the airline cost and the hotel cost.
Meghan Coyle:
Okay. Now let’s make it a little bit spicy. Let’s say you don’t have to go home for the holidays. You want to use that time off to go somewhere else. What are some good ways to save money on this type of holiday travel that’s more like a vacation?
Sam Kemmis:
One option is to go international. Like I said, other countries aren’t necessarily celebrating Thanksgiving. Some don’t celebrate Christmas or the same holidays in December. It might be worth looking at some of those countries to see if there’s some cheaper flight options. And then you can always check out Google Flights or Skyscanner search tools and put in “Anywhere” for the destination. Just be like, “Surprise me,” and just see what’s cheap.
Meghan Coyle:
I love that. You could end up literally anywhere for the holidays. Any other tips for saving on holiday travel without using your points?
Sam Kemmis:
I plug this all the time. I’m always promoting selling your family on doing Thanksgiving the week before or after actual Thanksgiving because…
Meghan Coyle:
Oh, yeah. I remember you wrote an article about this.
Sam Kemmis:
I did, and nobody ever cares and nobody ever bites, but I’m going to say it again. If you just convince your family to do it the week after, airfare will be half as expensive. There will be so much availability for vacation rentals, anything you need, and it still feels like the holiday. It doesn’t really matter as long as you all agree. Then you could extend that out to anything and be like, “Is anything real? Is everything arbitrary? Is it all just in our minds?”
Meghan Coyle:
And with that, we’ll leave everyone with a lot of existential questions.
Sam Kemmis:
That’s right.
Meghan Coyle:
Well, Sam, I know it’s a couple of months away, but I hope you have a great holiday season, or let’s just say a great fall/autumn season, and thanks so much for helping us out today.
Sam Kemmis:
My pleasure.
Sean Pyles:
As ever, I am impressed by how far a little flexibility can go when it comes to saving money on travel. And I say that as someone who is totally inflexible with my travel plans and therefore will never save money like you described doing in college, Meghan. That might be another reason why traveling around the holidays is not my thing.
Meghan Coyle:
I’ll say I did a lot of crazy things as a college student to save money. I remember going to these hour-long talks about the economy so I could get a free Chipotle burrito, and then it turned out it wasn’t even a whole burrito. That tells you how much my time was worth back then. One hour equals half a Chipotle burrito. But back to holiday travel, flexibility is really the key to getting deals on travel at any time of the year.
Sean Pyles:
Yeah. This is really something that I’ve taken to heart, which is that if you’re going to travel for the holidays, try to do it on the days when other people don’t. I mean, if you travel on the holiday itself, sure, you might miss out on some meal prep and maybe some games in the backyard if it’s not snowing where you are, but the hassles you’ll avoid just might be worth it. Now of course, that might not work if you have to deal with layovers or you’re going, say, from the West Coast to the East Coast and the time change makes it untenable. But if you don’t have those factors, why not? I’m sure the captains and flight attendants would love to have your company on the actual holidays.
Meghan Coyle:
Yes. And a hearty, “happy Thanksgiving” is always welcome when you have to work the holiday. And just think of the money and potential annoyances you’re saving by traveling the day of. If you can swing it, why not?
Sean Pyles:
All right. Well, our series continues next week. Meghan, what have you got in store for episode three?
Meghan Coyle:
Well, Sean, I would venture a guess that the biggest worry people have about traveling for the holidays is probably a flight getting canceled or maybe a road getting iced over so you can’t get somewhere. But a close second would be your luggage, all your stuff, the stuff you’d need to look and feel great at your destination, not to mention the presents. You lose that and, well, sad face. We’re going to have some tips and advice for getting your stuff from one place to another without losing your mind or your money.
Jessie Beck:
Once you add on the cost of paying to have a carry-on bag on that basic economy ticket, you might as well just get an economy ticket and be able to be a little bit more flexible. I think that’s the most important thing for me. If I did have to make a last-minute change, I can do that penalty-free.
Sean Pyles:
For now, that’s all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.
Meghan Coyle:
This episode was produced by Tess Vigeland, Sean helped with editing, Claire Tsosie helped with fact-checking, and a big thank you to NerdWallet’s editors for all their help.
Sean Pyles:
Here’s our brief disclaimer: We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Meghan Coyle:
And with that said, until next time, turn to the Nerds.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
A certified financial planner offers a listener actionable advice to help him save for a big move while maintaining financial stability.
How much should you save before you move to a new city? How can you reach your savings goals while also spending on your lifestyle? Recording in-person from a studio in Chicago, host Sean Pyles sits down with Magda Doemeny, a certified financial planner with NerdWallet Advisors, to host an actual financial planning session with a listener. Jim, a 36-year-old nonprofit worker, joins them to share his aspirations of moving to a higher cost-of-living area without a job lined up. Magda advises him on how much money in living expenses he should consider saving before making the move, the practicality of high-yield savings accounts, and the benefits and limitations of using a Roth IRA for a down payment, among other practical strategies for reaching his goals while maintaining financial stability.
NerdWallet Advisory LLC, dba NerdWallet Advisors, is an SEC-registered investment advisor and wholly owned subsidiary of NerdWallet Inc. The advice provided in this episode of Smart Money was for illustrative purposes only and not intended as financial or investment advice specific to your personal facts or circumstances.
Check out this episode on your favorite podcast platform, including:
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Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
Welcome to NerdWallet’s Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius Nerds. I’m Sean Pyles. This episode, we’re continuing our series where we’re doing something pretty unusual for Smart Money. At the request of NerdWallet’s brilliant legal team, we say often and explicitly that we are not here to give you individual personal finance advice. What we talk about is food for thought, for educational and entertainment purposes only. But this episode, our listener is getting specific personal finance advice for their money question.
A few weeks ago, you may remember that we put out a call inviting you, dear listener, to contact us if you wanted some free financial planning and allow us to record that planning session. Lots of you wrote in and today we’re going to hear from one of you. We’re coming to you live from a studio in Chicago and we’ll be talking in person with a listener. But before we get into that, I’d like to bring back Magda Doemeny. She’s a certified financial planner with NerdWallet Advisors. One thing I want to be clear about is that Magda and NerdWallet Advisors are a distinct platform from NerdWallet. Magda will give our listeners some specific individual personal finance advice and that advice will be given on behalf of NerdWallet Advisors, not NerdWallet. Also, in exchange for coming on and talking with us, our listeners are receiving a free one-year membership to the NerdWallet Advisors platform. Magda, welcome back to Smart Money.
Magda Doemeny:
Thanks, Sean.
Sean Pyles:
So we’ve talked with you before, but can you give us a refresher on who you are and what the NerdWallet Advisors platform is?
Magda Doemeny:
Yeah. So I’m an advisor with NerdWallet Advisors, and what we offer is affordable financial planning memberships with access to a certified financial planner like me at a low monthly cost. What we do is review your finances as a whole, and ultimately, create a financial plan that has action items in there that are pretty bite-sized for you to break down. And then we’ll check in with you periodically throughout the year. And ultimately, if you ever have a question, you can always schedule a call and/or send us a note, and you really just have unlimited access to us.
Sean Pyles:
Great. So a lot of people have not gone through the financial planning process before. What’s something that people might not expect about going through this?
Magda Doemeny:
I think the thing that folks aren’t usually ready for is the commitment aspect of this. Kind of like if you decide to update your health and fitness regimen, going to the gym or going to the doctor, if that’s all that you’re committing to, that’s not really going to change your life. And so what we really want is for folks to understand that we can break this into bite-sized pieces so that it is one day and one month at a time so it’s a lot less daunting. But it does take commitment for you to make sure you want to go through this process.
Sean Pyles:
It’s about the small regular actions beyond one big meeting with you.
Magda Doemeny:
Sean Pyles:
All right. Well, let’s get to some financial advising in a moment, our financial planning session with a listener here in Chicago. Stay with us. Let’s get to the guest star for this episode. Jim is a Smart Money listener who is 36 and lives in Milwaukee, Wisconsin. And he’s here with us now in studio. Jim, welcome to Smart Money.
Thanks for having me.
Sean Pyles:
So tell us a little bit about yourself. What do you do for work? What are your hobbies, all that sort of stuff.
I work for a nonprofit. I manage grants that go out to education programs. I’m a former journalist and middle school math teacher, actually. And for fun, I play a sport. I play a sport called hurling, not curling on the ice with the brooms. Hurling is like Irish lacrosse. And I love, love, love to kayak for the very few number of weeks that it’s fun and comfortable to do that and the weather’s nice.
Sean Pyles:
I bet. Okay. So how would you describe your current mode of managing your finances? Are you active? Are you passive? Somewhere in between?
I would say extremely active.
Sean Pyles:
Sean Pyles:
What does that mean for you?
I track all of my expenses. I rebalance my accounts as best as I can about every quarter. I’m very, very, very cognizant of where my money’s going and if it’s doing the most that I can make it.
Sean Pyles:
Great. And that’s why you’re a Smart Money listener.
That’s right.
Sean Pyles:
So how would you very broadly describe your finances right now?
