Save more, spend smarter, and make your money go further
Summer is a common time for many people to change up their living situations by moving either across town or across the country. And whether you are moving for a new job, a recent graduation, or just a change of scenery, moving to a new city can help give you a fresh financial start. Here are a few things to keep in mind as you plan your move.
Changing (lowering) your cost of living
The biggest thing to make sure that you’re aware of when moving to a new city is that your overall cost of living is going to change. This may be obvious to many people, but goods and services cost different amounts in different areas of the country and world. From very expensive places like New York and San Francisco to less expensive places like Tulsa or Boise and everywhere in between.
Before you move to a new city, make sure to understand the difference in the cost of living between your current city and your new city. There are many online calculators that can compare the cost of living between two different cities. Make sure to dig deeper than just the overall cost of living. The cost of living accounts for lots of different areas of spending like housing, food, transportation, and more. Understanding how different things might change in price from what you’re used to can help you plan a budget for your new city.
Hopefully, you are moving to an area with a lower cost of living. That’s a great opportunity to take your extra money and start saving or investing it. If you are moving to a higher-cost area, you can take the chance to really get serious about budgeting.
New friends and family
Your new city will also give you the chance to change who you interact with and how much. You may be moving closer to family, or have the chance to meet new friends. Changes in your family or friend’s situation can also impact your finances. If you are moving closer to extended family, you may have an opportunity to collaborate on child care and save some money that way.
If you’re moving to a new city where you don’t know anyone, consider how that might affect your budget and your social life. Will you be spending more money at bars, events, and other places to meet new people? Work those expenses into your new budget!
Updating your recurring subscriptions
Recurring subscriptions can be an easy way to lose your money if you’re not careful. Without tracking them with a budgeting tool like Mint, it’s easy to find yourself paying for monthly subscriptions that you don’t actually use. Moving to a new city can be a great way to update your recurring subscriptions and be proactive about which ones you want to pay for.
While some monthly subscriptions like streaming services are easy to transfer with you when you move, others won’t make as much sense. It probably isn’t a good idea to continue paying for your local gym membership if you move halfway across the country. Take the time as part of your move to really take a look at which monthly payments you are making and which are still providing value.
Budgeting for your move
A budget is one of the most important tools you have to achieve a positive financial future. Budgeting for your move is important in two different ways. We’ve talked a bit already about how to adjust your budget for your new situation, but it’s also important to make a budget for the move itself.
Without a budget, it can be easy to spend much more than you intended to on your move. Moving is always stressful, so before you notice it, you can find yourself spending hundreds or thousands of extra dollars. Make sure to do your research on moving options, and don’t forget to give yourself some grace in the budget to account for unexpected things to come up while moving.
The Bottom Line
Moving to a new city is an exciting time, and can be a great opportunity to get a fresh financial start. Make sure to compare the cost of living in your new city, and how it compares to the prices that you’re used to. Adjust your budget for your new living situation and don’t forget to budget for the move itself. One great way to update your budget is to take a look at some of your recurring monthly subscriptions and have an honest conversation with yourself and others in your household about which subscriptions are worth it for you. Following these tips can get you off to a great start in your new city and with your new life.
Save more, spend smarter, and make your money go further
Dan Miller is a freelance writer and founder of PointsWithACrew.com, a site that helps families to travel for free / cheap. His home base is in Cincinnati, but he tries to travel the world as much as possible with his wife and 6 kids. More from Dan Miller
Save more, spend smarter, and make your money go further
Making your money work for you is an important step on the road to financial security and independence. Earning money by trading your time is important, but it’s just as important to find a way to make money without having to be actively involved. While you might dream of being able to make money while you sleep, there are plenty of steps you can take that will help put your money to work.
Pay Down Your Debt
The most important thing that you can do to make your money work for you is to pay down and eliminate your high-interest debt. This includes things like credit card payments, some auto loans, and other types of consumer debt. You may be paying up to 20% or more in interest — which means that when you put money towards paying off that debt you’re getting a 20% return on your investment. It’s hard to beat that kind of guaranteed return.
Start a budget, figure out your income and expenses and start paying down that debt. The exact debt repayment strategy that you use is less important. What is important is that you make a plan and start sooner rather than later. Once you have eliminated your high-interest debt, you can start with the other suggestions in this article.
Open a High-Yield Savings Account
One place to start can be to open up a high-yield savings account that is separate from your checking account where you keep the money to pay your regular monthly expenses. This is important for two reasons. The first is that keeping your savings separate from the money you use for your regular savings helps keep you from raiding your savings to pay your bills.
The second reason is that a savings account may offer slightly higher interest rates than a checking account. Currently, interest rates are at historical lows. That is great for refinancing or taking out a mortgage, but not great for savings accounts. Still, a high-yield savings account is a great place to put your emergency fund money. For anything more than that, you’ll want to look at investments that offer higher returns.
Grow Your Wealth Through Investing
If inflation hovers around 2-3% every year, any investments you have should make at least that much. Otherwise, while you may have more money, that money will be worth less than it was the year before. If all of your money is in a savings account earning 1% interest or less, then you are actually LOSING money to inflation each year. There are many ways to earn residual income, and you’ll want to pick the one that makes the most sense for you. As one example, Investing in the stock market has historically returned around 7% per year.
Take Advantage of Credit Card Rewards
Another way to make your money work for you is to take advantage of credit card rewards. Many credit cards offer rewards of up to 5% back or more in certain spending categories. There are also several cards that offer initial welcome bonuses that are worth $1000 or more. Taking the time to strategically use credit cards can be a worthwhile investment. Check out our list of the best rewards credit cards to see if one of them might make sense for you.
