YouTube is one of the oldest and still most popular video sharing services. It is completely free to use, but YouTubers — the people who make videos regularly — can earn some income for their posts. How does this work? How can people be making money off of a completely free platform?
The main way is through ads. YouTube didn't always play an ad in front of almost every single video. But now, it's hard to watch any video on the website without having to skip or sit through an advertisement. These ads are provided through Google Adsense. YouTubers connect their channel to Adsense and select the videos they would like to monetize — this means play an ad in front of them.
Ads are how Google makes money on all corners of the internet, including YouTube. Depending on how many views a video gets, Google and the YouTuber get more money in return. Google gets 45 percent of the revenue for a video and the content creator gets the remaining 55 percent. YouTubers agree to this when they activate their Adsense account and connect it to YouTube.
That percentage might sound like a decent amount, but the actual profits are very small. In 2013, a video with about 500 views would only earn about $3.80. However, a video with a billion views would earn $7.8 million. So if YouTuber's channel has a decent amount of subscribers and regular viewers, they can earn somewhat decent compensation for their content. But unless they have followers in the thousands or millions, it can be hard to make YouTube a full-time job.
However, Adsense isn't the only way YouTubers can make money for their videos. Another avenue is sponsorships. This is usually a short-term partnership between a content creator and a company. Typically, the YouTuber will be asked to promote or review some kind of product in exchange for a lump sum of cash. The amount of money varies based on the subscriber base and the size of the company providing the sponsorship. Once again, the bigger your channel is, the more money you're likely to make from these deals. However, sponsorships — while not steady — can be a good way for YouTubers to earn more money. Google doesn't get a cut of the profits like with native ads.
While many people might think that professional or full-time YouTubers have an easy job, content creators actually put a lot of time and effort into their videos and into building their audience. It can take years to build a channel up from zero to thousands of subscribers. And the rewards for doing so (at least in terms of revenue) aren't really satisfactory until a YouTube channel has millions and millions of subscribers.
When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.
A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.
One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.
The Federal Reserve
The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.
This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.
The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.
Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.
Frugal gifting often gets a bad reputation. However, this shopping method does not make you cheap — it makes you practical. Frugal gifts often avoid waste and overspending and can be just as meaningful (if not more so) as any other present.
With the National Retail Federation predicting each consumer this holiday season to spend upwards of $1,000 on holiday gifts amidst an economic recession —this year might be the perfect time to reconsider your spending budget. We've formulated the ultimate list of frugal gift-giving ideas to get you started.