Is money tight these days? When your income is limited, scaling back your budget can only get you so far. The good news: Cutting back on spending isn't the only way to improve your finances.

So what else can you do to create breathing room on a tight budget? You can potentially make big changes by finding a new source of income. With the right side gig, putting in just a few extra hours of work per week could be enough to help you cover major bills and build up your savings.

Finding the right side gig is a bit of an art. You'll need to figure out when you have free time, which skills people are willing to pay you for, and how much money you can realistically make once all of your personal expenses are covered. Here's what you should consider:

There are plenty of websites where you can list your services for hire, such as Lyft, Task Rabbit, and Fiverr, but they don't always pay well. According to a study from Human Rights Watch, people who used gig work platforms earned less than minimum wage after covering all of their work-related expenses.

So if you want to increase your earning power with a side job, you might want to skip the gig-work platform and look for a part-time job listing, or see if you can provide products or services directly to people you know.

Take a look at your current schedule, including the time you devote to work and non-work responsibilities. Then list out the times you're available for a side gig. Keep in mind that you might need to factor in commute times when determining your availability.

If you only have a few hours free here and there, you might have to look for a way to make money online instead of going somewhere in person. However, if you work remotely, you could potentially do two jobs at once. For example, if you work from home as a virtual assistant (VA), you may be able to house sit or pet sit while doing your VA duties.

Taking on a second job can mean having twice as many work responsibilities to keep track of. If you're not organized, things can spiral out of control quickly. Here are a few tips for staying on top of your main job and your side gig at the same time:

Block off time in your schedule for each job. Using a color-coded calendar can help.

Take time each Sunday to review your schedule for the upcoming week.

Create to-do lists at the beginning of each day and list items in order of urgency.

You may also find that you have less time for basic tasks like cooking meals or working out. If you want to make sure they get done, add them to your schedule. Just be willing to try time-saving approaches, such as batch cooking or socializing with friends by working out together.

If your side gig is freelance or contract work, and you earn at least $400 a year after covering all your business expenses, you'll have to pay self-employment taxes.

Fortunately, getting prepared to file your business taxes is easier than you might think. You'll need to keep a list of your business expenses and income, along with receipts, so you can report the information on a Schedule C and Form 1040 when you file your taxes.

You can use a program such as QuickBooks to help you stay organized, or simply start a spreadsheet so you have a complete list of income and expenses to refer to when it's time to file.

Read more: How do self-employment taxes work? A step-by-step guide.

Burnout is a major problem for people who take on side hustles. But some side gigs put you at higher risk than others. According to a survey from SideHustle.com, these are the side hustles and habits that are most likely to lead to burnout:

Doing gig work, such as ridesharing or deliveries

Working more than eight hours a week at side gigs

Having more than two side hustles

What helps people cope? According to that same survey, many side hustlers (56%) feel they just have to push through. But others get relief from taking mental health days (48%), sleeping or napping (39%), and exercising (37%).

After a long week of working multiple jobs, you might be tempted to blow your money on guilty pleasures like meal deliveries or online shopping. But impulsive spending can quickly undo all of your hard work.

Instead, take a few steps to ensure your extra funds go toward helping improve your financial situation. One of the easiest ways to do that is to set up an automatic deposit to the account where you want your money to go.

For example, if you want to increase your emergency savings and earn $200 a week from your side gig, set up an automatic contribution of $200 per week to a high-yield savings account (HYSA). If you want to pay off your credit card, increase your automatic monthly payment to the card.

Read more: Should you automate your savings? Pros and cons to consider first.

If you start a side gig, there's no need to form a limited liability company (LLC). In fact, you can simply operate as a "sole proprietorship," or a business owned and run by an individual, without doing any business registration. And as a sole proprietor, you can file your taxes using your Social Security number.

With that said, you may eventually want to take the extra steps to form an LLC. The main benefit of being an LLC is that it prevents anyone from going after your personal assets if something goes wrong with your business.

Read more: Do I need a business bank account if I'm self-employed?

Self-employed professionals, freelancers, and small business owners are all responsible for paying taxes, just like employees.

But navigating the tax payment process can be a bit more complex when you work for yourself, so understanding potential credits and deductions is important. One of these is the qualified business income (QBI) deduction.

Here’s what the QBI deduction is, how it works, who’s eligible for it, and more.