Start a Passive Income Stream
The holy grail of financial independence is passive income. Passive income is income that continues to make money with little to no day-to-day involvement on your part. There are many different ways to generate passive income. A few passive income ideas might be creating and selling crafts, writing a guide or book, starting a blog, or investing in the stock market.
Investing time and money in real estate can also be a way to earn (relatively) passive income. While rental real estate is not without complications, when it is all working, each month you earn rental income. That helps pay down your mortgage balance, hopefully with some extra left over each month. If you think that becoming a landlord is not for you, another way to invest in real estate is through a Real Estate Investment Trust (REIT). REITs combine some of the best parts of real estate and investing in the stock market.
The Bottom Line
There is an important difference between earning money and having your money work for you. While earning money through a job is important, the real key to financial security is earning passive income. Pay down your debt, start investing and watch the returns come in. You may not make money while you sleep, but following these tips will help set you on the right financial path.
Save more, spend smarter, and make your money go further
Dan Miller is a freelance writer and founder of PointsWithACrew.com, a site that helps families to travel for free / cheap. His home base is in Cincinnati, but he tries to travel the world as much as possible with his wife and 6 kids. More from Dan Miller
Adoption is a life-changing journey. Whether the choice to adopt comes after years of expensive infertility treatments or is a route you’ve always wanted to take, the choice to welcome a new family member is rarely a financial one, but rather a decision of the heart.
But at some point, prospective adoptive parents have to consider the costs. It’s unlikely your decision to adopt will boil down to numbers. But it helps to know what to expect.
The figures can vary depending on your adoption journey, from almost nothing to upward of $70,000. But you can use them as a baseline to help you financially prepare for starting a family and to make an informed decision about which type of adoption makes the most sense for you.
How Much Does It Cost to Adopt a Child?
There are three basic types of adoption: domestic infant adoption (sometimes called private adoption), international adoption, and public adoption.
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But if you’re looking to adopt a baby, private and international adoption are the only two real options. Because of the way the foster care system operates, it’s exceedingly rare to be able to adopt an infant through public adoption. Their primary goal is reunifying families whenever possible, which can take years.
But regardless of your adopted child’s age, some costs are common to all three, such as the expense of a home study, which involves visits by a social worker and background and financial checks. Other costs are unique to the adoption route you choose, such as the travel expenses involved with international adoption.
And the costs vary wildly, so it’s crucial you understand the ins and outs of each adoption type.
Domestic Infant Adoption
When adopting a baby in the United States, you have two options: adopting through an agency or independent adoption.
Costs of Adopting an Infant Through an Agency: $25,000 – $70,000
Adopting through an agency is more expensive, but there’s also a higher success rate. Also, some agencies offer a sliding scale for those who need help affording adoption, which can potentially save you a few thousand dollars, depending on your income. However, each state has its own laws that regulate adoption fees, including sliding scale fee structures.
Average Costs of Domestic Agency Adoption
Agency Fees
$15,000 – $45,000
Legal Fees
$2,500 – $6,000
Birth Mother Expenses
$4,000 – $16,250
Home Study Fee
$2,750
Adoption agencies are typically full-service operations. Thus, their fees generally include everything involved in the adoption process, which can be complex. The journey to bring a child home involves many parties, including attorneys, social workers, physicians, counselors, government administrators, and adoption specialists.
There are also costs associated with matching birth parents and adoptive parents. For example, there are advertising expenses to find expectant mothers. And then there are medical expenses and court costs to ensure the health of the mother and child during pregnancy as well as the safety and security of the child after placement.
When you adopt through an agency, it typically completes the entire process from beginning to end, hence the expense.
Adoption agencies that charge more include more services. For example, if you find an agency with fees at the lower end, it’s likely because their fee doesn’t include the costs of hiring an attorney, unlimited advertising for birth parents, certain birth mother expenses, or adoption disruption insurance (a guarantee you won’t lose your money if the birth mother changes her mind).
So always ask for a written, line-by-line breakdown of the agency’s costs to see what services its rate covers before signing with it.
Costs of an Independent Adoption With an Attorney Only: $10,000 – $40,000
If agency adoption is too expensive but you’d still like to adopt a newborn, you can save a lot of money by hiring an attorney to facilitate an independent adoption. Independent adoption happens when prospective parents locate a birth parent on their own and use an attorney to process the necessary paperwork.
Average Costs of Independent (Attorney) Adoption
Legal Fees
$3,000 – $6,000
Advertising Fees
$0 – $1,000
Birth Mother Expenses
$6,000 – $30,000
Home Study Fee
$1,000 – $4,000
The cost of an independent adoption can range from $10,000 to $40,000, though it could go higher based on your circumstances. The final bill depends on how much you need to spend to find an expectant mother and how much you pay for medical and living expenses, which may be regulated by state law.
Further, adopting independently is a bit like trying to sell a house without a realtor. You must find a birth mom on your own, which means advertising for and vetting birth moms without help.
So, while it can be cheaper, you still have to go it alone. And if you have trouble finding a birth mother, your costs can quickly add up. Agencies give a flat rate no matter how much advertising it takes. If you have trouble finding someone, you could quickly blow past the $40,000 mark.
Another reason independent adoption costs can vary more widely than those through a private agency is because in most states, adoptive parents won’t have their costs reimbursed if a birth mother changes her mind, what’s commonly called a disrupted adoption. Most adoption agencies build disruption insurance into their fee structures.
