• 6 Most Profitable Digital Products To Sell Online

    I love selling digital products and I’m glad I finally started selling digital products in 2019 after years of dragging my feet. It has been an incredible and profitable income source in my online business!

    Selling Digital Products In 2020

    Selling digital products is a highly profitable way to earn money online while also helping your customers solve a problem and improve their lives. It’s truly a win for everyone.

    Selling digital products is actually my favorite way to make money online (here are the ways I make money online). I sell digital products that make me hundreds of dollars every month and sometimes even thousands in passive income. I love making products once that I can then sell thousands of times.  

    Whether you are a blogger, YouTuber, or online business owner, selling digital products is a great way to earn money online in 2020 and beyond.

    Even if it is not your main revenue it can become a great side income that helps you earn money to pay for items you need.

    Why Should I Sell Digital Products?

    Maybe you are wondering if you should even sell digital products or why digital products are such a great way to earn money online. 

    There are a ton of reasons why you might want to start selling digital products. Here are a few:

    • Passive income – create products once and sell an infinite number
    • No physical inventory to worry about – everything is done online
    • Low start up costs – you can create digital products with free programs
    • Easy to create products – time to create digital products can be low
    • Easy to sell – plenty of avenues to sell your products 
    • Easy to create products for multiple niches & interests

    These are very compelling reasons for why every person wanting to create an income online should be making and selling digital products. It is a fantastic opportunity to create passive income for yourself while also creating useful products for others. 

    How to Sell Digital Products Online

    There are many different ways to sell digital products online and each have their pros and cons. 

    You can sell on sites like Etsy where you don’t own your platform but can reach a huge amount of customers quickly. 

    You can sell on your own website as well which takes more work to setup but you keep more of the money and have more control over your products. 

    First, you will need your own website or at least a domain for selling on your own website. See how to start a website or blog here. 

    Next you will want an e-commerce platform that will allow you to both take payments and deliver your digital products to your customers. There are many different e-commerce platforms that make this possible so let’s look at the best ones for selling digital products specifically.

    Etsy – I love selling on Etsy because you don’t have to find people to buy your digital products – they are already on the platform and Etsy is bringing them to you! It’s easy for beginners to start and Etsy shop and you can get 40 free listings through this link.

    Podia –  Podia is a more robust platform that will allow you to not only sell digital downloads but also offer memberships and online courses. If you have plans to grow a full online business it’s the ideal platform to use to keep everything in one place. Get a 14 day free trial of Podia here

    SendOwl – This platform is specifically designed for selling digital products. You upload the digital products and start selling immediately. This platform is just $9 per month with no additional fees taken our from sales you make. Get a free trial of SendOwl here.   

    Woocommerce – WooCommerce integrates easily with existing WordPress websites to sell digital downloads. WooCommerce is not specifically for digital downloads but they have made the process super simple for sellers and do not take additional fees from sales. I currently use WooCommerce to sell my digital downloads on my website. Get started with WooCommerce.

    How To Determine Profitable Digital Products

    There are tons of digital products you can sell online but if you are looking for maximum profitability from your efforts then you need to think about your end customer.

    If you are aiming for a market of people who don’t have much money then you can’t price your items that high. If you are looking to sell to a group of people that won’t get anything besides personal satisfaction from your product that drops the level of profit for you as well. The customer you are targeting will determine how profitable your item will be.

    You want to look for markets where your future customer is going to gain high rewards from your products therefore they will be willing to spend more which increases your profit.

    The most profitable items help someone earn money or achieve a goal especially if it financially benefits them more. An example of this is selling editable marketing materials to real estate agents. These products are profitable because you can charge more for them because the customer is willing to spend more to save time in creating these materials and will make money in their business from them.

    Next let’s look at some of the most profitable product ideas and examples of each.  

    6 Most Profitable Digital Products To Sell Online

    If you are planning to add digital product sales to your online income streams, then you likely want to make sure you choose the most profitable digital products to sell so your time is used wisely. Below are my top picks for the best digital products to sell in 2020 and beyond. 

    1. Ebook templates
    2. Marketing templates
    3. Swipe files
    4. Spreadsheets templates
    5. Online courses
    6. Elements for creators 

    These are incredibly profitable areas of digital products because they are things that help other people make money. Generally people with money or making money are the ones who are willing to spend more. 

    There are dozens if not hundreds of other digital product ideas for things you could sell online, in fact I’ve shared more than 60 digital product ideas you can sell online!

    Regardless of which digital product you decide to sell, your profits for creating a digital product will always be higher than a traditional product because you are creating a product once you can sell again and again.

    Growing A Digital Product Business On Etsy

    Etsy has downsides but it’s also an amazing place to build a business and earn an income.

