Here’s How Much Teachers Are Paid in Every State

Teacher in a classroom
Monkey Business Images / Shutterstock.com

The coronavirus pandemic rages on, but one way or another, teachers returned to work last fall and have continued doing their jobs throughout this school year.

Elementary school teachers in the U.S. earned an average annual wage of $63,930 as of 2019, according to the U.S. Bureau of Labor Statistics. Middle school teachers earned an average of $63,550 at that same time. High school teachers averaged $65,930 per year.

But teacher pay varies considerably by state. States also vary as to which level pays best. Often, elementary school teachers make less than their middle school and high school counterparts, but not always.

Following are the average annual wages for elementary, middle and high school teachers in each state. The states are ranked based on elementary-school pay.

50. Mississippi

Mississippi road sign
Peek Creative Collective / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $44,060
  • Employment: 12,340

Middle school teachers:

  • Average annual wage: $48,170
  • Employment: 6,180

High school teachers:

  • Average annual wage: $46,580
  • Employment: 8,850

49. South Dakota

Teacher in a face mask explaining math
Deliris / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $44,110
  • Employment: 4,070

Middle school teachers:

  • Average annual wage: $44,990
  • Employment: 1,920

High school teachers:

  • Average annual wage: $44,610
  • Employment: 3,500

48. West Virginia

Monkey Business Images / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $45,390
  • Employment: 5,330

Middle school teachers:

  • Average annual wage: $47,570
  • Employment: 5,160

High school teachers:

  • Average annual wage: $47,610
  • Employment: 4,460

47. Arizona

Asia Images Group / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $45,600
  • Employment: 23,290

Middle school teachers:

  • Average annual wage: $45,120
  • Employment: 12,330

High school teachers:

  • Average annual wage: $50,320
  • Employment: 16,990

46. Oklahoma

sevenMaps / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $45,970
  • Employment: 17,980

Middle school teachers:

  • Average annual wage: $46,360
  • Employment: 8,320

High school teachers:

  • Average annual wage: $47,320
  • Employment: 11,680

45. North Carolina (tie)

wavebreakmedia / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $48,560
  • Employment: 42,520

Middle school teachers:

  • Average annual wage: $49,620
  • Employment: 18,770

High school teachers:

  • Average annual wage: $49,930
  • Employment: 24,030

44. Louisiana

stockfour / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $48,630
  • Employment: 23,670

Middle school teachers:

  • Average annual wage: $49,790
  • Employment: 7,600

High school teachers:

  • Average annual wage: $52,090
  • Employment: 14,810

43. Arkansas

Monkey Business Images / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $48,800
  • Employment: 13,010

Middle school teachers:

  • Average annual wage: $50,720
  • Employment: 6,450

High school teachers:

  • Average annual wage: $51,870
  • Employment: 11,940

42. Idaho

Teach online
Agenturfotografin / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $48,880
  • Employment: 8,380

Middle school teachers:

  • Average annual wage: $53,970
  • Employment: 1,820

High school teachers:

  • Average annual wage: $50,640
  • Employment: 6,210

41. Alabama

Young teacher using internet to remotely teach during the coronavirus crisis
Timothy Kuiper / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $50,270
  • Employment: 23,650

Middle school teachers:

  • Average annual wage: $51,600
  • Employment: 10,310

High school teachers:

  • Average annual wage: $51,950
  • Employment: 15,230

40. Kansas

wavebreakmedia / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $50,650
  • Employment: 16,340

Middle school teachers:

  • Average annual wage: $53,500
  • Employment: 6,630

High school teachers:

  • Average annual wage: $52,050
  • Employment: 12,310

39. Missouri

wavebreakmedia / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $50,920
  • Employment: 22,850

Middle school teachers:

  • Average annual wage: $51,930
  • Employment: 11,080

High school teachers:

  • Average annual wage: $50,980
  • Employment: 30,640

38. Montana

DGLImages / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $52,160
  • Employment: 4,920

Middle school teachers:

  • Average annual wage: $58,710
  • Employment: 2,070

High school teachers:

  • Average annual wage: $52,360
  • Employment: 3,670

37. Indiana

wavebreakmedia / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $52,570
  • Employment: 25,530

Middle school teachers:

  • Average annual wage: $52,450
  • Employment: 11,320

High school teachers:

  • Average annual wage: $53,150
  • Employment: 21,180

36. Kentucky

wavebreakmedia / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $52,660
  • Employment: 19,270

Middle school teachers:

  • Average annual wage: $53,830
  • Employment: 8,160

High school teachers:

  • Average annual wage: $55,100
  • Employment: 12,280

35. Maine

Young girl in online class with geometry teacher on her laptop
Aleksandra Suzi / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $52,860
  • Employment: 5,780

Middle school teachers:

  • Average annual wage: $56,740
  • Employment: 3,230

High school teachers:

  • Average annual wage: $55,260
  • Employment: 5,400

34. South Carolina

DGLImages / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $53,450
  • Employment: 22,550

Middle school teachers:

  • Average annual wage: $55,180
  • Employment: 9,790

High school teachers:

  • Average annual wage: $56,730
  • Employment: 14,050

33. Tennessee

Undrey / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $53,540
  • Employment: 30,620

Middle school teachers:

  • Average annual wage: $53,880
  • Employment: 13,240

High school teachers:

  • Average annual wage: $55,060
  • Employment: 20,690

32. Iowa

iofoto / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $53,950
  • Employment: 18,720

Middle school teachers:

  • Average annual wage: $55,250
  • Employment: 7,920

High school teachers:

  • Average annual wage: $56,570
  • Employment: 11,950

31. Colorado

Asian woman teacher checking homework at her desk.
Monkey Business Images / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $54,670
  • Employment: 25,740

Middle school teachers:

  • Average annual wage: $54,940
  • Employment: 12,980

High school teachers:

  • Average annual wage: $56,370
  • Employment: 17,580

30. Florida

child reading
KK Tan / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $55,210
  • Employment: 77,170

Middle school teachers:

  • Average annual wage: $56,640
  • Employment: 33,600

High school teachers:

  • Average annual wage: $57,880
  • Employment: 50,640

29. North Dakota

Older teach wearing a face mask in an empty classroom
vladaphotowiz / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $55,630
  • Employment: 4,450

Middle school teachers:

  • Average annual wage: $59,700
  • Employment: 1,380

High school teachers:

  • Average annual wage: $56,250
  • Employment: 2,800

28. Texas

Monkey Business Images / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $56,280
  • Employment: 131,880

Middle school teachers:

  • Average annual wage: $56,290
  • Employment: 64,340

High school teachers:

  • Average annual wage: $58,000
  • Employment: 107,190

27. Nevada

A female teacher in an empty classroom during the pandemic
POP-THAILAND / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $56,980
  • Employment: 10,480

Middle school teachers:

  • Average annual wage: $59,150
  • Employment: 4,000

High school teachers:

  • Average annual wage: $58,090
  • Employment: 5,760

26. New Mexico

ESB Professional / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $57,330
  • Employment: 7,650

Middle school teachers:

  • Average annual wage: $49,570
  • Employment: 3,250

High school teachers:

  • Average annual wage: $57,410
  • Employment: 6,880

25. Wisconsin

GagliardiImages / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $57,980
  • Employment: 28,240

Middle school teachers:

  • Average annual wage: $58,940
  • Employment: 13,800

High school teachers:

  • Average annual wage: $59,180
  • Employment: 17,880

24. Georgia

Oksana Kuzmina / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $58,190
  • Employment: 50,250

Middle school teachers:

  • Average annual wage: $58,830
  • Employment: 28,440

High school teachers:

  • Average annual wage: $59,860
  • Employment: 26,500

23. Wyoming

ESB Professional / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $58,940
  • Employment: 2,550

Middle school teachers:

  • Average annual wage: $61,340
  • Employment: 1,090

High school teachers:

  • Average annual wage: $61,400
  • Employment: 1,690

22. New Hampshire

Monkey Business Images / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $59,930
  • Employment: 6,070

Middle school teachers:

  • Average annual wage: $60,290
  • Employment: 3,100

High school teachers:

  • Average annual wage: $60,720
  • Employment: 5,000

21. Nebraska

Pressmaster / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $60,390
  • Employment: 9,810

Middle school teachers:

  • Average annual wage: $62,130
  • Employment: 4,310

High school teachers:

  • Average annual wage: $60,500
  • Employment: 6,890

20. Utah

Students in a classroom during the pandemic
saravutpics / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $60,660
  • Employment: 13,110

Middle school teachers:

  • Average annual wage: $63,720
  • Employment: 6,540

High school teachers:

  • Average annual wage: $61,050
  • Employment: 8,920

19. Minnesota

Monkey Business Images / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $63,250
  • Employment: 22,420

Middle school teachers:

  • Average annual wage: $64,790
  • Employment: 9,730

High school teachers:

  • Average annual wage: $64,960
  • Employment: 20,130

18. Illinois

ESB Professional / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $63,280
  • Employment: 64,270

Middle school teachers:

  • Average annual wage: $63,630
  • Employment: 21,700

High school teachers:

  • Average annual wage: $74,340
  • Employment: 44,810

17. Hawaii

Poznyakov / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $63,360
  • Employment: 5,780

Middle school teachers:

  • Average annual wage: $63,520
  • Employment: 2,090

High school teachers:

  • Average annual wage: $62,580
  • Employment: 4,320

16. Vermont

Student in face mask raising hand
Halfpoint / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $63,480
  • Employment: 3,770

Middle school teachers:

  • Average annual wage: $61,470
  • Employment: 1,030

High school teachers:

  • Average annual wage: $66,660
  • Employment: 2,770

15. Delaware

ESB Professional / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $63,970
  • Employment: 3,800

Middle school teachers:

  • Average annual wage: $64,800
  • Employment: 2,200

High school teachers:

  • Average annual wage: $66,920
  • Employment: 3,330

14. Ohio

Ohio roadway sign
Joseph Sohm / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $64,090
  • Employment: 57,220

Middle school teachers:

  • Average annual wage: $63,510
  • Employment: 30,880

High school teachers:

  • Average annual wage: $64,410
  • Employment: 47,510

13. Michigan

Teacher writing on blackboard
l i g h t p o e t / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $69,050
  • Employment: 37,130

Middle school teachers:

  • Average annual wage: $64,920
  • Employment: 13,910

High school teachers:

  • Average annual wage: $63,000
  • Employment: 22,820

12. Washington

Kids working with robotics.
Syda Productions / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $69,390
  • Employment: 30,440

Middle school teachers:

  • Average annual wage: $70,970
  • Employment: 9,430

High school teachers:

  • Average annual wage: $71,690
  • Employment: 14,810

11. Pennsylvania

Hurst Photo / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $69,630
  • Employment: 57,100

Middle school teachers:

  • Average annual wage: $69,330
  • Employment: 26,460

High school teachers:

  • Average annual wage: $66,920
  • Employment: 46,130

10. Virginia

Parent and child use hand sanitizer and face masks at school
1641857584 / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $69,690
  • Employment: 38,700

Middle school teachers:

  • Average annual wage: $71,920
  • Employment: 18,300

High school teachers:

  • Average annual wage: $69,070
  • Employment: 25,620

9. Oregon

Hurst Photo / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $69,980
  • Employment: 15,950

Middle school teachers:

  • Average annual wage: $70,660
  • Employment: 6,250

High school teachers:

  • Average annual wage: $71,780
  • Employment: 8,840

8. New Jersey

ESB Professional / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $71,880
  • Employment: 40,640

Middle school teachers:

  • Average annual wage: $73,380
  • Employment: 26,590

High school teachers:

  • Average annual wage: $78,090
  • Employment: 30,230

7. Rhode Island

wavebreakmedia / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $72,310
  • Employment: 4,100

Middle school teachers:

  • Average annual wage: $75,130
  • Employment: 1,670

High school teachers:

  • Average annual wage: $75,950
  • Employment: 4,840

6. Maryland

Rawpixel.com / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $75,380
  • Employment: 28,610

Middle school teachers:

  • Average annual wage: $74,400
  • Employment: 14,890

High school teachers:

  • Average annual wage: $77,050
  • Employment: 17,150

5. Alaska

Schoolboy with backpack in snow.
Romrodphoto / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $75,860
  • Employment: 3,820

Middle school teachers:

  • Average annual wage: $80,730
  • Employment: 1,160

High school teachers:

  • Average annual wage: $75,820
  • Employment: 2,790

4. Connecticut

Teacher on camera during the pandemic
Hananeko_Studio / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $78,070
  • Employment: 15,930

Middle school teachers:

  • Average annual wage: $79,510
  • Employment: 8,320

High school teachers:

  • Average annual wage: $78,540
  • Employment: 15,820

3. Massachusetts

racorn / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $82,450
  • Employment: 31,430

Middle school teachers:

  • Average annual wage: $80,520
  • Employment: 15,910

High school teachers:

  • Average annual wage: $81,070
  • Employment: 27,120

2. California

African American woman with grade school students wearing red caps.
Rawpixel.com / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $82,560
  • Employment: 164,910

Middle school teachers:

  • Average annual wage: $80,160
  • Employment: 39,780

High school teachers:

  • Average annual wage: $85,080
  • Employment: 109,840

1. New York

iofoto / Shutterstock.com

Elementary school teachers:

  • Average annual wage: $82,830
  • Employment: 92,560

Middle school teachers:

  • Average annual wage: $87,050
  • Employment: 42,010

High school teachers:

  • Average annual wage: $87,240
  • Employment: 75,360

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

TaxSlayer.com Review 2021 – Free Tax Filing & Online Return Preparation

TaxSlayer doesn’t blow competition like TurboTax and H&R Block out of the water, but it’s superior in several crucial ways. Most notably, it’s cheaper than many better-known alternatives. If cost is a critical consideration in your choice of an online tax prep program, that’s a huge selling point.

