A recent Forbes article reported that the average American has $65,100 in their savings account, but averages are skewed by outliers. A better representation of how much money Americans have in their savings account is the midpoint value, also known as the median. The median savings amount for American households is only $5,300.
Setting financial goals is one of the best ways to improve your financial health and have a secure financial future. If you’re closer to the median savings amount or have far less in your savings account, it may be time to start setting financial goals.
We’re here to provide you with a five-step plan to set financial goals that can help you increase your savings, plan for your retirement, and provide you with some extra funds to treat yourself.
Key takeaways:
Financial goals are personal and professional goals designed to improve your financial well-being.
Financial goals can be short-term, medium-term, or long-term goals.
Financial goals can help you build wealth, but it’s also important to set aside money to treat yourself every now and then.
What Are Financial Goals?
Financial goals can vary depending on who you ask, but essentially, they’re personal and professional goals you set to improve your financial well-being. Good financial goals will allow you to work toward a life with less stress about your finances. These goals also allow you to spend money on the things you enjoy without feeling guilty.
5 Steps for Creating Financial Goals
Getting your financial goals in order can seem overwhelming, which is why it’s a good idea to map it out and have some structure. Below, we provide five steps to help you design financial goals that work for you. These steps allow you to focus on what matters most while also keeping you motivated to stay on the right track.
1. Discover What Inspires Your Financial Goals
Financial goals can take some time, so it’s helpful to find something that will help keep you motivated throughout the process. To start, make a list of what you want to achieve and details for why these items are important to you. For example, you may include:
“I want to save enough money to have my dream wedding.”
“I want to build an emergency fund to afford to pay my bills should I lose my job.”
“I want to start a retirement fund so I can enjoy my retirement by finally traveling the world.”
“I want to pay off all of my debt so I can experience less stress and spend without feeling guilty.”
Reminding yourself of your goals and what inspires you are actions that psychologists recommend while pursuing what matters most to you. While vision boards may seem like pseudoscience, Tchiki Davis, Ph.D., explains, “Initial research suggests [vision boards] can help us more easily reach our goals. This may be due to how vision boards help us gain self-awareness and self-reflect on what is important to us.”
2. Make a Plan for Your Situation
The second step is to make a plan that’s specific to you because everyone’s financial situation is different. Take a look at where you currently are with finances to start making a plan. This will allow you to create a plan that will allow you to reach your short-term financial goals and ones that may take a little longer.
The following are some financial goal examples, along with an idea of how to prioritize them.
Create a Budget
Learning how to create a budget and then implementing it is a great short-term financial goal. A budget is how you give your financial goals a strong foundation. Your budget will help you monitor how much you’re spending and decrease the likelihood of overspending. It will also let you know if you have extra money to spend on other things.
Plan for Retirement
Planning for your retirement is a long-term financial goal, but you get the most value out of it by starting sooner rather than later. Experts at Vanguard recommend that you start investing in your retirement funds in your 20s if possible. When you start investing earlier, your money has more time to compound, giving you more retirement funds. If you start your retirement later, don’t worry. By putting a little more into your retirement, you may have the ability to catch up for lost time.
Start an Emergency Fund
Unfortunately, we don’t know when an emergency will happen, so a good financial goal is to start an emergency fund. Many financial planners recommend[1] saving at least three to six months’ living expenses. This can take some time, but it can provide peace of mind should an emergency arise. As part of your budget, you can save a set amount every month to get closer to your emergency fund goal.
Some expenses to consider:
Rent or mortgage
Utility bills
Groceries
Car payments
Credit card and other debt payments
Pay Off Debts
Having debt can restrict your ability to achieve your financial goals. Your personal situation should determine how you prioritize this within your budget and other goals. When you get out of debt or decrease it significantly, you can save money on interest fees and improve your credit. This will free up additional funds and help you pursue more of your financial goals.
Begin Investing
Investing outside of your retirement fund is one way to generate passive income or have more money for your other financial goals. Your investments will ideally grow over time. If you invest in dividend stocks, these pay out money each quarter based on company profits. You can also continue investing and holding onto your investments to sell later for additional funds.
Get a Higher-Paying Job
Finding a higher-paying job is one financial goal many people may overlook. When you make more money, you have more resources to achieve your short- and long-term financial goals. It’s something to consider if your current job doesn’t allow you to budget properly, save for retirement, pay off your debts, or pursue your other goals.
Before searching for a new job, it’s also helpful to consider how happy you are at your current job. One benefit of financial goals is that they can help decrease stress and increase happiness. Leaving a job that makes you happy may counteract the benefits of making more money.
3. Map Out S.M.A.R.T. Financial Goals
It’s easy to get off track with your financial goals, so it’s helpful to organize your individual goals to improve your chances of success. A popular strategy for creating and managing goals of all types is to make S.M.A.R.T. goals. S.M.A.R.T. stands for:
Specific
Measurable
Achievable
Relevant
Time-bound
If your goals are vague and unrealistic with no time frame, they will be much harder to achieve. Using the S.M.A.R.T. goal strategy helps you make a plan relevant to what you want to accomplish within a realistic amount of time.
Let’s say you want an emergency fund with $5,000. An example of turning this into a S.M.A.R.T. goal would be, “By next year, I’ll have an emergency fund of $5,000 by saving $416.66 each month.”
If these numbers are unachievable for your financial situation, that’s OK. Make adjustments and see what works for your financial situation and your budget.
4. Keep Track of Your Goals
Keeping track of your financial goals can help you stay on the right track while also keeping you motivated. The S.M.A.R.T. model includes measuring your progress, and this is where the motivation comes from. Whether it’s paying down your debts, adding to your emergency fund, or saving for retirement, seeing the progress can inspire you to continue.
5. Don’t Overshoot Your Financial Goals
People commonly overshoot their financial goals and leave no room for spending on themselves. Treating yourself as you pursue your financial goals is important because it can feel like a chore. Sometimes, it’s also difficult to maintain motivation as you pursue your long-term goals. Part of setting financial goals is having extra spending money to do something fun occasionally.
Maybe you want to save money for a big purchase like a relaxing vacation or new furniture. Be sure to include these as you create your goals. When creating your monthly budget, you can also create space for extra spending money to make sure you take the time to enjoy yourself each month.
Improving Your Credit Is a Financial Goal Priority
If you don’t have a good credit score, it can be difficult to achieve your other financial goals. Lower credit leads to additional interest fees, higher deposits, and potentially more debt. Making your credit a priority will improve your ability to pursue all your other financial goals.
Credit.com has a variety of credit tools and services to assist you while you work on your financial goals. You can start by getting your free credit report card to see where your credit stands. We also offer our ExtraCredit® service, which includes credit monitoring, rent and utility reporting, and more.
Most of us have hopes and plans for the future, and they often require a degree of financial success. Whether your aspiration is relatively small and close to home (say, hosting an amazing 30th birthday party for your sweetie at their favorite restaurant) or considerably grander (owning multiple homes and retiring by age 50), it takes planning and discipline to achieve them.
In a nutshell, smart money habits can start you on the path to achieving financial success and realizing your dreams. Adopting small (and repeated) changes in behavior can be one way to start building good financial habits that can last a lifetime.
Read on to learn six of the most important money habits that can help steer you to financial success and realizing your money goals.
Why Good Money Habits Matter
Good money habits can set you up for financial success. They act like guardrails, keeping you moving towards positives (like an impressive retirement fund) and away from potential challenges (say, too much credit card debt). They are, in fact, similar to other wise habits in your life, whether that means eating well, exercising regularly, not staying up too late watching Netflix, or remembering to call your folks often.
Yes, good habits can require some time and energy to establish, and then you likely need to maintain focus to stay on track. Some will become second nature or no-brainers; others may require more ongoing effort. But by sticking with them, good money habits can guide you to help manage your personal finances well, make smart decisions with your funds, and achieve your future goals.
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6 Good Money Habits to Adopt
Here’s a closer look at six key money habits that can help you develop financial success.
1. Set Financial Goals
Formulating your financial goals can be an important step. Goals can guide you as you go about building a financial plan for the years ahead.
One person’s goals might be to pay off their student loans and save for a down payment on a house; another might want to sock away enough cash to start their own business down the road; and yet another might want to achieve a lifestyle where they can pay for their child’s college education and take ski vacations every winter.
Putting pen to paper or opening a document on your laptop can be a helpful way to focus and define specific financial goals to work towards. This can give you clarity and boost your motivation vs. simply saving in the abstract.
Once you have goals in mind, you can begin saving toward them and tracking your progress.
2. Budget Well and Track Your Spending
If you are just winging it in terms of your finances, it’s probably wise to prioritize setting up a budget. The word “budget” can cause a knee-jerk reaction because it smacks of deprivation (as in, no more lattes, ever!) but that’s not what it’s about.
Rather, a budget involves understanding how much money you have coming in and where it’s going (typically towards spending and saving). It can help you be more aware of your finances and balance them, too.
Out of the various techniques, the 50/30/20 budget rule is a popular option. It spells out that 50% of your take-home pay goes towards your needs (housing, food, and healthcare, for instance), 30% towards your wants (dining out, those lattes mentioned above, travel), and 20% towards savings.
There are plenty of other different budgeting methods to try and tools you can use to track your spending, which is an important facet of good budgeting. Your bank may even offer a convenient system for this. By tracking your spending, you can see where you may be spending too much (say, your once-a-week takeout habit has crept up to four times a week), be more mindful with money, and optimize your finances. Perhaps you can put more towards debt payments, for example, than you realized.
It can also be wise to get in the habit of checking in with your money regularly; many people find that a couple of times a week is a good frequency.
💡 Quick Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.
3. Consolidate Debt
As you work on your budget, you may want to cultivate another money habit to develop financial success. That involves dealing with debt.
This might mean paying off credit card balances in full and making all other necessary debt payments on time, such as mortgage installments and student loan payments. Calendar reminders can help ensure that all payments get made on time, as can automating your payments (more on that below). It may even help to arrange to have all payments due on the same day. Some lenders are willing to move a monthly due date.