Part of the 2017 Tax Cuts and Jobs Act (TCJA), the QBI deduction allows eligible self-employed taxpayers and small business owners to deduct up to 20% of qualifying business income on their federal income taxes. President Trump's sweeping 2025 tax bill made those provisions permanent.

This deduction, also known as the Section 199a deduction, reduces your taxable business income and can result in a lower tax burden or a larger refund, depending on your financial situation. It’s available whether you itemize your deductions or take the standard deduction.

It’s important to note that the QBI deduction doesn’t reduce your 15.3% self-employment tax, which is a combination of Social Security and Medicare taxes. It simply excludes a portion of your business income from federal taxes.

The IRS defines qualified business income as “the net amount of qualified items of income, gain, deduction, and loss from any qualified trade or business.” Essentially, any net profit you earn from your business could count as QBI, with some exceptions:

Capital gains or losses from investments, commodities or foreign currency transactions

Interest income

Income for business outside the U.S.

Wage income

Certain dividends, including qualified real estate investment trust (REIT) dividends)

Income from publicly traded partnerships (PTPs)

Annuities

Reasonable salary payments from an S corporation

Many self-employed professionals and small business owners are eligible for the QBI deduction. Here’s a breakdown of business and income qualifications. If you have questions about your eligibility, seek guidance from a tax professional.

Pass-through businesses may qualify for the QBI deduction. These entities aren’t subject to corporate taxes like C corporations. Instead, owners report their business income on their personal tax returns, and that income is taxed at ordinary income tax rates. These are eligible pass-through entity structures:

Sole proprietorship

Limited liability companies (LLCs)

S corporations

Partnerships

Your total business income may also affect your eligibility for the QBI deduction. Generally, you can only claim the deduction for 2024 if your income is less than $383,900 if married filing jointly and $191,950 if a single filer. In this case, the IRS considers your business as a qualified trade or business.

While income limits apply, it’s still possible to qualify for the QBI deduction even if you earn more. Certain specified services trades or businesses (SSTBs) may be eligible with higher incomes, but the rules are a bit complicated. In this case, SSTBs earning less than $241,950 ($483,900 if filing jointly) might be eligible for a reduced QBI deduction.

The IRS classifies SSTBs as businesses providing these services:

Health

Law

Accounting

Actuarial science

Performing arts

Consulting

Athletics

Financial services

Brokerage services

Investing and investment management

Certain rental real estate businesses that meet IRS safe harbor standards might also qualify for a QBI deduction. If any of these special considerations apply to your business, it’s best to get guidance from a tax professional on whether you’re eligible.

Calculating your QBI deduction is pretty straightforward if your business income is less than $191,950 as a single filer or $383,900 for joint filers. You add up all of your qualified business income and multiply that amount by 20% to find your deduction.

Remember qualified business income is any profit you earn from your business excluding things like investment income, dividends, and interest. So if your business earned $50,000 in qualified business income during the year, your QBI deduction would be $10,000. Put another way, the deduction reduces your taxable income by $10,000.

Service businesses, or SSTBs, that have income above that threshold may get a phased-out deduction — up to the $241,950 ($483,900 if filing jointly) limits. But calculating that deduction is trickier. Per the IRS, the deduction “may be partially or fully reduced to the greater of 50% of W-2 wages paid by the qualified trade or business, or 25% of W-2 wages plus 2.5% of the UBIA of qualified property from the qualified trade or business.” Whether you qualify for a partial deduction depends on your total business income.

In that case, it’s best to rely on a tax expert or software, such as H&R Block, to calculate your QBI deduction. You can also review the IRS instructions for Form 8995-A for additional guidance.

Enacted in 2017 for the 2018 tax year, the Tax Cuts and Jobs Act made the QBI tax deduction available through the 2025 tax year. The Republicans' 'One, Big Beautiful Bill' made the deduction permanent.

When you’re self-employed — earning a large chunk of your income as a freelancer, independent contractor, or small business owner — it can be challenging to meet the borrower requirements for a mortgage loan. But it’s not impossible. Here’s what you need to know about qualifying for a mortgage when self-employed.

In this article:

Can you qualify for a mortgage when self-employed?

General mortgage requirements for self-employed buyers

How do lenders calculate self-employed income?

What if you’ve been self-employed for less than 2 years?

Step by step: How to get a mortgage when self-employed

FAQs

It’s possible to qualify for a mortgage as a self-employed borrower. Like W-2 employees, you generally need good credit, sufficient income, and stable employment.