Regardless of your selected plan, TaxSlayer is quite flexible. It allows you to complete the required forms and schedules with minimal guidance — or with the help of an “I want to be guided” wizard that emulates more hands-on programs like H&R Block and TurboTax if you prefer. If you need help with some parts of your return but not others, you can use the wizard only for those trickier sections.

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TaxSlayer Plans, Pricing, and Features

TaxSlayer offers four main tax preparation plans: Simply Free, Classic, Premium, and Self-Employed. It also provides a separate Military package for active-duty filers, who must receive a W-2 from an employer identification number related to the military or Department of Defense to qualify. The Military version includes a free federal return with all federal forms and applies to all tax situations.

As a new TaxSlayer filer, you must choose your package when you begin the filing process. If you attempt to do something the plan you chose doesn’t support, the software prompts you to upgrade.

Final pricing is set when you e-file and is subject to change without notice as tax season wears on, so your initial quote might rise by the time you complete your return. Plan accordingly.

For all packages, TaxSlayer’s system offers you a choice between a guided, interview-style wizard that walks you through the preparation process step by step and a self-guided platform that lets you choose which forms and sections to complete and when. You can navigate between the wizard and the self-guided system at will, which is helpful if you’re confident enough to fill out some sections on your own but feel you need assistance with others.

Simply Free

This plan provides your federal return and your first state return for free. Each subsequent state return costs $39.95.

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Classic

This plan costs $24.95 for your federal tax return and $39.95 for each state tax return. It includes support for all major IRS tax forms, meaning it’s appropriate for tax situations of all complexities — including investors, rental property owners, and small-business owners.

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Classic comes with all the features of the free option, plus:

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This plan costs $44.95 for your federal return and $39.95 for each state return. Its support features are significantly more robust than lower-priced plans, so it’s definitely a solid choice for novice filers or those who lack the confidence or knowledge to navigate a complicated situation on their own.

Premium includes all the features of lower-priced plans, plus:

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Self-Employed

This plan costs $54.95 for your federal tax return and $39.95 for each state tax return. Its support features are even more impressive than the Premium plan’s, with extra support and hand-holding for self-employed filers and solopreneurs.

Self-Employed includes everything in the Premium plan, plus:

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Additional Features

TaxSlayer has some other features and functions available to all filers, regardless of plan level.

Pay Prep Fees With Your Refund

TaxSlayer allows all customers to deduct TaxSlayer’s prep fees, including those for state returns, from their federal income tax refunds. There’s an additional processing fee associated with this option. Check with TaxSlayer for details.

Refund Calculator

TaxSlayer has a pretty elaborate Web-based tax refund calculator that allows you to enter much of the information you’d include on your return — filing status, personal income, profit or loss from a business, standard or itemized deductions, and credits — and receive an estimate of your federal refund or the amount you owe. You can enter as much or as little as you like, but a complete accounting ensures a more accurate number.

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Mobile Apps and Functionality

TaxSlayer offers Android and iOS apps for download. These are functionally identical to the regular website and include value-added features, such as the on-site refund calculator. TaxSlayer’s regular website is already quite mobile-friendly, so while the app is a nice option to have, it’s not strictly necessary.

Knowledge Base

TaxSlayer has a well-maintained, searchable knowledge base with a comprehensive range of help topics.


Advantages

TaxSlayer’s most notable advantages are its affordability and convenient tools that help taxpayers customize their experience.

1. Paid Plans Are More Affordable Than Some Competitors’ Comparable Options

In addition to a comprehensive free option, TaxSlayer users enjoy moderately priced paid plans. The most expensive option, Self-Employed, charges just $54.95 for federal filing and $39.95 per state.

By contrast, TurboTax charges about $100 to well over $300 for CPA-assisted plans capable of handling more complex tax situations plus $50 or more per state return.

2. Choice Between Guided Wizard and Self-Preparation

TaxSlayer has a flexible interface that lets you choose how you complete your return. If you have a simple tax situation or can tackle a more complex return on your own, you can use TaxSlayer’s self-guided forms and schedules, which provide minimal support and guidance.

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Regardless of your chosen plan level, you can move between the wizard and self-guided interface as needed and fill out different sections of your form in whatever order you choose.

3. Powerful Refund Calculator

TaxSlayer’s refund calculator is quite comprehensive, almost like a mini-return you don’t have to pay for. If you want to get a sense of how big your refund or obligation will be before completing and paying for your return, this feature is ideal.

TaxSlayer’s calculator also guides you step by step through each relevant item, making it easier to use than the less user-friendly calculators issued by TurboTax and TaxAct.

4. Strong Mobile Resources

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5. Accuracy Guarantee Includes Federal and State Returns

TaxSlayer’s accuracy guarantee promises to reimburse filers for federal and state penalties and interest attributable to software calculation errors. That’s a significant advantage relative to some competing services, which only offer accuracy guarantees on federal returns.


Disadvantages

While TaxSlayer provides a lot of bang for your buck, paying such low prices means living without certain perks you’d get from other tax preparation software providers.

1. No Audit Support for Lower-Priced Plans and Certain Filers

You need to upgrade past the Simply Free plan to get free audit support, which includes an over-the-phone consultation with an in-house tax professional who can answer any questions about correspondence you receive from the IRS or state revenue agencies.

2. No Refund Bonus

TaxSlayer doesn’t offer a refund bonus — you always receive the exact value of your federal refund, no more. By contrast, H&R Block offers a refund bonus of up to 5% of the total refund when you agree to receive at least $100 of it as an Amazon gift card.

3. Customer Support Isn’t as Robust as Some Other Programs

TaxSlayer has free phone and email support for everyone, but its customer support system has several disadvantages: restricted operating hours, lack of a user-curated help center (such as TurboTax’s AnswerXchange), and a two-tiered priority support system that pushes Simply Free and Classic customers to the back of the line when Premium customers need help. Also, online live chat is only available to Premium customers.

By contrast, H&R Block’s phone, email, and live chat support — including 24-hour support during tax season — is available to all customers, regardless of package. And H&R Block has a network of more than 10,000 physical offices that offer in-person support, something TaxSlayer can’t provide.

4. Website Has Some Lingering Functionality Issues

No website is perfect, but in the past, TaxSlayer’s has had enough errors and functionality issues to impact the user experience. Though the return preparation process is generally smooth, I’ve encountered page-not-found errors in TaxSlayer’s help database before.

A couple of years back, I was directed to a particularly egregious missing page from the site’s main navigation bar, though the issue appears to be fixed now. And I’ve experienced several timeouts when navigating to TaxSlayer pages from search engine results pages.

I expect TaxSlayer to address these lingering issues as time goes on, and they’re fewer and farther between these days. Still, their existence is befuddling. By contrast, I’ve had nothing but good experiences with H&R Block’s tax prep interface.