If you have student loan debt, you might look into refinancing options. You might, say, be able to lower your monthly payment, though that could extend the term of your loan and cost you more in interest over the life of the loan. However, doing so may be the right move for some people. (Also keep in mind that if you refinance federal loans as private student loans you will lose access to federal benefits and protections.)
Facing and managing your debt is an important step, regardless of the specific solution you decide upon. It’s a habit that allows you to take control of your money. And it can keep your debt-to-income ratio low, which can be an important factor when you want to borrow money at as low a rate as possible.
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4. Know When to Consider Balance Transfer vs. Personal Loans
Building on the idea of consolidating debt is the next financial habit. This one involves knowing the warning signs when your debt is getting uncomfortably high and then taking steps to rein it in.
Sometimes, the steps above aren’t enough. If that’s the case, it’s wise to consider your options vs. taking a wait and see approach. Currently, credit card interest rates are over 20% which can be hard for some people to pay off.
So if you see your balance rising to a level you are worried about, consider the following options as you take control of your debt:
• You might try a balance-transfer credit card, which can give you a reprieve from high interest accruing for a period of time (often 18 months), allowing you to pay down your debt.
• You might consider taking out a personal loan and using those funds to pay off your credit card debt. The goal here is to have a lower monthly payment on the personal loan than what your credit card bill amounted to.
• Contact a nonprofit credit counseling service, such as the National Foundation for Credit Counseling, or nfcc.org. Getting in this habit before debt gets deeper can help you in the long run.
5. Automate Your Finances
It can be a good idea to save money right after getting paid — before the cash sits in checking long enough to spark the urge to spend it. So why not make it simple and save automatically upfront?
A person interested in saving might begin by automating just one kind of transaction. For example, they may opt to have $50 moved from a checking account to a different savings-oriented account each month. If that money remains unspent each month, those monthly automatic savings would total to $600 at the end of the year.
That could be a good way to start an emergency fund without expending much effort. You can also automate payments of, say, your utilities and housing costs or your car loan. Paying bills on time this way can help build your credit.
There are also numerous ways to automate your investments. A workplace plan, like a 401(k), may already be doing this. For someone who’s on their own, mutual funds can make auto-investment really easy. Alternatively, a robo-advisor service can automatically invest contributions on behalf of the investor. (Note: This automation may be challenging for those paid irregularly, such as freelancers and seasonal workers.)
By embracing automation, you can nail an important money habit. You can pay yourself first and stash cash away in savings. And you can avoid such bad money habits as not saving enough, paying bills late, or forgetting to pay them at all.
Recommended: How to Become Financially Independent
6. Investing Early and Often
“I invested too much money for retirement,” said no one, ever. Arguably, there’s no other financial goal that requires more habitual action — spread over decades — than saving and investing for retirement.
It can be tempting to push off planning for retirement until tomorrow. After all, when someone’s in their 20s or 30s, retirement is likely decades and decades away. Psychologically, it’s simple to presume that it’s just not worth thinking about in the now.
But, for many, retirement can be one of life’s biggest and most important expenses. It can secure your comfortable future. Investing early, often, and wisely, can help accomplish that goal.
Adopting this habit ASAP can be a big help; it allows for more time for money to grow via compounding. Compound returns are earnings on both the original amount invested (the principal) and the money earned via investing (the profit). The more months (or years) a person invests, the higher the potential for profits to compound. Note: It is important to note that all investing carries risk as the stock market can fluctuate.
Being consistent about moving money into your portfolio is important, too. Luckily, there are easy and affordable ways to get started investing. First, open an account, like a brokerage or a retirement account. (Investing in a 401(k) also counts as investing.) Then, investors can purchase investments like stocks and funds to achieve their goals. Or investors can use an automated investing service.
The Takeaway
Building good financial habits can be rewarding. There are more technological tools than ever to help with budgeting or expense tracking. From digital apps to automatic investing, building healthy financial habits has never been more accessible.
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About one in seven Americans has unclaimed funds lurking somewhere. In fact, there’s an estimated $70 billion in unclaimed assets in the United States. Typically, the amounts people receive when retrieving this money can be small (say, $20) or, in rare cases, it can be a significant amount of six figures or higher.
States typically manage these funds, which can come from forgotten bank accounts, pensions, insurance benefits, wages, savings bonds, and other sources.
If you’re wondering whether there’s any money out there that belongs to you, read on. This guide will walk you through where unclaimed money may be hiding and how to claim it.
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How to Find Unclaimed Money 5 Ways
Money usually remains unclaimed because owners have no idea it exists. That’s why it may be worth searching for unclaimed funds in your name just in case. So how do you go about it? Unfortunately, there’s no single place you can look for all potential unclaimed cash. It may take some work, but here are some steps you can take to help make sure you’re claiming everything that’s yours.
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1. Searching State Databases
A good first step may be to hunt for unclaimed funds at the state level. Each state has an office that oversees unclaimed property, typically housed in the state treasurer’s, controller’s, or comptroller’s office. You can link to your state by visiting the website unclaimed.org, which is run by the National Association of Unclaimed Property Administrators.
Don’t forget to search your name in the database of each state where you have lived, not just the one where you live now. Make sure that you are searching the official state site (it should have .gov in the URL) to avoid scams. If you are married and changed your name, you may want to consider searching under your maiden name too.
You can continue your search by checking MissingMoney.com, which offers a multi-state database endorsed by the National Association of Unclaimed Property Administrators.
All of these searches are free to complete. If someone asks you for money to complete a search, that’s a red flag. There’s no reason to pay to access money that’s yours, unless there is a small processing fee.
If you happen to find unclaimed property, each state has its own process for proving that you’re the true owner and getting your hands on the cash. Many states allow you to file a claim electronically.
Usually you need to provide some kind of official documents to prove that you’re the person named as the owner. Luckily, there is typically no time limit for claiming the money. If the owner has died, you can often claim funds from a deceased relative. You can typically file a claim if you’re an heir, trustee, or executor of the estate.
2. Looking for Unpaid Wages and Pensions
Here’s another possibility in terms of how to find unclaimed funds: Hunt for back pay. If your employer owes you back wages, you can search the Department of Labor’s database. Start by inputting the name of the employer. You typically have to move quickly in this case, since the agency only keeps unpaid wages for three years.
You can also look for pensions from a former employer. Pension funds may be unclaimed if a company closed its doors or ended a particular pension plan. You can look for funds through the website of the Pension Benefit Guaranty Corporation, which is a government agency.
3. Checking for Unclaimed Tax Refunds
If you think you may have failed to receive a tax refund at some point, you can track that down through the Internal Revenue Service’s website. Keep in mind that you will need to know the exact refund amount in order to conduct the search.
4. Searching for Insurance Funds
Many insurance companies transfer unclaimed funds to states, but a couple of federal government agencies maintain their own unclaimed funds databases. The U.S. Department of Veterans Affairs holds onto unclaimed VA life insurance funds for most policyholders and, if they’re deceased, their beneficiaries.
People who had mortgages insured by the Federal Housing Administration can check for potential unclaimed refunds on the website of the U.S. Department of Housing and Urban Development.
5. Finding Savings Bonds
Another potential place to find unclaimed funds could be in forgotten or lost savings bonds. To check whether you have a bond that has reached maturity, check the government’s website Treasury Hunt. You’ll be prompted to enter your Social Security number and your state.
The site also offers advice on finding lost, destroyed, or stolen savings bonds.
• FDIC and Closed Banks You may also want to see if you have any money that is in a lost bank account or one that was held at a now-closed bank. It’s a very rare occurrence, but bank failures do occasionally happen. If you believe you had funds in one that you never received, you can contact the FDIC Claims Depositor Services at 888-206-4662, option 2.
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Being Aware of Scams
Where there’s free money, there are bound to be con artists trying to take advantage of it. Some companies may offer to help you find unclaimed funds and recover the money for a percentage of the amount owed you. Be cautious: These can be scams. Paying these fees is pointless, since you can search for unclaimed property and reclaim it for free (or perhaps for a small processing fee to the state).
The IRS recently warned of another kind of unclaimed money scam, in which a letter arrives, claiming to be from the government, alerting you to a refund you have not yet accessed. This fraudulent communication then says that your banking details are needed to receive the money. If you send that sensitive information, you could end up losing money and having your accounts compromised.
Using Your Unclaimed Money
If you happen to be one of the lucky people who finds cash waiting for them, what should you do with it? You may be tempted to blow the surprise windfall on those new shoes you’ve been eyeing or on a dream vacation.
But depending on the sum you receive and your financial situation, there may be smarter ways to put the unexpected money to use. Consider these possibilities.
Paying Off Debt
If you have high-interest debt, many people suggest putting much of your extra cash toward knocking it out. That’s because interest rates can cause a balance to balloon significantly over time, meaning the longer you wait to pay off your high-interest debt, the more you’ll likely pay overall.
Credit cards and payday loans tend to have high interest rates, but you may also want to check the rate you’re paying on your student loans, car loan, personal loan, or mortgage. One method for potentially paying off your debt faster is to tackle your highest-interest debt first, while staying on top of minimum payments for your other liabilities.
Building An Emergency Fund
Once you’re on top of your debt or at least the highest-interest liabilities, it may be a good idea to establish or pump up an emergency fund.
Financial experts suggest having enough saved to cover three to six months’ worth of living expenses.
It may be a good idea to keep this money in a safe place, like a high-interest savings account, for unexpected emergencies such as car repairs, medical bills, or a layoff. Having an emergency fund may help you avoid getting into high-interest debt in the future since you have that cash cushion to see you through challenging times.
Saving for a Goal
Once you have a basic emergency fund, you may want to start setting aside money to get closer to a big financial goal. Maybe you want to have a wedding, travel, start a business, or buy a home.
Saving in advance means you may need to take out less in loans or pay less in credit card charges. Or you might be able to avoid them altogether, keeping more of your money in your pocket.
Investing for the Future
Another option is to invest your money in an individual retirement account, college savings plan, brokerage account, or another financial vehicle.
Investing your money for the long-term could allow you to take advantage of the power of compounding returns and potentially increase your chances of reaping solid growth over time. It can be tempting to spend your lucky find on short-term fun, but investing may set you up for financial freedom in the future.