I would say stable, but maybe precarious. So I make enough to do what I’m doing now, but I don’t make enough to be working towards some other really big goals. So what I’m really interested in learning is what kind of financial risks might be worth it for me to take so that I can pursue some big goals that I have.
Sean Pyles:
Okay. Well, tell us about your current financial goals. From what I understand, you’re hoping to move from Milwaukee to San Diego potentially, and you’re considering even maybe dipping into your retirement accounts to fund that move. Talk with us about that.
That’s right. I am a Midwestern boy, born and bred. I was born in Chicago. I absolutely love the Midwest and I absolutely love Milwaukee. Everyone should visit. It’s a wonderful place to live. It’s affordable, it’s got this gorgeous lake. It’s got friendly people, and I am so sick of winter. I never want to be cold again for the rest of my life if I can avoid it. And while I’m pretty sure that if I did move to a warmer place, I’d eventually see that maybe the grass isn’t greener, but I would feel a lot more peace of mind if I’d given it a shot. So I’ve been on the job hunt for a while to try and make that feasible. And San Diego is kind of my prime target, but it’s been slow-going.
And I’ve had a couple of close calls and I’ve got some traction right now with a few things, but it’s an expensive place. I don’t have a lot of connections, and I’ve put a lot of time in and I’m getting older and I’d like to start a family and buy a house one day and stuff like that. So I’m trying to weigh how important is it to me based on my financial security, if it’s a risk that’s wise to take.
Sean Pyles:
Right. Well, making such a jump, moving to a new place and maybe even using retirement funds to make that move is pretty risky. So how are you thinking about the tradeoffs of the risks and potential rewards for your life?
Absolutely. So I have a Roth IRA that I’ve been saving and I’d originally used it as a way to save for a down payment. I have a really generous retirement plan through my work when I put 5% in, another 9% comes back. So about 14% of my pay is going into my retirement fund through my employer. So extra stuff has been going into this Roth IRA that I’ve had for a couple of years. And it’s because I’ve done some research and I know that you can use a Roth IRA without paying penalties and without paying taxes. And even on the earnings of that, I know that there’s a limit that you can use even toward a down payment on a first home.
So I’ve been saving for that, but because I really, really, really want to make this move and I haven’t gotten a job to do that yet, I would feel more secure and not like I’m going to deplete all my emergency funds and all that if I knew that it wasn’t a terrible idea for me to tap into that Roth. And I might even be willing to go without a job and work service industry things just to get out there, and maybe that would advance the job hunt faster. But I don’t want to do that if I think that that’s going to put me in an unwise situation. I would say that I’m very, very cautious about my finances because I took on a lot of student loan debt in my undergraduate degree, so I never want to be in that position again. And being stable financially is really, really important to me.
Sean Pyles:
Right. Okay. And so you’re hoping to get maybe a second opinion to bounce some ideas off of and see if this isn’t so crazy an idea?
I would love someone to give me permission to do something a little scary.
Sean Pyles:
Okay. Well, have you ever used a financial advisor before?
Sean Pyles:
Okay. Well, Jim, I know you have been sitting here across from Magda for a little while, but let me officially introduce you to each other. Jim, Magda, Magda, Jim.
Magda Doemeny:
Sean Pyles:
So Magda, I’m curious if you have any initial thoughts about Jim’s financial situation based on what we just talked about?
Magda Doemeny:
Yeah, I think this is not uncommon. There are folks who want somebody to talk to them about where they are financially today and what kinds of decisions they can make, whether it be moving across the country or halfway across the country, buying a home, how much can they actually afford when it’s so expensive? Can they actually afford a little bit more than they think? So when I look at your situation, I think you’re doing all the right things by asking all of these questions. And what it really boils down to is what do we do? Do we actually make that move with your current financial situation or not? I think I am a firm believer that your retirement is intended for retirement and we want to do everything in our power not to touch that mostly because we can’t undo it.
Once we remove the funds from a retirement account, you can’t really put them back. And there’s so many tax benefits specifically to those types of accounts. So I want to talk a little bit more about the details of what your income is, talk about those expenses, talk about other ways we could increase income, if at all. Because when we do something big like this, I want to plan for it. And that means not taking the resources necessarily that we have and seeing what we can do with it, but instead saying, I’m going to do this in X amount of time. How do I get myself there? What do I do now?
Sean Pyles:
Let’s look into some more specifics. I know when you do financial planning, you need some specific numbers. You’re looking for balances of savings accounts. Let’s really dive into that nitty-gritty. So when it comes to something like a savings fund for a move, what would you maybe want to see from Jim here? Or what other options might there be for Jim to make this move if there isn’t a lot of liquid cash available?
Magda Doemeny:
I think if you are going to be making a move without a job, I want at least a year’s worth of expenses. I really want a year’s worth of expenses where you’re going, not where you are today, right? Because what we want to know is if it takes you a year to find a job that can pay you somewhat near your cost of living, I don’t want you to have to incur high interest debt, which is what could happen, right? Ultimately, if you need to pay for something, it goes on a credit card and if there’s not cash to support it, that stays there. You get a rolling balance, and that could just be for your day-to-day expenses potentially. So we need ideally at least a year if you’re quitting your job and moving.
Sean Pyles:
And so Jim, what is your emergency savings like right now, or your move savings fund? Do you have anything like that put aside?
I do. So my emergency fund right now, I’ve been aiming to have about six months and I don’t have that yet. So I’d say right now I just wanted a big trip, but I’ve gotten reimbursed for my company. So I would say I’ve got something like 6,000 in emergency savings and my low cost of living in Milwaukee, I’d say that would just barely cover three months.
Sean Pyles:
Okay. And are you putting aside a certain amount monthly to build that up or how are you thinking about increasing your emergency savings?
Yeah, I save about $850 a month, although I’ve had a couple of big expenses lately and I have a car that I love, but she is at the end of her rope. She’s put in a good hard life and she deserves a rest. So knowing that I have this car that serves me fine now, but would absolutely not make a cross country move. I’ve been delaying doing anything about the car in hopes that I might be able to move somewhere where that’s not a necessity and that would save me a lot of money, but I don’t know those circumstances until I’ve made that change.
Sean Pyles:
Okay. So talk with us a little bit about the car. Are you willing to take on some debt? I know you mentioned that you’re not really keen on debt at this point after all of your student loans. It seems like it might be an inevitability unless you really prioritize living somewhere that’s more central, which could mean higher rent payment, especially in a more expensive place like San Diego.
Sure. I mean, of course if I bought a car I would absolutely need a car loan, but my bigger more important priority is the move. So if I could move somewhere where I didn’t need a car, I would happily forgo a car so that I could pursue that.
Sean Pyles:
Okay. Well, Magda happens to live in San Diego. Can you speak a little bit about how walkable certain parts might be? What are your thoughts around the necessity of a car in that city?
Magda Doemeny:
Yeah. I’ve been there for just over a year now, and I live more in the suburbs since I have two kids. I think it’s possible, but generally California is not very public transportation friendly, I’d say, born and raised in California. So part of what’s fun about California is all the places you can go. Beach, mountains and those things will need a car. And so outside of you moving there to restrict your life to your area, you can expect to need a car to get places which is $100 Lyft here or something like that. I mean, it costs me $50 here to the airport. So you’ll probably need a car.
Sean Pyles:
So I’d like to hear your thoughts around Jim’s savings in terms of emergency savings and savings for a move like this. Do you have any tips for how he could potentially increase the cash that he has to make a move like this possible on the timeline that you have? Do you have a set timeline, by the way? Do you want to move within a year?
Yesterday.
Sean Pyles:
Yesterday. Yeah. So as soon as possible, what do you think are some good ways to accelerate savings?
Magda Doemeny:
Yeah. So I have a little bit of context on your situation, which includes how much you have in retirement savings, which for your age is actually pretty good relative to how much your income is. And this is more something that we use to gauge just general progression around how much you’re saving for retirement, but it is based on your income and your living expenses because it means you’ve saved enough to cover your current lifestyle. But with a move to San Diego, the assumption would be you’d have to increase your income and increase your savings if that was your permanent home forever.
If you end up moving back to Milwaukee, great, then you’re saving higher. So because of that, I think something that I could suggest is one, we want to take a look at your expenses in general. It sounds like you track them pretty closely, which is great, but we can always, if we set a goal which is I need to save X dollars, which for you would definitely be six months, but if you didn’t have an income, I’d want it to be a year, and we can work backwards from that number. One thing I could suggest is that we actually decrease some of your retirement contributions, but I want to learn a little bit more about your match. So in order to get that 9% match, is there a minimum contribution you have to put in to get the 9% match?
So we are a unionized office, so there’s actually two employer contributions. So when I put in 5%, that gets matched to 3.5%, but then there’s a 5.5% that is not a match, it’s just put in. But my 5% that I put in now is necessary to get the full 9%. Yeah.
Magda Doemeny:
Sean Pyles:
And this is 5% on what salary?
Well, I just got a raise, so about 74.
Sean Pyles:
Okay. Congrats on the raise, by the way.
Thank you. Thank you.
Sean Pyles:
And so you mentioned that Jim was in a pretty solid place in terms of his age for retirement savings. What was that balance and how do you think about these benchmarks? Because there are certain numbers people see around, okay, one time is your salary, one you’re 30, that sort of thing. So can you provide some context and details around Jim’s situation for that?