Final Word

Few people enjoy preparing and filing their taxes, but not everyone has the same relationship with the IRS, state revenue authorities, and their tax preparer.

If your tax situation is simple and straightforward, your highest priorities are likely to be filling out your return as quickly and cheaply as possible and maximizing your refund. If your situation is more complicated, avoiding an audit is likely to be a major concern.

Though TaxSlayer isn’t perfect, it offers opportunities for taxpayers at both ends of the spectrum, often at a lower cost than the competition. If you’ve been filing with a better-known program like H&R Block or TurboTax, it may be time to give TaxSlayer a closer look.

Source: moneycrashers.com

Citi Rewards+: 25,000 Point Sign Up Bonus

Update 5/13/21: The link below is now increased from 20,000 to 25,000 (standard offer on Citi website is 15,000). Not sure if the in-branch 30,000/40,000 offer is still around.

Update 10/14/19: This deal is being offered again. Keep in mind there is an in branch 30,000/40,000 points. Hat tip to reader Khmalh

The Offer

Direct link to offer (seems to only be available via Credit Karma)

  • Citi is offering an increased sign up bonus on the Citi Rewards+ card, 20,000 Citi ThankYou points after $1,500 in purchases within the first three months

Card Details

  • No annual fee
  • Card earns ThankYou points
  • Earn 2x points on grocery and gas, up to $6,000 per year, then 1x
  • Earn 1x points on everything else
  • Bonus ThankYou Points are not available if you received a new cardmember bonus for Citi Rewards+℠, Citi ThankYou®Preferred, Citi ThankYou® Premier/Citi Premier℠ or Citi Prestige®, or if you have closed any of these cards, in the past 24 months.
  • Low intro rate on purchases and balance transfers
  • 3% foreign transaction fee
  • 10% rebate on all redeemed points each year, on up to the first 100,000 redeemed points

Our Verdict

Launch sign up bonus was 15,000 points, we also saw a 10,000 point + $100 live nation credit. Still not really worth it because of the 24 month restrictive language, better to get a sign up bonus on the Premier or Prestige.  If you have any questions about Citi cards, read this post as they are most likely answered there.

Source: doctorofcredit.com

Top Ways to Manage Your Debt Ratio

Debt ratio is the difference between the amount of debt you have charged versus the amount of money the credit card has authorized for you to use, or your credit limit. The difference is your debt ratio. This can also be referred to as revolving (credit card) credit you have available. If your credit limit is 5,000 dollars and you have charged 2,500 on the card, your debt ratio is 50%

Debt ratio accounts for 30% of your FICO score, which makes it the second highest factor the credit agencies take into account when looking at your credit.

Maintaining your debt ratio can make an impact on your credit score, but unlike payment history, not everyone knows how to ensure their debt ratio is a positive force on your credit score. Here are a few tips for you to make sure your debt ratio is not a drain on your credit score:

Maintain Your Total Revolving Credit

  • Don’t ever close credit cards if you can avoid it. The more cards you have open, the higher your total of available credit. Credit calculating software takes your TOTAL available credit versus TOTAL debt into account. Closing a credit card will decrease your overall available credit without decreasing your debt.
  • Keep your debt even across your credit cards. It is better to have 4 credit cards with 20% debt ratio, then 1 card with 80% ratio and 3 cards with no debt.

Know Your Limits

  • Keep the balances on your credit cards as low as possible. Aim to keep all of your balances below 50% of the credit limit on that card.
  • The FICO software ranks your credit debt based on levels. If your credit card debt is more than 75% of your credit limit, it will cause serious damage to your credit score. The next limit begins at 50%, then 25%.
  • If your debt is high and approaching that 75% mark, call your credit card company and request an increase of your credit limit

Check Your Credit Report Regularly

  • Look at your credit report to ensure the credit card companies have accurately reported your credit limit. If they haven’t reported your limits, the FICO software will read all of your cards as maxed out.
  • Report any errors on your credit report immediately. The sooner errors are remedied, the better.
  • Maintain communication with your credit card company. Call them if there are suspicious charges on your account or if you need to make adjustments to your payment schedule.

By maintaining your debt ratio, you can ensure your credit score is as high as possible. While a solid debt ratio alone is not the only element involved in the calculation of your FICO score, it is a significant portion.

Have questions about your credit score or need help repairing your credit? Contact Credit Absolute today!

Source: creditabsolute.com

Get a Head Start on Spring Cleaning

It’s early March, which means that spring is less than a month away. Use the next month to get your house in perfect, organized order so you can spend spring enjoying the wonderful weather outside.

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The following plan is designed to clean from high to low places in your home so you won’t have to go back over any areas. Follow the steps in order for a clean home just in time for spring, and feel free to break up the jobs over the next few weekends so the work doesn’t take up one whole weekend. These items should be done in addition to your normal weekly or biweekly housecleaning.

Declutter

Spring is the time to renew, which means it’s also the perfect opportunity to get rid of items in your house that are weighing you down. Separate items into four action-item areas: trash, give away/sell, storage and put away. If the thought of cleaning out all of the closets overwhelms you, focus on one room or area of the house at a time, and start with the most time-consuming part to feel a sense of accomplishment when it’s completely clutter-free. Then, the rest of the rooms, closets and drawers should be a breeze – or at least not as difficult as the first task.

Dust up high and down low

Using a microfiber, static-cling cloth (like a Swiffer duster), remove dust from ceiling fans, light fixtures and on top of furniture and appliances, such as the refrigerator. Use the brush attachment of your vacuum cleaner to clean the dust on air conditioner vents, radiators, door frames and windowsills. Remove cobwebs from windows and walls.

Move the big pieces

Once or twice a year, dust behind the sofa, dressers, nightstands and china cabinet and under the beds. Use your vacuum cleaner’s crevice attachment to suck up the dust along the baseboards. While you’re at it, vacuum the baseboards of your closets as well.

Even more cleaning tips from Apartment Guide:

Wash lesser-used linens

You might be surprised at the linens you rarely think about washing, such as dust ruffles, mattress pads, decorative shams, throw pillow covers, curtains, dining room chair covers, sofa cushion covers (check to make sure they’re washable), tablecloths, runners, welcome mats, afghans, decorative towels and extra blankets. If you’re afraid to wash them in the washing machine, check the tags for washing instructions and wash them by hand in cold water, though you’ll probably be fine grouping them by color and washing them on the gentle cycle in cold water with a mild detergent. Hang these linens to dry.

Scrub the forgotten areas

Using a solution of one part bleach to 10 parts water (or a store-bought degreasing cleaner) and a washcloth, clean fingerprints off doors, light switch plate covers and electrical outlet covers (carefully!). Clean the inside and outside of windows using a window cleaner or a solution of one part white distilled vinegar to one part water. Wipe away streaks with newspaper.