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The Takeaway
How do you find unclaimed funds? Typically, it involves searching on websites to see what pops up. These are usually specific to the kind of money that is sitting unclaimed, whether that means going searching for tax refunds, the contents of closed bank accounts, back wages, or insurance payments.
Whether it’s deciding what to do with reclaimed cash, if you’re owed any, or figuring out how to afford a big goal, life poses plenty of personal finance challenges. Finding the right financial partner can be an important step in making your money work harder for you.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with up to 4.60% APY on SoFi Checking and Savings.
FAQ
What is the best website to find unclaimed money?
Using a website to find unclaimed money will depend somewhat on the source of the unclaimed funds, such as whether it’s from an insurance claim, a forgotten safety deposit box, or other source. One good place to start can be unclaimed.org, which is run by the National Association of Unclaimed Property Administrators.
What happens if money is unclaimed?
When money is unclaimed, it often goes through a dormancy period (perhaps five years), after which the state takes control of the funds.
How do you claim unclaimed money from the IRS?
If you were expecting a federal tax refund and didn’t receive it, visit the IRS’ Where’s My Refund page and/or call their helpline at 800-829-1040. For state taxes, contact your local Department of Revenue by checking this website.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..
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.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
As part of your Diversity, Equity, and Inclusion (DE&I) strategy, your organization, like many others, is likely developing a plan to attract and retain veteran talent. Many organizations have adopted dedicated veteran employee relations groups, specialized talent acquisition teams, or tailored onboarding programs. Perhaps overlooked, the financial well-being benefits you offer can add significantly to the success of these efforts.
Financial health is an important subject for everyone, but it can have some unique aspects for veterans. Despite the dedicated financial resources available to service members while serving, the transition to civilian life after years in the service can affect their short and long-term financial stability.
There are several noted reasons this may occur. Veterans have likely dealt with relocations, deployments, a lack of employment opportunities for their spouses, and, of course, war-related trauma. All of that can leave them vulnerable in certain aspects of their financial health.
That’s why veteran employees can use your help. Research published in 2020 by the research and advisory company Gartner, Inc. shows that veterans want three main workforce financial benefits — financial planning, financial education, and debt management.
With that in mind, SoFi at Work has published our Guidebook: “Are your financial well-being benefits veteran-ready?” to help HR and Total Rewards leaders design a meaningful and impactful program to support your veteran workforce.
The complete guide is available for download from our website, but here are the core components that we recommend be included in a veteran-ready financial well-being program.
Student Loan Employer Contributions
Despite having access to significant federal veterans’ education benefits, more than a quarter of veteran undergraduate students have taken out private and federal student loans (with a median amount of $8,000) to complete their education, according to The Pew Charitable Trusts. The fact of the matter is the cost of education has outpaced the support of programs that the GI Bill and SCRA Interest Cap offer service members, resulting in the need for additional funding. And veterans, who are often working and raising families while going to school, may take longer to finish degrees, meaning certain benefits will have expired before their coursework has been completed.
This is why well-designed employer-sponsored student loan offerings are critical for a successful veteran-ready financial well-being program. While there are several military student loan repayment and forgiveness programs, try to avoid the mistaken thinking that your veteran employee’s needs are fully met. Many of these programs are for fully disabled veterans only. Others have other specific and sometimes complicated restrictions.
Fortunately, recent legislation makes it easier for employers to help veterans — as well as all employees — pay down student debt. Thanks to the CARES act of 2020, employers can now support workers with direct student loan payments in the same tax-advantaged way they have supported tuition reimbursement for years. These changes allow employers to provide up to $5,250 tax-exempt annually toward a qualified employee’s student loan repayment through 2025.
In addition, the SECURE 2.0 Act (passed in the House on March 29, 2022) allows employers to address student debt in another way — by making matching contributions to retirement plans based on employees’ student loan payments.
The purpose of the law is to assist employees who may, because of their student loan debt, decide against making elective contributions by payroll reduction and as a result, miss out on employer matching contributions. The SECURE 2.0 student loan provision goes into effect on January 1, 2024.
Recommended: How Does an HR Team Implement a Student Loan Matching or Direct Repayment Benefit?
Emergency Savings Programs
Veteran financial wellness also suffers among those who have less in liquid savings or feel they could not absorb an unexpected financial shock. In a 2021 Military Family Advisory Network survey, 38.4% of veteran families reported that they have less than $500 in an emergency savings fund, or no fund at all. This suggests that employers can help relieve financial stress among veteran employees through automatic emergency savings programs.
These plans allow employees to contribute after-tax payroll deductions automatically into a customized savings account. Many employers also make matching contributions, much as they might with a 401(k). Depending on plan design, these funds can be available at any time and for any reason. In addition, most Emergency Savings Accounts (ESAs) are portable, meaning that veterans and other employees can take advantage of the program and retain its benefits even when they have a change in employment.
These programs gained popularity during the pandemic when it became painfully evident that many employees were not financially ready for an emergency. The same may hold for veterans transitioning to civilian life. When employers offer a trusted and easy way to save, they can help veterans with this transition.
Help With Debt and Negative Credit Events
Another factor that impacts veteran (and all) employee financial well-being is high-interest debt. While the intention might have been to keep this for a short period, many Americans face challenges with paying down that debt over time. The Military Family Advisory Network survey found that over three quarters (75.8%) of veteran families carry current debt.
High debt levels and other factors can have a negative effect on an employee’s credit rating, increasing the chances that they will be rejected for a variety of credit instruments. Research suggests that this type of adverse credit event can result in a significant drop in veteran financial-wellness perception. Here are some ways employers can help support employees facing negative credit events:
• Debt and Financial Coaching: Offer one-on-one debt repayment and budgeting counseling, including budget and spend tracking programs to help balance monthly necessities, debt repayment, and discretionary spending.
• Some Early Paycheck Programs: Not all of these plans are created equally, but a well-designed early paycheck program can help employees meet short-term financial needs without having to take out debt with excessive fees or interest rates.
• Credit Score Monitoring: Provide free credit score monitoring services and counseling to help veterans rebuild damaged credit scores or build new credit.
Recommended: How Financial and Mental Health Can Collide With Work
Balance Short-Term Needs and Long-Term Financial Goals
While we have mostly discussed programs that are designed to support the shorter-term financial needs of veteran talent, it is important that your overall program also helps veterans get ready for their top financial goal: retirement readiness. As Gartner found, veterans are 48% more likely to list getting ready for retirement as a personal goal than their nonveteran counterparts. Since they may be eligible for additional benefits, like pensions, this is another reason to include professional financial coaching or planning in your overall financial well-being strategy. This can help veteran talent navigate the increasingly complex retirement landscape.
The Takeaway
It’s essential to analyze your workforce — and the talent you’re looking to hire — to understand what programs will best serve your veteran employees’ needs. But implementing a few hallmark veteran-ready financial well-being programs can help you improve the overall financial wellness of your veteran workforce and help you attract and retain talent in this competitive landscape.
Learn how SoFi at Work can help.
Photo credit: iStock/SDI Productions
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For information on licenses, see NMLS Consumer Access (www.nmlsconsumeraccess.org ). The Student Debt Navigator Tool and 529 Savings and Selection Tool are provided by SoFi Wealth LLC, an SEC-registered investment adviser. For additional product-specific legal and licensing information, see SoFi.com/legal. Equal housing lender.
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.
Inside: Do you want to know the legit ways on how to make 200 dollars fast? This guide will show you how to start working on fast money ideas. With tips on side hustles, online trading, and more, you’ll be able to build up a healthy bank account in no time.
Do you want to know the different ways to make 200 dollars in your leisure time? I bet you do! We all would like extra money in our pockets.
In an era of digitization, earning an extra $200 in your spare time has become more accessible.
Various online platforms offer numerous possibilities to gain this amount swiftly without any major investments or specialized skills. Utilizing these platforms can not only help you reach your financial goal but also provide you with an enjoyable experience.
Let’s delve into the uncomplicated and quick ways to make 200 dollars fast.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Best Ways to Make Money 200 Dollars Fast
Discover the best ways to earn 200 dollars quickly by enlisting and acquiring the necessary skills.
You don’t even need to start a business or learn new skills virtually if you need the following legit ways to make $200 fast.
Just to note, you will find many of these ideas to be similar to how to make 300 dollars fast.
1. Sell Things You No Longer Need
Want to declutter and make some quick cash, to the tune of 200 dollars?
Start selling your no-longer-needed items and hit your goal. This method perfectly fits for minimalists looking to clear out space, or parents whose kids frequently outgrow their clothes and toys.
For instance, selling gently used toys or clothes could net you $200 in no time. Who knew making money could be as easy as cleaning up?
Even better turn this into a money-making business by flipping items for a living.
2. Sell gift cards
Struggling to add cash to your wallet? Turn those neglected gift cards lounging in your drawers into quick money.
Convert idle (Gift Cards) money to tangible cash by listing and selling on sites like CardCash at a discounted rate.
Another option is to trade your gift cards (you won’t use them) into something you want (like Apple or Amazon). So, weigh your options wisely.
In fact, you can read my CardCash review on my personal experience trading in gift cards.
3. Take on freelance jobs
Let’s start harnessing our skills and take on freelancing jobs online. Freelancing offers a flexible and income-generating platform, perfect for anyone looking to make a quick buck.
It is an effective income hustle, proven by data-driven facts. Best yet, it’s not exclusive to professionals alone. As a beginner, freelance gigs can offer an excellent starting point.
To get started, build a solid profile on a freelance platform that best suits your skills. Offer your virtual skills by getting jobs done in freelancing and experience good compensation for your comfort zone through this job.
4. Get Paid to Travel by Housesitting
Immerse yourself in a world of four-legged friends, greenery, and cozy, well-furnished homes while your wallet gets a welcomed cash addition.
Housesitting is not just about watching homes; it includes pet sitting and dog walking. All you need to do is join such platforms at no cost, set your rates and hours, and voila, you’re earning money while sleeping.
Essentially make money in your leisure time while enjoying the companionship of adorable pets. Who knew earning extra money could indeed entail wagging tails and furry hugs by signing up with Trusted Housesitters?
5. Rent Out Your Spare Space
Do you have spare space gathering dust? Turn it into a $200 goldmine!