    If you want to grow a business selling digital downloads on Etsy I recommend my friend Sharon’s Etsy Entrepreneur course where she walks you through the process of setting up an Etsy shop and growing it to make $1,000 a month or more. She grew her Etsy store of digital downloads to more than $1,000 a month and has inspired many people to do the same.

    Remember that your business growth will depend on being consistent and growing over time adding valuable products. For most of us we begin with one product and grow over time building on what works.

    Over time you will learn tips and tricks to grow your digital products shop and find that success can be far beyond you expected when you focus on profitable digital products.

  • 63 Digital Product Ideas To Sell To Make Passive Income

    Selling digital products on Etsy is a great way to make passive income! You may have heard this before but what exactly can you sell? What are digital products?

    Today I’m talking about A LOT of digital product ideas you can create and sell on Etsy or any online platform in order to make passive income. If you don’t know what to create to sell on Etsy this will give you a great starting off point on digital items you can make.

    63 Digital Product Ideas

    The digital product ideas in this video range from the standard items you can make like SVG files to ones you might not have thought about selling like Instagram story highlights.

    Here are 50 digital product ideas you can create and sell for passive income:

    1. Art prints
    2. Birthday cards
    3. Birthday invitations
    4. Build plans
    5. Bullet journals
    6. Business cards
    7. Business logos
    8. Business planners
    9. Cash envelopes
    10. Checklists & trackers
    11. Clip art
    12. Coloring pages
    13. Craft patterns
    14. Crochet patterns
    15. Digital papers
    16. Ebooks
    17. Embroidery patterns
    18. Etsy banners
    19. Excel templates
    20. Facebook templates
    21. Flash cards
    22. Fonts
    23. Funny cards
    24. Gift tags
    25. Graduation invitations
    26. Greeting cards
    27. Holiday cards
    28. Instagram story highlights
    29. Instagram templates
    30. Invitation templates
    31. Knitting patterns
    32. Leather making patterns
    33. Lightroom presets
    34. Meal plans
    35. Party banners
    36. Party decor
    37. Party invitation
    38. Party signs
    39. Phone wallpaper
    40. Pinterest templates
    41. Planner inserts
    42. Printable backdrop
    43. Printable envelopes
    44. Printable photo props
    45. Printable stationary
    46. Printable stickers
    47. Quilt patterns
    48. Quote prints
    49. Resume templates
    50. Selfie frames
    51. Sewing patterns
    52. Shower invitations
    53. Snapchat filters
    54. Social media templates
    55. Stock photos
    56. SVG cut files
    57. Sympathy cards
    58. Thank you cards
    59. Website themes
    60. Web store themes (Shopify themes)
    61. Wedding invitations
    62. Wedding signs
    63. Workbooks

    This is a huge list of digital products and even this list is not comprehensive. I left plenty of digital products off the list! Since this list mainly focused on items you can create to sell on Etsy I didn’t even include things like courses!

    How To Decide What To Sell

    If you have been trying to decide what to sell then this will definitely help get you started! Most of these ideas can be created in free programs like Canva.

    You don’t have to have design skills or a background in digital marketing in order to create and sell digital downloads. You don’t need a formal education or design background to create digital products and earn money selling them – you just have to be curious and willing to learn!

    When deciding what type of digital product to sell I would recommend picking an area where you have a passion in life and then deciding the types of products. For example, maybe you think you should make SVG files because they are popular, but you really love making spreadsheets to keep your life and business organized. I’d focus on that instead!

    Or maybe you like planning parties so you think you need to create party invitations. But I wouldn’t limit myself to one digital product. I’d think about what types of products would complement each other in a shop that helps my target audience. You can create listings that complement and link back to each other like related party invitations, party signs, party photo booth backdrops, photo booth props, and more.

    Creating Digital Products Online

    There are a number of ways to create digital products online these days. It’s possible to make digital products to sell for free with a number of programs!

    Adobe InDesign

    Adobe InDesign – I personally use Adobe InDesign for creating all my printables because it’s the best, most reliable and has the most flexibility. There is a learning curve because it’s a professional program but it’s worth it for the hassles it removes. Try creating with Adobe InDesign’s free trial.

    Adobe Illustrator

    Adobe Illustrator – This program is a must have for all graphics creators! It allows you to do so much and the only limit will be your creativity. It’s perfect for creating wall art, clip arts, designs for SVGs, etc. Try creating with Adobe Illustrator’s free trial.

    Canva

    Canva – Canva is one of the best free editing programs where you can create a digital products and the paid version is even better with bonus features that help take your work to the next level. Try creating with Canva.

    PicMonkey

    PicMonkey – This might be a photo editing heavy program but you can also create digital downloads through PicMonkey and edit photos for stock photos sales as well. Try creating with PicMonkey.