However, proving stable and sufficient income can be challenging for some applicants. Understanding the requirements for self-employed mortgage loans can help you submit a complete application that shows your creditworthiness and ability to repay the mortgage.

The following are general loan requirements. Specific qualifications may vary by mortgage lender.

Lenders tend to look for a 620 minimum credit score for conventional loans backed by Fannie Mae or Freddie Mac. FHA, VA, and other government-insured home loans can have looser credit requirements, making qualifying with a lower score possible. For example, you could get an FHA loan with a credit score as low as 500 if you have a 10% down payment.

Your DTI ratio measures how much of your monthly gross income goes toward debt. Generally, a DTI ratio of around 36% is considered good, meaning 36% of your income pays monthly debts. Each lender can set its own DTI requirements. Some allow a higher debt ratio, like 45% or 50%, but you’ll likely need a strong credit score if you carry more debt.

The minimum down payment for conventional loans is 3% to 5% of the home’s purchase price. However, you’ll likely have to pay primary mortgage insurance (PMI) if you put down less than 20%. FHA loans require 3.5% down, while VA and USDA loans don’t have down payment requirements.

A lender requires proof of income to ensure you can afford your monthly mortgage payments. Borrowers typically need to show at least two years of self-employment income via personal tax returns, business tax returns, balance statements, and/or profit and loss statements. Some lenders may also want proof of cash reserves, additional savings that can cover your mortgage if your income takes a hit.

Mortgage lenders typically assess your self-employed income by looking at a two-year average of your net income. Your net income is gross revenue minus your business expenses and deductions.

If you plan to buy a house in the next year or two, pay close attention to your business deductions — the more deductions, the lower your taxable income, which can hurt your mortgage application.

“In many cases, self-employed borrowers who minimized their taxable income to avoid paying taxes won’t show sufficient income on a mortgage application,” noted Mason Whitehead, producing branch manager with Churchill Mortgage, via email. “This could make it harder to qualify for conventional, FHA, or VA loans that primarily look at taxable income.”

You may still qualify for a mortgage if you’ve been self-employed for under two years. However, the mortgage lender may require additional documents to ensure you have the cash flow to repay the mortgage. For example, you may have to show income from your previous experience in the same or a related industry.

Self-employed borrowers may also consider applying for a non-qualified mortgage (non-QM). Non-QM loans offer more flexible ways to verify your income, making it easier to qualify if your tax return doesn’t show sufficient income. However, non-QM loans can come with higher interest rates than other types of mortgage loans.

“Self-employed clients who don’t qualify using tax returns may choose a bank statement program where lenders average out the deposits in their bank account for the last 12 to 24 months,” said Whitehead. “These programs may come with a higher interest rate, but if you don’t otherwise qualify, it’s a good solution.”

Read more: The different types of mortgages

Here are the steps to getting a mortgage as a small business owner.

Mortgage lenders typically ask for the following documents as proof of income for the self-employed:

Personal federal income tax returns

Business tax returns

Business profit and loss statement

Recent business balance sheet

Lenders may ask self-employed applicants to submit some of the following documents to prove self-employment:

Business licenses

Client list or contracts

Proof of business insurance

A letter from a professional organization that can confirm your membership

There are several ways to make your application more appealing to lenders. Consider the following tips:

Check your credit report for errors or major negative remarks that may harm your approval odds.

Monitor your debt-to-income ratio and consider paying down debt to achieve 45% or lower.

Consider a larger down payment to lower your total loan amount and borrowing risk.

Apply with a co-signer or co-borrower with a strong credit history who accepts being responsible for loan payments if you can’t make them.

As with any loan, it's a good idea to apply for preapproval with several lenders so you can compare offers. Shopping around with more than one mortgage provider is especially critical when you’re self-employed because financial institutions can have different income requirements that significantly impact your eligibility.

Learn more: How to choose a mortgage lender

Lenders generally look for two years of stable income, which you can show through your personal or business tax returns. If you have less than two years of stable income, you may need to provide additional documents, like a profit and loss statement or balance sheet.

Mortgage lenders typically use net income when assessing self-employed income since it gives a better idea of cash available after you’ve paid your expenses. Net income is your total revenue minus business expenses and deductions.

Your mortgage rate will depend on your credit score, debt-to-income ratio, business income, and assets. As with any loan, you may receive a higher interest rate if the lender believes they’re taking on more risk, as with a bank statement mortgage or other non-QM loan that uses alternative income verification methods.

