15 Of The Best Money Books For Young Adults – Learn How To Live The Life You Want

Are you looking for the best money books for young adults?

best money books for young adults

best money books for young adults

Today, I want to talk about the best money and life books for new high school graduates, college graduates, and other young adults. These would be great for graduation gifts, or just for yourself!

I wasn’t always good with money when I was younger. I bought more clothes than I needed, financed a new car, spent a lot going out to eat, and spent a lot of money on things I didn’t need. It took me several years to realize how my spending habits were affecting the rest of my life.

I think this is fairly common when you’re younger, and there are lots of great financial books for young adults that can help you understand how money works and how to prepare for the future. 

The best money books for young adults explain personal finance topics like saving, investing, making more money, and more. And, reading them when you’re young can help you get on the right track with your money from a young age. 

Rather than spending years playing catch up with your money, you can get started on a great path now. 

I often get questions from young readers who are looking for help with their money, and I also get questions about how to help a young person with their money. These books are a great gift for yourself or someone you know.

For me, I love to give books as gifts, especially personal finance books for high school and college graduation gifts. And the best money books for young adults on this list make for great gifts – I’ve even given some of these books as gifts.

If you want to change your life, then I recommend that you start reading personal finance books. Yes, money is not everything, but improving your financial situation can help you gain control of your life.

Related: 6 Simple Steps That Will Teach You How To Write A Check

There are many different books listed below, so you will be sure to find at least one or two that meet your needs.

The best personal finance books may help you learn how to:

  • Understand basic financial concepts in an easier way
  • Reach financial independence or retire early
  • Take on your own yearlong shopping ban
  • Deal with and pay off debt
  • Better manage the 168 hours a week you have
  • Become more confident
  • Invest for your future
  • Choose your own dreams and adventures
  • Find the best path to pay off your student loans

And more!

Here are 15 of the best money books for young adults.

 

1. Broke Millennial

Broke Millennial was written by Erin Lowry, and is a must-read for young adults. She makes the topic of money entertaining, fun, and relatable for young adults. You won’t be bored with this money book!

Erin gives readers a step-by-step plan to stop being broke, and she discusses many topics, from tricky ones like how to manage student loans, how to discuss money with your partner, and more.

Please click here to check out Broke Millennial.

Another one of the best money books for young adults is Broke Millennial Takes On Investing. Erin recently published this one and it’s a great read, as it covers the topic of investing without making you feel dumb.

 

2. Work Optional: Retire Early the Non-Penny-Pinching Way

Work Optional is another one of my top picks for best money books for young adults, as it was written by one of my favorite writers, Tanja Hester. This personal finance book will show you how to reach financial independence so that you can live the life you want. 

I know retirement feels very far away when you’re younger, but this book explains how early retirement is a possibility if you start saving money now. Yes, retiring before the traditional age of 65 can happen, and it starts with the kind of guidance you’ll get in this book.

Please click here to check out Work Optional: Retire Early the Non-Penny-Pinching Way.

 

3. The Year of Less by Cait Flanders

If you’re looking for one of the best financial books for graduation gifts, check out The Year of Less by Cait Flanders. In this book, Cait writes about her yearlong shopping ban which will inspire you to simplify your own life and address your relationship with material possessions.

Cait talks about how for a full year, she only bought groceries, toiletries, and gas, and how it impacted her life. This is a great read for young adults as it is so easy to get into a spending cycle when you get your first real job and start earning larger paychecks.

Please click here to check out The Year of Less by Cait Flanders.

 

4. Dear Debt

Dear Debt was written by Melanie Lockert and focuses on people’s relationships with debt in a funny and endearing way.

Dear Debt is a must read for anyone who has debt or is taking on debt. Melanie shares her personal experience paying off $80,000 of student loan debt, how it affected her mindset, and more. This is one of the best money books for young adults because it’s a personal story about overcoming debt. There’s also tons of great money advice that will help others overcome the debt that may be holding them back.

Please click here to check out Dear Debt.

 

5. 168 Hours: You Have More Time Than You Think

Do you ever wish that you had more time in your week?

This book, written by Laura Vanderkam, focuses on helping people manage their time better so they can focus on what really matters.

Laura writes about tips and tricks to live a more efficient life. She teaches you how to prioritize things in your life, from how to get enough sleep every night to finding time for hobbies you’ve been wanting to try. You will learn how to use your 168 hours a week to make your life better, as you’ll learn many great life-changing strategies.

Please click here to check out 168 Hours: You Have More Time Than You Think.

 

6. How to Win Friends and Influence People

How to Win Friends and Influence People was written by Dale Carnegie in 1936 and has sold over 15,000,000 copies worldwide. This is one of the most best-selling books ever, and for good reason!

This book will show you how to approach situations differently, become more confident, and get people to like you. This is one of the best money books for young adults that people of all ages will benefit from, because this book is all about living a happier and more successful life at any age.

Please click here to check out How to Win Friends and Influence People.

7. Quit Like A Millionaire

Quit Like A Millionaire was written by Kristy Shen and Bryce Leung, who are well-known people in the FIRE community. And, if you’re not familiar with FIRE, it stands for Financial Independence Retire Early. Everyone approaches FIRE differently, but the point is to stop letting money hold you back from living the life you want.

Kristy retired early at the age of 31 with a million dollars, and has a very inspirational story. In this book, she explains how that was possible and how it can be a reality for you too. This is a great guide on how to save more money, retire early, and live the life that you want.

In this book, you’ll learn a step-by-step guide on how to reach success, whatever that may mean for you. This is a fun and inspirational book that will open you up to new possibilities and opportunities.