    Selling Digital Products Online

    You will want an e-commerce platform that will allow you to both take payments and deliver your digital products to your customers. There are many different e-commerce platforms that make this possible so let’s look at the best ones for selling digital products specifically.

    Etsy

    Etsy – I love selling on Etsy because you don’t have to find people to buy your digital products – they are already on the platform and Etsy is bringing them to you! It’s easy for beginners to start and Etsy shop and you can get 40 free listings through this link.

    Podia

    Podia –  Podia is a more robust platform that will allow you to not only sell digital downloads but also offer memberships and online courses. If you have plans to grow a full online business it’s the ideal platform to use to keep everything in one place and is cheaper than most other platforms. Get a 14 day free trial of Podia here

    SendOwl 

    SendOwl – This platform is specifically designed for selling digital products. You upload the digital products and start selling immediately. This platform is just $9 per month with no additional fees taken our from sales you make. Get a free trial of SendOwl here.   

    Shopify

    Shopify – One of the most popular platforms to use for selling goods online. Shopify has emerged at the top of many seller’s lists for the ease of use, beautiful designs, set pricing, and powerful backend. It offers everything you need to sell digital or physical products and scale your business too. Get a free trial of Shopify here.

    WooCommerce

    WooCommerce – WooCommerce integrates easily with existing WordPress websites to sell digital downloads. WooCommerce is not specifically for digital downloads but they have made the process super simple for sellers and do not take additional fees from sales. I currently use WooCommerce to sell my digital downloads on my website. Get started with WooCommerce.

    Marketing Digital Products Online

    Once you’ve created your digital downloadable products and have them ready to be sold, you have to market them! People won’t know your products exist without a little effort on your part. While Etsy makes this the simplest (you just need a little SEO to go!), you should still work to promote your items in oder to make sales. The following items are what I’ve found work best for promoting digital products to the right audience.

    MailChimp – Email marketing sells more products than anything else and should be at the top of your list when you are planning to create and sell digital products. MailChimp makes it easy and cheap to get started and can scale with your business growth. Try MailChimp for free.

    Grow Your Passive Income With Digital Products

    Digital products are amazing because these are things that you can create once and sell online over and over creating passive income and freedom in your life. This benefits you but it also benefits the end user who gets something they need at a lower price point and quicker. Not everyone has the budget to pay top dollar for custom designed work so digital products have revolutionized how consumers are able to get what they need. It is truly a win win for us all.

    If you have been wanting to sell some type of digital products in order to earn passive income I highly recommend it! I started my Etsy shop to share what I had made for myself during my own budgeting journey. I definitely did not know everything about Etsy and have figured it out along the way while also selling thousands of dollars worth of products.

    If you want to grow on Etsy I recommend my friend Sharon’s Etsy Entrepreneur course where she walks you through the process of setting up an Etsy shop and growing it to make $1,000 a month or more. She grew her Etsy store of digital downloads to more than $1,000 a month and has inspired many people to do the same.

    Regardless of whether you continue to learn on your own or pay for education, I hope you keep going and keep creating products for the world to use and enjoy. You are capable of creating the products that can change your life while also helping others.

  • April 2020 Online Income Report – $2,054.34

    Welcome to my April 2020 monthly online income report! Each month I share how much I make from my part time online content creation hobby.

    I’m diving into how I make money online selling digital products and making videos about our personal finances on my YouTube channel. These are passion projects I’ve done since before I made any money so it’s amazing to see the income rising.

    Each month here on the blog I go into more detail about what I earned from online endeavors like this personal finance blogmy YouTube channel, and my Etsy shop. I like sharing real numbers to inspire myself and others and I value transparency which this report allows me to give you.

    I’ve been slowly building online income over the last two years while working on my blog and YouTube channel part time during my off hours after working a full time job. This is a hobby and a part time side hustle for me.

    Growing my online income has helped me achieve financial goals like paying off debt faster! I use all of my income from these endeavors to pay off debt. I’m building an income producing asset to help pay for the liability of debt.

    It’s been a lot of work in terms of a side hustle but I’ve enjoyed both earning income and helping people by sharing what we’ve done financially.

    Why Share An Online Income Report

    I’m sharing my online income reports as a YouTuber, digital product creator, and blogger to show people that it is possible to make money online in a non-sleazy way that helps people.

    Lots of people want to know how much small YouTube creators make with videos and if you can make money from a small audience online. Fellow YouTubers want to know how I make money with affiliate marketing and digital products not just ad revenue because they know it is hard to survive on YouTube ad income.

    Income reports allow me to share what I’m doing with Etsy and YouTube while building my online income so other creators can benefit and it lets me be fully transparent with my audience about how much I am making.

    It’s amazing that we can earn money creating and sharing content online.