International Adoption: $26,500 – $73,000
Those unfamiliar with the adoption process often believe it’s less expensive to adopt a child from another country. But the reverse is more often true.
Average Costs of International Adoption
Agency Fees
$15,000 – $30,000
Legal Fees
$500 – $6,000
Immigration Application Fee
$1,000 – $2,000
Dossier Preparation and Clearance
$1,000 – 2,000
Home Study Fee
$1,000 – $4,000
In-Country Adoption Expenses
$2,000 – $10,000
Travel Expenses
$5,000 – $15,000
Child’s Passport, Visa, Medical Exam
$1,000 – $4,000
The cost of an international adoption can range from just over $20,000 to more than $70,000. The wide variance is due to the different requirements of each country.
International adoption (also called intercountry adoption) has some similarities to domestic adoption. But it has its own unique steps and expenses that can quickly escalate beyond the cost of domestic adoption.
The costs of international adoptions can include immigration processing and court costs (both in the foreign country and the U.S.), travel expenses, foreign and domestic legal fees, foreign agency fees, passport and visa fees, medical examinations, and in-country adoptions expenses (such as foster care for the child, donations to the orphanage, and payments for the in-country adoption liaisons).
The costs also depend on whether a government or private agency, orphanage, nonprofit organization, attorney, or a combination of entities is managing the adoption.
Additionally, some international adoptions are finalized in the child’s country of origin, while others must be finalized in the U.S., depending on the laws of your state, further adding to the total cost. And depending on the country’s regulations, you may have to plan an extended stay, which means time off work and (potentially) lost wages.
Public Adoption: $0 – $2,500
The least expensive route to growing your family is unquestionably public adoption, or adopting through the foster care system. It’s very difficult to adopt a baby, though. So this option is best for those who wish to adopt an older child.
Public adoption costs next to nothing because the government subsidizes many associated fees and expenses.
Average Costs of Public Adoption
Agency Fees
Usually $0
Legal Fees
$0 – $2,000
Home Study Fee
$0 – $500
Federal and state financial adoption assistance programs exist to encourage the adoption of children with special needs that make them difficult to place, such as older children, sibling groups, or those with physical or mental disabilities.
Thus, most prospective parents who are adopting through public agencies will find their state is often willing to waive most or all of the fees associated with adopting through the foster care system, including both the home study fee and attorney fees.
Additionally, if you become a foster parent and apply to foster-to-adopt, the government subsidizes some of your future adopted child’s living expenses while you await finalization.
But if you have your heart set on adopting a newborn, foster care adoption isn’t the route for you. It’s nearly impossible to adopt an infant that way.
Some babies in the foster care system were abandoned by their biological parents or taken by the state due to abuse, neglect, or drug addiction. But no child in the system — infant or otherwise — is immediately available for adoption.
The state’s No. 1 priority is to reunite children with their biological families. That includes extensive sessions with counselors and social workers. If that effort ultimately proves unsuccessful, the state next tries to place the child with a biological relative.
Only after these efforts — which could take several years — are children placed for adoption. Thus, by the time babies in foster care become eligible for adoption, they’re no longer babies. But if they were placed with a foster family, that family gets the first chance at adoption. However, if you’re interested in adopting an older child and are prepared to help them work through the trauma, the rewards can be immense. My parents adopted my little brother from foster care at the age of 6, and his presence has enriched our family in myriad ways.
Factors That Influence Adoption Costs
Every adoption is unique, and though adoption agencies typically try to work within your budget, unforeseen costs can occasionally raise the base projected cost. And that can have a significant impact on your overall family budget.
Birth Mother Expenses
Depending on your state’s adoption laws, a birth mother may be eligible for coverage of certain expenses. You may have to pay medical expenses related to the pregnancy, including insurance coverage if she’s not already covered or eligible for Medicaid.
If you work with an agency, they should take care of helping her find coverage. But you may still be responsible for some medical expenses, such as doctor copays. Once you’re matched with a birth mother, her medical expenses become your medical expenses.
Adoption agencies typically work these into their overall fee structure but allow for variances that could affect your cost. For example, you may pay more or less depending on what stage of pregnancy the mother’s in when the agency matches you. If you’re matched in the ninth month, there will be fewer expenses.
And if you’re adopting independently, some or all of the medical costs the birth mother incurs as a result of the pregnancy may be your responsibility as defined by the laws of your state. Consult with an adoption lawyer for more information.
Additionally, in some states, you may need to cover other birth mother expenses. Birth mother expenses are court-approved funds adoptive families provide to help prospective birth mothers with pregnancy-related expenses. In addition to medical care, costs could include living expenses like maternity clothing, groceries, rent, and transportation.
Some states that allow birth mothers to request living expenses cap the total amount. For example, Ohio caps the amount birth mothers can be reimbursed for living expenses at $3,000 and Connecticut at $1,500. Other states have no cap but permit a judge to set one on an individual basis.
Thus, these expenses can vary widely from one adoption to another.
Advertising
The longer you have to wait for a birth mother match, the more money an agency must pay toward advertising to find you one. Ask the adoption agency how they deal with this variable cost. Some charge one flat fee regardless of the amount of advertising required; others set a variable cost.
And if you’re doing an independent adoption, you’ll be covering this expense on your own. If you don’t already know a birth mother to adopt from, you’ll need to find one. That means drawing on your personal connections, using social networks or community organizations, utilizing adoptive family websites, posting print ads, or seeking referrals from adoption attorneys.