Laura Grace Tarpley edited this article.

Does saving money feel like a challenge, even if you earn a decent income or keep a tight budget? It may have something to do with where you live.

Factors such as how much you earn, the price of daily essentials, housing costs, taxes, and more can impact your ability to save, some of which may be out of your control — and depend on the state you live in.

Curious about how your state aids or impedes your ability to save? We evaluated seven key metrics across all 50 states to determine the best and worst states for savers. (See our full methodology here.)

North Dakota scored the top spot on our list as the best state for saving money. This state has one of the lowest costs of living, combined with a strong median annual household income of $78,720.

The state also has a significantly lower top marginal state income tax rate than some of the other states on our list. Finally, less than 40% of North Dakota renters and less than 23% of homeowners are housing cost burdened (defined as spending 30% or more of household income on housing costs).

Read more: What percentage of your income should go to a mortgage?

The second-best state for saving money is Wyoming. This state’s cost of living was on the lower end compared to some of the other states we evaluated. The median annual household income sits at $73,090, according to the latest data, and it was among the states with the lowest property tax rates on our list. This state also had the lowest percentage of renters burdened by housing costs.

The third state on our list is Iowa, where the median annual household income is a substantial $76,320. Residents also pay modest taxes, with the top marginal state income tax rate of 3.80% and a state sales tax of 6%. This state also had one of the lowest household debt-to-income ratios across all 50 states.

South Dakota came in fourth place with a median household income of $67,180. In the state of South Dakota, just 24.6% of homeowners experience a housing cost burden, and the household debt-to-income ratio is 1.24, which is on the lower end. Another perk: South Dakota is one of nine states with no income tax, making it easier for residents to allocate more of their paychecks toward savings.

Nebraska took the fifth spot on our list of the best states for saving money. The annual median household income is an impressive $78,360. Further, the sales tax rate in Nebraska sits at 5.50%, along with an effective property tax rate of 1.43%. Nebraska was also one of the states with a lower percentage of housing cost-burdened renters and homeowners (42% and 26.4%, respectively).

Read more: This map highlights the average net worth in every state

The worst state for saving money is Hawaii. This state has the second-highest individual income tax rate and the highest cost of living in the country. It also has the highest household DTI, despite the median household income being a whopping $91,010.

Renters and homeowners in Hawaii face higher housing costs as well, with over 56% of renters and 38% of homeowners burdened by housing costs.

It may come as no surprise that the state known for high taxes and cost of living is the second-worst state for saving money. With the highest top marginal income tax rate of all the states (13.30%), the highest sales tax rate (7.25%), and the third-highest score for cost of living, savers may not have much income left over to put in their savings accounts.

The median household income in California is $85,300, but even a higher salary isn’t enough to cover California’s housing costs in many cases. As it stands, 53% of renters and 41% of homeowners are burdened by housing costs.

Massachusetts is the third-worst state for saving money, according to our data. It has the second-highest median household income out of all the states we compared at $93,550. Still, nearly half of all renters and close to 36% of homeowners in Massachusetts are burdened by housing costs. Massachusetts also had the second-highest cost of living across all states.

Florida came in fourth place among the worst states for saving money. The median household income in Florida is $65,370 and it’s one of a handful of states with no state income taxes. Even so, the majority of Floridians are burned by their rent (56.8%). Plus, this state had a higher cost of living compared to many other states we evaluated.

Oregon took the fifth spot on our list of the worst states for saving money. Despite an impressive median household income of $86,780, more than half of all renters and 35% of homeowners in Oregon are housing cost burdened.

One upside is that Oregon is one of a handful of states with no state sales tax. However, Oregon still has one of the highest top marginal state individual income tax rates in the nation at 9.90%.

Read more: This map highlights the average credit score in every state

Even if you don’t live in one of the best states for savers, there are still ways you can maximize your savings. Here are a few tried-and-true savings strategies that work regardless of your zip code:

Where you keep your savings is just as important as the amount you’re contributing. The national average interest rate for a savings account is only 0.38%, according to the FDIC. However, there are savings options out there that can help your savings grow faster.

For instance, putting your money in a high-yield savings account or certificate of deposit (CD) could help you earn as much as 4% APY or more on your savings. This can help you earn a significant amount of interest over time and hit your savings goals faster.