Please click here to check out Quit Like A Millionaire.

 

8. Get Money

Get Money is a book by Kristin Wong, and it’s an engaging read that will teach you how to manage your money.

Kristin gives you a step-by-step personal finance guide that will show you what you need to do in order to stop letting money control your life. You will learn how to create a budget, pay off your debt, build a better credit score, negotiate, and how to start investing.

Please click here to check out Get Money.

 

9. Financial Freedom: A Proven Path to All the Money You Will Ever Need

Financial Freedom was written by Grant Sabatier, who decided that he needed to change his life by learning how to make more money.

Here’s a bio I found about Grant to show you how awesome he is!

“In 2010, 24-year old Grant Sabatier woke up to find he had $2.26 in his bank account. Five years later, he had a net worth of over $1.25 million, and CNBC began calling him ‘The Millennial Millionaire.’ By age 30, he had reached financial independence. Along the way he uncovered that most of the accepted wisdom about money, work, and retirement is either incorrect, incomplete, or so old-school it’s obsolete.”

In his book, Grant writes about how to reach financial freedom through steps such as building side hustles, traveling the world for less, building an investment portfolio, and more. 

Please click here to check out Financial Freedom.

 

10. The Simple Path To Wealth

The Simple Path To Wealth was written by JL Collins, and it’s one of the most popular and best money books for young adults that’s available.

Collins writes about many important financial topics in his book, such as how to avoid debt, how to build wealth, what the 4% rule is and how to use it to your advantage, and more.

This is an easy book to read, and it makes complicated personal finance topics much easier to understand. Many people have said that JL Collins is the reason why they were able to retire early, thanks a lot to his website and book.

Please click here to check out The Simple Path To Wealth.

 

11. Student Loan Solution

Student Loan Solution was written by David Carlson, and it’s a great book for anyone who has student loan debt.

Student loans can be extremely difficult to understand, as there is so much different terminology as well as different ways to pay them back (such as loan forgiveness, consolidation, and so on). This book explains a 5-step process that will help you to better understand your student loans, the best ways to pay them off, and more.

Please click here to check out Student Loan Solution.

 

12. The Millionaire Next Door

The Millionaire Next Door is another classic personal finance book, and it was written by Thomas J. Stanley.

In his book, he writes about the common traits of those who are wealthy, and how the wealthy can be even someone such as your neighbor, even though you might not realize it. This book shows readers that anyone can retire with wealth, not just your traditional multi-millionaires living in huge mansions with airplanes.

This is one of the best finance books for graduation gifts because it will make you rethink what it means to be rich, which is important to understand from a young age.

Please click here to check out The Millionaire Next Door.

 

13. The Infographic Guide to Personal Finance: A Visual Reference for Everything You Need to Know

The Infographic Guide to Personal Finance, written by Michele Cagan, is one that I learned about from my readers. What’s great about this book is that it gives you a visual guide to important personal finance topics, and many people learn better from visuals.

This book is different in that it is full of infographics, which make it fun and easy to read. You will learn how to find a bank, build an emergency fund, how to pick health and property insurance, and more.

Please click here to check out The Infographic Guide to Personal Finance.

 

14. Choose FI

Choose FI was written by Chris Mamula, Brad Barrett, and Jonathan Mendonsa. These guys are behind one of my favorite Facebook communities, Choose FI, and they explain how to reach financial independence and retire early. 

While retiring early may seem out of reach if you’ve just graduated, this book teaches you how to “choose your own adventure” and improve your financial situation.

Please click here to check out Choose FI.

 

15. I Will Teach You To Be Rich

I Will Teach You To Be Rich was written by Ramit Sethi and is a excellent book for beginners. It would make a great gift for a recent high school or college graduate.

Ramit’s I Will Teach You To Be Rich is packed full of great lessons, and it is written in a fun way. He covers the basics of personal finance such as budgeting, saving money, investing, and more.

Please click here to check out I Will Teach You To Be Rich.

What do you think are the best money books for young adults?

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Source: makingsenseofcents.com

15 Top Income-Earning Blogs: Make Money Online Blogging [Infographic]

Top Paid Bloggers

Top Paid Bloggers

Table of Contents

biggest reason why you should start a blogyet?

I hope this list of income-earning blogs inspires you and proves you can make money online through blogging.

15.  Making Sense of Cents

Founder – Michelle Schroeder-Gardner
Income – $146,498 per month.

MichelleSchroederGardner #15 top earning blogs

MichelleSchroederGardner #15 top earning blogsMichelle Schroeder-Gardner started Making Sense of Cents to “help improve my finances, keep track of my progress and to help readers improve their finances along the way.”

Well, let’s see — how has Schroeder-Gardner done in these areas?

She’s certainly improved her finances, paying off over $38,000 in student loan debt in just 7 months while growing the site’s revenue year-over-year.

Schroeder-Gardner has transparently tracked her progress in her popular monthly income reports.  She says the reports act as a journal for her and keeps her accountable, while also showing others that side income is possible.

And she’s also helping others with their finances by publishing thousands of how-to articles about earning more, saving more, and becoming financially fit.
Making Sense of Cents’ primary income comes from affiliate marketing.  You can see a complete breakdown of this profitable blog’s earnings here.

#14.  Smart Passive Income

Founder – Pat Flynn
Income – $152,276 per month.

Pat Flynn #14 top earning blogs

Pat Flynn #14 top earning blogsSmart Passive Income (SPI) founder Pat Flynn is a beacon of light in the sometimes dark and shady internet marketing space.