    Previous Online Income Reports

    If you’re interested in past income reports, you can see all of them here:

    As you can see from past income reports, my online income in the first few months of 2020 trended much higher than my income last year. The growth is not viral or explosive but it has moved up and is consistently over $1,500 each month.

    I’ve been consistently earning $1,500 a month now which is far beyond my original goal of earning $600 per month with my YouTube channel.

    I like sharing these numbers to show small YouTubers what is possible with a channel that isn’t huge or growing by hundreds of thousands of subscribers in a year. While that would be amazing, it is possible to still earn income as a small channel and blog.

    You can find ways to monetize outside of ads in order to build an income and diversify it.

    April 2020 Online Income Report

    Here are the main income sources broken down by what I earned for the month of April. I’ve included referral links to each if you want to join too!

    Advertising Income – $856.72

    • YouTube Advertising Channel 1 – $741.23
    • YouTube Advertising Channel 2 – $100.36
    • Adsense & Sponsored – $15.13

    Affiliate Marketing Income – $706.78

    • Shareasale – $2.63
    • Awin – $40.51
    • Robinhood – $130.17
    • Amazon – $148.47
    • Impact Radius – $385.00
    • Rakuten – $0.00
    • Capital One – $0.00

    Product Sales Income – $480.59

    • Etsy Products – $355.44
    • Website Sales – $125.15

    Patreon – $10.25

    • Patreon $10.25

    Total Income: $2,054.34

    This is the amount earned in April 2020 before any fees, expenses, or taxes.

    That means I don’t keep all of it it and at least 25% will be gone for taxes before it hits my personal bank account. I also won’t be paid all of it in the month it is earned since each source pays out at different times. In the video you can see the difference between what I earned and what I received in April.

    There are multiple expenses I’m now paying for each month:

    However, I must say with much excitement: I finally hit $2,000 in a month!

    I’ve consistently made $1,000 a month then $1,500 a month and now this is my first month earning $2,000. I can barely believe it.

    I hit the goal of earning $2,000 in a month from mostly YouTube generated activity which is insane and exciting and worth all the work that has gone into it. I’ve been making videos for over 2 years now and not a single one has gone viral.

    It’s amazing to me that I’m able to earn $2,000 in a month WITHOUT going viral. It just goes to show that consistent and steady work does make a difference.

    What I Worked On In April 2020

    I have been continuing to work on a few different priorities growing income sources and I even added a new one this month too!

    Diversifying Income

    In March I started selling on my own website to get off of relying completely on Etsy (I am still selling on Etsy since so many people love and use the platform!). Etsy has been a great place to start a digital download shop, but it has some downsides as well, mostly high fees, which I hope to combat with my own website sales.

    (I’m testing out multiple platforms to sell with like Podia, SendOwl, WooCommerce, and Shopify too in order to see which I like the best currently for selling digital products.)

    In April 2020 I decided to test out another revenue source: Patreon!

    I started a Patreon to include my monthly budgeting printables along with some of the future printables I plan to create around different areas of life like meal planning, online business, and planning. I’m hoping the Patreon offers another revenue source for me an also allows people to get MORE for their money since they will get access to a large library of items for just $10 a month.

    The Patreon will also allow a lower level $2 per month option for anyone who just wants to support my work. I ended up with $10.25 for the month which is a decent start for a new revenue source! I’m hoping it continues to grow.

    Creator Pennies Academy

    Another great thing about Patreon is that I’m adding a level for creators!

    I’ve been sharing content about creating content recently and since everyone has a lot of questions I’ve decided to add a “Creator Pennies” level on Patreon where I can do weekly prompts, tips for earning, monthly live videos answering questions, and answer your questions via messaging.

    I’ve set this price point at $20 which is still pretty low compared to most similar academy type programs so I’m very hopeful people are interested and want to learn about and grow with me.

    Made for videos for two YouTube channels.

    In April I decided to use my second channel more frequently by uploading more content. I decided to start making and adding at least a couple videos a month with a goal of one per week.

    For so long I only had my second channel with very old videos and no strategy. I’m now going to test out a new strategy that is very different from my main channel where I talk about financial topics.

    In April I made videos for both channels.

    Added new affiliate marketing partners.

    I have continued with my implementation of ideas learned from Making Sense of Affiliate Marketing course and in that regard I’ve added a couple new affiliate marketing partners.

    I don’t plan to add too many or add any I don’t actively use myself. I find it is easier and more authentic to only promote programs I actively use. It’s similar to how I only buy stocks of companies I actively use and adore. It’s just easier to be myself and share what I truly use and love than try to make quick cash (gross tactic anyway).

    Adding new partners that I’m loving will be so helpful in growing the affiliate income because it is not hard to share these products.

    What I’m Working On Next

    So what’s on tap for next month? I’ve got a few things planned:

    Grow the products in my shops. I plan to create more items and also promote what is already there on both Etsy / my website / Patreon. I still have a goal of having 100 listings on Etsy and I want to get to that by the end of the year.