Rent your unused closet, driveway, or extra room and have a quick injection of cash. Websites like Neighbor and VRBO are ideal platforms where you can list and rent out these spaces.
Start by exploring the listings in your area, identify the market range, and list your space accordingly. The extra income is just a few clicks away.
Best suited for property owners with underutilized spaces, this idea can serve as a consistent source of income and isn’t just a one-time fix.
6. Participate in Focus Groups
Get ready to voice your opinion and earn 200 dollars instantly!
Focus groups can be your golden ticket to making a quick $200. From my personal experience, they are organized discussions run by companies eager to pay for consumer insights.
Follow these steps and you could be cashing in:
Start by signing up and participating in a focus group that typically involves finding a suitable event in your area.
Involve yourself with popular websites like Bestmark.
Once you start searching for focus groups, you are likely to be targeted with sponsored ads on Facebook that match up to your opportunities.
By participating in discussions, I have earned a range from $50 to over $200.
7. Babysitting is Great Money
Looking for a quick way to pad your wallet? Babysitting is the golden ticket.
This gig is ideal for teenagers, college students, or anyone with some free evenings or weekends who enjoys hanging out with kids and can tolerate the occasional tantrum.
Start marketing your talent by creating a profile on care portals like Sittercity. Having a certificate in CPR can increase your profile and give assurance to the parent looking for a babysitter.
Remember to start with your personal network. Friends, family, and neighbors are a great way to kickstart your babysitting journey. With a bit of effort, you could be earning in less than 24 hours.
8. Make Videos
Are you passionate about making your own video or editing someone’s video to earn an incredible 200-dollar quickly? Jumpstart your day by hitting each click on your computer and adding sound effects on various kinds of videos on any social media.
You can also monetize your own videos by becoming a YouTube vlogger content creator and signing up for the YouTube Partner Program.
With an incredible shift to a remote life, you can now instantly earn from making your own videos through ad sponsorship, brand affiliation, and paid subscription on any application.
9. Get a Side Hustle
Engage yourself in a side gig, a savvy way to rake in cash promptly. Side hustles harmonize best with go-getters seeking financial flexibility or pursuing dreams outside the 9-to-5 grind.
Kickstart your hustle journey with free webinars or training. These platforms provide insights into key strategies and the nitty-gritty of the field.
Get cracking now to transform your monetizing dreams into reality!
Very popular are these side hustles for men. Or especially these side hustles for college students!
10. Online trading with Stocks and Options
Trading stocks and options emerge as a financial adrenaline rush, providing a swift track to earning money. You can convert spare moments into potential cash gains with just a few clicks.
Expert tips include starting with research, practicing with a simulation trading account, and diversifying your portfolio to mitigate risks.
The journey to online trading success begins with educating yourself. You must participate in a free investing webinar to undergo training to grasp trading basics, understand market trends, and form your strategy.
Check out how I learned to trade stocks and options with this Trade and Travel review.
Trade & Travel
Learn to trade stocks with confidence.
Whether you want to:
Retire in peace without financial anxiety
Pay your bills without taking on a side hustle
Quit your 9-5 and do what you love
Or just make more than your current income….
Making $1,000 every.single.day is NOT a pie-in-the-sky goal.
It’s been done over and over again, and the 30,000 students that Teri has helped to be financially independent and fulfill their financial dreams are my witnesses…
11. Take Up a Part-Time Job
Eager to fill your pockets a bit more, huh? Part-time jobs are your key to fast cash without compromising your ‘me-time’.
A part-time job supplements your primary income, leaving your piggy bank a bit heavier. Where you get to choose the timing that fits around your primary commitments.
Honestly, some of the best part-time jobs are actually low-stress jobs after retirement. You don’t need to wait for extra money. So, go get that financial freedom and earn more than just the minimum.
12. Yard Sale
Hosting a yard sale is a nonchalant trick to amass cash swiftly. It’s your winning lottery ticket staring at you from your cluttered garage floor.
Kick-off by hosting it on Friday or Saturday, when shopping spirits fly high! If your neighborhood or city has a date set for a community garage sale or jackpot, you’ll be swimming in extra traffic.
Don’t hesitate to unleash your inner salesperson, but remember, no rule binds you to wait for an event to rake in cash.
Remember, yard sales are your fast lane to quick money, and with these tips, you’re ready to speed!
13. Make Money with Your Collectibles
Turn your old favorite collection of Pokemon cards or Beanie Babies into a treasure chest waiting to be unlocked.
This money-making method is perfect for those who have carefully amassed certain collectibles over time. Sign up for eBay now and enlist your collectibles, antiques, and merch items to earn from it.
Want to kickstart your financial journey with collectibles? Find the most popular items to flip as well as insights on what to look for.
14. Collect and sell items from the trash
It’s time to transform your everyday trash into a hefty stash of cash! Collecting recyclable trash can be turned into a worthwhile moneymaker.
Start by saving cans, bottles, or scrap metal that you’d usually throw away. Then, locate a local recycling center that’s willing to pay for these items – the prices may surprise you!
This method is great for anyone willing to invest a little time and energy, particularly those who are environmentally conscious and eager to declutter. Perfect job for those who are frugal green.
Think about it, that old toaster might just be your next treasure trove! You may even find some highly valuable items in the trash to flip!
15. Sell Used Clothing
Selling used clothing is a clever and straightforward way to turn spare time into real cash.
Remember, a vibrant description for your clothes will attract buyers, so play up any unique or high-quality aspects of your garments.
Fashion enthusiasts want to earn a quick buck on the side. Begin by taking a charming picture of your clothes and posting it to Facebook Marketplace and ThredUp.
16. Do Social Media Marketing
Welcome to the era of making money by simply being social media savvy. Transform your digital skills into quick cash through Social Media Marketing.
Explore the digital world that awaits with all of the social media platforms. You can create engaging content while responding to the readers.
Take your skills to the next level, consider enriching your knowledge via a free webinar or online training.
This is an easy job that pays more than $25 an hour.
17. Sell Printables on Etsy
Do you love making creative paintings and printable designs? Imagine, your beautifully designed chore chart or a fascinating word puzzle bringing joy to scores of customers.
You can dive into this free training to jumpstart your side hustle. This method is a sure-shot hit for you.
Find out which digital products to sell on Etsy.
18. Invest in Cryptocurrencies
Do you have extra money in savings in your account and don’t know where to invest it?
Since 2008, cryptocurrency has taken the world by storm. Known for its decentralizing nature and secured by cryptography, it’s no regular dough.
Turn the tides in your favor and download an investment app to make your $200 grow faster. Consider taking a free webinar or training for a crash course.
You see, investing in cryptocurrencies is not a heavy-duty task. With the right smarts and patience, you can ride the next crypto wave!
19. Get Paid to Click
Among the numerous ways to earn an extra $200, getting paid to click is a simple and fun method.
Websites provide users with the opportunity to earn money through ‘pay to click’ surveys or rewarding viewers for ad consumption. Additionally, apps such as Survey Junkie and Swagbucks allow you to earn money by taking surveys, participating in focus groups, or simply navigating the web.
Each user generally earns from a few cents to a dollar per click. With patience and consistent effort, you can gradually accumulate your earnings to reach your $200 target.
Here are the top legit survey platforms:
20. Check Out Cashback Apps
Earn a cashback every time you shop at your favorite retail store or online.
Start off by signing up for apps like Dosh, Fetch, Rakuten, and Ibotta which offer bonuses just for signing up.
Lastly, apps like Acorns or CoinOut provide cash back on everyday shopping, even rounding up your purchases to add a bit more to your savings.
21. Do Odd Jobs as a TaskRabbit
Wanna earn cash quickly? Sign up and do freelance labor with TaskRabbit.
This user-friendly job marketplace connects people in need of task assistance with capable individuals willing to complete the tasks for a fee. It offers a diverse array of tasks, from assembling furniture and helping with moves to painting, yard work, and minor home repairs.
Just by performing various tasks, such as events staffing, running errands, or crafting. With the average TaskRabbit making double the minimum wage, this might be the gig for you.
TaskRabbit
Find local jobs that fit your skills and schedule.
With TaskRabbit, you have the freedom and support to be your own boss.
Plus set your own rates!
Get Started
22. Earn Money with Your Knowledge
Using your personal set of skills is a major advantage in freelancing platforms such as Fiverr, Upwork, and Freelancer.com.
Be it graphic design, content creation, SEO mastery, or even web development, you can monetize these proficiencies directly from your home. Data shows a significant growth in the gig economy over the past decade, suggesting a flourishing potential for remote work and online income generation.
Remember, your vast knowledge pool is your strength here. So, focus on what you’re best at, and let the money flow in.
Indeed, by effectively marketing your skills, pulling in a sum over $200 within a few hours is achievable. Remember to value your work appropriately and not devalue your aptitude just to land a job.
23. Tutoring
Online tutoring provides plenty of diverse opportunities in various subjects beyond just English. You can choose to specialize in specific topics and decide to tutor students of different age groups – from young children to college students.
Platforms like VIPKID and Magic Ears allow qualified tutors to offer virtual classes, specifically in the English curriculum for kids aged 4-12 years.
Tutors are usually compensated with payments ranging from $7 – $9 per class or up to $25 or more per hour. Also, you can increase your rate once you gain experience and build a reputation as a tutor. With in-person tutoring, you can expect to earn $20 an hour or more.
24. Petsitting
Looking for a quick way to make $200 fast? If you’re an animal lover, offering pet-sitting services isn’t just enjoyable, but also quite profitable.
Simply sign up with platforms like Rover, you can possibly get paid two days after service completion and you can always set your own rates. Just by walking the dog from house sitting.
Fun fact: Dog sitters often earn up to $50 a day. This is flexible and enjoyable work that could definitely help you reach your $200 target quicker than you’d imagine!
Rover
Get paid to play with pets!
Rover makes it easy and promotes you to the nation’s largest network of pet owners.
Earn money doing something you love.
Become a Sitter
25. Collect Scrap Metals and Junk
One man’s trash is indeed another man’s treasure.