Calling himself a “crash test dummy of online business,” Flynn transparently shows what’s working and what isn’t working in his business.

His site details his online business experiments and gives readers actionable blueprints to follow and outlines mistakes to avoid.

Flynn didn’t invent the online income report, but he certainly popularized them.  He’s been publishing monthly income reports on the blog since 2008, detailing his income sources, revenue figures, as well as his expenses.  It’s still one of the most trafficked pages on the site.

Flynn is a great example of a blogger who has successfully branched out into other areas as well.

In 2010, Flynn launched the Smart Passive Income Podcast which is routinely in iTunes top 10 Business podcasts.  To date, the show has been downloaded an impressive 33 million times.

He also broadcasts Ask Pat, a Q and A online business podcast, and SPI TV for visual learners.

Flynn is now a Wall Street Journal best-selling author with 2016’s release of Will It Fly?.

And while his individual success has been plentiful and hard-earned, Flynn gives back by serving on the board of the non-profit Pencils of Promise, helping to build new schools for children in underprivileged regions around the world.
SPI’s primary income comes from affiliate marketing, with other earnings from podcast sponsorship and products.

#13.  Lifehacker

Founder – Gina Trapani
Income – $154,000 per month

Lifehacker Gina Trapani top paid blogger

Lifehacker Gina Trapani top paid bloggerLifehacker was founded in 2005 by Gina Trapani as part of the Gawker Media network.

From the start, Trapani acted as the sole contributor, writing 8 articles a day.  Talk about blogging like a boss!

She impressively launched the site with an exclusive sponsorship from Sony, rumored to be 3 months for $75,000.  Yeah, she’s a boss.

Lifehacker eventually added other contributors and the blog continued to grow in popularity.

As its motto claims, the site’s content is about “tips, tricks and downloads for getting things done.”

Trapani moved on from the company in 2009, and Nick Denton has run it ever since.

The site still churns out 18 articles a day, all designed to make you more productive.
Lifehacker earns its most of its revenue from advertising and it’s been one of the top-earning blogs since it’s inception.

#12.  Timothy Sykes

Founder – Timothy Sykes
Income – $165,000 per monthTimothy Sykes profitable blog

Timothy Sykes profitable blog

Timothy Sykes is a multimillionaire stock trader who famously earned $4 million while day trading in college.

As a high school student, Sykes took $12,415 of his bar mitzvah gift money and turned it into  $1.65 million by day trading penny stocks.

Not stopping there, Sykes has created a hedge fund and starred in the television program Wall Street Warriors.
These days, Sykes documents his trades and strategy on his popular blog, TimothySykes.com.  His top-earning blog offers a Millionaire Challenge and a successful subscription service where users can get real-time trading alerts and access a vast library of trading videos.

#11.  Tuts+

Founder – Collis Ta’eed, Cyan Ta’eed and Jun Rung
Income – $175,000 per month

2 Top Paid Bloggers2 Top Paid Bloggers
Cyan Ta’eed and Collis Ta’eed

Collis Ta’eed, Cyan Ta’eed and Jun Rung founded Tut+ as a modest blog with tutorials on freelancing and Photoshop.

The site ultimately grew into a network of 15 educational blogs, helping people learn profitable online skills, from coding to videography.

At the center of it all remains Tuts+.  In 2014, the group combined all 16 blogs into one central hub called Envato Tuts+.

Envato Tuts+ Premium, a subscription-based membership area offering video courses and ebooks, is the primary source of the site’s income.
You can still find plenty of free content to learn creative skills and yes, they still have tutorials on freelancing and Photoshop.

Tuts+ is one of my favorite blogs and it’s inspiring to know it started as a hobby and developed naturally and organically into one of the highest-earning blogs online.

#10.  Smashing Magazine

Founder – Sven Lennartz and Vitaly Friedman
Income – $215,000 per month

Vitaly Friedman Top Earning BlogsVitaly Friedman Top Earning Blogs
Vitaly Friedman

Smashing Magazine is the superb creation of Sven Lennartz and Vitaly Friedman.

The blog debuted in 2006 with the goal of helping people with web design and web development interests.

Today, Smashing Magazine is a go-to site for anyone looking to acquire these lucrative skills, with an enormous amount of informative and actionable content.

Not surprisingly, the blog receives 5 million page views a month.

The site now hosts frequent web development conferences and full-day workshops all over the world, to help both professionals and amateurs improve their craft.

This top earning blog’s main income comes from their membership area, where users can learn from an impressive number of tutorials covering everything from coding, web design, mobile app development, UX design, graphics and WordPress.

#9.  EOFire

Founder – John Lee Dumas
Income – $223,000 per month

EOFire top earning blog

EOFire top earning blogI’m convinced John Lee Dumas never sleeps.

He operates EOFire.com, short for Entrepreneurs on Fire, delivers a daily business podcast, and in recent years has published two best-selling journals — The Freedom Journal and The Mastery Journal.

But his bread and butter is the EOFire podcast, which is fantastic. In 2012, he noticed none of his favorite podcasts were podcasting daily, leaving him wanting more. So he launched his daily podcast interviewing entrepreneurs, and the rest, as they say, is history.

JLD, as he’s affectionately known, has now interviewed over 1600 entrepreneurs, including Tim Ferriss, Barbara Corcoran, Seth Godin and Gary Vaynerchuk.

In 2013, EOFire was named Best of iTunes.