Magda Doemeny:
Yeah. So correct me if I’m wrong, Jim, but I have that in terms of retirement savings, about 125,000 or so, which is spread between a Roth IRA and a 403(b) at your employer. So that’s about 97,000 in one and 26,000 in the other.
It’s like 120 in the employer and then another 27 or so in my Roth.
Magda Doemeny:
Oh, okay. So 120.
Sean Pyles:
Which just for context will put you ahead of the vast majority of people in this country. So even though these benchmarks are very aggressive, one time your salary at 30 is impossible for many, many people, you’re doing fantastic in that regard. So you should be proud of that.
Magda Doemeny:
Older me will thank me, but younger me really wants to be warm.
Magda Doemeny:
Right. And that’s true. So that I tend to use, there’s a number of different ways you can just figure out if you’re on or off track. I tend to not use the very detailed method until you’re really close to retirement because then we’re actually making a decision to cut off your salary, which the best ways for you to increase your saving is really only two ways. It’s increase your income or decrease your spending. And so for you, I think that your retirement savings is great, which is why potentially we could trim back a little bit, but I really hate giving away free money, so I don’t know that I’d want to do that. So I would want to prioritize two things. The first one would be is there any other way we can increase your income, whether it’s gig work or contracting at what you do? If there’s a way for you, I think you had mentioned at some point that you have a journalism background. Is there a way you can start picking up some writing?
Magda Doemeny:
Something like that.
Fun fact about me, I’m a giant nerd and I actually am a seasonal tax preparer.
Magda Doemeny:
So I’ve done that the last couple of years. People look at me like, what is wrong with you that you could do this for fun? But I love it. But part of the reason why I haven’t spent more time on side gig work, even though I have plenty of time for it, is because I’ve been using that time for the job hunt. So I’ve been trying to spend my time making connections and networking and finding roles that I might want to do that would increase my income and my full-time job. So it’s tricky to be able to find the time to do that when you’re working at night as well.
Magda Doemeny:
And what’s the target salary range you’re looking at, where are you finding it?
I would love something in maybe the 110s, but I think I would accept a role that would be anything from 95 on up.
Magda Doemeny:
Sean Pyles:
Okay. Which sort of specific jobs are you looking for?
That’s a great question. So my background is in nonprofits, that’s where I have the most experience and I think it’s most likely where I’d go. One reason why I’ve stayed in nonprofits so long is not only do I love it and it is very meaningful work and I work with good people and I like the causes that I work for, but I was on the public service loan forgiveness plan, so about half of my student debt was forgiven in April because I had worked for a nonprofit for 10 years. So now that that’s happened, the financial incentive isn’t there for me to stay in nonprofits. So I’m very open to going into something else. For a while, I really like the analytical parts of my job and I take classes in SQL and R and Python for fun.
But because I’m sort of in a middle career, it’s tricky to find a role where I’m not taking a low step, a step downward, and I’ve got a lot of ad hoc do-it-yourself learning that is a little trickier to sell, especially in tech right now, which seems like it’s had a lot of layoffs. So I have a very, very broad net, which has its pros and cons. It means I’d be willing to do a lot of things, but then it’s really hard to know how to network or find something. So I’d say right now I’ve been looking in largely government jobs.
Magda Doemeny:
And I will say that you ultimately want to look at what your goal is here, which if it is to increase your income. We as financial planners will tell people all the time, you can stop working to go and get a degree if that’s going to increase your income over time. And so even you mentioned taking a step down from maybe career level where you are, but ultimately, if you’re stepping into an industry that will 2 to 3x your salary, that might not be a bad decision, especially if some of these positions being in the engineering tech space, their entry level positions could be not too far below your current one and sure it might be below, but it’s probably remote, which is great.
And you’ll still be a W-2 employee, which we care a lot about. Not that you can’t be a contractor, but that comes with benefits when it comes to being fully remote. And so that could be something that you shouldn’t shy away from if you can actually get into that industry and then start to really progress your career a lot higher versus in one that might be a little more stagnant.
I have no problem with that and applying elsewhere. And I love learning, but I have such a hate-hate relationship with the higher ed industrial complex. And the thought of taking on more student loan debt makes me want to jump out a window. It’s not to say that I would never do it, but it would be very hard to maintain the feeling that this is…
Magda Doemeny:
Really going to help you.
Right. Really going to help me. That it’s not going to cause a lot of the same kind of anxiety that it’s caused me for the past 18 years.
Magda Doemeny:
And could you get into the industry without additional education?
I’d like to think so.
Magda Doemeny:
Yeah. But that’s where you’re struggling.
People keep saying that I can, but they haven’t given me an offer yet.
Sean Pyles:
Well, I want to turn to talking about a different type of debt, home debt, mortgage debt. You’re hoping to become a homeowner at some point. How have you begun to plan for that?
Limited. So I used to be married. I got divorced last year and I had been using the Roth IRA combined with my partner. We were saving together in different vehicles, but the Roth was a way where I could save this money. I had worked in a lot of other sketchy nonprofits before that I didn’t really trust how they were managing their finances. So I did my retirement savings myself through my Roth. So after doing some research, I learned that with a Roth IRA, as long as it’s at least five years old, you can use all the contributions toward whatever you want without a penalty or taxes and even 10,000 of the earnings for first-time home purchase. So the way that we were saving for a home together was she was using her savings vehicle and I was using the Roth IRA as my savings vehicle.
So that’s been there. I’m not contributing to that Roth right now because I’ve got other priorities in my budget, but it’s been there as well. When it’s time for a down payment, I’ll draw from that. But I don’t intend to buy property anywhere until I have proven to myself that whether or not living somewhere with a really, really wonderful miraculous climate like San Diego would be worth it. So I guess my savings is in the Roth IRA and that’s part of why I’m interested in talking today is like, well, I don’t think buying a home is in the very near future and I don’t think it will ever feel like something that I would feel good about until I made this other change, if that makes sense.
Magda Doemeny:
Yeah. And that absolutely makes sense. I want to weigh, I think it’s okay to use a Roth IRA for something that I would view as an investment. Not to say that you moving to San Diego and bettering your life and the way that it would better your life isn’t an investment. But the problem with doing it not into an asset like a house is that if you decide that this isn’t for you and you don’t like it and you move back, it is money that was depleted that didn’t have the potential to turn into something more. And so for something like living expenses, that is something that I’d prefer we save for outside in some capacity versus depleting a retirement account to use for effectively an emergency fund really is what we would be using it for. And I do think that we could, ultimately, find a way to do that.
We would just probably extend your timeline a bit, but you had mentioned that you’re saving typically around 880 or so a month in a year’s time, and especially if there’s any way we can even trim back expenses even more, that can be a good chunk of money that we can set aside to say, this is your getting to San Diego. I know a year might be too long of a timeline, so we could figure out how to adjust that if we can figure out how to make more money and then we can really hoard a lot of cash that we can use for a move.
Music to my ears, making more money.
Sean Pyles:
So I want to turn to specific advice on an even monthly basis potentially for Jim in a moment. But I also have a question around accounts because we’re NerdWallet, I’m all about getting people the best products for their goals. What sort of savings account are you using? Do you have a high-yield savings account? Talk with me about that.
I chose my savings account based on NerdWallet’s recommendations.
Sean Pyles:
And it is high-yield?
It is high-yield. [inaudible 00:24:29] income. Yeah. So I think right now my savings account is at 4.6%.
Sean Pyles:
Okay, great. So what do you think about trimming expenses to be able to save more? Do you have anything in mind that you think, okay, that’d be an easy expense to trim right off the bat?
Honestly, no. So sure, I go out often. I am a pretty extroverted person and it’s been very good for just my mood to be able to see a lot of my friends. I don’t always have to spend money when I go out, but it’s pretty tricky to go out into a bar or a restaurant with friends and not spend some money. So I can imagine if I was really disciplined I could shave a couple of hundred dollars a month off of that. But like I said about my car, I feel like anything that I would save by doing that would just get gobbled up when this car, ultimately, crosses the Rainbow Bridge.
Magda Doemeny:
And it is something that we want to plan for when we look at cash. We don’t want anyone to have too much cash. I don’t know if that’s crazy to say out loud, but cash is not great. Cash is for specific purposes, which is your emergency fund and any short-term goals that you have, your car being one of them. So we would want to pre-fund whatever we think a down payment would be, so you’d want to do some research on what car you would want, and then we’d figure out roughly how much we’d want to put down for something like that and that we’d want to set aside in cash. So if you’re saying that you don’t think that you could trim expenses too much, which is fair, I mean, I don’t want to say go live with 10 roommates and find a way to never go out and enjoy life. That’s not what your finances are all about.
It’s about meeting you where you are within the means of getting to your goals. I do think the next priority would have to be focusing on increasing income, which it sounds like you’re doing. But then my goal for you would be that we wouldn’t move to San Diego until we at least knew where your income could get. Because if we find out that your income is 110 or 120, that’s very different than if we find out your income would stay at 75, which we know for certain…
Would not.