It could take a long time to find a birth mother if you don’t have extensive networking options. And that can substantially drive up your adoption costs. Depending on how long it takes you to find someone, fees for print and online advertising can range from several hundred dollars to tens of thousands.
Attorney Fees
Lawyers are necessary for dealing with the legal aspects of any adoption. These include the original consent to adoption and termination of parental rights as well as the court proceedings to finalize the arrangement.
However, the fees can vary considerably based on the type of adoption you opt for. Attorney fees can also vary depending on other factors, including:
The Complexity of the Case. Will they need to represent you multiple times in court? All adoptions must eventually be finalized before a judge. But some adoptions — such as international adoptions or those in which birth mother expenses must be court-ordered — could require more paperwork or court appearances than others.
The Number of Hours the Attorney Works on the Case. Lawyers charge by the hour. Even if you don’t have to appear in court more than once, adoption can involve a lot of paperwork.
The Number of Additional Attorneys or Support Staff Needed. Depending on the complexity of your case or who you hire, you may be represented by a law firm rather than a single attorney. Additionally, your lawyer may use a support team to fulfill basic tasks like clerical work.
Depending on your case, rates are often negotiable. And while attorneys often charge by the hour, many offer a flat fee for certain types of cases.
For example, a family law attorney might charge a flat fee for a straightforward adoption case that requires a simple filing of paperwork and one court appearance. But they might charge by the hour for a more complex case, such as an international adoption.
Regardless, most lawyers offer payment options so clients can find an arrangement that works for their budget. And all lawyers have fee agreements informing clients of costs upfront. So ensure you thoroughly read the agreement beforehand.
Time Off
Unfortunately, in the U.S., paid parental leave isn’t guaranteed by law, and many workplaces don’t have this benefit. Even when they do, it may not apply to adoptive parents. So check with your human resources department about whether your workplace offers adoption benefits.
Whether your employer offers paid time off, all adoptive parents are entitled to up to 12 weeks (three months) of leave through the Family Medical Leave Act. The act equally guarantees maternity and paternity leave for biological and adoptive parents.
But it only guarantees your job and health insurance. It doesn’t guarantee paid time off. If your company doesn’t provide paid parental leave, you need to plan for lost wages.
Final Word
The costs of adoption may feel formidable, especially if you have your heart set on adopting an infant through domestic or international adoption. But they don’t have to be insurmountable.
Many resources are available to help families afford to adopt, including options for post-placement reimbursement, like the adoption tax credit. Talk with adoption professionals to explore your options before completely ruling it out.
Also, talk with other families who’ve adopted. Many are happy to share stories of how they were able to afford adoption, especially if it helps others fulfill their dreams of a family.
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Sarah Graves, Ph.D. is a freelance writer specializing in personal finance, parenting, education, and creative entrepreneurship. She’s also a college instructor of English and humanities. When not busy writing or teaching her students the proper use of a semicolon, you can find her hanging out with her awesome husband and adorable son watching way too many superhero movies.
People have always grumbled that a dollar doesn’t go as far as it used to. But these days, that complaint is truer than ever. No matter where you go — the gas station, the grocery store, the movies — prices are higher than they were just a month or two ago.
What we’re seeing is the return of a familiar economic foe: inflation. Many Americans alive today have never seen price increases like these before. For the past three decades, inflation has never been above 4% per year. But as of March 2022, it’s at 8.5%, a level not seen since 1981.
Modest inflation, like what we had up through 2020, is normal and even healthy for an economy. But the rate of inflation we’re seeing now is neither normal nor healthy. It does more than just raise the cost of living. It can have a serious impact on the economy as a whole.
Recent inflation-related news:
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In March 2022, the U.S. inflation rate hit a 40-year high of 8.5%.
Prices for gasoline have increased nearly 50% over the past year.
Retail giant Amazon has added a 5% fuel and inflation surcharge for sellers.
The Federal Reserve is planning a series of interest rate hikes to cool the overheated economy.
What Is Inflation?
Inflation is more than just rising prices. Prices of specific things we buy, from a gallon of milk to a year of college tuition, rise and fall all the time. These price increases affect individual consumers’ lives, but they don’t have a big impact on the entire economy.
Inflation is a general increase in the prices of goods and services across the board. It drives up prices for everything you buy, from a haircut to a gallon of gas. Or, to put it another way, the purchasing power of every dollar in your pocket declines.
Most of the time, inflation doesn’t disrupt people’s lives too much, because prices rise for labor as well. If your household spending increases by 5% but your paycheck increases by 5% at the same time, you’re no worse off than before.
But when prices rise sharply, wages can’t always keep up. That makes it harder for consumers to make ends meet. It also drives them to change their spending behaviors in ways that often make the problem worse.
Causes of Inflation
Inflation depends on the twin forces of supply and demand. Supply is the amount of a particular good or service that’s available. Demand is the amount of that particular good or service that people want to buy. More demand drives prices up, while more supply drives them down.
To see why, suppose you have 10 loaves of bread to sell. You have 10 buyers who want bread and are willing to pay $1 per loaf. So you can sell all 10 loaves at $1 each.
But if 10 more buyers suddenly enter the market, they will have to compete for your bread. To make sure they get some, they might be willing to pay as much as $2 per loaf. The higher demand has pushed the price up.
By contrast, if another seller shows up with 10 loaves of bread, the two of you will be competing for buyers. To sell your bread, you might have to lower the price to as little as $0.50 per loaf. The higher supply has pushed prices down.