His journals wrote the book (no pun intended) on how to run a successful crowdsourcing campaign.  And through a partnership with Pencils of Promise, Dumas is parlaying the success of his journals into the creation of schools in underprivileged countries.  You can see one of the schools Dumas made possible here.
EOFire earned a gross income of $595,936 in February of 2016. That’s an incredible feat for one month and well-deserved for JLD.

It’s always good to see good people doing good work and succeeding.

#8.  Gizmodo

Founder – Peter Rojas
Income – $325,000 per month

Peter Rojas is so awesome he’s on this list twice.Peter Rojas 2 top earning blogs

Peter Rojas 2 top earning blogs

Rojas created Gizmodo to cover technology, entertainment, politics, science and science fiction.

Gizmodo launched in 2002 as part of the Gawker Media network run by Nick Denton with Rojas as Editor in Chief.  The blog quickly grew in popularity by partnering with a variety of international firms to deliver translated versions of its content in Europe.

When you visit the site’s home page, one of the first things you notice is an above-the-fold banner that is larger than most.   As you scroll down, you’ll find Gizmodo does a great job of showing a lot of content with only a couple of display ads along the side, with one of them being the same advertiser found at the top of the page.  When you finally scroll past all the content (there’s a lot!) and reach the bottom of the page, you’ll find another large banner just above the footer, and yes, the advertiser is the same as in the other two spots.
Gizmodo’s home page has a great balance of being heavily content-focused but still being able to make a tidy profit with ads.   The ads are unobtrusive but still get noticed, and because of the repetition, the advertiser gets noticed too.  It’s a win-win advertising model for other sites to emulate.

#7.  Perez Hilton

Founder – Perez Hilton
Income – $575,000 per month

Perez Hilton runs a profitable blog

Perez Hilton runs a profitable blogPerez Hilton is a great example of a successful blogger who capitalized on other opportunities outside of blogging.  He’s also a television personality, nationally syndicated host of Radio Perez, and author of a children’s book.

But what he’s most famous for is his celebrity gossip blog PerezHilton.com.  Millions visit his site every day to revel in his brand of snarky gossip entertainment.
Hilton, born Mario Armondo Lavandeira Jr, started his blog as a hobby and decided to focus on Hollywood “because it was something I was inherently curious about, and fascinated with. And, let’s face it, celebrities — a lot of them — are crazy.”

This profitable blog earns its revenue from advertising banners on the site.

#6.  Copyblogger

Founder – Brian Clark
Income – $1,000,000 per month

With Copyblogger, Brian Clark created an audience-focused content marketing machine. Brian Clark #6 top earning blogs

Brian Clark #6 top earning blogs

In fact, Forbes recently called it “the most influential content marketing blog in the world.”

Copyblogger has been helping people write better, sell more, and get more traffic since 2006.

The site’s original tagline was “Internet Marketing For Smart People.”  In other words, they’re not selling snake oil and get rich quick schemes.

Now the tagline is “Words That Work” and boy, do they ever.  Clark and his team are outstanding at writing copy.

When I read they’re sales copy, I’m always compelled to buy. In fact, this site operates on their Genesis Framework and a StudioPress blog theme.
Based on their audience research and communication, they’ve strategically added tools and platforms to help content marketers and digital entrepreneurs grow their businesses.

#5.  Mashable

Founder – Pete Cashmore
Income – $2,000,000 per month

Pete Cashmore High Earning Boog

Pete Cashmore High Earning BoogMashable was started in 2005 by Pete Cashmore, a 19-year-old who still lived at home with his parents in Scotland.

He began by documenting the latest news about social media and emerging Internet technologies.

His work resonated with lots of folks and Mashable became an immediate success, attracting 2 million readers within the first 18 months.

Mashable has come a long way since those early days.  It’s no longer just Cashmore contributing Mashable’s content (they’re hiring!), and they are now headquartered in New York City.
Mashable is positioned to be one of the top-earning blogs online for some time.

The blog is still growing with over 45 million readers a month and the content has expanded to cover business, entertainment and lifestyle and now offers 5 international editions.

Mashable’s income primarily comes from advertisements on the site.

#4.  TechCrunch

Founder – Michael Arrington and Keith Teare
Income – $2,500,000 per month

Michael Arrington and Keith Teare started TechCrunch in 2005 to cover technology industry news.

Keith Teare topo earning blogs founderKeith Teare topo earning blogs founder
Keith Teare

The blog has grown immensely and now features big-name columnists in the startup and venture capital industries.

AOL bought TechCrunch in 2005 for a rumored $25 to $40 million..
TechCrunch earns revenue from display advertising on the blog   Specifically, they charge between $19.25 and $36.50 per CPM (Cost Per Thousand views).

According to the site, they receive 12 million visitors per month and 35 million page views per month.  With such a high CPM, you can see how this top-earning blog makes its considerable income.

#3.  Moz

Founder – Rand Fishkin and Gillian Muessig
Income – $3,300,000 per month

Rand Fishkin #3 highest earning blogsRand Fishkin #3 highest earning blogs
Rand Fishkin

Moz is the go-to place for all things SEO.  Search engine optimization pros check out Moz daily to see what’s happening in the space.

They also come to use their tools and resources to help them rank their sites and extend their visibility.

Rand Fishkin co-founded the site with Gillian Muessig, who happens to be his mother.   The two initially operated a web design shop and Rand had to learn SEO to promote the business.  He shared what he learned in SEO forums and quickly became known as an authority in the field.

Frustrated by the secretive world of SEO, they started SEOMoz in 2004 as a way to openly share the knowledge.  In fact, the Moz part of their name is a direct nod to the open-source sharing philosophy made famous by the Mozilla Foundation and Dmoz Web directory project.