Clean inside appliances

  • Refrigerator: Take everything out of the refrigerator and scrub the shelves, inside the drawers and the inner doors using a paste made from baking soda and water. Then wipe away residue with a clean, damp washcloth.
  • Oven: Clean inside the oven using your oven’s self-cleaning feature or by spraying your cold oven with a baking soda and water solution (3 teaspoons baking soda to about one liter of water) several times a day, which will loosen the black carbon enough for you to wipe it down with a damp cloth until it is clean.
  • Washing machine: While wearing protective gloves, wipe mold and mildew from the inside of your washing machine using the bleach and water solution mentioned earlier. Then run your empty washing machine on the normal, permanent press or medium cycle using ½ cup of bleach and hot water, set for the largest load. When the cycle is finished, leave the washing machine door open for a day to air out.

Photo Credit: Shutterstock / dcwcreations

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Source: apartmentguide.com

5 Ways to Prevent Working Mom Burnout

We already know the devastating impact COVID has had on women in the workforce — four times as many women as men dropped out of the labor force last September, and 9.8 million working mothers were suffering from burnout. 

As a working mom, I feel fortunate to have had the opportunity to raise my children while also building my own career. I genuinely believe that I have been blessed with the opportunity to have the best of both worlds. Every mom knows the joy that comes from raising children — and how often that joy can be found nestled between the familiar and crushing walls of fatigue.

In honor of Mother’s Day and all the moms out there, I wanted to share five tactics that helped me navigate and balance employment and motherhood while avoiding burnout. 

1. Know your limits

It’s impossible to be everywhere at once. Try to split school events with your spouse or other members of your support system. When my girls were in grade school, my husband had more flexibility at work than I did. So, it was dad selling hot dogs with the other moms on “Hot Dog Day.”. My daughters loved seeing him there as it was uncommon for a dad to be there, and he had a great time. It’s a memory my girls still laugh about to this day.

 Don’t stress about making fancy desserts for bake sales, either. While you may feel obligated to say yes to everything, remember not to stretch yourself too thin. 

2. Outsource, outsource, outsource

Think about operating your home like a small business. Try to outsource everything you don’t like or don’t have time to do. Your time is valuable, so consider where it’s best spent. I am a very neat person and can clean my house better than someone else, but it’s so time consuming! Having someone clean my house once a week when the girls lived at home was the best money ever spent. This opened more time for me to spend on both the kids and my career. 

3. Take time for yourself

It may seem out of the question, but finding time for yourself is critical for your mental health. I know you’re probably so focused on your children, your career and your home, that finding a few minutes for yourself can seem impossible. But that time will be well spent — even if you have to wake up early to have some “you” time.

I love to wake up early to have some time to myself before the chaos of the day gets started. My “me” time is a daily workout. This is a part of my day I will never miss. It is a positive outlet that releases endorphins and a great way to start your day. Find your positive outlet. Every mom deserves at least one thing they do just for themselves. 

4. Negotiate for what matters most

This doesn’t only apply to your salary. Years ago, I lived on Long Island but worked in Manhattan. As my kids grew older, I needed to be closer to home. I asked my boss at the time if he would open a Long Island office for me, and his initial response was “no.” So, I took it upon myself to do research and build a case for an office space nearby. I found an office that was cheaper than the desk in their NYC office and showed him how I would be able to be more productive with a shorter commute. I made such a compelling argument that he had no choice but to say “yes.” This win was amazing and life changing for me and my family.

Understand what is most important to you and figure out a way to make it happen. You have to advocate for yourself, because no one else will.

5. Build a solid support system

Having child care was necessary for me to continue with my career. But beyond our sitter, I also put trust in my daughters’ teachers and took advice from other parents, especially those who had older children.

Starting with the fifth grade, teachers told us not to help our girls with homework so they could learn how to do it on their own. While it was hard at first, it was a blessing in disguise, because it taught my children how to be independent and figure things out on their own. I had friends whose kids were in high school and the parents were still trying to help them with their homework. So happy that wasn’t me! Other mothers also gave me great advice and helped me feel like I was not in it alone. It truly takes a village to raise a family, and it is always OK to ask for help.

As moms, we know just how difficult it can be to balance our work lives with motherhood. If we are stretching ourselves out too thin, then we won’t be our best selves professionally or for our families. As the world opens back up and we can return to some semblance of our normal lives, I hope these tips will help you find your balance and be the best working mom you can be. 

Registered Investment Adviser, ALINE Wealth

Gina Grippo-Martinez is a wealth adviser at ALINE Wealth. Her Wall Street days behind her, Gina currently holds her Series 7, 63 and 66 licenses, and helps her clients plan for their futures. She lives with her husband and their two daughters in Point Lookout, Long Island. For more information, please visit www.ALINEWealth.com.

Source: kiplinger.com

9 Cheap Birthday Party Ideas

From hiring a video arcade on wheels to treating 10 little princesses to a spa day, today’s birthday parties have gone next level. You could easily drop $300 to $500-plus on your kid’s next shindig.

Fortunately, you don’t have to. It’s possible to host a fun and memorable birthday celebration for friends and family without breaking the bank.

Here are some inexpensive party ideas to consider when planning your next birthday bash:

1. Being Selective with the Guest List

As tempting as it might be to invite everyone in your child’s class or the whole soccer team, limiting the guest count is a simple way to save money on a birthday party.

Less people means less food, less party supplies, and fewer favors–but not necessarily less fun. It’s possible to have a close knit vibe at a birthday party that gets people talking to each other and enjoying themselves even more than they would have at a big event.

If your child is willing to invite only one or two friends, you might consider skipping a party altogether and opting for an experience. Going bowling or spending a couple of hours at a play space, zoo, or museum can suddenly become an affordable option.

2. Sharing the Party with a Friend

If your child’s birthday falls around the same time as one of their close friends, you might want to consider teaming up and having a dual birthday party.

This enables you to share the costs and responsibilities with another family and, if the kids have a similar friend group, it would not necessarily have to be a much larger party.

It can be a good idea, however, to make sure each child gets their own cake and presents.

3. Choosing a Cheap (or Free) Venue

While hosting a party at a local climbing gym or other entertainment venue can be appealing, you can end up dropping as much as $300 just for the space.

One way to throw a birthday party on a budget is have the party at home. That said, you may want to keep in mind that the wear and tear on your floors and furnishings might not be worth the savings.

In good weather, a backyard party can be a great, low-cost option. Or, you might consider having the party in a local park or garden.

If your child’s birthday lands in a cold weather season, you can save money on a venue by limiting the guest list and going with the most basic package (such as just food and drinks for each child), and providing your own cake and goody bags.

You can also check deal websites for discounts and promotions or ask the venue about a discount for having the party at an off-peak time or day.

4. Sending Digital Invites

Skipping the paper and going with digital invitations can be kinder to the environment and also cut down on birthday party costs.

You can design your own digital invitation and send via email or text, or you may want to take advantage of one of the many online (and free) e-invitation sites.