Magda Doemeny:
Would not cut it.
Would not be possible.
Magda Doemeny:
Yeah, because I mean right now your housing expense is $1,000 a month, correct?
Which is incredible.
Magda Doemeny:
It’s incredible. And no roommates, I assume.
That’s right.
Magda Doemeny:
Yeah. So I think in San Diego I would guess that you could do $1,000 with maybe two or three roommates or something. I don’t know if I’m being extreme. And so right now, based on your ability to maintain your contributions to retirement, which I’d love to do. Like I said, you’re a little ahead of the game, so if you change jobs and they didn’t have this incredible match, I think I’d be okay with you trimming down your retirement contributions and we could reallocate those funds to maybe a cash account or just a standard investment account so that you can liquidate that anytime. There could be penalties associated with if you’ve made money on them, but no penalty, that would just be taxes. So we could reallocate funds that we could say this is towards building towards a future home or something like that. So I would be okay with that, but I think we really need to figure out what your next job is going to be.
You and me both. Yeah.
Magda Doemeny:
Sean Pyles:
Well, that brings me to the next part of this conversation, the actual specific recommendations, Magda, that you would have for Jim. So when you’re thinking about a financial planning session like we’re having now and this ongoing relationship that you will have with Jim going forward, what would you say is maybe the first best thing that Jim should do to get to that goal? Moving to San Diego, hopefully, within a year, maybe two years.
Magda Doemeny:
I think the first thing would be that we get a better idea of what the cost is actually going to be in San Diego. So that means really doing some research and finding real places on rent. We could talk about the other parts of the cost of living, obviously, but there’s ways to do research and just find out how much is it going to cost to buy your groceries down there. And then accommodating for lifestyle change of just going out and about potentially a lot more in a new city. So I’d want to get a better handle on that so then we could figure out how much do you need to make to support that lifestyle. I also want to make sure we figure out how much we need for a down payment on a car. If we need one, which I think in San Diego you would, I wouldn’t want to anchor on not needing a car because if you do, we got to find that money somewhere once we’ve already done that.
Sean Pyles:
I imagine it’d be cheaper to buy a car in Wisconsin than San Diego.
Magda Doemeny:
And driving it all the way through. I don’t know if there’s income tax you guys…
Magda Doemeny:
Or do you guys have sales tax there?
Magda Doemeny:
Yeah. Okay. So I’m sure it’s probably cheaper than California. So I think those would be the first few things, and then we would want to figure out how to create an actual budget for you once you moved so that we could decide how much can you be spending while you’re there on non-housing so that we don’t go too far over budget. And then we would figure out if we need to, how much we can contribute to your retirement once you started your job. My biggest thing that I actually haven’t mentioned is moving somewhere without a job. One of the most important things that you’re losing is your healthcare. And I don’t know about other states, but being in California, it’s not cheap. And this can be several hundred dollars a month just so that you have healthcare coverage, which you have to have. And so that’s another reason why it’s just important for you to have some source of employment, whether it be that they provide it or you have an income to pay for the healthcare. So we’d want to make sure that got set up as well.
Sean Pyles:
Accomplishing financial goals. One thing Magda and I talked about before this recording is about making changes. It’s like going to therapy. You don’t just go for the conversation. It’s about having some proactive differences that you’re going to make in your day-to-day life. Are you prepared to make some significant changes to maybe how you manage your income and expenses, maybe working a little bit more to be able to get to where you want to be in a year?
I very much am. The challenge is making the changes that are going to yield the biggest benefit. So like I mentioned, I have no problem working two jobs. I’ve done that for a lot of my career, but lately I’ve been using that second job time to find a different first job. And so it’s hard to know what the payoff is, like where’s the most lucrative place to spend my time. That also aligns with my goals and also takes into account just how much time I’ve already put in. I don’t want to look too much at all this time that I’ve worked on it, but the fact that I’ve put so much time in and it’s still this important to me kind of makes me want to look more boldly at what kind of risks am I really willing to take.
Sean Pyles:
Well, Jim, do you have any other specific questions for us that you haven’t asked yet?
Anybody’s selling a car for really cheap?
Sean Pyles:
Unfortunately, no. Not here, not me. Great. Well, Magda, let’s turn to what some listeners can get from this conversation. At a high level, what do you see in Jim’s situation that might be applicable to our audience?
Magda Doemeny:
I think it’s very common for people to not really understand exactly what their money can do for them. And frankly, even as a CFP, I find this to be the case sometimes too, where I want to take risks, which is taboo, but sometimes I want to do that and I know folks want to be able to stretch their dollars. It is possible to be too conservative sometimes. I want to encourage folks to take risks sometimes that are something you’ve at least thought through and have a plan for. I know I’ve said plan a thousand times right now, but that’s really what this boils down to is when you want to take a risk, you just have to do the research to put it together so that you have a plan. Because too many times what we see is I might talk to somebody on the back end of that non-existent plan and I say, well, let’s talk about how you got here.
And it comes along with such and such was going on and I just didn’t want to do it anymore, and I did X and now I’m here. And that’s not always the case for everybody, but if you have a plan and a direction, it also helps you decide when it’s not working. You get there and you’re bleeding cash and you say, wow, I can only make it here six months. So you have an exit point to say, I can only spend this much money in six months. Now I need to go back to my cheaper lifestyle. If we don’t at least plan things through, then we don’t know our entry, our exit, and we don’t know when things are really turning in the wrong direction. I know that’s more of a negative way of thinking about it, but the positive spin would be true as well.
Like I mentioned, when you want to make a change, I want people to be empowered by that change. The same is true if you decide to go back to school and get an education. I want you to know that this is bettering your future, and that’s why you’re willing to take the risk and slow down your career temporarily to speed it back up. The same is true for making this move. I want you to get there and enjoy it and not have money be the thing that’s just constantly in your background saying like, oh, is this a bad decision? I can’t afford it. And so I think that’s pretty applicable to most people who want to take risks.
Sean Pyles:
Great. Well, Jim, I hope this was helpful. Keep us posted on how things are going for you, and thank you so much for coming on Smart Money and talking with us.
This is fantastic. Thank you so much.
Sean Pyles:
Great. And, Magda, thanks as always for sharing your insights.
Magda Doemeny:
Of course. Happy to be here.
Sean Pyles:
And that’s all we have for this episode. Remember, listener, that we are here to answer your money questions. So turn to the Nerds and call or text us with your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. Also visit nerdwallet.com/podcast for more info on this episode. And remember that you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes. To learn more about NerdWallet advisors, go to https://nerdwalletadvisors.com/smart-money.
Here’s our brief disclaimer. I am not a financial or investment advisor. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
This episode was produced by Tess Vigeland, Cody Gough, and myself. And a special thank you to Magda Doemeny, Georgia McIntyre, and Emily Canedo, and a big thank you to NerdWallet’s editors for all their help. And with that said, until next time, turn to the Nerds.
NerdWallet Advisory LLC, dba NerdWallet Advisors, is an SEC-registered investment advisor and wholly owned subsidiary of NerdWallet Inc. The advice provided in this episode of Smart Money was for illustrative purposes only and not intended as financial or investment advice specific to your personal facts or circumstances.
Are you looking for the best digital marketing side hustles? Digital marketing side hustles are a great way to earn extra money online. With so many options like social media management, SEO, and affiliate marketing, there’s bound to be a side hustle that fits your interests and skills. Why should you start a digital marketing…
Are you looking for the best digital marketing side hustles?
Digital marketing side hustles are a great way to earn extra money online. With so many options like social media management, SEO, and affiliate marketing, there’s bound to be a side hustle that fits your interests and skills.
Why should you start a digital marketing side hustle? It gives you the freedom to work from anywhere, the flexibility to set your own schedule, and the chance to build new skills. Whether you’re a beginner or have some experience, you can probably find a digital marketing side hustle that works for you and suits your lifestyle.
I have been hearing the term “digital marketing side hustle” a ton online lately, and I wanted to write a full article on it so that you can learn more about it as well. These types of side hustles are extremely popular right now (and I think they will be for a really long time)!
What is digital marketing?
Digital marketing is any online marketing that takes place on the internet.
It includes a lot of different activities:
Social media – Sharing posts on platforms like Facebook and Instagram
Email – Sending promotional messages to people’s inboxes
SEO (Search engine optimization) – Making a website more visible on search engines like Google
Content creation – Writing blog posts or making videos to connect with an audience
Why is digital marketing important?
It helps businesses reach more people. Many people shop online, so having a strong presence is key.
A digital marketing side hustle is a way to make extra money by growing a business online (this could be your own business or someone else’s!). This could mean running social media accounts, making ads, writing content, or improving websites so they show up better in search results (SEO).
It’s a flexible job you can do from home and often at your own pace, which is great if you want to earn money without a full-time job. Some people even turn their digital marketing side hustle into a full-time job (this is what I’ve done!).
Best Digital Marketing Side Hustles
Below are the best digital marketing side hustles.
1. Blogging
Blogging is a great digital marketing side hustle for a person who wants to be creative.
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I started making over $1,000 a month from my blog around one year after starting, and I was making around $10,000 a month just two years later. I have now earned over $5,000,000 from my blog over the years (you can read all of my income reports here). I am able to travel whenever I want, and I really love what I do.