Inflation results from demand outstripping supply. Economists often describe this as “too much money chasing too few goods.” There are several ways this kind of imbalance can happen.
Cost-Push Inflation
Cost-push inflation happens when it costs more to produce goods. To go back to the bread example, cost-push inflation might happen because a wheat shortage makes flour more expensive. It costs you more to make each loaf of bread, so you can’t afford to bake as much.
As a result, you bring only five loaves to the market. But there are still 10 customers who want to buy bread, so they must pay more to get their share. The higher cost of production drives down the supply and thus drives up the price.
In the real world, cost-push inflation can result from higher costs for anything that goes into making a product. This includes:
Raw Materials. The wheat that went into your bread is an example. Higher-cost wheat means higher-cost flour, which means higher-cost bread.
Transportation. In today’s global economy, materials and finished goods move around a lot. Transporting products requires fuel, which usually comes from oil. So whenever oil prices go up, the price of other goods rises as well.
Labor. Another factor in production cost is labor. When schools closed during the COVID-19 pandemic, many parents had to stop working to care for their children. That created a worker shortage that drove prices up.
Demand-Pull Inflation
The opposite of cost-push inflation is demand-pull inflation. It occurs when consumers want to buy more than the market can supply, driving prices up.
Typically, demand-pull inflation results from economic growth. Rising wages and lower levels of unemployment put more money in people’s pockets, and people who have more money want to spend more. If the booming economy hasn’t produced enough goods and services to match this new demand, prices rise.
Other causes of demand-pull inflation include:
Increased Money Supply. Another way people can end up with more money in their pockets is because the government has put more money in circulation. Governments often do this to stimulate a weak economy or to pay off past debts. But as the money supply increases, the purchasing power of each dollar shrinks.
Rapid Population Growth. When the population grows rapidly, the demand for goods and services grows also. If the economy doesn’t produce more to compensate, prices rise. In Europe during the 1500s and 1600s, prices soared as the population grew so fast that agriculture couldn’t keep up with the new demand.
Panic Buying. Early in the COVID pandemic, consumers started buying extra groceries to fill their pantries in preparation for a lockdown. This led to shortages of many staple products, like milk and toilet paper. As a result, prices for those goods went up.
Pent-Up Demand. This occurs when people return to spending after a period of going without. This often happens in the wake of a recession. It also occurred as pandemic restrictions eased and people returned to enjoying movies, travel, and restaurant meals.
Built-In Inflation
When consumers expect prices to be higher in the future, they often respond by spending more now. If the purchasing power of their savings is only going to fall, it makes more sense to take that money out of the bank and use it on a major purchase, like a new car or a large appliance.
In this way, expectations of high inflation can themselves lead to inflation. This type of inflation is called built-in inflation because it builds on itself.
When workers expect the cost of living to rise, they demand higher wages. But then they have more to spend, so they spend more, driving prices up. This, in turn, reinforces the belief that prices will keep rising, leading to still higher wage demands. This cycle of rising wages and prices is called a wage-price spiral.
Effects of Inflation
Inflation does more than just drive up the cost of living. It changes the economy in a variety of ways — some harmful, others helpful. The effects of inflation include:
Higher Wages. As prices rise with inflation, wages typically rise as well. This can create a wage-price spiral that drives inflation still higher.
Higher Interest Rates. When the dollar is declining in value, banks often respond by raising interest rates on loans. The Federal Reserve also typically raises interest rates to cool the economy and rein in inflation, as discussed below.
Cheaper Debt. Inflation is good for debtors because they can pay off their debts with cheaper dollars. This is most useful for loans with a fixed interest rate, such as fixed-rate mortgages and student loans.
More Consumption. Inflation encourages consumers to spend money because they know it will be worth less later. All this spending keeps the economy humming, but it can also drive prices even higher.
Lower Savings Rates. Just as inflation encourages spending, it discourages saving. Higher interest rates can counter this effect, but they often don’t rise enough to make a difference.
Less Valuable Benefits. High inflation is worse for people on a fixed income. They face higher prices without higher wages to make up for them. Benefits such as Social Security change each year to adjust for inflation, but higher benefits next year don’t help when prices are rising right now.
More Valuable Tangible Assets. Inflation reduces the purchasing power of the dollars you have in the bank. Tangible assets like real estate, however, gain in dollar value as prices rise.
Measuring Inflation
The most common measure of inflation is the Consumer Price Index, or CPI. The Bureau of Labor Statistics (BLS) determines the CPI based on the cost of an imaginary basket of goods and services. BLS workers painstakingly check prices on all these items each month and record how each price changes.
To calculate the annual rate of inflation, the BLS looks at how much all prices in its basket have changed since a year earlier. Then it “weights” the value of each item based on how much of it people buy. The weighted average of all items becomes the CPI.
The BLS then uses the CPI to calculate the annual rate of inflation. It divides this month’s CPI by the CPI from a year ago, then multiplies the result by 100. This shows how the purchasing power of a dollar has changed over the last year. The result is reported monthly.
Other measures of inflation include:
Personal Consumption Expenditures Price Index (PCE). This inflation measure is published by the Bureau of Economic Analysis. Like the CPI, it’s a measure of consumer costs, but it’s adjusted to account for changes in the products people buy. The Federal Reserve uses the PCE to guide its monetary policy, as discussed below.
Producer Price Index (PPI). The PPI measures inflation from the seller’s perspective, not the buyer’s. It’s calculated by dividing the price sellers currently get for a basket of goods and services by its price in a base year, then multiplying the result by 100.