These days the profitable blog and community simply go by Moz, and Fishkin jokingly refers to his title as “Wizard of Moz.”
Moz earned $42 million in 2016, primarily from its paid membership area, which offers valuable tools and services for the avid search engine marketers.

True to the name, Moz still offers numerous tools for free and even the membership area comes with a 30-day free trial.

#2.  Engadget

Founder – Peter Rojas
Income – $5,500,000 per month

We last saw Peter Rojas at #8 with Gizmodo and while that blog focuses on many topics, with Engadget, it’s all about tech.Peter Rojas runs two top earning blogs

Peter Rojas runs two top earning blogs

Rojas created Engadget to give sound advice and detailed reviews on technology and consumer electronics.  From the beginning, the site has employed numerous writers and editors to contribute to its content machine.

Engadget is now run by AOL, who acquired the blog in 2005.
The lesson here is if you ever want to sell your blog, it’s best if it is a brand on its own and not a personal brand.

The company earns massive revenue from advertising on the site.

#1.  HuffPost

Founder – Arianna Huffington
Income – $14,000,000 per month

Arianna Huffington is a top paid blogger

Arianna Huffington is a top paid bloggerIn 2005, Arianna Huffington launched the Huffington Post with the goal of becoming a political counterpart to the popular Drudge Report.  The blog provided a liberal view of politics and lifestyle and quickly gained a strong following.

The site has grown year after year and in 2011, Huffington sold the blog to AOL for $315,000.

Huffington received $21 million-plus stock options in the company as part of the sale and stayed on as Editor-in-Chief.  She resigned from that post in August 2016, and now devotes her time to a new startup Thrive Global, a health and wellness site.

The site has rebranded and is now known simply as HuffPost.

It is the #1 most popular political blog according to a study by eBizMBA.  Alexa Global, Compete and Quantcast.

The top-earning blog is an enormous success, earning $14,000,000 in revenue in 2016, and it is estimated to be worth $1 billion currently.

Sponsored advertising revenue provides the majority of HuffPost’s income.  The site provides banners and other ads across it’s variety of channels.

What do you think?

I hope this list shows you what is possible and inspires you to follow your own path to the top.

As always I would love to hear your thoughts.  Please leave a comment and let me know what you think

15 Top Earning Blogs Making Money Online Infographic

As always I would love to hear your thoughts.  Please leave a comment and let me know what you think

Most profitable blogsMost profitable blogs
Top Paid Bloggers

As always I would love to hear your thoughts.  Please leave a comment below.  What did you think?

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Effective tax rates in the United States

I messed up! Despite trying to make this article as fact-based as possible, I botched it. I’ve made corrections but if you read the comments, early responses may be confusing in light of my changes.

For the most part, the world of personal finance is calm and collected. There’s not a lot of bickering. Writers (and readers) agree on most concepts and most solutions. And when we do disagree, it’s generally because we’re coming from different places.

Take getting out of debt, for instance. This is one of those topics where people do disagree — but they disagree politely.

Hardcore numbers nerds insist that if you’re in debt, you ought to repay high-interest obligations first. The math says this is the smartest path. Other folks, including me, argue that other approaches are valid. You might pay off debts with emotional baggage first. And many people would benefit from repaying debt from smallest balance to highest balance — the Dave Ramsey approach — rather than focusing on interest rates.

That said, some money topics can be very, very contentious.

Any time I write about money and relationships (especially divorce), I know the debate will get lively. Should you rent a home or should you buy? That question gets people fired up too. What’s the definition of retirement? Should you give up your car and find another way to get around?

But out of all the topics I’ve ever covered at Get Rich Slowly, perhaps the most incendiary has been taxes. People have a lot of deeply-held beliefs about taxes, and they don’t appreciate when they read info that contradicts these beliefs. Chaos ensues.

Tax Facts

When I do write about taxes — which isn’t often — I try to stick to facts and steer clear of opinions. Examples:

  • The U.S. tax burden is relatively low when compared to other countries.
  • The U.S. tax burden is relatively low when compared to U.S. tax burdens in the past.
  • Overall, the U.S. has a progressive tax system. People who earn more pay more. That said, certain taxes are regressive (meaning that, as a percentage of income, low earners pay more).
  • A large number of Americans (roughly one-third) pay no federal income tax at all.
  • Despite fiery rhetoric, no one political party is better with taxing and spending than the other. The only period during the past fifty years in which the U.S. government had a budget surplus was 1998-2001 under President Bill Clinton and a Republican-controlled Congress.

Even when I state these facts, there are people who disagree with me. They don’t agree that these are facts. Or they don’t agree these facts are relevant.

Also, I sometimes read complaints that the wealthy are taxed too much. To make their argument, writers make statements like, “The top 50% of taxpayers pay 97% of all federal income taxes.” While this statement is true, I don’t feel like it’s a true measure of where tax burdens fall.

I believe there’s a better, more accurate way to analyze tax burdens.

Effective Tax Burden

To me, what matters more than nominal tax dollars paid is each individual’s effective tax burden.

Your effective tax burden is usually defined as your total tax paid as a percentage of your income. If you take every tax dollar you pay — federal income tax, state income tax, property tax, sales tax, and so on — then divide this total by how much you’ve earned, what is that percentage?

This morning, while curating links for Apex Money — my second personal-finance site, which is devoted to sharing top money stories from around the web — I found an interesting infographic from Visual Capitalist. (VC is a great site, by the way. Love it.) They’ve created a graphic that visualizes effective tax rates by state.