You can start a blog about something you’re passionate about. Whether it’s cooking, travel, or fashion, there’s an audience out there for almost any topic.
To make money from your blog, you can use display ads, sponsored posts, affiliate marketing, or even sell your own products (like courses, ebooks, T-shirts, etc.).
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Social media management is a popular digital marketing side hustle. Businesses need help with their social media accounts and you can earn money by managing these accounts for them.
Social media managers create posts, respond to comments, and grow their followers. This helps companies get more customers and build their brand.
I have been a social media manager in the past, and it is an interesting and fun job if you like social media. I specialized in Facebook marketing, but you could manage a company’s TikTok, Pinterest, Instagram, and more for them.
3. Affiliate marketing
Affiliate marketing is a great way to earn money online. You promote products or services and earn a commission for each sale made through your referral link. This can be done on platforms like blogs, YouTube, or social media.
Affiliate marketing is one of my favorite digital marketing side hustles too! I love that I can write content and possibly earn money from it years later, all because people are still searching and reading the content that I wrote a long time ago. So, this means that I can earn money while I’m sleeping or on vacation.
One of the other best parts about affiliate marketing is that it has a low entry cost. You don’t need to invest in inventory or worry about shipping. You just share products you believe in and can start earning money (the company that you are promoting does most of the work).
Creating quality content is key when it comes to affiliate marketing. I recommend that you always write honest reviews, make tutorials, or share personal experiences. These best practices build trust with your audience and increase the chances they will buy through your links.
Plus, there are affiliate programs for almost every product you can think of nowadays, so this is a digital marketing strategy that you can probably easily start.
If you want to learn more about affiliate marketing, I recommend learning more at Affiliate Marketing Tips For Bloggers – Free eBook.
4. Selling online courses
Selling online courses can be a great way to make extra money. If you have expertise in a subject, you can create a course and sell it online.
Many people are looking to learn new skills and are willing to pay for quality courses. I buy online courses all the time and I have learned so much. (I have bought courses related to running an online business, blogging, personal finance, and even parenting courses such as childbirth and baby sleep.)
Here are some course topic ideas:
Personal finance – Courses on budgeting, investing, or paying off debt can be popular.
Blogging – Teach others how to start a blog, create engaging content, or monetize their platforms.
Online business and entrepreneurship – Share insights on starting an online business, dropshipping, or creating digital products.
Health and wellness – Topics like fitness routines, nutrition planning, or mental health can be so helpful.
Skills and hobbies – You can teach anything from photography, painting, and cooking to coding, graphic design, or language learning.
Career development – Courses on resume writing, job interview strategies, or career coaching can be valuable for those looking to advance in their careers.
Social media marketing – Teach strategies for growing a following, creating content, or using platforms like Instagram, TikTok, or LinkedIn for business.
Parenting and family – Courses on parenting strategies, homeschooling, or managing work-life balance as a parent can be very helpful.
Arts and crafts – You can sell courses on creative writing, drawing, digital art, or playing music.
Travel planning and hacks – Share your expertise on travel planning, finding deals, or traveling on a budget.
Creating a course can take some time, but the payoff can be worth it. You can record video lessons, create quizzes, and provide downloadable resources. Once your course is ready, you can sell it on platforms like Teachable (this is the platform I use for my courses) or your own website.
You can learn more about the course that I created at How I’ve Made Over $1,000,000 From My First Course Without a Big Launch.
5. Creating a YouTube channel
Starting a YouTube channel can be a great way to make money. It’s all about creating videos that people want to watch. You don’t need fancy equipment and many people start with just a cell phone.
The key to success on YouTube is to find a niche you enjoy and create consistent, high-quality content that resonates with viewers.
Making money with your YouTube channel can be done through multiple ways, such as ad revenue, sponsorships, affiliate marketing, and selling your own products or services.
You can learn more at How Much Money Do YouTubers Make?
6. Dropshipping
Dropshipping is a popular way to start a side hustle. This type of business lets you sell products online without needing to have inventory. All you do is set up an online store, and when a customer orders, the supplier ships the product directly to them.
You don’t need a big budget to start dropshipping. Most of the costs go into creating and marketing your online store, so this can make it a low-risk option for beginners.
7. Virtual assistance
Virtual assistance is a flexible and rewarding side hustle. If you’re good at organizing, managing tasks, or providing customer support, you can help businesses stay on track.
Virtual assistants (VAs) do many kinds of work. You might handle emails, manage social media accounts, manage their blog, schedule appointments, and more. You can choose tasks that match your skills.
You don’t need much to get started. A computer and internet connection are enough. Many clients don’t care about formal education as long as you can do the job well.
I was a virtual assistant for several years, and I really enjoyed the job. Now, I currently have a virtual assistant and she is a lifesaver for my business!
You can learn more at How To Find Virtual Assistant Jobs.
8. Selling ebooks
Selling ebooks is a good way to make money online. You can write about anything you know well. Whether it’s cooking, personal finance, fiction, or self-help, there’s an audience for your expertise.
Or, you can also write fiction such as romance novels.
Publishing platforms like Amazon Kindle Direct Publishing (KDP) and Barnes & Noble Press make it easy to self-publish and reach a wide audience. You can also sell your ebook directly from your own website, allowing you to keep a larger portion of the profits.
Promotion is extremely important when it comes to writing a book, so you’ll want to use digital marketing, such as social media, your blog, or even email marketing to reach potential book buyers.
The best part about selling ebooks is that it creates passive income. Once your ebook is published, it can possibly sell with little ongoing effort, making it a great way to earn money over time.
9. Graphic design
Graphic design is a good side hustle for anyone with a creative eye. You can use your skills to create logos, websites, social media graphics, and more. People and businesses always need good design to stand out.
I have hired graphic designers many times in the past, and I know of many other business owners who have as well.
One of the best things about graphic design is that you can start without spending a lot of money. There are free or low-cost design tools, like Canva, that help you make professional-looking graphics without needing expensive software.
Graphic design is needed in many fields, from making social media images and website banners to designing ebooks, infographics, and print materials. This gives you the chance to pick projects that match your interests and skills.
10. Freelance writing
Freelance writing is a great way to make extra money. If you love writing, it’s a perfect fit. You can write about topics you enjoy and get paid for it. Many businesses need content for their blogs, websites, and newsletters.
As a beginner, you might start with lower-paying jobs. This helps you build a portfolio. Over time, you can raise your rates as you gain experience.
There are many types of freelance writing. You can write articles, blog posts, product descriptions, or social media content. You might also do copywriting or ghostwriting.
I have been a freelance writer for years and I really enjoy it due to the flexible schedule and being able to work from home.
You can learn more at 14 Places To Find Freelance Writing Jobs – (Start With No Experience!).
11. Email marketing
Email marketing is a great side hustle. It involves sending emails to a group of people to promote products, services, or events. This may involve running your own email list or helping other businesses reach their customers directly.
You don’t need much to start. Just a computer, internet connection, and starting an email list on a platform like Convertkit.
For my email list, I use Convertkit. They make it easy to manage my newsletter email list and send high-quality emails.
12. SEO consulting
SEO consulting is all about helping websites appear higher in search engines like Google. If a website ranks higher, more people will visit it.
This might involve fixing content, making the site faster, looking for the best keywords (with keyword research), doing competitor analysis, building links from other sites, on-page optimization, and making sure the site works well on mobile devices. You’ll also need to keep up with the latest SEO trends and changes since search engines are always changing.
13. Run Facebook ads for small businesses
By running Facebook ads for local businesses, you can help small businesses reach new customers, and you may be able to earn $1,000 a month for each client that you have.
Facebook is one of the largest advertising spaces that exists, and this is an area that will just continue to grow and be popular.
Also, there is a free webinar (you can sign up here) that will teach you how to start this business, even if you’re new.
14. Influencer marketing
Influencer marketing is when you use social media to promote products or services. There are many social media platforms that you can get started with, such as Instagram, TikTok, YouTube, and Facebook.
You have probably seen people on Instagram or YouTube showing off clothes, their favorite electronics, vacations, or even food. These content creators are getting paid to do that.
You don’t need millions of followers to start. Even with a few thousand engaged followers, brands might pay you to talk about their products.
I have done many influencer marketing partnerships over the years and I think it’s a great gig, especially if you have passion for the topic that you are creating content on.
15. Video editing
Video editing is a great digital marketing side hustle. Lots of businesses need videos to promote their products or services, and you can help them create polished, engaging content.
You don’t need a lot of fancy equipment to start. A decent computer and good editing software will do.
Many video editing projects can be done remotely so this means you can work from home or anywhere with an internet connection.
Video content is everywhere. From YouTube to Instagram, more people want high-quality videos and this means there’s a growing demand for video editors.
Frequently Asked Questions
Below are answers to common questions about digital marketing side hustles.
Is digital marketing a good side hustle?
Yes, digital marketing can be a good side hustle. There are many ways to make money with digital marketing, so there is probably something that may fit what you’re looking for. Plus, many digital marketing side hustles don’t cost a lot of money to begin, so there is little risk to start.