Historical Examples of Inflation
A little bit of inflation is normal. But sometimes inflation spirals out of control, with prices rising more than 50% per month. This is called hyperinflation, and it can be devastating for an economy.
Hyperinflation has occurred at various times and places throughout history. During the U.S. Civil War, both sides experienced soaring inflation. Other examples include Germany in the 1920s, Greece and Hungary after World War II, Yugoslavia and Peru in the 1990s, and Venezuela today. In most cases, the main cause was the government printing money to pay for debt.
The last time the U.S. had prolonged, high rates of inflation was in the 1970s and early 1980s. The inflation rate was nowhere near hyperinflation levels, but it spiked above 10% twice. Eventually, the Fed hiked interest rates to double-digit levels to get it under control.
Although high inflation can be destructive, zero inflation isn’t a good thing, either. At that point, an economy is at risk of the opposite problem, deflation.
When prices and wages fall across the board, consumers spend less. Sales of products and services fall, so companies cut back staff or go out of business. As a result, jobs are lost and spending drops still more, worsening the problem. The Great Depression was an example.
The Federal Reserve, or Fed, is the U.S. central bank — or more accurately, banks. It’s a group of 12 banks spread across the country under the control of a central board of governors. Its job is to keep the economy on track, reining in inflation while trying to avoid recessions.
The Fed maintains this balance through monetary policy, or controlling the availability of money.
Its main tool for doing this is interest rates. When the economy is weak, the Fed lowers the federal funds rate. This makes it easier for people to borrow and spend.
When the problem is inflation, it does the opposite, raising interest rates. This makes it more costly to borrow and more worthwhile to save. As a result, consumers spend less, slowing down the wage-price spiral.
The Fed has other tools for fighting inflation as well. One option is to change reserve requirements for banks, requiring them to hold more cash. That gives them less to lend out, which in turn reduces the amount consumers and businesses have to spend.
Finally, the Fed can reduce the money supply directly. The main way it does this is to increase the interest rate paid on government bonds. That encourages more people to buy bonds, which temporarily takes their money out of circulation and puts it in the hands of the government.
Inflation Frequently Asked Questions (FAQs)
If you keep seeing stories about inflation in the news, you may have some other questions about how it works. For instance, you may wonder:
What Is Hyperinflation?
Hyperinflation is more than just high inflation. It’s a wage-price spiral gone mad, sending prices soaring out of control. As noted above, the usual definition of hyperinflation is an inflation rate of at least 50% per month — more than 12,000% per year. However, some economists use the term to refer to an inflation rate of 1,000% or more per year.
What Is Disinflation?
Disinflation is a fall in the rate of inflation. This is what the Federal Reserve and other central banks try to achieve through their monetary policy, such as raising interest rates.
Disinflation is not the same as deflation, or falling prices. During a period of disinflation, prices are continuing to rise, but the rate at which they rise is slowing down.
What Is Transitory Inflation?
When the first signs of a post-COVID-19 inflation spike appeared, Federal Reserve chair Jerome Powell described it as “transitory.” By this, he meant that the rise in prices would be short-lived and would not do permanent damage to the economy.
However, in November 2021, Powell declared it was “time to retire that word.” Based on the growth in prices, he had concluded that inflation was more of a long-term trend. The Federal Reserve responded by planning to fight inflation harder, buying more bonds and plotting out a series of interest rate hikes.
What Is Core Inflation?
Measuring inflation can be tricky because prices for some products fluctuate more than others. Food and energy prices, in particular, can shift a lot from month to month. Including these products in the CPI can lead to sharp, but temporary, spikes or dips in the inflation rate.
To adjust for this, the CPI and PCE have a separate “core” version that doesn’t include food or energy prices. This core inflation measure is more useful for predicting long-term trends. The main versions of the CPI and PCE, known as the “headline” versions, give a more accurate picture of how prices are changing right now.
What Is the Consumer Price Index (CPI)?
As noted above, the Consumer Price Index, or CPI, is the main measure of inflation in the United States. The BLS calculates it based on how much prices have risen for an imaginary basket of goods and services that many Americans buy.
Final Word
A little inflation in an economy is normal. It can even be a good thing, because it’s a sign that consumers are spending and businesses are earning. The Fed generally considers an annual inflation rate of 2% to be healthy.
However, higher inflation can cause serious problems for an economy. It’s bad for savers whose nest eggs, including retirement savings, shrink in value. It’s even worse for seniors and others on fixed incomes whose purchasing power has fallen. And it often requires strong measures from the central bank to correct it — measures that risk driving the economy into a recession.
If you’re concerned about the effects of inflation, there are several ways to protect yourself. You can adjust your household budget, putting more dollars into the categories where prices are rising fastest. You can stock up on household basics now, before the purchasing power of your dollars falls too much.
Finally, you can choose investments that do well during periods of inflation. Stock-based mutual funds and real estate investment trusts are both good choices. Just be careful with inflation hedges like gold and cryptocurrency, which carry risks of their own.
GME is so 2021. Fine art is forever. And its 5-year returns are a heck of a lot better than this week’s meme stock. Invest in something real. Invest with Masterworks.
Amy Livingston is a freelance writer who can actually answer yes to the question, “And from that you make a living?” She has written about personal finance and shopping strategies for a variety of publications, including ConsumerSearch.com, ShopSmart.com, and the Dollar Stretcher newsletter. She also maintains a personal blog, Ecofrugal Living, on ways to save money and live green at the same time.