5. Getting Creative With Decorations

One of the best things about the internet is that somebody’s probably already created precisely what you need. Rather than drop a chunk of money at the party store on themed decor, you may want to check out Pinterest for free printables.

You can also find ideas for DIY decorations on Pinterest (along with many other sites) using low cost supplies, possibly even things you already have on hand. Dollar stores can also be great places to shop for decorations and supplies.

If you do hit the party store, you may want to consider going with just one or two premium themed items and keeping the rest of the decor colorful and fun.

6. Making a Semi-Homemade Birthday Cake

Custom bakery cakes can run from $3.50 to $5.50 per slice, according to Thumbtack , a company that connects customers with local professionals. If you multiply that by 15 guests, you could easily drop $50 to $80 on the birthday cake alone.

A cheaper option is to buy a cake mix, then make it look and taste homemade with a few simple baking hacks, such as swapping butter for oil and milk for water, adding an extra egg, and making your own buttercream frosting.

To make cupcakes that look like they came from a bakery, you can pipe icing on top using a ziplock bag with a tiny hole snipped in the corner.

7. Timing the Party Right

If the party takes place during lunch or dinner time, there’s a good chance people will expect to be fed a meal.

Choosing an off-time to celebrate–such as 10:30am or 2:30pm–means you can steer the party away from heartier fare (like freshly delivered pizzas or a sandwich platter) and stick to serving finger foods and snacks instead.

8. Buying in Bulk for Gift Bags

If you’ll be giving each guest a swag bag, consider buying toys and trinkets in bulk sets and then dividing them up. This can be a real cost saver when compared to purchasing items individually (even at the dollar store).

Fun items like paper airplanes, wooden yoyos, squishy toys, stampers, fidget spinners and Slinkys can often be purchased in packs at stores as well as online.

9. Playing Some Free Games

You don’t necessarily have to rent a bouncy house or hire live entertainment to keep a birthday party lively and fun. There are a number of inexpensive ways to make sure there is plenty of action, activity, and laughter. Here are a few fun, free games you might consider:

•   Duck Duck Goose
•   Charades
•   Musical Chairs
•   Red Rover
•   Rock Paper Scissor Tournaments
•   Three Legged Races
•   Marco Polo (you can even play on land)
•   Hot Potato
•   Simon Says

Recommended: Money Tips for Teenagers

The Takeaway

It can be tempting–and easy–to spend a lot creating a memorable birthday party.

But with just a few cost-cutting strategies, such as trimming your guestlist, shifting the time of the party, choosing an inexpensive venue, and organizing some free games, you can throw a festive birthday bash without breaking the bank.

You can also make birthday celebrations more affordable by setting a budget and saving up in advance.

If you’re looking to start saving, opening a SoFi Money® cash management account can be a good option. With SoFi Money’s “vaults” feature, you can separate your savings from your spending while earning competitive interest on all of your money.

Start saving for your next big celebration with SoFi Money.



SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Source: sofi.com

Does a Year Make a Difference? How to Know Whether to Retire Now or Later

In some cases a year can make a huge difference. Think back to 2019. It was certainly different than 2020 (to say the least). But sometimes years go by and not all that much has changed. Knowing when to retire is a huge decision. It can be easy to put it off a year and then again another year.

Do those years really make a difference in the grand scheme of things? The answer largely depends on your perspective, but the answer is yes. Our choices about when to retire — even waiting just a year — impact both our financial as well as our emotional well being.

Current and Future Value of Your Decision

When figuring out when to retire, you need to think about both the present and your future. What does delaying retirement net you now? What does it mean to your future?

For example: If you retire earlier, can you still afford your future? If you delay retirement, can you be more financially secure without regretting the extra year working?

Let’s take a look at what the real differences are when you delay your retirement one year. What about if you wait another five years or longer?

Your time is your most valuable resource. And, let’s face it, how you spend your time gets increasingly more important as you age. You have fewer years ahead of you and you want to make the best use of them.

You should probably consider time as an important component in your when-to-retire decision making. What does delaying retirement for a year or more mean if you value your time?

If you are happy, fulfilled, and are finding meaning in work, then there is probably no need to rush to retirement. However, if there are other ways to spend your time that you think are more important, then you might want to prioritize retirement sooner rather than later.

Ashley Whillans, an assistant professor at Harvard Business School, writes about how to think about and value your scarcest resource, your time, in her book, Time Smart: How to Reclaim Your Time and Live a Happier Life.

She became interested in the value of time after observing that people don’t spend money for optimum happiness. (Get tips for how to spend money for happiness.)

Here is what she said on the NewRetirement podcast, “If people are not spending one resource that’s so precious in our lives, money, in a way that promotes happiness, I’m sure that they’re probably not optimizing the way they spend their time, either. And we also became really interested in trying to understand the trade-offs that we make between time and money.”

She advocates taking time seriously. “So I do hear from a lot of my MBAs, a lot of the executives I chat with, saying, ‘Well, once I get this title, once I hit this number in the bank, then I can start focusing on what I would like to do with my time. But it’s not until I achieve this title or achieve this amount of money in the bank that I’m really going to take time seriously.’”

How do you value your time? How can you use that valuation to inform your decision of when to retire?

If you have a pension, waiting a year can make a HUGE difference between vesting into income or not. For most pension holdings, when they qualify for income is the most pivotal factor for when to retire.

This could be a million-dollar decision. Don’t retire before you get your pension.

(The other big decision is whether you take your pension as a lump sum or as payments)

There are a few considerations to think about with regards to delaying retirement and what that means for your Social Security retirement income.

First, you can retire from work and delay the start of Social Security. And if this is your decision, then when you retire might not have appreciable financial considerations.

However, if you need to start Social Security right away after you retire and you haven’t yet turned 70, then you may take a financial hit. Depending on your Social Security earnings and how long you live, the difference between starting Social Security at age 62 and age 70 can be a $500,000 decision in lifetime value.

But, what is the difference of just delaying the start of Social Security for one year?

Higher Earner: Let’s say you are a relatively high earner and will be earning the maximum Social Security benefit available. If this is true, then your monthly benefit at your Full Retirement Age (66 for most people) would be around $3100. If you were to delay for a year, then you could boost your monthly benefit to around $3300. That is a $200 monthly and a $2400 a year difference. The boost would result in almost an extra $50,000 over a 20-year retirement. 

Average Earner: What about someone more average? Does delaying a year still make a big difference? The average Social Security benefit at Full Retirement Age is $1,500. Delaying the start for two years boosts monthly income by an extra $200. That is a $2,400 a year difference and would result in an extra $48,000 over a 20-year retirement.

So, delaying retirement a year can indeed make a big difference in Social Security income because it is a decision that impacts you not just in one year, but over your lifetime.

Model different Social Security start ages in the NewRetirement Planner.

Retirement and retirement planning depends on a variety of inter-related levers: your income, expenses, how much you save, and how much you withdraw from savings will all be impacted whether or not you have work income.