Can I do digital marketing with no experience?
Yes, you can start digital marketing with no experience. Many online resources (such as blog posts) and courses can teach you the basics.
What are some digital marketing side hustles for beginners?
For beginners, some great digital marketing side hustles include blogging, managing social media accounts, and affiliate marketing. You might also try selling online courses or creating a YouTube channel. These are all beginner-friendly options.
What’s the best way to learn digital marketing skills to make money on the side?
The best way to learn digital marketing skills for making extra money is to start with free resources like blogs, YouTube videos, and podcasts that teach the basics. After that, you can take online courses to learn more about specific topics like SEO, content marketing, social media marketing, or email marketing.
How can I turn email marketing into a profitable side job?
To turn email marketing into a profitable side job, start by building an email list. You can share valuable content or discounts to your subscribers. Then, send regular newsletters or promotional emails.
Best Digital Marketing Side Hustles – Summary
I hope you enjoyed this article on the best digital marketing side hustles.
Digital marketing side hustles can be a great way to make extra money from home. Whether you like blogging, managing social media, or affiliate marketing, there’s probably a side hustle that can match your interests.
Many of the digital marketing jobs listed above are flexible and can be done from anywhere, making them really appealing.
There are also lots of resources to help you get started, so even beginners can jump in and start earning. If you want to add to your income or try out a new career, digital marketing side hustles can be a great choice.
What digital marketing side hustles are you interested in?
Wyoming is a state filled with natural beauty and fascinating history. Whether you’re looking to rent in Cheyenne or searching for an apartment in Casper, living in Wyoming offers a unique experience. From its vast landscapes to its small-town charm, there’s much to discover about the Cowboy State. Here are some fun facts about Wyoming that might surprise you.
1. Yellowstone National Park is the first national park in the world
Established in 1872, Yellowstone is a symbol of America’s natural heritage. It spans over 2 million acres and hosts diverse wildlife. Geysers, hot springs, and the iconic Old Faithful are just a few highlights. The park’s creation set the precedent for preserving natural wonders across the country.
2. Wyoming was the first state to grant women the right to vote
In 1869, Wyoming made history by giving women the right to vote. This bold move earned it the nickname “The Equality State.” Wyoming’s commitment to equality continued when it elected the first female governor in the U.S.
3. The state is home to the smallest population in the U.S.
With fewer than 600,000 residents, Wyoming has the smallest population of any U.S. state. Despite its size, Wyoming is known for its tight-knit communities and wide-open spaces. The lack of crowding offers residents a peaceful, close-to-nature lifestyle. You’ll rarely find traffic jams in Wyoming’s towns.
4. Devils Tower was the first declared United States National Monument
In 1906, President Theodore Roosevelt designated Devils Tower as the first national monument. This striking rock formation rises 867 feet from its base. It holds cultural significance for Native American tribes and attracts climbers and tourists alike.
5. The cowboy spirit is alive and well in Wyoming
Wyoming is known for its cowboy culture, and ranching and rodeos are integral parts of the state’s identity. Wyoming hosts the Cheyenne Frontier Days, the largest outdoor rodeo. Cowboys and cowgirls from all over compete in this week-long event. Wyoming’s Western heritage is celebrated year-round in towns across the state.
6. The Wind River Range has some of the best rock climbing in the country
For adventure seekers, the Wind River Range is a climber’s paradise. The range offers challenging routes and breathtaking scenery. The Cirque of the Towers is a particularly popular spot. This rugged area attracts climbers from around the world.
7. Wyoming produces more coal than any other state
Wyoming is the leading coal producer in the United States. The state’s vast coal reserves contribute significantly to its economy. Nearly 40% of the country’s coal comes from Wyoming’s mines. The industry provides jobs and supports local communities. Despite shifts in energy trends, coal remains vital here.
8. Jackson Hole has one of the steepest vertical drops in North America
Ski enthusiasts flock to Jackson Hole for its challenging terrain. The mountain’s vertical drop of 4,139 feet is among the steepest on the continent. Jackson Hole’s slopes attract world-class skiers and snowboarders. The resort also offers stunning views of the Teton Range.
9. Wyoming has the lowest population density in the lower 48 states
With only six people per square mile, Wyoming offers plenty of space to spread out. This low density provides a sense of solitude and freedom. It’s ideal for those seeking a quieter, more private lifestyle. The open landscape enhances the feeling of living in harmony with nature.
10. The state has a strong tradition of ranching and farming
Agriculture plays a crucial role in Wyoming’s economy and culture. Cattle ranching, in particular, has deep roots in the state. Wyoming’s wide plains are perfect for raising livestock. The state also produces significant amounts of hay, barley, and wheat. Ranching families often pass their traditions down through generations.
11. The University of Wyoming is the only four-year institution in the state
Founded in 1886, the University of Wyoming is a cornerstone of education. Located in Laramie, it serves students from across the state and beyond. The university offers diverse programs and has a strong focus on research. It’s also home to the state’s only law school.
12. Wyoming is a top destination for stargazing
The state’s low light pollution makes it ideal for observing the night sky. Areas like the Snowy Range and Bighorn Mountains offer spectacular views. Stargazers can see the Milky Way with the naked eye. Wyoming’s clear skies and high elevations enhance the experience.
13. The Wyoming state flag was designed by a local resident
The distinctive flag, featuring a bison and the state seal, was designed by Verna Keays. In 1917, the design was selected in a statewide contest. The bison symbolizes Wyoming’s wildlife and frontier heritage.
14. Wyoming is a major producer of natural gas
Natural gas production is a significant part of Wyoming’s energy sector. The state ranks among the top 10 producers in the nation. Wyoming’s gas fields contribute to both local and national energy supplies. This industry plays a key role in the state’s economy. It’s another example of Wyoming’s natural resource wealth.
15. Wyoming’s Old West history is preserved in numerous museums
The state’s rich history is showcased in its many museums. Places like the Buffalo Bill Center of the West in Cody offer immersive experiences. These museums preserve the stories of Wyoming’s early settlers, Native American tribes, and cowboy culture. They provide valuable insights into the state’s past. Visitors can step back in time and explore the Old West.
If you’ve been skipping your federal student loan bills, or you have defaulted loans, your time is running out to get back on track without harsh consequences. Two key pandemic-era relief programs are set to expire on Sept. 30: the student loan on-ramp and the Fresh Start program.
Millions of borrowers are benefitting from the on-ramp or Fresh Start — and some may not know it. To check, log into your studentaid.gov account and review your monthly payment history and loan repayment statuses. If you have missed or late payments, you’re on the on-ramp. If you have a loan listed as in default, you’re benefiting from the Fresh Start program.
In either case, you need to act by Sept. 30. Here’s how.
Student loan on-ramp: Make a plan to deal with your bills
The student loan on-rampbegan Oct. 1, 2023, and lasts until Sept. 30, 2024. It’s intended as a safety net for the “most vulnerable borrowers,” the White House said last summer.
The program is automatic for all borrowers who miss payments during this time — there is no enrollment process. During the on-ramp, you can’t fall into delinquency or default. Missed payments won’t be reported to credit bureaus.
Roughly 3 million borrowers have taken advantage of the on-ramp and were at least 30 days late on their loans as of June 30, according to Federal Student Aid office data.
If you’ve been skipping payments, make a plan for October. Otherwise, you could face harsh and costly consequences. Once a payment is 270 days late, you will enter student loan default. Debt collectors can garnish your wages and charge hefty fees.
Here are steps to take before the on-ramp expires:
Check your student loan accounts. Log into studentaid.gov, see how much you owe and update your contact and billing info. Your servicer can answer questions.
Choose a repayment plan. If you don’t select a repayment plan, you’re automatically enrolled in the standard 10-year repayment plan. For more affordable payments, consider an income-driven repayment (IDR) plan.
Consider a deferment or forbearance. If you won’t be able to afford payments for the foreseeable future, consider a student loan deferment or forbearance to pause payments for up to three years.
If you want to change repayment plans, note that only two IDR plans are currently available: SAVE and Income-Based Repayment (IBR).
Fresh Start program: Sign up ASAP to lock in defaulted loan relief
If your federal student loans were in default before the pandemic, take advantage of the Fresh Start program. About 7.5 million borrowers with defaulted loans are eligible.
You must enroll in the program by Sept. 30 to get out of default and lock in benefits, including:
Loans returned to “current” status on credit reports, and negative default marks removed.
Access to federal student aid and other government loans, like mortgages.
Access to flexible repayment plans and potential loan forgiveness.
Access to short-term relief, like deferment or forbearance.
Suspension of involuntary debt collection efforts.
If you miss the Sept. 30 deadline and let your loans stay in default, you could face harsh consequences. Debt collectors might garnish your paychecks and tax refunds. You may face steep collections fees. Your credit score could plummet, making it difficult to qualify for future loans, mortgages or even apartment rentals.
You can avoid that headache — and get back on track with an affordable repayment plan — by signing up for the Fresh Start program. Here’s how:
Submit a Fresh Start request. Fresh Start enrollment is free and can take less than 10 minutes. You can do it online on myeddebt.ed.gov, over the phone by calling 1-800-621-3115 or by sending a letter postmarked by Sept. 30.