    Create more affiliate focused videos. These videos tend not to kill it in ad revenue but they are great income producers with affiliate marketing income.

    Looking for sponsors. I’d like to start doing sponsored videos where a good company I love and have vetted sponsors all of my videos about budgeting for a month, or my 4-5 Transfer Tuesday videos in a month. I’d like to try to start doing a bundle of sponsored videos to provide more value to the sponsor and also bring in more income.

    Popular Content

    Here are some of my top videos for the month of April

    April Monthly Budget | Big Emergency Savings & Investing Small Amounts | Budget With Me

    $2,900 Stimulus Check Arrived!! Save & Pay Off Debt With Me

    How We Budget $3,000 | April Paycheck Budget Planner | Budget With Me

    I’m glad to see these videos did well and hope to create more that are also doing well. A lot of the top videos in April had to do with the corona shutdown and stimulus checks which was a very popular topic.

    Looking forward to sharing my May online income!

  • Trying New Budgeting Styles | April Paycheck Budget

    Our April paycheck budget has a ton of new changes because our lives are different now and it felt like a good time to change up the budget as well! We are now trying out a pay yourself first method which we will soon combine with a percentage based style like 80/20 or 50/30/20. I’ll be sharing more about these as we try new stuff out!

    While our lives are so different as we navigate the current financial crisis and global pandemic we’ve adjusted our goals for the year and it felt like a good time to change up how we budget because everything else is different too!

    Our main focus for paying ourselves first is our savings for our emergency fund and building up 3 months of expenses because $1,000 is not an emergency fund.

    Budget With Me!

    In the video you can budget along with me as we cover the budget necessities: bills, fixed expenses, variable expenses, debt payments, and sinking funds.

    This is the first time we have implemented the pay yourself first method where we put all of our goals first and make sure those are covered before anything else. That means savings, investing, and debt repayment comes first in our budget before bills of expenses like food and fun.

    If you are new to watching our budgets, here’s a little run down of our situation! We both work full time, I do freelance work and earn income from my YouTube channel and this is our take home income that I am budgeting. I cover bills, variable spending expenses, sinking funds and the goals for the month. This month we are super focused on increasing our emergency fund which we are trying to cover 3 months of expenses and eventually even more.

    April Paycheck Budget Setup

    During this paycheck our main goal was to continue building our emergency fund.

    April monthly goals:

    • Save $2,000 for our emergency fund
    • Don’t do unnecessary online shopping

    Goals for this paycheck for me were:

    • starting a new type of budget
    • setting up business payments biweekly
    • emergency fund growth

    With that in mind we broke down our April 2020 monthly budget into a more specific way for this paycheck budget.

    April 2020 Monthly Budget

    Here’s the breakdown of the paycheck budget for the first half of April 2020.

    Salary$2,599
    Extra Income$26
    Pennies Not Perfection$400
    Total Income$3,259

    With $3,259 in planned income for the month we broke it down this way.

    Pay Yourself First:

    Emergency Fund$1,130
    Student Loan$220
    Roth IRA$50
    Robinhood$10
    Ellevest$10

    Fixed Expenses:

    Mortgage$600
    Therapy$130
    Netflix$15

    Sinking Funds:

    Phone$50
    Life Insurance$35
    Car Insurance$75
    Car Repairs$50
    House$25
    Christmas$25
    Emergency Fund Extra$45

    Variable Expenses:

    Food$350
    Gas$50
    Medication$30
    Birthday$50
    J Personal$100
    M Personal$50
    Giving$100
    Misc$50
    Buffer in Acct$9

    Paying Yourself First

    Paying ourselves first is super exciting! Let’s be real, it’s fun to save money and invest money once you realize what that money can do for your in the future.

    Paying yourself first isn’t hard it just means prioritizing things like saving, investing, and paying off high interest debt. Paying yourself by doing these things before anything else in your budget is a great way to hit goals.

    We plan to continue trying this style of budgeting and see how it helps us better hit all our many goals!

    Our Emergency Fund Savings

    Because we aren’t playing many different expenses like daycare or going out to eat or going to events or throwing parties (the list goes on) we are able to save a lot more money in our emergency fund!

    We recently determined what we need for our emergency fund to equal 3-6 months of expenses.

    Looking at our monthly expenses and cutting out many things for an emergency situation means we need roughly $3,000 a month for our expenses. This means for a 3 month emergency fund we will need $9,000 saved. For a 6 month emergency fund we will want to stock up $18,000.

    We have a plan for our emergency fund and hopefully things go well and we can save it up with our extra income coming in and big paychecks from the government.

    Now with planning to save $2,000 a month we will also be adding a lot of our regular income to our emergency fund. This means we will be able to save up to $9,000 much quicker than I originally expected.