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A little stress is a good thing. It keeps us on our toes, challenges us to improve and can even lead to healthier brain function. A life without any stress at all would be pretty boring.
But when it comes to money, most people are dealing with more than just a little bit of stress. On this end of the spectrum, the upsides of stress are replaced with even more downsides – poor sleep, increased anxiety, decreased immunity and more. Just about everyone could benefit from stressing less about money.
That might be easier said than done, but there are some tried and true strategies we can recommend. Here are some of our favorites.
Adjust Your Withholding
Emily Guy Birken, author of “End Financial Stress Now,” said one of the fastest ways to add more money in your budget is to adjust your tax withholding at work. If you’re used to getting a large tax refund, you can change your tax withholding status to make your regular paycheck larger.
Talk to your HR department about how to change your tax withholding and use the IRS tax withholding calculator to see what you specifically need to change. Depending on when your employer implements the changes, they could come into effect during your next paycheck or the one after.
“The only caveat you need to remember is that you’ll get a smaller or no refund in April,” Guy Birken said.
Start a Money Journal
Research has shown that journaling about your problems can lead to reduced stress and anxiety. If you’re worried about money, take a notebook and start writing down what you’re worried about. Consider it a brain dump exercise; just start writing and don’t worry about having all the information perfectly laid out.
Once you’re done, go through the entries and prioritize your stressors. Are you more worried about saving for retirement or establishing an emergency fund? Are you more worried about your student loans or your credit card balance? Try to list items in order from most important to least important.
After prioritizing the items, start a new list and break down the steps you need to take. Then, you can start tackling those tasks and reduce your stress.
Call Your Credit Card Provider
If you have a credit card balance, try calling your provider and asking for a lower interest rate. Remind them that you’ve been a long-time customer and that you’ve never missed a payment. A lower interest rate will prevent more interest from accruing and help you pay off the balance faster, which should help alleviate some financial stress.
Switch to a Lower Student Loan Payment
Lowering your monthly student loan payment can provide some breathing room in your budget. If you have federal student loans, you can switch to an income-driven repayment (IDR) plan which may result in a lower payment. IDR plans also offer loan forgiveness after 20 or 25 years, depending on the plan and type of loan.
Here’s how much of a difference you might see every month. Let’s say you owe $50,000 in federal student loans with a 5.28% interest rate and a 10-year term. If you switch to one of the IDR plans, your monthly payment would be $256 compared to $537 on the standard 10-year plan.
The main downside of an IDR plan is that your repayment term is extended, and you may owe taxes on the forgiven amount when the term is over. But it’s a good temporary fix if you need a lower payment. You can always switch back to the standard plan if you want to repay your loans faster.
Lower your Bills
If you need more breathing room in your budget, try negotiating with your internet, cable and cell phone providers. You may also be able to lower any outstanding medical bills if you call the billing department and ask for a discount.
“Internet and cable service is an easy place to start because they’re used to be negotiated with,” Guy Birken said.
Some tenants have had luck negotiating their rent during the pandemic, especially if they live in a city where people have moved out in droves.
Examine your Transactions
A 2020 Mint survey found that 65% of Americans don’t know how much they spent last month. While ignorance may feel like bliss, the anxiety that comes with being unaware of your spending feels more like misery.
Print out or download your credit card and bank statements from the past month and parse through them. You may discover that you’re still paying for a makeup subscription box or gym membership you thought you canceled. You may also find transactions you don’t recognize, which could be evidence of fraud.
Cancel any subscriptions you no longer use and ask for a refund if the expense has gone through within the past month. Be persistent about canceling. Sometimes it can take weeks for the request to go through, so set a calendar reminder to double-check that the subscription has been canceled.
Start a Budget
If you discover that you’re spending more than you earn, you need to make some radical changes. Start by making a budget, which can help you track spending and free up money to save, pay off debt and meet your other financial goals.
You can use Mint to create a budget. Mint will suggest categories based on your current spending and show how much you spend on average. You can then decrease or increase the amounts depending on your goals. When you’re close to exceeding the budget, you’ll get an email notification.
If you’re new to budgeting, don’t be surprised if you keep going over budget in certain categories. It takes time to change your financial habits, so be patient with yourself.
Close Old Accounts
A common stressor is having to manage multiple accounts. You can forget about one and end up with an overdrawn bank account or some fraudulent activity. If you have several accounts you don’t need or use regularly, consider consolidating them. After you do that, set up your bills, credit cards and loans on autopay so you don’t have to worry bout missing a due date.
“It made it easier to maintain the financial aspect of our lives because we didn’t have a sprawling mess to manage and many of the ‘day to day’ activities were on autopilot,” said Jim Wang of Wallet Hacks.
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Zina Kumok is a freelance writer specializing in personal finance. A former reporter, she has covered murder trials, the Final Four and everything in between. She has been featured in Lifehacker, DailyWorth and Time. Read about how she paid off $28,000 worth of student loans in three years at Conscious Coins. More from Zina Kumok
Dear Penny,
A big advantage of Parent PLUS loans is that you can qualify for something called income-contingent repayment. Basically, your payment is capped at 20% of your disposable income. You’re planning to retire soon, so I’m assuming your income will drop soon as well. That means you could qualify for an extremely low payment once your daughter graduates.
Get the Penny Hoarder Daily She is a good kid with some special problems that she overcomes daily. I want her to have this degree and a chance in life. She worked very hard to overcome all of the physical and mental challenges in her life, BUT expenses are starting to affect my retirement. Any advice?