Watch for servicer communication. After you sign up for Fresh Start, the government will transfer your payments from the Default Resolution Group to a federal student loan servicer. Your new servicer will contact you once your loans transfer over.
Choose a repayment plan after getting out of default. You’ll be automatically placed into the standard 10-year repayment plan, but about 80% of Fresh Start borrowers sign up for an IDR plan, according to the Education Department. Half of Fresh Start borrowers have $0 monthly payments under an IDR plan.
You can apply for an IDR plan within a week or so of your loan transfer.
When looking for funding for your small business, there are plenty of types of loans to consider, including term loans. A term loan provides a borrower with a lump sum of cash they repay on a fixed repayment schedule.
Term loans can be helpful for businesses looking to expand, buy more real estate, update equipment, or purchase more inventory in advance.
So, what are term loans exactly? Read on to learn more about small business term loans, their advantages and disadvantages, and the different types of term loans available.
What Is a Business Term Loan?
A business term loan is a type of small business financing that provides a lump sum of money up front you then pay back over a set period of time, called a term. Payments are often monthly but could be weekly, bi-weekly, or even quarterly.
Part of each payment goes toward the principal, lowering the remaining loan balance, and part goes toward interest. Interest rates on business term loans may be fixed or variable. Repayment terms can range anywhere from 12 months to 25 years, depending on the loan amount, lender terms, and the borrower’s creditworthiness.
Term loans aren’t just used for small businesses, though. Mortgage loans, auto loans, and student loans are also all types of term loans.
What Can a Term Loan Be Used For?
Common uses of term loans for businesses include:
• Buying real estate or upgrading property you already own (the real estate would likely serve as collateral)
• Buying new equipment or repairing equipment you already own (the equipment could serve as collateral)
• Restocking inventory
• Buying vehicles for work
• Meeting payroll and other expenses
• Covering employee wages
What Are Different Types of Business Term Loans?
Most small business owners factor in two things when considering term loans — the purpose of the loan and the term length (there are short-, intermediate-, or long-term business loans).
Payments may be higher with short-term loans than long-term loans, though this depends on how much the business borrows. When considering what your business can qualify for and pay back with its available cash flow, remember to factor in how the length of your loan term affects the payment amount.
Short-Term Loans
Short-term loans typically have a length of less than one year but can extend up to 18 months. Businesses that don’t qualify for a line of credit might find short-term loans helpful. Though these loans are typically easier to qualify for, they tend to have higher interest rates.
It’s important to note that short-term loans may come with a balloon payment, meaning the last payment is much larger than the rest. Keep this in mind when deciding whether a short-term loan is right for your business.
Recommended: The Cost of Capital
Intermediate-Term Loans
Intermediate loans typically have terms between one and three years. Because of their slightly longer payoff time, they may be an option if you’re hiring a new salesperson, for instance, and know there might be some lag time before they start bringing in revenue.
Like short-term loans, intermediate business term loans may also have a balloon repayment structure.
Long-Term Loans
Long-term loans typically have terms of five to 10 years, but they may extend up to 25 years. They typically require collateral, such as real estate or equipment, and may come with lower interest rates than short- and intermediate-term loans.
Long-term loans are often more difficult to qualify for, requiring proof of revenue and a solid credit history. However, they can provide helpful capital for business investments, making them a valuable option for established businesses planning for growth.
Recommended: Merchant Cash Advance for Bad Credit
How Do Business Term Loans Work?
Once you’ve determined the amount you need to borrow and the purpose, you can approach financial institutions to explore their available programs, interest rates, and loan terms.
You’ll also want to find out what documentation you’ll need to apply, what collateral might be required, and whether they can supply the funds on your timeline. Be sure to check what small business loan fees may apply.
Once you’ve evaluated the above factors, compare multiple lenders and choose the one that suits your needs. The loan application process typically happens online, but you may be able to apply in person if the loan is through a bank.
Rates and terms offered vary based on the lender, your personal and business credit history, your time in business, and your financial health and history. Pay particular attention to whether the loans you research are secured and how the interest rates are structured:
• Secured vs. unsecured loans: Secured loans require collateral or a personal guarantee, meaning that your assets will be used as payment if you can’t pay your loan. Unsecured loans do not require this collateral and are therefore riskier for the lender, so they often have higher costs and shorter terms than secured loans.
• Fixed vs. variable interest rates: A fixed interest rate remains stable over the entirety of the term loan. A variable interest rate fluctuates throughout the life of the loan, depending on the prime rate — the rate that commercial banks charge their most creditworthy borrowers.
If you’re approved for the loan, you are free to use the funds once disbursed. From there, you’d make regular payments based on the loan agreement.
Recommended: How to Check Your Credit Score for Free
Deciding If a Business Term Loan Is Right for You
It can be challenging to decide which kind of loan is the right fit for your business. There’s a lot to consider. Here are a few questions to ask before applying:
• Why do I need funding?
• How does this help me reach my business goals?
• How healthy are my business finances?
And if any of these apply to you, it may not be time to consider term loans just yet:
• Your business is new
• You have poor credit
Business Term Loans: Pros and Cons
Like any other loan, business term loans have advantages and disadvantages that are important to consider when deciding whether they’re right for you. Below, we’ve outlined the pros and cons of term borrowing to help you determine whether term loans are a good fit.
Advantages of Business Term Loans
Pros of term loans include:
• You may be able to borrow a large amount of money.
• Multiple types of term loan programs may be available when you look at different lenders.
• Interest rates are typically lower than credit cards, payday loans, and other short-term funding options.
• As you pay the term loan back on time, you can boost your business credit score.
Note: Check with your accountant or tax professional to see what tax benefits you may realize. Term loan interest may be tax-deductible.
Recommended: What Are the Tax Benefits of a Limited Liability Company (LLC)?
Cons of Term Loans
As with any financial product, there are downsides to consider, as well. Cons of term loans include:
• You may be able to borrow a large amount of money.
• Multiple types of term loan programs may be available when you look at different lenders.
• Interest rates are typically lower than credit cards, payday loans, and other short-term funding options.
• As you pay the term loan back on time, you can build your business credit score.
Note: Check with your accountant or tax professional to see what tax benefits you may realize. Term loan interest may be tax-deductible.
Recommended: What Are the Tax Benefits of a Limited Liability Company (LLC)?
Disadvantages of Business Term Loans
Cons of term loans include:
• You may be entering into a long-term debt.
• The loan application process may take longer than you’d like.
• Some business term loans come with prepayment penalties, which means you can’t prepay to reduce the amount of interest paid over the loan’s life.
• If your credit isn’t the best, the interest rates you’re offered may not be, either.
Recommended: Debt-to-Income Ratio
How to Apply for a Business Term Loan
Assess your business goals and lenders’ eligibility requirements as you choose the best option for your company. Here’s how:
1. Compare Small Business Term Loans
Comparing lenders’ terms can help improve your chances of qualifying for a loan. That way, you don’t spend valuable time applying for options for which you’re not eligible. On top of that, it helps keep you from overpaying on rates and fees or endangering your business cash flow with a repayment schedule that’s too aggressive.
2. Look at Each Lender’s Eligibility Requirements
It’s helpful to examine these requirements side by side:
• Personal and business credit
• Time in business
• Annual revenue
• Collateral
• Down payment
• Personal guarantee
3. Scrutinize the Lender’s Fees
Also look at the fees side by side:
• Interest rate and APR
• Origination fees
• Late payment fees
• Early payoff penalty
4. Review the Repayment Schedule
Important questions to ask:
• Are payments made daily, weekly, monthly, or quarterly?
• Are payments automatically deducted from a business bank account?
Many lenders have strict repayment terms for their business term loans, meaning you need to make sure you can meet those standards. That way, you don’t overdraft your accounts, accrue late fees, or damage your credit score.
Recommended: Long-Term Small Business Loans
5. Gather the Required Documents and Apply
When applying for a loan, documents often requested by lenders include:
• Bank statements (personal and business)
• Tax returns (personal and business)
• Business legal documents, including licenses and permits
• Personal identification
• Business plan
• Revenue statements
• Accounts receivable reports
• Accounts payable reports
Because the exact documentation required varies by lender and loan type (and whether collateral is involved), you’ll need to clarify what the lender you choose will need.
Also, it can be worthwhile to explore business grants since those do not need to be paid back.
Recommended: What Are Small Business Grants?
The Takeaway
When businesses seek funding, term loans are worth considering. With a business term loan, the company borrows a certain amount of money in a lump sum and then pays it back in regular installments at either a fixed or variable interest rate. Terms can range from short (even under a year) to long (perhaps as long as 25 years), with the funds used for a variety of purposes.
If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.
With SoFi’s marketplace, it’s fast and easy to search for your small business financing options.
FAQ
What does “term loan” mean for a business loan?
Like other term loans, a business term loan provides a borrower with a lump sum of cash they repay on a fixed schedule over the set period of time, or term. The interest rate can be either fixed or variable.
What is an example of a term loan?
An example of a term loan is a small business loan of $50,000 from a bank that has to be paid over three years in monthly payments, with fixed interest.
