I picked up one for $30. Is there another way to protect bike from rusting. Bolts, pedals etc? Is a bike cover even necessary?? I use it for commuting but store it in my garage when at home.

Waterproof bike covers promote condensation, which increases the rate of rust formation. Best to use such a cover only to protect the bike from rain and then remove the cover when the rain stops.

I have a tarp over my family's bikes, but the bottom is generally open for air to pass through. Do you think that helps avoid condensation/rust?

I've had (and have) city bikes where I use lubricants for their ability in the wet, chose parts accordingly and paint the bikes with appropriate paints. 2-part brushed epoxy, powdercoat. Marine grease aka boat trailer hub grease in bearings (lots!) and all threads (and on any metal having water issues). Finishline wet lube for the chain. Seats with plastic covers and/or a produce bag to put over them when I park the bike. The only things those bikes don't really like is going into puddles deeper than the bearings and even then, with enough marine grease stuffed in, many bearing do fine.

You can buy your way out of it somewhat. Pricier bike components are usually anodized, stainless, or nickel plated, or at worst chrome plated and powder coated. Cheaper ones might be black oxide coated or galvanized. Better components also have better ball bearing seals, especially for MTB parts. On the other hand leather saddles and grips and luggage are more susceptible than plastic. Waterproof luggage is made from waterproof fabric, but if it's leather or heavy fabric like a book bag it needs wax.

Kind of depends on the water too. Coastal areas are going to get salty corrosive moisture