There are several tax credits and deductions that you may qualify for that can lower your tax liability in April. For example, making extra contributions to your 401(k), IRA, and/or health savings account (HSA) can help lower your taxable income. There are also write-offs related to caring for dependents, working from home, medical expenses, student loan payments, and more.

However, unless you’re a tax expert, you may not know about all of the deductions and credits available to you. Tax software programs are fairly reliable when it comes to finding potential write-offs. But if you’d like the help of a human expert, consider speaking with a tax professional who can help you identify which credits and deductions you can take advantage of at the federal and state level to lower your overall tax bill or increase your refund.

Read more: Wondering what to do with your tax refund? 5 ways to spend it wisely

Saving more money isn’t just about trimming your costs — it can also be helpful to look for ways to increase your income. One of the easiest ways to do that is to ask for a raise.

But before you meet with your manager, you’ll need to do some preparation. Begin documenting your accomplishments and concrete ways you've contributed to your company's bottom line. Then present your case for getting a raise when the time is right (such as during a yearend review or following a strong sales quarter).

If a raise isn't an option, set a date to revisit this conversation with your manager at a later time. You may also want to consider whether it makes sense to look for a new position; strategic job hopping can be an effective way to increase your salary over time.

Housing costs can place a major financial strain on American households, especially for those in higher cost of living areas.

Whether you’re a renter or a homeowner, downsizing to a more modest home can help trim your monthly rent or mortgage payment, as well as reduce the amount you spend on utilities and maintenance. If it makes sense for your situation, relocating to a new neighborhood or even a new state with a lower cost of living or tax rate can also help you save significantly.

Contributions to your savings should be considered a monthly expense in your budget. This ensures saving remains a priority and that your savings account grows consistently over time. You may also consider setting up automatic contributions from your checking account to your savings account so you don’t even have to think about it.

Read more: Your complete guide to budgeting for 2025

The less you spend on unnecessary expenses, the more you can afford to set aside for future savings goals. Take some time to review your monthly budget and your most recent bank statements. Be honest with yourself about which expenses are non-negotiable and which ones you can probably scale back (think: unused subscriptions, takeout orders, shopping, etc.).

Every dollar counts when it comes to saving money, and shaving a few dollars off your bottom line each month can make a big difference in your savings account balance.

Read more: How to save money in 2025: 50 tips to grow your wealth

Debt can be a drag on your budget, especially your savings account contributions. Carrying debt costs money in interest over time. Prioritize paying off high-interest debt, such as credit cards, to free up room in your budget. There are many debt repayment strategies you can use to tackle your debt — so find one that works for you.

Read more: What’s more important: Saving money or paying off debt?

Our grading system, collected and carefully reviewed by our personal finance experts, comprised more than 400 data points to develop our list of the best and worst states for saving money.

We evaluated all 50 states according to several key metrics, using the most recent data available:

Household debt-to-income ratio (DTI): We used publicly available data from 2024, provided by the Federal Reserve, to determine the household DTI for each state. States with a lower DTI ranked higher on our list.

Percent of renters experiencing housing cost burden: “Housing cost burden” is defined as spending 30% or more of household income on housing costs. We used information from the Population Bureau, sourced from the U.S. Census Bureau’s 2020 ACS Public Use Microdata Sample to determine which states had more housing cost-burdened renters.

Percent of homeowners experiencing housing cost burden: We used data from the United Health Foundation to examine the percentage of households in each state for which housing costs are 30% or more of household income.

Median household income: The median household income is the true “middle” income across all residents where half of all households earn more than the median and half earn less. We favored states with a higher median household income based on 2022 data, the most recent available from the Federal Reserve Bank of St. Louis.

Cost of living: Cost of living is defined as the amount of money needed to cover your basic living expenses in a particular area. We favored states with a lower cost of living, based on the Missouri Economic Research and Information Center’s cost of living index for Q1 20254.

Effective property tax rate: This is defined as the average amount of residential property taxes actually paid, expressed as a percentage of home value. We favored states with a lower tax rate, based on analysis by the Tax Foundation using the U.S. Census Bureau’s 2023 American Community Survey.

State sales tax: Sales tax is a tax imposed on the sale of goods and services. We favored states with a lower sales tax rate, based on analysis by the Tax Foundation.

Top marginal state individual income tax rate: We relied on analysis from the Tax Foundation to determine the current maximum statutory income tax rate in each state, based on individual income tax rates, brackets, standard deductions, and personal exemptions for single and joint filers in 2025.