What are the three main types of term loans?
There are short-term, intermediate-term, and long-term loans.
Photo credit: iStock/pikselstock
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Earning an MBA, or a Masters of Business Administration, degree can increase your salary, teach you specialized skills, and provide you with new career opportunities. But getting your MBA is expensive, with an average cost of $62,600 for a two-year program vs. $59,684 for a master’s degree in general. A degree from a top-tier school can be considerably more, with tuition and living expenses totaling $200,000 for the program.
Just how big of an MBA pay increase you’ll get in return depends on a number of factors, including the school you attend, the field you’re in, and your previous work experience. Here’s what to know about an MBA salary increase and how much you might expect to receive.
Value of an MBA Degree
An MBA degree can make you more marketable to employers, which can in turn help you land a better job and a higher salary, research shows. And while earning your degree can come with a hefty price tag, taking out MBA loans is one option to help you pay for it.
The median starting salary of recent MBA graduates in the U.S. is $120,000, according to the 2024 Corporate Recruiters Survey from the Graduate Management Admission Council (GMAC). That’s significantly more than the $69,320 starting salary of grads with a bachelor’s degree. Knowing how much you might earn could help you determine if an MBA is worth it.
An MBA can also help you advance in your career. The majority of employers in the GMAC survey said that MBA grads typically perform better and move up the ladder faster than other employees. That places them in high demand in the workplace. One-third of employers from across the globe reported that they plan to hire more MBA graduates in 2024 than they did in 2023.
Average Salary Increase with an MBA
Overall, MBA grads reported a median salary increase of 33% after earning their degree, according to the GMAC’s most recent Enrolled Students Report. Full-time MBA students had a 42% increase in salary, while those who worked and studied for their MBA at the same time said their salary increased by 29%.
However, the amount your salary might increase once you have an MBA depends on the field you’re in. Here’s a closer look.
Salary By Industry and Job Function
The following industries tend to pay well for those who have earned an MBA, making them some of the best jobs for MBA graduates.
Finance
Many MBA grads pursue a career in finance, and it can be lucrative. The average salary for an individual with an MBA in finance is $145,257, but the amount can be as much as $195,000, and that’s not counting possible commissions and bonuses.
Technology
Another hot field for those with an MBA is technology, especially as AI becomes more prevalent. The average salary for MBA grads in tech is about $118,000 a year. However, your MBA salary increase could run higher still and may even include a signing bonus.
Consulting
Those who work as consultants and have their MBA average about $83,797 annually, but the base pay can be as much as $117,000. A consultant’s salary may go up dramatically within a few years, especially if they work at a big firm.
Healthcare
Healthcare management is a popular job for MBA graduates. The average earnings are $88,000 per year, although it’s not uncommon for those in healthcare management to bring home a six-figure salary.
Marketing
After graduating with an MBA in marketing, your annual earnings will be approximately $130,721 on average, and they could be as much as $165,000. That’s well above the average marketing salary for those without a degree, which is $81,330.
Business
The salary for a business analyst with an MBA is $104,629 a year, although it can be as much as $128,000.
Accounting
If you earn an MBA in accounting, you could earn an average starting salary of $126,598. Your pay could even be as high as $166,000.
Factors Influencing MBA Salary Potential
In addition to the field you choose to work in, how much you’ll earn after getting your degree is influenced by such things as the MBA program you choose and your previous work history and salary.
These are the three major factors that can affect MBA salary potential.
School Reputation and Rankings
Although it’s likely to be pricier, going to a top-rated school to get your MBA can pay off in multiple ways. These schools tend to have robust networking programs and employer recruitment opportunities. Some colleges may help prospective graduates find internships and jobs. Also, grads from top 10 schools tend to earn more than those who attend other programs.
Before applying to an MBA program, do your research to see where recent alumni have ended up and which companies have recruitment relationships with the school. For instance, certain coveted employers might always attend a particular school’s job fairs. If a university has connections to companies you might be interested in working at, you may want to apply to their MBA program.
Specialization and Concentration
Every MBA program offers different classes, internships, and hands-on opportunities, and it’s important to look for ones tailored to your goals and career path. Choose a program with specialized concentrations in the field you’re most interested in. For instance, some MBA programs specialize in healthcare while others focus on finance.
If you’re currently in a field that you want to pivot out of — moving from marketing to consulting, say — an MBA could help with career change without going back to an entry-level job.
Work Experience and Performance
The more work experience you have, the more likely you are to score a higher salary once you get an MBA. This is especially true if that experience is relevant to the area of study you’re pursuing. Most people going for their MBA have about five years of experience on the job. And some MBA programs require students to have a certain number of years of work experience before they apply.
Your work performance is also a key factor in what you might earn after you obtain your degree. As mentioned above, employers in the GMAC survey found that MBA grads tended to be better performers on the job. High achievers are more likely to command a higher salary.
Maximizing Your MBA Salary Prospects
In addition to choosing the right MBA program, there are other steps you can take to land a good job and a higher salary when you graduate. Here are a few strategies that can help you get ahead.
• Take advantage of networking opportunities. Get to know your fellow classmates and connect with teachers and faculty members. Go to school gatherings, job fairs, and networking events. Find people who are in the field you’re in, and get to know them.Then make a point to stay in touch with the contacts you make. These people can be valuable resources over the course of your career.
• Apply for internships. Many MBA schools offer internship programs, and they typically expect students to take advantage of them if possible. An internship can give you real-world experience and also connect you to key contacts who may be able to help you find a job when the time comes.
• Seek out alumni. Make a list of the companies you’re interested in working for, and then search out any alumni of your school who work there. Ask to meet with them for coffee or an informational interview. Solicit their career advice. If you make a solid connection, they may keep you in mind for future job openings.
Choosing the Right MBA Program
It’s important to find an MBA program that fits your interests and goals. Look for programs that offer concentrations in the areas and fields you want to pursue. Then review the curriculum and the courses offered to make sure they appeal to you.
In addition, learn where graduates of the MBA program have ended up. What companies do they work for and what kinds of jobs do they have? You might even reach out to ask how they felt about the program and if they would recommend it.
Location
Where the school is located is also a prime consideration. If you’re working and going to school at the same time, you’ll need to find a program in your area. You could also explore top online MBA programs if you want to take advantage of a particular school’s offerings when you’re unable to attend it in person. These programs tend to cost $10,000 less than in-person ones, but you may miss out on networking opportunities.
If you’re a full-time student and you have the opportunity to move to attend school, you could choose an MBA program near the area where you hope to work. For instance, if you’d like to be employed in Silicon Valley, a school nearby might be a good choice for you. It may be easier to get an internship there as well as a job after graduation.
Cost
Of course, the cost of an MBA program is likely to be one of the most important factors in your decision. Beyond the tuition, find out the true cost of getting an MBA at any school you’re interested in. This includes living expenses, books, transportation, and so on.
How to Pay for Your MBA
There are a number of ways to pay for your MBA, such as scholarships, grants, and student loans. You may want to consider both federal and private student loans. Federal loans include Federal Direct PLUS loans for graduate students from the Department of Education. The maximum amount you can borrow with these loans is the cost of attendance, which is determined by the school minus any other financial aid you may have, and the loan’s interest rate is fixed.
Private student loans may have fixed or variable rates, and the MBA loan rates you might qualify for depend on your credit history, among other factors. These loans are offered by banks, credit unions, and online lenders. Be aware, though, that with private student loans, you will not have access to the same federal protections and programs you would with federal loans, including income-driven repayment plans. Also, if you refinance federal student loans with a private loan, you could pay more interest over the life of the loan, depending on its rate and term length.
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The Takeaway
Earning an MBA may help you fulfill your career dreams and earn a higher salary. Research shows that the degree can increase your salary by about 33%, depending on such variables as the school you attend and the field you work in. But getting an MBA can be costly, averaging more than $60,000 for a two-year program, up to $200,000 for top-tier schools. So you’ll want to weigh the pros and cons.
If you decide that earning an MBA makes sense for you, there are ways to help cover the costs and develop a solid budget. You can explore all options, including scholarships, grants, and federal and private student loans, as well as refinancing your existing loans.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
FAQ
What is the average starting salary with an MBA?
The median starting salary with an MBA is $120,000, according to the Graduate Management Admission Council’s 2024 Corporate Recruiters Survey. That’s far higher than the $69,320 starting salary of graduates with a bachelor’s degree.
Is an online MBA worth the investment?
Whether an online MBA program is worth the investment depends on the program you choose and what you hope to get out of it. Online programs offer greater flexibility and are typically less expensive than in-school programs. According to one estimate, online MBA programs tend to cost about $10,000 less. However, with an online program, you may not have access to all possible networking opportunities or the opportunity to speak with professors face to face. You may also feel less connected to the school and the overall experience.
How long does it take to recoup MBA program costs?
How long it takes to recoup MBA program costs is different for everyone, depending on the price of the program and the salary increase they enjoy after earning their degree. According to the Graduate Management Admission Council, it takes grads of two-year full-time MBA programs about three and a half years of working to recoup the cost. Those who enroll in online MBA programs recoup the cost in about two and a half years of work.
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