    This paycheck we were able to save over $1,000 to the emergency fund which moves us even closer to our goals.

    Investing To Hit Goals

    While we are prioritizing savings during this time due to potential job security, we are also continuing to invest small amounts into the market and dollar cost average our investments.

    One of my goals this year is to max out my Roth IRA and because I haven’t started on that goal yet it felt like a good time to get going on that goal.

    I’ve been investing for a long time now and I love investing when markets are going up and when markets are going down. In fact, my shortest time frame investments are for at least 15-16 years from now when I want to use the dividends to help my daughter.

    Because I am not investing money for the short term I don’t worry much about the markets year to year ups and downs because I know that in a long time frame that money will continue to grow. That’s why I’m still investing small amounts even when I have bigger goals to achieve, because I know small amounts I won’t miss now will add up to huge amounts later.

    I’ve talked a bit about the investing platforms I use for different purposes and here are the ones I plan to use this month:

    Because all of thee accounts have different goals and allow me to try out the more popular investing platforms I’m able to try different things and also work toward multiple goals in the far off future.

    Trying New Budgeting Styles

    I don’t call myself a budgeting expert and probably never will because there are too many styles of budgeting. What works for me for a while doesn’t work for me at another time. What works for me may never work for you.

    The thing is that creating a budget and following it during times of uncertainty and times of stability both helps you create a sense of calm and control. And if budgeting doesn’t feel like it’s working for you? Try a different method!

    Some people love budgeting by paycheck. Some people love Dave Ramsey’s method. Some people adore YNAB. Some people do 50/30/20 percentage based budgeting. There really are many styles of budgeting and one size does not fit all!

    I plant to go through a few more styles of budgeting to see if we can improve on what already works for us. I think it is great to take the best bits of advice from various sources and make them work for you. Best practices from others can improve your life very quickly and that includes with budgeting!

    No matter what your goals are, continue with budgeting and using your money wisely and consistently to hit your goals. You don’t have to be perfect with your money but you do need to be consistent!

  • Is $1,000 Enough For An Emergency Fund?

    Certain financial experts suggest you start bettering your financial life with saving up $1,000, and while that is a good start, most people have expenses far beyond $1,000. But is $1,000 enough for an emergency fund?

    While a starter emergency fund of $1,000 can help many people get started, it’s important to consider whether or not $1,000 is enough for an emergency fund.

    Why do you need an emergency fund?

    Why exactly do you need to keep money in savings for an emergency? Generally when things are going well and income is flowing in most people do not prioritize an emergency fund (myself included!). However, ignoring an emergency fund only ends up hurting you when you finally encounter an emergency.

    An emergency fund is absolutely critical for anyone who wants to be prepared for handling the ups and downs of life. Life is filled with unplanned events and an emergency fund allows you to walk through things that pop up with lots of peace.

    What type of events might be considered an emergency? These are things that come up during a month that you weren’t expecting but are a normal part of life. That includes many things like the following that run close to over over $1,000.

    • Emergency: a dental office visit that ends up costing hundreds up dollars or even up to $1,200 or more for an emergency
    • Emergency: flat tires where you end up needing to replace 1 or even 4 tires that can costs from $400 – $1,000
    • Emergency: medical event where you have to visit the ER which could cost $500 with your deductible and more for ambulance services or follow up appointments

    There are a number of different types of emergencies but many of them cost hundreds of dollars that you likely don’t have included in your current budget. Having one of these expenses pop up could destroy your budget and send you into debt if you do not have an emergency fund.

    If you can’t pay for the emergency expense with your income during the month then you might turn to credit cards or borrowing from friends and family. Either situation increases debt and makes your life harder in the long run. Being able to cover an emergency expense with your emergency fund makes things easier and less stressful.

    An unfortunate fact of life is that “emergencies” do happen and they will happen to you. That is why having an emergency fund is something you must do if you want to maintain your quality of life and go through life without being stressed by each new emergency.

    How Would You Pay For $1,000 Emergency Expense?

    Let’s start at the beginning… Can you afford an emergency expense that is $1,000? As I shared before, many common emergency expenses can be $1,000 or even more. Sadly according to many studies and polls, almost half of American can afford a $1,000 emergency expense but unfortunately that means half can’t cover that unexpected bill.

    Most people who responded to the poll linked above would pay for a $1,000 expense like a cap repair by dipping into savings like an emergency fund.

    Others responded to say they would pay for an emergency expense by using a credit card, taking out a personal loan, or asking family for help to cover the unexpected expense.

    The Federal Reserve has backed up this type of response with survey results that said 61% of Americans said they would pay for an unexpected $400 expense with cash, savings or a credit card. In their poll only 12% said they would not be able to cover it.