Thinking of ways to earn quick cash? Consider collecting scrap metals and junk. This simple but profitable task can be done by anyone, with no particular set of skills necessary. All you need are keen eyes, a truck, and, admittedly, a little bit of strength to do the following:
Identify Metals: Start by identifying the most valuable metals – brass, copper, and aluminum.
Collect: Gather your metals, either from your home or by browsing local dumps. Remember, one man’s trash can be another man’s treasure.
Sell: Locate a local scrapyard and sell your haul at a fair price.
Keep in mind that patience is key; you might start with just $100 a day, but with experience, this can increase to a lucrative $500 a day!
26. Cash Out Your Coins
Are you sitting on a pile of coins? Maybe it’s time to cash them out. Here’s how:
Gather all your change together. Check under the sofa cushions, in car cup holders, and even in the bottom of your bag.
Take your coins to a coin-counting machine. These can be found at many grocery and department stores as well as your local bank.
Deposit these coins in a savings bank.
Expert Tip: Many banks provide free coin-counting services to their customers. Save on the counting machine charges by using these instead.
27. Run A Dropshipping Business
Dropshipping is a retail fulfillment method where you sell products without ever handling the inventory. This side hustle could potentially make you a quick $200 if executed strategically. Ready to dive in?
To level up, consider enrolling in free webinars on sites like Skillshare or free dropshipping training programs like Oberlo 101. This method is most suitable for those game to learn the ins and outs of online retail business and are ready to deal with customer interactions.
Remember, selling high-demand items will turn a quicker profit!
28. Do Micro Tasks
Looking to make cash fast? Turn your spare time into cash by capitalizing on microtask websites and get paid for completing simple jobs!
This method is particularly effective for those with meticulous attention to detail and those who can afford to spend some time on basic tasks such as data entry, data verification, information sorting, and transcription.
Microtasking might not be a golden goose, but it sure can help you accrue $200 surprisingly fast. The beauty of this hustle is in its simplicity, making easy money with minimal to no investment.
29. Find Sign-Up Bonuses
Did you know that many banks and credit companies offer sign-up bonuses as a strategy for attracting new clients?
For instance, some banking promotions in the United States can offer bonuses of up to $300 in total value when you sign up for a new account or credit card. Also, there are several credit cards that provide bonuses ranging from $500 to $800 or more, simply for registering and spending a defined amount within a specific timeframe.
Some cards, such as Chase Sapphire Preferred, offer lucrative rewards like a $1,000 bonus after a spend of $4,000 in the first 3 months.
It’s definitely rewarding to explore these possibilities to supplement your income, but it’s crucial to maintain a good credit score and commit to paying off your balance monthly to avoid any interest charges.
30. Cash Advances
Cash advances offer a rapid solution, but it’s essential to use them wisely.
Basically, a Cash advance is an advance on your next paycheck, and yes, it’s a viable way to get your hands on some quick cash. Also, some budget apps like Chime offer this service automatically.
Keep in mind, though, it’s an advance and not additional income. So, plan your expenses wisely and make it count!
FAQ
If you’re on a quest to make $200 as fast as possible, we’ve got your back. From selling items you own to completing quick gigs online, there is a plethora of opportunities out there for everyone.
For example, suppose you’re handy at a skill – be it haircuts, car repairs, pet sitting, or painting. You can start by offering your services to people in your neighborhood.
Or, if you’re the digital savvy type, consider selling items you no longer need on online platforms such as Facebook Marketplace or Craigslist. You’d be surprised at how quickly you can make money from items collecting dust in your home.
Ultimately, make sure you choose a fast money-making plan that aligns with your skills, interests, and resources. Go forth and rake in that cash.
If you need to make $200 today, you have a range of options at your disposal.
You can try different online strategies, including participating in online surveys, offering your skills on freelance platforms, or even reselling items online. While many people will sell the idea of a blog to make money, that is not a way to make money today.
Remember, the key is to zone in on tasks that require minimal effort but offer swift returns; these could include grandma sitting, dog walking, or even participating in online offers and promotions.
To kick-start your financial venture, locate valuable items in your home that you no longer need. Your dusty old guitar or that once-loved designer handbag could do the trick. Sell these items on widely used platforms such as Craigslist or Facebook Marketplace for instant cash.
Also, in the digital age, skills are an asset. Offering your skills on platforms like Fiverrcan turn your talents into quick cash. Don’t underestimate the power of quick gigs!
Tapping into the world of free sign-up bonuses can also fill your wallet quickly. Or even participating in a paid focus group!
If you need to make $200 quickly, there are several tried and tested methods. You could start by driving for Uber or Lyft for the evening during a concert.
My preferred method is trading options in the stock market. While this one is a skill, I developed over time. It has proved to be a tried and true method for me to make $200 in a few hours.
Time to Get 200 Dollars Instantly
By reading this article, you have learned and discovered the most effective ways to earn $200 quickly.
In order to have quick success, here are tips to help you out:
Sign up for a complimentary training or webinar that focuses on effective and proven methods of earning money swiftly.
Learning from other’s experiences can certainly save you some trial and error.
Ensure these training modules offer you practical skills and insights rather than just theory. Real-world applications of these strategies are what will help you rake in some quick cash.
Remember, your motivation and dedication are as important as the information and tools you acquire.
If you are looking to make a little bit more, check out how to make 500 dollars fast. Or even how to make 2000 fast!
Know someone else that needs this, too? Then, please share!!
A flexible expense is a non-essential item in your budget. Because it’s not a must-have, you can change the expense in question to help save money. For example, while the newest smartphone (with all kinds of amazing camera functions) might be enticing, purchasing it could add strain to your budget. Instead, you could continue using the phone you bought last year and not increase that expense. In this way, managing flexible expenses can be key to making a budget that helps you reach your financial goals.
Flexible expenses span many categories, from dining out to travel to self-care. These expenses are negotiable, meaning you can save money by reducing or changing how often you spend on these items and services.
Here’s how to distinguish flexible expenses from inflexible expenses and how to reduce your monthly costs on them.
What Is a Flexible Expense?
The definition of a flexible expense is an item in your budget that you can modify or adjust as needed. These are different from necessities with fixed costs, such as rent and health insurance.
In addition, it’s worth noting that a fluctuating bill is not necessarily a flexible expense. For instance, while you might turn the thermostat down a degree or two to be thrifty or the price of fuel might shift, heating your home during cold months isn’t a negotiable expense.
Flexible expenses are those you change to make room in your budget. These may at times be commonly forgotten monthly expenses, such as buying birthday gifts or loading up on toys for your pet, but they aren’t essential for life.
Therefore, you can change them if you want. Perhaps you realize something (boredom? FOMO?) has been a cause of overspending in a specific area, or maybe you want to start saving money for a financial goal, like the down payment on a house.
Flexible Expense Examples
Flexible expenses are daily or monthly expenses you can change or eliminate. Here are examples of items in your budget that have wiggle room:
• Vacations. You might decide against saving for a vacation in Mexico and instead have a staycation to free up some funds.
• Beauty treatments. Having your hair or nails done is an expense you could eliminate or pay for less frequently.
• Electronics. A new phone or tablet can be a nice upgrade, but, if the one you bought three years ago is in working order, replacing it is a flexible expense.
• Food. This is a good example of an expense that can be either a flexible or inflexible expense. Everyone has to eat, that’s a fact. But planning meals and saving money on groceries when you shop are examples of how you might manage the inflexible cost of feeding yourself. There is a range of how much you might pay, but you will have to pay something.
However, when it comes to how often you eat out, get fancy lattes on the go, and meet friends for drinks, those are flexible expenses you can cut (even entirely) to save money. Those expenses are likely to vary too; for instance, you might dine out more around holidays.
• Entertainment. How much you spend on streaming services and cable television isn’t a necessary expense. It’s a flexible one. Yes, this kind of entertainment can be fun and relaxing, but you could cut cable or limit yourself to one or two streaming services.
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Recommended: 30 Fun and Affordable Hobbies
Flexible Expenses vs Inflexible Expenses
When you make a budget, inflexible expenses are the ones that are permanent and vital to daily life. For example, your mortgage, credit card minimum payments, and car loan costs are inflexible expenses. But, of course, they are flexible at a certain point. For instance, you could refinance your home to lower your mortgage payment or pay off a debt to get rid of it.
However, these require significant financial shifts and are more challenging to adjust to than your flexible expenses. As mentioned above, flexible expenses can reflect the wants vs. needs in life, or your discretionary spending. Flexible expenses can include dining out, deciding to upgrade your car or electronics, taking a vacation, purchasing gifts for others, paying to redecorate your home, joining a gym or yoga studio, and the like.
These are things many of us spend money on, but how much you spend and how often is under your control.
Flexible Expense Budgeting
Taking control of your flexible expenses can mean making a budget to manage your money and prevent overspending. One approach to take is the 50/30/20 budget rule. This popular system involves designating 50% of your income for essentials, such as housing and transportation, 30% for nonessential expenses, and saving the remaining 20%. Your flexible expenses will go into the 30% portion of the budget.
For example, say your monthly take-home pay is $5,000. Half your income ($2,500) goes towards your needs, and 30% ($1,500) is for flexible expenses. The remaining $1,000 gets put towards savings. So, your job is to make your non-essential expenses fit into the $1,500 portion of your budget.
That said, the 50/30/20 rule might not work for you, especially if more than half your income goes toward essentials. Not to worry: You can approach flexible expenses from another angle. Instead, you can take your bank and credit card statements from the past three months, identify the flexible expenses, and decide which ones you can cut from your budget or reduce. For instance, you might realize you’re spending $75 at coffee shops every month and decide to make your own coffee every morning.
Where Flexible Expenses Should Be Funded From
You can pay for flexible expenses by opening a checking account and using funds in it for those charges. For instance, you might have your cable bill linked to your bank account to make an automatic payment every month. You might tap a linked debit card when you shop for, say, some new shoes.
A credit card with rewards could also be a good way to pay for flexible expenses. Getting cash back on every purchase can be a good perk when paying for flexible expenses. For example, using specific credit cards for such major expenses as flights and hotels during a vacation can provide considerable rewards. However, you’ll want to be wary of carrying too much of a balance on your credit card since that’s typically high-interest debt that can be hard to pay off.