Here’s a summary graph (not the main visualization):

State effective tax rates

As you can see, on average the top 1% of income earners in the U.S. have a state effective tax rate of 7.4%. The middle 60% of U.S. workers have a state effective tax rate of around 10%. And the bottom 20% of income earners (which Visual Capitalist incorrectly labels “poorest Americans” — wealth and income are not the same thing) have a state effective tax rate of 11.4%.

Tangent: This conflation of wealth with income continues to grate on my nerves. I’ll grant that there’s probably a correlation between the two, but they are not the same thing. For the past few years, I’ve had a low income. I’m in the bottom 20% of income earners. But I am not poor. I have a net worth of $1.5 million. And I know plenty of people — hey, brother! — with high incomes and low net worths.

It’s important to note — and this caused me confusion, which meant I had to revise this article — that the Visual Capital numbers are for state and local taxes only. They don’t include federal income taxes. (Coincidentally, I made a similar mistake a decade ago when writing about marginal tax rates. I had to make corrections to that article too. Sigh.)

GRS readers quickly helped me remedy my mistake, pointing to the nonprofit Tax Foundation’s summary of federal income tax data. With a bit of detective work, I uncovered this graph of federal effective tax rates by income from the Peter G. Peterson Foundation. (Come on. What parent names their kid Peter Peterson? That’s mean.)

Federal effective tax rates

Let’s put this all together! According to the Institute on Taxation on Economic Policy, this graph represents total effective tax rates for folks of various income levels. Note that this graph is explicitly comparing projected numbers in 2018 for a) the existing tax laws (in blue) and b) the previous tax laws (in grey).

TOTAL effective tax rates in the U.S

Total Tax Burden vs. Total Income

Here’s one final graph, also from the Institute on Taxation and Economic Policy. This is the graph that I personally find the most interesting. It compares the share of total taxes paid by each income group to their share of the country’s total income.

Tax burden vs. total income

Collectively, the bottom 20% of income earners in the United States earned 3.5% of total income. They paid 1.9% of the total tax bill. The top 1% of income earners in the U.S. earned one-fifth of the nation’s total personal income. They paid 22.9% of total taxes.

Is the U.S. tax system fair? Should people with high incomes pay more? Do they pay more than their fair share? Should low-income workers pay more? Are we talking about numbers that are so close together that it doesn’t matter? I don’t know and, truthfully, I don’t care. I’m concerned with personal finance not politics. But I do care about facts. And civility.

The problem with discussions about taxation is that people talk about different things. When some folks argue, they’re talking about marginal tax rates. Others are talking about effective tax rates. Still others are talking about actual, nominal numbers. When some people talk about wealth, they mean income. Others — correctly — mean net worth. It’s all very confusing, even to smart people who mean well.

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Final Note

Under the Digital Accountability and Transparency Act of 2014, the U.S. Department of the Treasury was required to establish a website — USASpending.gov — to provide the American public with info on how the federal government spends its money. While the usability of the site could use some work, it does provide a lot of information, and I’m sure it’ll become one of my go-to tools when writing about taxes. (I intend to update a couple of my older articles this year.)

U.S. federal budget

The USA Spending site has a Data Lab that’s currently in public beta-testing. This subsite provides even more ways to explore how the government spends your money. (I also found another simple budget-visualization tool from Brad Flyon at Learn Forever Learn.)

Okay, that’s all I have for today. Let the bickering begin!

Source: getrichslowly.org

Effective tax rates in the United States

I messed up! Despite trying to make this article as fact-based as possible, I botched it. I’ve made corrections but if you read the comments, early responses may be confusing in light of my changes.

For the most part, the world of personal finance is calm and collected. There’s not a lot of bickering. Writers (and readers) agree on most concepts and most solutions. And when we do disagree, it’s generally because we’re coming from different places.

Take getting out of debt, for instance. This is one of those topics where people do disagree — but they disagree politely.

Hardcore numbers nerds insist that if you’re in debt, you ought to repay high-interest obligations first. The math says this is the smartest path. Other folks, including me, argue that other approaches are valid. You might pay off debts with emotional baggage first. And many people would benefit from repaying debt from smallest balance to highest balance — the Dave Ramsey approach — rather than focusing on interest rates.

That said, some money topics can be very, very contentious.

Any time I write about money and relationships (especially divorce), I know the debate will get lively. Should you rent a home or should you buy? That question gets people fired up too. What’s the definition of retirement? Should you give up your car and find another way to get around?

But out of all the topics I’ve ever covered at Get Rich Slowly, perhaps the most incendiary has been taxes. People have a lot of deeply-held beliefs about taxes, and they don’t appreciate when they read info that contradicts these beliefs. Chaos ensues.

Tax Facts

When I do write about taxes — which isn’t often — I try to stick to facts and steer clear of opinions. Examples:

  • The U.S. tax burden is relatively low when compared to other countries.
  • The U.S. tax burden is relatively low when compared to U.S. tax burdens in the past.
  • Overall, the U.S. has a progressive tax system. People who earn more pay more. That said, certain taxes are regressive (meaning that, as a percentage of income, low earners pay more).
  • A large number of Americans (roughly one-third) pay no federal income tax at all.
  • Despite fiery rhetoric, no one political party is better with taxing and spending than the other. The only period during the past fifty years in which the U.S. government had a budget surplus was 1998-2001 under President Bill Clinton and a Republican-controlled Congress.