    Between savings, credit, and help from family most people at least have an idea of how they would want to cover an unexpected expense.

    Is $1,000 Enough For An Emergency Fund?

    In most cases, $1,000 is not enough for an emergency for most people.

    On average a general emergency for people is more than $1,000 and Bankrate found that the average unexpected expense for survey respondents was about $3,500.

    So what happens when you’ve only saved up $1,000 for emergencies and then you encounter the typical $3,500 emergency? Unfortunately that means you have $2,500 you need to find a way to pay for and many people then turn toward credit cards or worse, payday loans. Those options can be a very high cost solution since the average credit card rate is 17%.

    One thing to remember when thinking about emergencies: they will eventually happen. In any given year probably a quarter or the people you know will need to find a way to pay for a financial emergency.

    So if we know emergencies will happen, those emergencies on average are $3,500, and any given year it might be us that has an emergency, what do we do with this information? We plan to save more than $1,000 in an emergency fund so that we will not have to turn toward high cost solutions to cover emergency expenses.

    When $1,000 Isn’t Enough

    You might want to know some specific situations where $1,000 is enough for you and when it is not.

    When $1,000 is enough for your emergency fund:

    • you are a student and live with family and have very limited expenses
    • you have a very stable income that is guaranteed and multiple sources of that income

    In some cases where you have very low or no expenses or if you have multiple sources of guaranteed income then you may be able to get by with just $1,000 in savings.

    When $1,000 is not enough for your emergency fund:

    • if you have children and are the sole provider for them
    • if you own a home and need to cover any unexpected repairs
    • if you are self-employed or have commission based inconsistent income
    • if you work in an industry prone to layoff
    • if you have chronic health problems and will likely have medical expenses
    • if you have multiple pets especially if older or unhealthy

    As you can see, there are many life situations where there could be a need for more than $1,000 in an emergency fund. If you are more likely to encounter “unexpected” expenses regularly, then you should work to build a larger emergency fund.

    How much should I have in my emergency fund?

    Since we clearly know $1,000 is not enough for an adequate emergency fund, how much do you need to save?

    This exact number of savings you need will vary from person to person and will depend on a few factors.

    Your emergency fund will depend on:

    • your monthly income
    • your monthly expenses
    • the stability of your income
    • your risk tolerance

    You will need to take into account all of those factors to determine how much you want to save up for your emergency fund.

    Let’s say you earn $3,000 a month but your expenses per month are only $2,000. You have a stable job but you are a single person so if you lose your income you will not have a backup plan besides unemployment.

    In this case you would want to save up 6 months of expenses, so 6 x $2,000, or $12,000 would be your emergency fund number.

    If you have a spouse and you both work then you might air on the side of saving up just 3 months of expenses.

    The more unstable your income is the more your will want to save up. If you are a business owner or work on commission then you might want to save up 6 months of expenses or even more in order to feel secure.

    For us we both work so we decided to save up 3 months of expenses. That meant we needed 3 months of $3,000 in expenses, or $9,000. We plan to save up even more eventually but having $9,000 means we feel secure enough to weather most emergencies that come along.

    You will have to look at all of the factors in your unique situation and then decide what makes the most sense for you and what gives you the most peace. Finding the peace of mind number for your situation will depend on both the numbers and how you feel about the numbers. Remember that this is a very personally choice and won’t necessarily match the numbers of other people who may have different factors involved!

    Tips For Saving An Emergency Fund

    Savings can be challenging when you are trying to juggle debt repayment, mortgages or high rents, and lower paying wages than previous generations. However, despite the circumstances we need to be more focused than ever because we know that $1,000 is not enough to cover emergencies.

    If you have struggled to save in the past then saving for emergencies might be something you need to try multiple tactics to achieve. Here are a few ways people have found success in saving consistently to build an emergency fund:

    You can try one or more of these tactics in order to start saving and keep building your emergency fund savings accounts.

    Where To Save Your Emergency Fund

    Where should you save your emergency fund? What’s the best place to keep your savings?

    I personally use and recommend an online savings account with a high interest rate. There are many online bank accounts you can open at placed like Capital One, Ally, or SoFi where you get a high interest on your savings with no fees.

    Reasons I like these types of accounts for your emergency fund:

    • You don’t have account minimums so you can start your emergency fund from the very beginning with just $1 or $5 or whatever you can spare. If you watch my Transfer Tuesday videos then you know $5 of consistent action adds up!
    • They are easy to open and generally very user friendly. These banks are not complicated and they make the process very easy and also don’t charge fees that traditional banks may charge.
    • Online only banks make it more inconvenient to withdraw the whole amount in your emergency fund which means you will be more likely to only use it in a real emergency.
    • You can keep your savings account separate from your regular checking account. If you want you can open an account at one of these banks you don’t normally use so your money is safe and not immediately accessible to put into your checking account.