Also worth noting: If you have enough money in an emergency fund, that could be useful for specific flexible expenses, such as unexpected bills. Not things like taking a long weekend away, but perhaps paying for a car repair bill that you didn’t see coming.
Recommended: Reasons Why It’s So Hard to Save Money
The Takeaway
A flexible expense is one you can usually change at will to fit your budget or an expense that can pop up without warning. These irregular expenses usually reflect your spending habits, such as how often you’ve dined out or treated yourself to some new clothes or electronics. Recognizing and wrangling these flexible expenses can help you take control of your finances. Also, keeping some cash in an interest-bearing bank account can be one way to afford fluctuations in these expenses.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with up to 4.50% APY on SoFi Checking and Savings.
FAQ
Is rent a flexible expense?
Because rent is a consistent monthly cost, it isn’t a flexible expense. This bill doesn’t fluctuate, and you’re usually only able to change it by moving somewhere else.
How do you budget for flexible expenses?
You can budget for flexible expenses with the 50/30/20 rule, where 50% of your income is for inflexible expenses and 30% of your income is for flexible expenses. The remaining 20% is for saving. This 30% provides a boundary in which you must fit paying for the nonessentials, like entertainment and travel.
What is an example of a flexible expense?
Flexible expense examples include a vacation and a meal out. Both are flexible expenses because they are nonessential expenses. You dictate the cost because you choose where you’ll go and what luxuries, treats, and events you’ll pay to partake in.
Do flexible expenses stay the same?
Flexible expenses regularly change based on your spending habits. For example, your choices regarding food and entertainment drive how much you’ll spend in these areas. You can change these habits weekly or monthly to adjust how much you’re spending, unlike rent or a car note.
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SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 8/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..
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.
If the price of higher education is giving you sticker shock, you’re not alone.
The average cost of tuition for 2023-24 was $26,027 for in-state residents at public colleges, and $27,091 for out-of-state students. At private colleges, the average tuition and fees totaled a whopping $38,768!
Most students end up taking out student loans to cover the cost of college. Over 43 million Americans have federal student loan debt, with an average balance of $37,718 each. Combined, Americans now hold $1.766 trillion in student loan debt!
Paying off your loan may become a burden, especially if you opt for a career in public service, art, or another low-paying field. Your debt may also become unmanageable if you run into unexpected economic difficulties due to medical bills, losing your job, caring for a parent or child, or other challenges.
If more traditional student loan repayment plans aren’t working, you may want to think outside the box. One approach could be crowdfunding student loans. Here are some things to know about this creative way to tackle your debt.
What Is Crowdfunding
Crowdfunding is the process of soliciting small contributions from multiple donors to meet a financial goal. Through online platforms like Kickstarter and GoFundMe, people have turned to crowdfunding to raise money for entrepreneurial ventures, medical crises, disaster victims, classroom supplies, and much more.
You can solicit donations from friends, family, and even complete strangers. By splitting the contributions among a large quantity of people, crowdfunding is a way to meet a big financial goal while not having to rely on finding one major source of funding.
Raising money online makes it easy to share your campaign widely and for people to easily contribute. Increasingly, people have been crowdfunding to pay off their debt, including fundraising for college. That can include textbooks, tuition, studying abroad, or living expenses — or, of course, student loans. 💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.
Sites for Crowdfunding Your Student Loan Repayment
There are a number of sites that allow you to set up a crowdfunding campaign so you can pay off your student loans. Before you sign up, you’ll want to make sure that you understand all the rules and fees that you might encounter during the process.
Here are some crowdfunding sites to look into:
GoFundMe: GoFundMe is perhaps the best-known crowdfunding platform out there. Setting up a fundraiser is easy. Once you have a GoFundMe account and set a goal, you’re encouraged to tell your personal story of why you’re raising money and add a photo or video. Then you can share the campaign with your network of family, friends, coworkers, followers on social media, etc. Once your GoFundMe page starts raising money, you can start withdrawing it. While GoFundMe doesn’t charge fees for setting up a page, there are transaction fees (2.9% + $0.30, which includes debit and credit charges).
Rally.org: Rally.org works a lot like GoFundMe. Once you have an account, you can set a goal, tell your story, and then start sharing with friends and family. Like GoFundMe, you can start withdrawing money as soon as people start donating to your fundraiser. There’s one big difference between Rally.org and GoFundMe: the fees. While there’s only transaction fees on GoFundMe fundraisers, Rally.org charges 5% + credit card fees (2.9% + 30 cents) for each donation processed. That 5% can make it harder for you to reach your fundraising goal.
Gift of College: If you’re not looking to launch a full-blown crowdfunding campaign, but you do want to make it easier for friends or family to help you pay off your student loans in the form of gifts at birthdays, holidays, or graduation, you might consider an account with Gift of College. To get started, you set up an account and link your student loan account. Then you can share your profile with friends and family to encourage them to buy you Gift of College gift cards for special occasions. It’s free to set up a Gift of College account, but there is a 5% processing/service fee charged to the gift giver for every gift card they buy (though the fee is capped at $15 per transaction). Gift of College can also be attached to 529 accounts.
Is Crowdfunding for Repaying Student Loans a Good Idea?
There are pros and cons to turning to the crowdfunding model as a way of making a dent in your student loan debt. Let’s start with the positives. If your campaign is successful, it’s an easy way to earn money to pay off your debt, and you don’t have to do much in return. Earning and saving the same amount through a job would likely take much longer, depending on your living expenses.
Similar to a wedding registry, a crowdfunding site also makes it less awkward to ask people in your life for help, compared to just asking for money outright. You probably have lots of loved ones who would like to help you but don’t have an easy way to do it.
Another perk is that obtaining a lump sum and putting it toward your loan principal can greatly reduce the interest that accumulates and the amount you owe over the life of the loan. Finally, crowdfunding often works. There are many examples of successful campaigns out there to inspire you.
There are some downsides to consider. One is that a crowdfunding effort is likely to get you a chunk of money once, rather than a regular stream of funding.
Considering the size of most student loans, and how interest compounds over time, you may not raise enough money to pay off the entire loan. So you’ll still have to figure out a way to consistently make your monthly payments.
Also, how much you may earn is unpredictable — it depends on the strength of your campaign and the size of your network, plus the generosity of donors, so it’s a bit risky to rely on this to stay solvent.
Another con is that depending on the size of the donation, you may need to pay taxes on the money, so you wouldn’t get to keep the entire amount you raise. Finally, even though a specialized crowdfunding site makes it easier, it may still feel uncomfortable to ask people you know for money, especially if they are facing their own debts and financial challenges.
How To Set Up a Crowdfunding Campaign
Pick a crowdfunding platform: First, you need to pick a crowdfunding site to use. Review the terms carefully so you understand how the process works. You’ll want to see if the platform keeps a percentage of funds donated, what processing fees are charged, whether it allows employers or the general public to contribute, and whether the money goes to your lender directly or comes to you in the form of cash.
Set a goal: If your fundraising goal sounds impossibly high, it could prevent some people from donating. Starting with a number that’s ambitious but reasonable may help, even if it means asking for less than your total student loan amount.
Build trust with your funders: You need to spell out what you are going to do with the money. Potential donors likely want to know what, exactly, their gift is supporting. And they probably want to be sure it will actually go toward student loans and not other expenses. Make clear how exactly you will pay off the loan and how you will hold yourself accountable to donors can go a long way toward building trust.
Telling your personal story: People may be more likely to support you if they understand the impact they can have on your life. Telling your unique story can help make their gift about more than just debt. You could describe your past accomplishments and future goals, as well as how the support will help you achieve them. Try putting up photos and a video to help people connect with your goals emotionally.
Leveraging your network: In order to have a successful campaign you’ll need to share with people you know through email and social media. You might want to tie the campaign to a special occasion, such as your birthday or graduation. You can ask your network to share on their channels as well.
Keeping the momentum going: A successful campaign doesn’t end when you launch. Posting updates on your crowdfunding page regularly will keep people interested and remind them to donate could help you reach your goal.
Express gratitude: People are doing you a favor when you donate, so thank them early and often! It will make them feel good about their gifts and perhaps even encourage them to share your campaign or donate more down the line.
Thinking About Student Loan Refinancing
If you can fund your student loan debt in full through crowdfunding, congratulations! But most people can’t depend on this as a long-term strategy and will need to find additional ways to pay off the rest of their balance.
If you’re still struggling with student debt, refinancing your student loans may be another way to make your loans more affordable. You can refinance federal loans, private loans, or a mix of both by taking out a new loan with a private lender like SoFi and using it to pay off your old ones. Note that if you do refinance federal loans with a private lender, you will lose eligibility for federal student loan benefits like deferment and income-driven repayment programs.
You may be able to qualify for a lower interest rate or lower monthly payments, depending on your credit history and income. It could be worth checking what rates you’d qualify for by applying for pre-qualification online. If you refinance with SoFi, membership includes complimentary support from career coaches and protection during periods of unemployment for those who qualify. Plus there are no hidden fees.
The Takeaway
With student debt growing exponentially, it’s worth considering creative solutions. Crowdfunding can be a relatively easy way to make a dent in your student loans without investing a lot of time. But for most people, it won’t be enough to eliminate their debt completely.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
Student Loan Refinancing If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) Please note that once you refinance federal student loans, you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans, such as the SAVE Plan, or extended repayment plans.
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Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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.
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After teaching my “Saving and Investing 101” class at the University of Rochester yesterday, two undergraduate students ask me personal investing questions:
“How should I invest the money in my Roth IRA?”
“My portfolio is currently in 7 stocks, all tech stocks. My dad thinks I should diversify. Should I? And how do I do that?”
I bet you’ve had similar questions before. Investing is a confusing topic.
Thankfully, many personal investing questions have a similar answer. So whenever anyone asks me for specific investing advice, I go over the following ideas.
It’s About *You*
Giving personalized investing advice can only occur after understanding the investor. One idea I shared with the class yesterday is:
“If 100 college students asked me how to invest their Roth IRAs, I know this: I would eventually tell most of them that a diversified stock portfolio is an ideal place to start. They’re young with long investing timelines, and the higher risk/reward aspect of stock investing makes sense for them.