Even when I state these facts, there are people who disagree with me. They don’t agree that these are facts. Or they don’t agree these facts are relevant.

Also, I sometimes read complaints that the wealthy are taxed too much. To make their argument, writers make statements like, “The top 50% of taxpayers pay 97% of all federal income taxes.” While this statement is true, I don’t feel like it’s a true measure of where tax burdens fall.

I believe there’s a better, more accurate way to analyze tax burdens.

Effective Tax Burden

To me, what matters more than nominal tax dollars paid is each individual’s effective tax burden.

Your effective tax burden is usually defined as your total tax paid as a percentage of your income. If you take every tax dollar you pay — federal income tax, state income tax, property tax, sales tax, and so on — then divide this total by how much you’ve earned, what is that percentage?

This morning, while curating links for Apex Money — my second personal-finance site, which is devoted to sharing top money stories from around the web — I found an interesting infographic from Visual Capitalist. (VC is a great site, by the way. Love it.) They’ve created a graphic that visualizes effective tax rates by state.

Here’s a summary graph (not the main visualization):

State effective tax rates

As you can see, on average the top 1% of income earners in the U.S. have a state effective tax rate of 7.4%. The middle 60% of U.S. workers have a state effective tax rate of around 10%. And the bottom 20% of income earners (which Visual Capitalist incorrectly labels “poorest Americans” — wealth and income are not the same thing) have a state effective tax rate of 11.4%.

Tangent: This conflation of wealth with income continues to grate on my nerves. I’ll grant that there’s probably a correlation between the two, but they are not the same thing. For the past few years, I’ve had a low income. I’m in the bottom 20% of income earners. But I am not poor. I have a net worth of $1.5 million. And I know plenty of people — hey, brother! — with high incomes and low net worths.

It’s important to note — and this caused me confusion, which meant I had to revise this article — that the Visual Capital numbers are for state and local taxes only. They don’t include federal income taxes. (Coincidentally, I made a similar mistake a decade ago when writing about marginal tax rates. I had to make corrections to that article too. Sigh.)

GRS readers quickly helped me remedy my mistake, pointing to the nonprofit Tax Foundation’s summary of federal income tax data. With a bit of detective work, I uncovered this graph of federal effective tax rates by income from the Peter G. Peterson Foundation. (Come on. What parent names their kid Peter Peterson? That’s mean.)

Federal effective tax rates

Let’s put this all together! According to the Institute on Taxation on Economic Policy, this graph represents total effective tax rates for folks of various income levels. Note that this graph is explicitly comparing projected numbers in 2018 for a) the existing tax laws (in blue) and b) the previous tax laws (in grey).

TOTAL effective tax rates in the U.S

Total Tax Burden vs. Total Income

Here’s one final graph, also from the Institute on Taxation and Economic Policy. This is the graph that I personally find the most interesting. It compares the share of total taxes paid by each income group to their share of the country’s total income.

Tax burden vs. total income

Collectively, the bottom 20% of income earners in the United States earned 3.5% of total income. They paid 1.9% of the total tax bill. The top 1% of income earners in the U.S. earned one-fifth of the nation’s total personal income. They paid 22.9% of total taxes.

Is the U.S. tax system fair? Should people with high incomes pay more? Do they pay more than their fair share? Should low-income workers pay more? Are we talking about numbers that are so close together that it doesn’t matter? I don’t know and, truthfully, I don’t care. I’m concerned with personal finance not politics. But I do care about facts. And civility.

The problem with discussions about taxation is that people talk about different things. When some folks argue, they’re talking about marginal tax rates. Others are talking about effective tax rates. Still others are talking about actual, nominal numbers. When some people talk about wealth, they mean income. Others — correctly — mean net worth. It’s all very confusing, even to smart people who mean well.

[embedded content]

Final Note

Under the Digital Accountability and Transparency Act of 2014, the U.S. Department of the Treasury was required to establish a website — USASpending.gov — to provide the American public with info on how the federal government spends its money. While the usability of the site could use some work, it does provide a lot of information, and I’m sure it’ll become one of my go-to tools when writing about taxes. (I intend to update a couple of my older articles this year.)

U.S. federal budget

The USA Spending site has a Data Lab that’s currently in public beta-testing. This subsite provides even more ways to explore how the government spends your money. (I also found another simple budget-visualization tool from Brad Flyon at Learn Forever Learn.)

Okay, that’s all I have for today. Let the bickering begin!

Source: getrichslowly.org

What to Know Before Taking Out a Subsidized Loan

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Disclaimer

Attending college or university is a dream for a ton of people. Yet higher education can be expensive, seemingly putting that dream out of reach for many students and families.

Tuition at American schools has steadily increased for decades, so it can be hard for your average student to afford it. But it’s not only tuition costs that you need to consider: fees, room and board, off-campus living, meal plans, textbooks, living essentials and other supplies all cost money.

Fortunately, there are many different types of financial aid available to help you meet the total costs of attending school.

Grants, scholarships and government programs can all be used to aid your pursuit of higher education. Student loans, including private and federal loans, are also commonly used to fund college. But taking on debt requires more financial planning than other types of aid.

If you’re ready to find the right loan for you and your unique financial situation, we’ve got you covered. We’ll go over everything and anything we think you need to know about subsidized student loans—the basics, how they’re different from unsubsidized loans and much more. 