Here are some estimates of what delaying retirement by a year might mean with regards to work income:

Let’s start with the obvious. Delaying retirement gives you an extra year of income. And that is no small chunk of change at probably $50,000 or more, perhaps much more.

Retiring early simply means that you aren’t banking that money or are able to use it for living expenses (and you need to pay for life somehow).

Work income enables you to delay making withdrawals to cover expenses. And, this delay enables the money to stay invested and continue to grow. So, the value of delaying a year can be equal to whatever you would have taken out of savings PLUS your returns on that money.

Many people withdraw about 4% of their savings a year (review 18 of the best withdrawal and retirement income strategies) and the average retirement savings for someone in their 60s is around $200,000.

So, with those averages, delaying that withdrawal for a year would net you $8,000 plus however much your money might appreciate.  (The appreciation might be $1500 over 20 years at a six percent return.)

When you are working, you might have higher (or lower) expenses than when you retire — depending on your personal situation.

You’ll want to think about commuting costs, lunches out, fancy coffee on your way to work and your wardrobe — well, if we ever get out of the pandemic anyway. And, if you choose to retire, you’ll want to carefully consider if your expenses will go up or down. Many people find that they spend a lot more after retirement. Explore best ways to budget for retirement. Or, create a detailed future budget in the NewRetirement Planner.

However, the biggest potential factor with regards to expenses and when to retire might be where you live. If you intend to relocate after retirement, this can be a pretty massive financial factor. Buying and selling a home is a big decision and timing those transactions can mean big swings in value. Relocation is another factor that can be modeled in the NewRetirement Planner.

Expenses can’t be easily generalized — delaying retirement a year might result in a higher or lower burn rate. So, let’s just call it even. (But we really recommend that if you are considering when to retire, do detailed personalized planning so that you can feel confident with your decision.)

First, do you know how much savings you need to have the retirement you want? (Use the NewRetirement Planner to get a detailed and reliable estimate.) If you don’t have enough and an extra year or more in the workforce could get you there, then keep working.

But maybe you want extra cushion or to leave behind a bigger financial legacy. Working longer could potentially enable you to contribute greatly to savings.

Extra savings — especially if you are able to do catch up savings — can be a great use of an extra year in the workforce. You are allowed to save up to $33,000 in tax-advantaged accounts after the age of 55 (as of writing).  (And, those savings might appreciate $6500 over 20 years.)

Many workplaces offer benefits in addition to salary. Health insurance and 401(k) matching are notable big ticket items that should be considered if debating if you should delay retirement a year.

If you are retiring before you are eligible for Medicare at 65, then you may face huge out of pocket insurance costs. And, if your employer offers 401k matching, then you will be walking away from that cash.

Health Insurance: Fidelity estimates that out of pocket costs for healthcare are just shy of $12,000 a year.

401(k) Matching: The most common employer match is 50 cents on the dollar of up to 6% of your salary. So, at a $150,000 salary, an employer might be adding $4,500 to your retirement account (assuming you saved at least $9,000).

Yes. Delaying retirement by a year can be meaningful. But, the reality is entirely dependent on your personal situation. Without counting appreciation on the additional savings, here is how it adds up:

Social Security: A year could mean a $0–$500,000 difference. Let’s take the modest example and say it costs you $50,000

Pension: (Because few people have a pension, and almost no one would retire before they vest, we’ll leave it out of this summation.)

Work Income: $50,000+

Work Benefits: $16,500 ($12,000 for health insurance and $4,500 for employer match)

Delayed Savings Withdrawals: $8,000+

Savings Contributions: $33,000 (if you can max out catch up contributions)

Your Time: As the TV commercial used to say, PRICELESS

There is a huge range for what delaying your retirement for just one year might cost you — but it is safe to say that $100–$200 thousand is a conservative estimate , except that your time really is priceless. At a minimum, it has some value to you that should offset whatever you might gain from working longer.

Use the NewRetirement Planner to run scenarios for what delaying retirement a year — or moving it up five years — might mean to you. Just remember to balance the financial side of the equation with how you really want to be spending time.

Source: newretirement.com

What Is the Price to Earnings (P/E) Ratio – Definition, Formula & Limitations

Before you start investing, you should know a few things about the stock market. One of the most widely known concepts is that you should buy low and sell high, making a profit in the middle. This is a widely-used strategy known as value investing.

But how exactly do you know what a “low” price or a “high” price is?

Successful value investors use a wide range of valuation metrics to determine whether a stock is undervalued, priced at par with its market value, or overvalued.

One of the most commonly used valuation metrics is known as the price-to-earnings ratio, or P/E ratio. The P/E ratio compares the current stock price for shares of a company to the amount of net profits, or earnings, the company generates per year.

The idea is that by comparing how many years’ worth of the company’s earnings it would take to buy the company outright, you can get a good idea of whether the price of the company — and therefore shares of the company — are trading at, below, or above its true market value, also called the intrinsic value.

What Is the Price-to-Earnings Ratio?

In simple terms, the P/E ratio is a valuation metric that helps investors make educated investment decisions. But how does it work?

Price-to-Earnings Ratio Formula and Calculation

The P/E ratio formula is a relatively simple one:

Share Price / Earnings Per Share (EPS) = P/E Ratio

For example, a company’s stock currently trades at $100 per share. The company’s earnings during the past year came in at $20 per share. In this case, you would divide the $100 stock price by the EPS of $20, and you would come to a P/E ratio of 5.

In this example, if the company’s earnings per share remain consistent and you purchase the stock right now, it would take five years for the company to generate enough profits to cover the initial cost of purchasing the share.

In general, stocks that trade at a discount trade with low P/E ratios, while stocks trading at a premium trade at high P/E ratios. Nonetheless, as you will learn below, there are some exceptions to that rule.

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Different Types of P/E Ratios

When talking about price-to-earnings ratios, investors generally default to the current, or trailing, P/E ratio.

However, there are actually three different P/E ratios that some of the most successful value investors follow, along with a related measurement known as the PEG ratio that takes valuation analysis to the next level.

1. Current or Trailing P/E Ratio

The current, or trailing, P/E ratio is the traditional calculation described above. This P/E ratio compares the current price to the 12-month trailing EPS.

2. Projected or Forward P/E Ratio

The forward P/E ratio is more of a speculative valuation metric because it attempts to predict the future. The idea is that if a company does well, it will grow, and investors can expect more out of future earnings than current earnings.

Therefore, by comparing the current share price to projected future earnings, you get a more detailed view of the current valuation of the company, taking its growth prospects into account.

There are two ways the forward P/E ratio can be calculated:

Current Share Price / Median Guided EPS = Forward P/E Ratio

Using this formula, you would divide the current price per share of the stock by the company’s estimate for EPS in the coming year.

Companies usually provide their expectations — or guidance — for the coming quarter or year in their shareholder reports. In most cases, guidance is displayed as a range. For example, a company may say it expects to earn between $10 and $15 per share over the next year.