But, some of those 100 students might need completely different advice based on their unique circumstances. Telling the whole group, “Invest in stocks,” would be a disservice to some individuals. That’s why personalized investing advice should come after – not before – understanding the individual investor.”
Goals, Timelines, Risk Tolerance
How, then, do we determine the specific investing advice for individual investors? How do we “understand” or “get to know” them?
You need to understand their goals and risk tolerance.
A financial goal is a combination of an amount of money and a timeline for a specific purpose. E.g. “I need $1.5M by 2035, because that’s when I want to retire.” The amount and timeline provide concrete numbers from which we can do objective math.
Risk tolerance is a bit harder to pin down. It’s personal and emotional. To unwrap someone’s risk tolerance, it helps to ask questions about their investing past (“Have you lived through bear markets or crashes – how did it make you feel?”). Short of that, running through hypotheticals can help (“If your account dropped 30%, but you knew it would likely recover in ~3 years or less, how would you feel?”). There are also many risk tolerance quizzes and questionnaires on the internet.
The goals and timelines lead to a math-based, objective investment recommendation. Short-timelined money should be invested in low-risk, low-reward assets, and long-timelined money in high-risk, high-reward assets. This is the basis of “bucketing your money.” If (or when) your goals change, your investment allocation should change too.
Risk tolerance adds a subjective, psychology-based aspect to an investment recommendation. Perhaps the math alone points an investor toward an 80% stock, 10% bond, 10% alternatives portfolio. But if they’re incredibly risk averse, that 80% stock allocation will turn their brain to mush when a bear market hits. (Not if a bear market hits; when.) A more conservative allocation would help their mental health.
How conservative? It’s impossible for me to say. It depends (!!!) on the person. There’s a balance between the math (can you hit your goals on time?) and the psychology (will you be able to sleep along the way?).
The crux of investing is not creating a Scrooge McDuck pile of gold.
Instead, investing is about maximizing the odds of achieving your financial goals while minimizing your sleepless nights.
Back to the Students…
How should the first student invest her Roth IRA?
Assuming her Roth IRA money is purely for retirement**, I think an 80-100% diversified stock allocation makes sense. A total market index fund would be a good choice.
**Most IRAs are. Withdrawals before age 59.5 are penalized. They are retirement accounts.
How should the second student diversify away from her 7 tech stocks?
This one is more nuanced. First, the money is not in an IRA. It might have a short-term timeline associated with it. She and I discussed this. The money is all long-term.
From there, the same idea of an 80-100% diversified stock allocation makes sense.
But! This student might enjoy the fact that she owns those 7 tech stocks. Similarly, I enjoy the fact that I own Berkshire Hathaway – it’s the only non-fund investment I own, the only single stock.
If her stock ownership is important to her, I think it’s reasonable for her to keep <10% of her portfolio in those 7 stocks. The remaining >90% of her investable assets should be diversified.
Different people. Different situations. Different advice.
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-Jesse
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Both personal loans and credit cards provide access to extra funds and can be used to consolidate debt. However, these two lending products work in very different ways.
A credit card credit is a type of revolving credit. You have access to a line of credit and your balance fluctuates with your spending. A personal loan, by contrast, provides a lump sum of money you pay back in regular installments over time. Generally, personal loans work better for large purchases, while credit cards are better for day-to-day spending, especially if you are able to pay off the balance in full each month.
Here’s a closer look at how credit cards and personal loans compare, their advantages and disadvantages, and when to choose one over the other.
Personal Loans, Defined
Personal loans are loans available through banks, credit unions, and online lenders that can be used for virtually any purpose. Some of the most common uses include debt consolidation, home improvements, and large purchases.
Lenders generally offer loans from $1,000 to $50,000, with repayment terms of two to seven years. You receive the loan proceeds in one lump sum and then repay the loan, plus interest, in regular monthly payments over the loan’s term.
Personal loans are typically unsecured, meaning you don’t have to provide collateral (an asset of value) to guarantee the loan. Instead, lenders look at factors like credit score, debt-to-income ratio, and cash flow when assessing a borrower’s application.
Unsecured personal loans typically come with fixed interest rates, which means your payments will be the same over the life of the loan. Some lenders offer variable rate personal loans, which means the rate, and your payments, can fluctuate depending on market conditions.
Personal loans generally work best when they are used to reach a specific, longer term financial goal. For example, you might use a personal loan to finance a home improvement project that increases the value of your home. Or, you might consider a debt consolidation loan to help you pay down high-interest credit card debt at a lower interest rate.
Key Differences: Credit Card vs Personal Loan
Both credit cards and personal loans offer a borrower access to funds that they promise to pay back later, and are both typically unsecured. However, there are some key differences that may have major financial ramifications for borrowers down the line.
Unlike a personal loan, a credit card is a form of revolving debt. Instead of getting a lump sum of money that you pay back over time, you get access to a credit line that you tap as needed. You can borrow what you need (up to your credit limit), and only pay interest on what you actually borrow.
Interest rates for personal loans are typically fixed for the life of the loan, whereas credit cards generally have variable interest rates. Credit cards also generally charge higher interest rates than personal loans, making it an expensive form of debt. However, you won’t owe any interest if you pay the balance in full each month.
Credit cards are also unique in that they can offer rewards and, in some cases, may come with a 0% introductory offer on purchases and/or balance transfers (though there is often a fee for a balance transfer).
Line of Credit vs Loan
A line of credit, such as a personal line of credit or home equity line of credit (HELOC), is a type of revolving credit. Similar to a credit card, you can draw from a line of credit and repay the funds during what’s referred to as the draw period. When the draw period ends, you’re no longer allowed to make withdrawals and would need to reapply to keep the line of credit open.
Loans, such as personal loans and home equity loans, have what’s called a non-revolving credit limit. This means the borrower has access to the funds only once, and then they make principal and interest payments until the debt is paid off.
Consolidating Debt? Personal Loan vs Credit Card
Using a new loan or credit credit card to pay off existing debt is known as debt consolidation, and it can potentially save you money in interest.
Two popular ways to consolidate debt are taking out an unsecured personal loan (often referred to as a debt or credit card consolidation loan) or opening a 0% interest balance transfer credit card. These two approaches have some similarities as well as key differences that can impact your financial wellness over time.
Using a Credit Card to Consolidate Debt
Credit card refinancing generally works by opening a new credit card with a high enough limit to cover whatever balance you already have. Some credit cards offer a 0% interest rate on a temporary, promotional basis — sometimes for 18 months or longer.
If you are able to transfer your credit card balance to a 0% balance transfer card and pay it off before the promotional period ends, it can be a great opportunity to save money on interest. However, if you don’t pay off the balance in that time frame, you’ll be charged the card’s regular interest rate, which could be as high (or possibly higher) than what you were paying before.
Another potential hitch is that credit cards with promotional 0% rate typically charge balance transfer fees, which can range from 3% to 5% of the amount being transferred. Before pulling the trigger on a transfer, consider whether the amount you’ll save on interest will be enough to make up for any transfer fee.
Using a Personal Loan to Consolidate Debt
Debt consolidation is a common reason why people take out personal loans. Credit card consolidation loans offer a fixed interest rate and provide a lump sum of money, which you would use to pay off your existing debt.
If you have solid credit, a personal loan for debt consolidation may come with a lower annual percentage rate (APR) than what you have on your current credit cards. For example, the average personal loan interest rate is 11.31% percent, while the average credit card interest rate is now 24.37%. That difference should allow you to pay the balance down faster and pay less interest in total.
Rolling multiple debts into one loan can also simplify your finances. Instead of keeping track of several payment due dates and minimum amounts due, you end up with one loan and one payment each month. This can make it less likely that you’ll miss a payment and have to pay a late fee or penalty.
Both 0% balance transfer cards and debt consolidation loans have benefits and drawbacks, though credit cards can be riskier than personal loans over the long term — even when they have a 0% promotional interest rate.
Is a Credit Card Ever a Good Option?
Credit cards can work well for smaller, day-to-day expenses that you can pay off, ideally, in full when you get your bill. Credit card companies only charge you interest if you carry a balance from month to month. Thus, if you pay your balance in full each month, you’re essentially getting an interest-free, short-term loan. If you have a rewards credit card, you can also rack up cash back or rewards points at the same time, for a win-win.
If you can qualify for a 0% balance transfer card, credit cards can also be a good way to consolidate high interest credit card debt, provided you don’t have to pay a high balance transfer fee and you can pay the card off before the higher interest rate kicks in.
With credit cards, however, discipline is key. It’s all too easy to charge more than you can pay off. If you do, credit cards can be an expensive way to borrow money. Generally, any rewards you can earn won’t make up for the interest you’ll owe. If all you pay is the minimum balance each month, you could be paying off that same balance for years — and that’s assuming you don’t put any more charges on the card.
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When is a Personal Loan a Good Option?
Personal loans can be a good option for covering a large, one-off expense, such as a car repair, home improvement project, large purchase, or wedding. They can also be useful for consolidating high-interest debt into a single loan with a lower interest rate.
Personal loans usually offer a lower interest rate than credit cards. In addition, they offer steady, predictable payments until you pay the debt off. This predictability makes it easier to budget for your payments. Plus, you know exactly when you’ll be out of debt.
Because personal loans are usually not secured by collateral, however, the lender is taking a greater risk and will most likely charge a higher interest rate compared to a secured loan. Just how high your rate will be can depend on a number of factors, including your credit score and debt-to-income ratio.
The Takeaway
When comparing personal loans vs. credit cards, keep in mind that personal loans usually have lower interest rates (unless you have poor credit) than credit cards, making it a better choice if you need a few years to pay off the debt. Credit cards, on the other hand, can be a better option for day-to-day purchases that you can pay off relatively quickly.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.
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When it comes to investing, your time horizon refers to the desired amount of time before you reach a financial goal. It’s one of the most important factors in your financial plan because the amount of time you have to reach your goal — whether it’s 3 months or 30 years — influences how much risk you want to take on, and therefore which investments you’ll choose.