Student Loans and Rising Education Costs

Having a plan for how you’ll pay for college is pretty important. That’s mostly because the tuition continues rise: 

  • According to The College Board, tuition and fees for a public four-year institution in the academic year of 1989–90 were $3,510, in 2019 dollars. 
  • For the academic year 2019–2020, those costs exceeded $10,000. In the same time span, tuition and fees for a private four-year institution rose from $17,860 to nearly $37,000. 
  • In the last 10 years alone, tuition and fees for four-year public schools have increased $2,020, while costs for four-year private schools have grown $6,210. 

But as we mentioned, total costs include a lot more than tuition, and these other cost items have shown the same upward trend:

  • Data from the U.S. Bureau of Labor Statistics (BLS) shows college textbooks costs increased 88% from 2006 to 2016.
  • Average dorm costs at all postsecondary institutions were $6,106 in 2017, per data from the National Center for Education Statistics (NCES). Boarding costs, including meal plans, were $4,765. A decade earlier those costs, respectively, were $4,777 and $4,009.
  • Costs rose 24% for students living off-campus at public four-year universities between 2000 and 2017, according to The Hechinger Report.

The growth in college costs has occurred rapidly, outpacing wagegrowth. This has made a degree unaffordable for many. That’s where student loans come in.

The biggest source of these loans is the federal government. According to Sallie Mae, more than 90% of student loan debt today is tied to federal student loans. While the government offers several loan types, often based on financial need, private lenders such as banks and credit unions also make student loans available.

What is a Subsidized Loan?

To better understand your loan options, let’s explore the specifics of one of the government’s most popular offers: the subsidized student loan.

Officially, a subsidized loan is a type of federal loan offered through the U.S. Department of Education’s Direct Loan Program and referred to as a Direct Subsidized Loan. They are made exclusively to undergraduate students who demonstrate financial need and can be used to pay for college, university or a career school.

Subsidized loans work like most other student loans. They allow college goers to borrow money as they learn, paying the principal and interest back later. Most loans don’t require repayment while you attend school, and provide a grace period of six months after graduation for you to find a job. 

The most notable feature of subsidized loans is that the government pays the interest while you attend school at least part time. This is a quality that’s pretty much unique to federal subsidized loans. 

The government will also pay the interest during the grace period and during periods of loan deferment. You eventually assume responsibility for paying the interest, and principal, once you enter the repayment plan. 

The bottom line for subsidized loans is they carry a lower lifetime cost, because the government pays interest while you’re at school.

Who’s Eligible to Take Out a Subsidized Loan?

Subsidized loans aren’t available to everyone, however. In addition to meeting basic requirements for getting a loan from the federal Direct Loan Program, applicants for subsidized loans must:

  • Demonstrate financial need.
  • Be an undergraduate student.
  • Be enrolled at least half time.

Anyone considering a subsidized loan must fill out and submit the Free Application for Federal Student Aid (FAFSA) form. This is how the government will establish whether you demonstrate financial need that is sufficient for taking out a subsidized loan.

What Else Should You Know?

There are two other main points to discuss about subsidized loans—loan limits and time limits. Ultimately, your school will decide how much you can borrow. But there are annual limits to what you can borrow through subsidized loans, as well as a maximum for the entirety of your college career.

  • In your first undergrad year you can borrow up to $5,500 through federal loan, no more than $3,500 of that amount can be through subsidized loans.
  • In your second year you can borrow up to $6,500, no more than $4,500 through subsidized loans.
  • In your third year you can borrow up to $7,500, no more than $5,500 through subsidized loans.
  • The limits for your third year apply to your fourth year, and any year after that for which you are eligible to borrow through federal subsidized loans.

Factors influencing what you can borrow include what year you are in school and whether you are a dependent or independent student. 

Importantly, you can only receive subsidized loans for 150% of the published time of your degree program. That means if you attend a four-year bachelor’s program, you can only receive a subsidized loan for six years.

What’s the Difference Between Subsidized and Unsubsidized Loans?

Unsubsidized loans are the other type of loan the government offers. While unsubsidized loans and subsidized have some similarities, unsubsidized loans have some major differences.  

Interest rates for both subsidized and unsubsidized loans are controlled and set by Congress. This makes the interest rates for government student loans among the lowest you will be able to find.

While the federal government pays interest on subsidized loans, you’ll be solely responsible for paying interest on unsubsidized loans. You’ll have to pay interest while you’re in school and during the grace/deferment period.  Here are some other key differences:

  • Unsubsidized loans are available to undergraduate students, as well as graduate and professional students.
  • Students don’t need to demonstrate financial need to apply for an unsubsidized loan.
  • There is no maximum time limit for how long you can receive unsubsidized loans (compared to the 150% rule for subsidized loans).
  • Annual and aggregate loan limits are generally higher for unsubsidized loans.

Private Loans vs. Federal Student Loans

Interested in how private loans stack up to government loans? In a nutshell:

  • Private loans can have variable interest rates, which may make them lower in some cases than even fixed interest rates on government loans.
  • Annual loan limits don’t apply to private loans, as you and your lender will work out a package that is best for you.
  • Being approved for a private loan means submitting to a credit check, or having a parent as a consigner.
  • Often, private loans require payment while you attend school, and may not have the allowance for forbearance and forgiveness as government loans do.

Taking the Next Steps Toward Taking Out a Student Loan

If you or your child is nearing college age, it’s time to start thinking about how you’ll pay for higher education. It’s a good idea to look into a few options, including student loans, scholarships, grants and other sources. 

If you want to get started on applying for a subsidized loan, get started on your FAFSA form. And if you’re taking a closer look at private student loans, you can find help here.

Infographic outlining what to know about subsidized loans, including their structure, requirements, and qualifications.


Sign up now.

Source: credit.com