Find the center point in the guidance by adding the two extremes together and dividing your total by two. In this case, you would add $10 and $15 to come to $25, then divide $25 by two to come to median guided EPS of $12.50.

You can also use the following formula:

Current Share Price / Analyst Median EPS Expectations = Forward P/E Ratio

Stock market analysts provide all kinds of predictions about publicly traded companies, including where the market price is headed, revenue expectations, and earnings expectations.

Using the formula above, you would ignore the company’s own guided expectations and rely on outside analyst projections, dividing the current share price by the median EPS expectations among analysts that cover the stock.

Of course, these two approaches will generally result in different forward P/E ratios.

3. Mixed P/E Ratio

The mixed P/E ratio, also known as the relative P/E ratio, takes both past earnings and expected future earnings into account using the following formula:

Current Share Price / (Past Two Quarters’ EPS + Future Two Quarters’ EPS) = Mixed P/E Ratio

This formula mixes the two formulas above by using the trailing EPS for the past two quarters rather than the past year and using the forward EPS for the next two quarters rather than the next year.

When calculating the mixed price-to-earnings ratio, you can either use the company’s guided earnings for the next two quarters or the analyst expectations for the next two quarters.

It’s a good general rule of thumb to calculate it both ways for a full understanding of mixed P/E valuation.

4. PEG Ratio

The PEG ratio looks at the price-to-earnings ratio while factoring in growth. The formula for the PEG ratio is:

P/E Ratio / ((Earnings This Year / Earnings Last Year)-1) = PEG Ratio

By factoring in earnings growth, investors get a more accurate picture of whether the stock is overvalued, undervalued, or trading at fair market value.

A PEG ratio of 1 is considered fair market value. When the PEG ratio falls below 1, the stock is considered to be undervalued and likely represents a strong buying opportunity.

Conversely, a PEG ratio above 1 suggests that the stock is overpriced, indicating that you’ll want to look elsewhere to find strong future growth opportunities.

What Does a P/E Ratio of 0 Tell You?

Often when digging into P/E ratios, you’ll find that the ratio is shown as “0.” A P/E ratio of 0 means that the company is currently generating negative earnings, or operating at a loss. Therefore, the P/E ratio cannot be calculated.

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What Is a “Good” P/E Ratio?

There is no static number that acts as a good P/E ratio across the market. Companies in different sectors tend to grow at different rates.

So, to determine if the P/E ratio of the stock suggests over- or undervaluation, it’s important that you look at the average P/E ratio across the sector that particular stock lives in.

Here are the average P/E ratios by sector based on December 2020 readings:

  • Technology Stocks P/E Ratio: 59.54
  • Service Stocks P/E Ratio: 213.18
  • Consumer Staples Stocks P/E Ratio: 50.94
  • Energy Stocks P/E Ratio: 0
  • Health Care Stocks P/E Ratio: 72.68
  • Biotech Stocks P/E Ratio: 49.48

It’s best to check industry averages at the time of your investment; you can use a resource like CSI Market’s valuation by industry to do so.

Is a High P/E Ratio Always a Bad Thing?

Naturally, investors look for lower price-to-earnings ratios when looking for opportunities to buy undervalued stocks at a discount. But is a higher P/E ratio always a bad thing?

Not necessarily.

P/E ratios are based on the current price of common stock compared to reported earnings over the past year. However, reported earnings and future prospects are two completely different topics.

In the technology and biotech sectors, it’s common to find stocks with what seem to be exorbitantly high P/E ratios. However, these higher ratios are generally justified by expectations of higher earnings.

For example, a biotechnology company currently may be generating little by way of profits but trades with a P/E ratio of 250. Consider that the average P/E ratio of biotech stocks is about 50 at the moment. With a ratio of 250, the stock is obviously overvalued, right?

Not always.

If the biotechnology company has a new drug application with the FDA for a new cancer therapy that proved to be more effective in clinical trials than the current standard of care, earnings will likely climb dramatically soon when the FDA approves the drug and the treatment hits the market.

Although this type of situation is generally seen in the technology and biotechnology sectors as a result of the industries being driven by innovation, any expectations of a coming blockbuster product, accretive acquisition, or anything else that will drive earnings higher can lead to higher P/E ratios that are entirely justified.

Is a Low P/E Ratio Always a Good Thing?

With the idea being to buy stocks at a low price and sell them at high prices, a low P/E ratio is naturally a good thing — right?

That depends on various factors.

For example, let’s say a technology company is doing relatively well. However, it’s trading with a P/E ratio of 10. That stock has to be a buy, right?

In many cases, yes. However, if the company has failed to innovate and produce compelling new products over the past couple of years, it may be quickly losing market share.

In this case, earnings are expected to fall, so a P/E ratio in line with the overall tech sector simply wouldn’t be justified. The low P/E ratio is more of a warning of painful times to come rather than a red sticker with a discount printed on it.


Is the P/E Ratio the End-All in Valuation Metrics?

Valuation is an interesting topic because the valuation of any stock on the market is relative. The value of anything — whether it be stock, a car, or a slice of pizza — is what someone else is willing to pay for it.

Considering the relativity of valuation, it’s impossible to tie down exactly what the value of any share of stock should be. Nonetheless, successful investors use various valuation metrics to give them an idea of whether they’re getting a good deal when buying shares.

Some of the most common valuation metrics used on Wall Street are listed below.

Other Valuation Metrics to Consider

  • Price-to-Sales Ratio. The price-to-sales ratio compares the price of a single share of common stock to the revenue generated from sales by the company over the past year. It’s a strong metric to use with more established companies that are generating consistent revenues.
  • Price-to-Book-Value Ratio. Price-to-book-value compares the current price of the stock to the value of assets the company has on its balance sheet. This is an important valuation metric because it gives the investor an idea of what the company would be worth if it was forced to liquidate its assets due to financial instability.
  • Price-to-Free-Cash-Flow Ratio. Finally, the price-to-free-cash-flow ratio compares the current price of the stock to the free cash flow generated by the company on an annual basis, providing a comparison of the stock price to the liquid cash the company generates.

Final Word

As you dive deeper into the stock market, you’ll quickly find that taking the time to understand current valuations of the stocks you’re interested in buying is a fruitful endeavor. At the end of the day, if you are blind to valuation, it’s easy to make the mistake of buying a stock that’s overvalued and doesn’t have much room for growth.

Although the P/E ratio is one of the most widely used valuation metrics, it’s far from the only one. Moreover, considering that valuation is a relative metric, it’s important to use as many tools as possible to get an understanding of the current value of any stock before making a purchase.

In conclusion, valuation is important, but it is only one part of the due diligence process investors should take part in before risking their hard-earned money.

Before buying any stock, make sure to research the company’s financial stability, market penetration, and continued innovation with the goal of cornering the market in the future.

Source: moneycrashers.com