    Online bank savings accounts are my personal favorite way to save but you can also save in any other savings account. Just make sure there is not a minimum balance requirement in case you need to use all the money and that there are no fees.

    Most savings accounts, even the ones with the highest return will not give you much return for your money. That is totally ok because you are not looking to make this money “work for you” as an investment.

    Your emergency fund is not meant to be an investment. It is meant to be an insurance policy so that it is there when you need it. You should not invest your emergency fund in the stock market since there is no guarantee the money will be there when you need it.

    Remember that whether you are starting with $5 or $500, keep saving your money!

    You may only be able to saving $5 a week but being consistent over time adds up and that consistency is more important than perfection!

  • How To Spend Your $1,200 Stimulus Check

    Stimulus checks for Americans are set to arrive starting April 9 and coming in waves over the next few weeks. The stimulus update for April 9 is that money should be arriving for people starting today Thursday April 9 or tomorrow Friday April 10 and the coming weeks.

    We are likely getting stimulus checks next week based on what government officials have said in the last couple of days so let’s talk about it! Today I’m going over some of the ways you could and should spend your stimulus money in order to use it wisely as well as share what we are doing with our stimulus money.

    Why Are We Getting Stimulus Checks & Who Gets Them?

    Let’s start with bad news – unemployment numbers are so very bad right now. I know people have been commenting on my videos about being laid off and I’ve been scared I would be as well, but now 10% of the American labor force has filed for unemployment with today’s numbers added in. That’s insane and more than any time in history for initial claims in a short period. 

    A lot of this is situational and hopefully most of these jobs come back and when stuff calms down people go back to work.

    Unfortunately combining this with the fact that most of us in the USA don’t have enough to cover $1,000 emergencies… we are in trouble. But the government is here to the rescue… in a way by hoping to get people through this temporary rough spot and get them spending as well to stimulate the economy.

    they are going to send every adult $1,200 if you made under $75,000 on your most recent tax return from 2019 or 2018. They will be looking at the most recent tax returns from these years. Married couples making under $150,000 will get $2,400.  You also get $500 per child on dependents. 

    So for us as a two income household with one child making under $150,000 we will get $2,900.

    If you qualify for these stimulus checks the government has now said they will start hitting direct deposit accounts starting next week. Considering I filed our taxes this year and got our refund in under two weeks… I believe they will hit our account next week. Things are moving fast and furious because they know we need the money out here.

    How To Spend It, If You Need It

    Since the money is coming soon, today I’m going to talk about ways to spend your stimulus check and share what we plan to do with ours because at a time of high unemployment and lots of uncertainty we need to make sure the money we are getting doesn’t go to waste. 

    Pay to cover your immediate needs. First, if you’ve lost your job and need the money for every day living then definitely pay for the essential necessities in your life. Pay for your food. Buy your medications. Pay for the things you need to actually survive right now. That’s what the money is for and using it for this is smart. Make sure you are healthy and well to get through this. 

    Pay your bills. Again, if you’ve lost your job and don’t know how to pay your rent then you should use this money for bills after you’ve covered the necessities for living. If the money won’t stretch far enough then cover the most essential bills until you get unemployment or a new job income coming in. This is again, for essential bills like covering your rent or utility bill, not paying for your subscriptions or other non necessary bills.

    Save the money. Open a high interest savings account if you don’t already have one and just save it. You can use Capital One, Ally, of SoFi. Open the account and put the money in this account and just let it sit there short term until you need it. If you’ve already started saving, then use the money to build your 3-6 months emergency fund and be more cautious right now. This is personally what we are doing because I do still have job uncertainty if this lasts longer than expected. 

    How To Spend It, If You Don’t Need It

    If you already have your essentials covered and an emergency fund and your job is very secure and this is “bonus” money for you, then congrats! You have a couple options for what to do with it.

    1) Invest in the market. The market is pretty volatile lately and doesn’t necessarily correspond to normal cues but you could go ahead and invest the money. Personally we use index funds and dollar cost averaging for the majority of our investing so I’d go with that method maybe in a Roth IRA but if you are doing this be cautious because none of us know how long this will last or what the market results will be.

    2) Invest in yourself. Spend the money to buy an online course you want to learn. Or spend the money on a certification you have been wanting to get and finally have time to do. If you have 

    3) Give it away. Give the money to a charity you care about. Or heck to people you know need it more than you. Venmo or cash app people money because you know they need it and you care about them. Be a blessing to others.

    I would say that it’s worth playing it safe with this stimulus check. Having more money on hand is the best bet. 

    There may be more rounds of layoffs, there may be more rounds of stimulus checks. Or there may not be. None of us really know yet and anyone saying they know something for sure is just talking with false confidence. Use this money for the best use for your family in whatever way makes the most sense for you.