In fact, a good way to think about your investing time horizon is like the leg of a table. Four key decisions uphold your investment portfolio, and the first is how much time you have, ideally, to attain a certain goal. The other three cascade from there: your risk tolerance, your investment choices, and your asset allocation.
Recommended: Investment Strategies for Beginners
What Is a Time Horizon?
What is an investment time horizon? In short, it is the expected time available to hold an investment or to achieve a financial goal.
First, an investing time horizon can refer to the amount of time that an investor is planning on holding an investment. For example, an investor may be planning to hold an investment for 10 years. Therefore, the investment horizon is 10 years.
Or, investors can think of a time horizon as a type of deadline: e.g. how long they plan to work toward a goal. For example, one common goal is to save and invest for retirement, which may be decades away.
This investing time horizon will likely be determined by the age of the investor and how much progress they are making towards their retirement goal.
An investment time horizon could also be short, long, or somewhere in the middle. 💡 Quick Tip: When people talk about investment risk, they mean the risk of losing money. Some investments are higher risk, some are lower. Be sure to bear this in mind when investing online.
Why Is Time Horizon Important?
Most financial goals have a time horizon attached to them implicitly, even if you haven’t spent much time thinking about it. If you’d like to buy a home, you might be thinking 2-3 years — or 10 years. If you’d like to buy a car, you might be thinking six months to a year. It all depends.
What drives the time horizon is the urgency of your goal. If you need a bigger home as soon as possible for your growing family, the goal of saving for a downpayment might be a short-term goal, with a shorter time horizon. If you want to buy a car, but you want to pay all cash, you might need a few years to save that money — so that goal would have a longer time horizon.
Goals like saving for college or retirement typically take years, and those time horizons are longer.
Once you can identify a realistic time horizon for the goal you’re investing toward, you can think about your investment strategy in more detail. Understanding the difference between short- and long-term investments is important, because some strategies will support your goals better than others.
Time Horizon and Risk Tolerance
Deciding on a short or long time horizon can help inform (or influence) your risk tolerance. Your tolerance for risk is, as it sounds, how much investment risk you can tolerate, when risk = the risk of losing money. If you can’t sleep unless you know your portfolio is relatively secure, and you’re on edge when markets are bumpy, you probably have a low risk tolerance.
Investors who have a low risk tolerance are considered risk averse, and they may prefer more conservative investments, like bonds. Low-risk investments like bonds and certificates of deposit (CDs) are less volatile, but they typically also have lower returns than higher-risk investments like stocks.
If you have a shorter time horizon of a year, and you don’t want to risk losing money, you may choose lower-risk investments like short-term bonds or types of CDs.
But if you have a higher risk tolerance, and you want to take on more risk with the hope of seeing higher returns, you might want to invest in stocks, mutual funds, or exchange-traded funds (ETFs).
Now let’s say you have a low risk tolerance, but you have a long time horizon to save for retirement: say 25 or 30 years. With a time horizon of three decades, your portfolio has more time to recover from periods of volatility, so you might feel more comfortable having a higher percentage of stocks in your portfolio, even though that increases your risk to some degree. It also increases your potential for growth over time.
This is often referred to as the risk-reward ratio, or a risk-reward calculation. Since no investment is genuinely risk-free, using a risk-reward ratio helps calculate the potential outcomes of any investment transaction — good or bad.
Recommended: 11 Golden Rules of Investing
Time Horizon, Risk, and Investment Choices
From the above examples, you can see that there is an interaction between the time you have until you achieve your goal, how much risk you’re willing to take on, and therefore what investment choices you might be open to.
Various investment types can exhibit different risk characteristics over different time periods. The stock market can be volatile during short time periods, like a month or a year. But over longer periods, the stock market generally continues to rise.
In fact, long-term investors may want to view risk through a different lens: If you don’t take on enough risk, you might not reach your investing goals. It is also possible to lose money by doing nothing, due to the effects of inflation. When cash just sits in low-interest accounts, it tends to lose purchasing power over time. 💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.
Asset Allocation and Time Horizon
The purpose of deciding on the time horizon for your goals, examining your risk tolerance, and selecting different investments is to then land on an asset allocation that makes sense for you.
Asset allocation is the investor’s decision to divide a portfolio among various asset classes. Popular asset classes can include different types of stocks, bonds, as well as cash and cash equivalents (e.g. money market funds).
Asset allocation typically has a large impact on the performance of a portfolio over time. So, once again, an investor’s time horizon and risk tolerance will influence not only the selection of certain securities, but the proportion of higher- and lower-risk investments in a portfolio.
Asset Allocation Formula
For investors saving for retirement, there’s a general rule of thumb for deciding asset allocation. Subtract your age from 110, and that’s how much an investor should allocate to stocks.
If an investor is 30, subtract 30 from 110, which is 80. Thus the investor might consider an allocation of 80% stocks, with the other 20% going to bonds and cash. Of course, this is just a general rule — each investor will likely need to use their discretion and evaluate their overall financial profile and risk tolerance as they make investing decisions.
Short-Term Investing Time Horizons
A short-term investing time horizon could be anywhere between zero and three years. Some examples of short-term goals include: saving up for a vacation, emergency funds, holiday gifts, or a down payment on a home.
For the most part, it makes sense to keep money for short-term goals in cash or cash equivalents, because the focus is generally on safety and liquidity — and investors won’t want to risk losing money that they’ll need relatively soon.
This can be especially true when the goal does not allow for any timing flexibility.
For example, say that you’re saving up for a down payment on a house in about six months. Because this is a short-term time frame, and because the objective is to make sure that the money is available for use in six months, it does not make much sense to subject this money to risky assets with high volatility, like stocks and bonds.
Cash can be held in a checking or savings account. This can be done with a traditional retail bank or an online bank account.
Another option to consider is a short-term CD at a bank or local credit union. Investors may be able to earn slightly more interest with a CD. Tread carefully, here: There may be a penalty to access money held in a CD before the maturity date.
For short-term goals that are flexible on timing, it may be possible to invest all or some of that money. For example, imagine an investor with the goal of starting a business in about three years.
Because they are flexible on timing, and willing to take on more risk in order to potentially see bigger gains, they may put some of their business start-up money into stocks or equity mutual funds or ETFs.
Recommended: Investing for Beginners
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Medium-Term Investing Time Horizons
A medium-term investing time horizon could be anywhere between three and 10 years. Examples of medium-term goals include: starting a family or paying for a child’s college education, or potentially a house remodel.
Investing in mid-term goals can actually be more complex than investing for both short and long-term goals.
Likely, an investor will want to consider a balanced approach in a diversified combination of investments. The nearer the goal, the more bonds and cash the investor will likely want to have. The farther out the goal, the more risk that an investor might take.
How much an investor allocates to equities (stocks) will depend on their comfort level with the stock market during a medium investing time frame, and their willingness to be flexible.
Long-Term Investing Time Horizons
A long-term investing time horizon is generally longer than ten years.
Examples of long-term financial goals include: paying for college, retirement, financial independence, creating an endowment, and building intergenerational wealth.
How should long-term money be invested? In general, longer investment time horizons allow for more risk — which may set the stage for higher potential returns. Therefore, it is possible to have the majority of long-term funds invested in the stock market or similarly risky asset classes, if the investor’s personal risk tolerance allows.
The notion of risk is complex during longer periods, however. With money that is saved and invested now to be held for use over the long-term, investors may have to contend with losing purchasing power to inflation, in addition to market volatility.
Inflation is the economic phenomenon of rising prices, which means that over time each dollar can buy less. Historically, the inflation rate has run at 2% to 3%, which means money that’s “earning nothing” is actually losing 3% each year. Therefore, one of the biggest risks for long-term investors may actually be acting too conservatively, too soon.
Example of an Investment Time Horizon
To recap the above, an investor’s time horizon depends on the goal in question. Not all goals have a specific time horizon, but those that do — like retirement or buying a home or paying for college — require careful planning.
In order to reach a specific goal with the needed amount of money, investors must take into consideration how much risk they are willing to take on, given the time allowed, and choose their portfolio investments and asset allocation accordingly.
Investment Time Horizon and Risk Types
Investor’s must contend with different types of risk, depending on the time horizon for their goal.
Market Risk
This is the most common and likely the most well-known type of risk: it’s simply market volatility. The more exposure you have to the equity markets (or any market with greater volatility, e.g. crypto, commodities, high-risk bonds) that puts you at a higher risk for losing money.
While market risk is a factor for most investments to some degree, time horizon obviously impacts how much market risk you’re exposed to.
Inflationary Risk and Investment Time Horizon
As noted above, a big risk factor for longer time horizons is inflation risk: The risk that your money won’t grow enough to keep up with inflation. If an investor has a 20-year time horizon, for example, and invests conservatively during that time, there is a risk that they won’t end up with enough growth.
Interest Rate Risk
Interest-rate risk is the risk that interest rates could rise, affecting the value of the fixed-income part of a portfolio. While interest rate changes can impact many investments, bond values fall as interest rates rise.
Investing With SoFi
Your investment time horizon is effectively a type of financial deadline for any given goal. Some time horizons are more flexible than others — and that’s important to know, because the amount of time you have may influence your risk tolerance and investment choices.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
Invest with as little as $5 with a SoFi Active Investing account.
FAQ
How do you calculate your time horizon?
Your time horizon is simply the amount of time between now (or when you start investing for your goal) and when you hope to reach your goal. For example, if you’re 35 and you’re planning to retire at 65, your time horizon for that goal is 30 years.
If you’re aiming to buy a home once you have $50,000 saved, you need to create a time horizon for when you’ll be able to reach that goal, based on the amount you can save per year, and your expected rate of return for the investments you choose.
What is the ideal investment horizon?
The ideal investment horizon varies from goal to goal. In the course of your life you may find yourself dealing with multiple time horizons for a range of goals. In some cases (e.g. saving for college or the arrival of a new baby), there’s an inflexible time horizon and you may have to adjust the amount you’re saving or the investments you choose. In other cases, like retiring or buying a home, you may be able to take more time to reach your goal.
What is time important in investing?
Time is a critical element in all investing decisions, whether long term or short term. As its most basic, time may allow investors to save more, recover from market volatility, adjust their risk exposure (if needed), and potentially see greater gains.
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