Sometimes I get antsy when parents talk about spending retirement money on their child’s education. But we’re talking about one year of college, not four. I think you’d deeply regret not giving your daughter the financial support she needs to make it through this final year.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].
Contact the financial aid office for your daughter’s school if you haven’t already done so. The Free Application for Federal Student Aid, or FAFSA, bases financial aid on income from two years earlier. For example, aid for the 2022-23 school year will be based on 2020 income. But some schools offer a process called professional judgment where administrators can adjust FAFSA information based on major life changes, like a parent’s retirement, on a case-by-case basis. Privacy Policy
Your daughter has no doubt overcome her challenges thanks to her own grit, but also because of your love and support as a parent. You’re making a sacrifice to pay for her last year of school because you believe in her. Once she graduates, paying off any debt you’ve incurred will be another challenge you’ll need to conquer together. -J.
Keep in mind, a Parent PLUS loan is only an option if your daughter is considered a dependent student. For example, if she’s 24 or older or she has dependent children of her own, unfortunately, you wouldn’t be eligible.
Ready to stop worrying about money?
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Dear J.,
With private student loans — whether you take them out in your name or co-sign for your daughter — you’re at the mercy of your lender if you’re struggling with payments. So I’d vote in favor of a Parent PLUS loan, even if you find a private loan with a lower interest rate.
If you can’t get a Parent PLUS loan, I’d suggest splitting taking half from your retirement funds and a private loan for the other half. Neither is an ideal option, but sometimes life forces us to choose between less-than-perfect options.
What makes me nervous about using retirement money is that virtually everyone’s investments have taken a hit in recent months. You want to limit your withdrawals as much as possible right now so that your money can recover. But at least since you’re 67, you won’t pay an early withdrawal penalty.
Now let’s address your daughter’s role. I don’t know if she currently has a job. If she is able to work some to help defray costs without jeopardizing her studies, that should be on the table. My daughter is in her last year of college. I don’t have any more money to pay for it. So for her last year, should I take from retirement monies or get a loan?
If financial aid can’t make up the shortfall, a Parent PLUS loan is a good solution. A Parent PLUS loan is a federal student loan that you, as the parent, are responsible for repaying. Source: thepennyhoarder.com
But I want her to focus on her studies so that she can actually complete her final year of coursework in a year. Stretching out the timeline further could pose a greater risk to your retirement. So I wouldn’t ask your daughter to get a job if she’s not already working or work more hours if she has a job.
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I’d also be clear with her: You’ll pay for one more year of school. But beyond that, you won’t be able to help her financially. Instead, I’d make sure your daughter understands the financial situation. Talk to her now about what her responsibility will be in helping you repay any loans. Once she graduates and finds a job, perhaps she could live with you and give you a percentage of her paycheck. I am a single parent. I am 67 years old and ready to retire. However, I am anxious about decisions I need to make.
By taking half from your retirement and half as a loan, you can minimize the damage to your nest egg while taking less debt into retirement. If you’re able to work just a bit longer to pay some of these expenses in cash, even better.
Perhaps you’ve gotten a raise or a bonus, and you want to pay off the remaining balance on a personal loan. Is that possible? The short answer is “yes” and, in many cases, it can be a wise decision.
But if there’s a prepayment penalty, then this loan payoff may be more costly than you’d expect. Learning how a prepayment penalty might affect your payoff amount can be helpful in making the decision whether or not to pay off a personal loan early. And if you’re gathering information about a personal loan early payoff without incurring a prepayment penalty, you do have some options.
Is It Possible to Pay Off a Personal Loan Early?
It’s unlikely that a lender would refuse an early loan payoff, so yes, you can pay off a personal loan early. What you have to calculate, though, is whether it’s financially advantageous to do so. If a personal loan early payoff triggers a prepayment penalty, it might not make financial sense to do so.
Overview of Prepayment Penalties
It may sound strange that a lender would include this kind of penalty in a loan agreement in the first place.
Some lenders may, though, to ensure you’ll pay a certain amount of interest before the loan is paid off. It is an extra fee that, when charged, helps lenders recoup more money from borrowers.
You can find out if you’d be charged with a prepayment penalty by looking at the loan agreement you signed with the lender.
If you have one, the penalty could be in effect for the entire loan term or for a portion of it, depending upon how it’s defined in the loan agreement.
Does Paying off a Personal Loan Early Affect Your Credit Score?
Personal loans are a type of installment debt. In the calculation of your credit score, your payment history on installment debt is taken into account. If you’ve made regular, on-time payments, your credit score will likely be positively affected while you’re making payments during the loan’s term.
However, once an installment loan is paid off, it’s marked as closed on your credit report — “in good standing” if you made the payments on time — and will eventually be removed from your credit report after about 10 years. Paying off the personal loan early might cause it to drop off of your credit report a few earlier than it would have and no longer help your credit score.
If I Pay Off a Personal Loan Early, Does My Interest Rate Decrease?
Since a personal loan is an installment loan with a fixed end date, if you pay off a personal loan early, you won’t pay less interest. You won’t owe any interest anymore because the loan will be paid in full.
Recommended: What are the average personal loan rates?
Advantages of Paying off a Personal Loan Early
There are definitely some advantages to personal loan early payoff. One obvious benefit is that you could save on interest over the life of the loan. A $10,000 loan at 8% for 5 years (60 monthly payments) would accrue $2,166.50 in total interest. If you could pay an extra $50 each month, you could pay the loan off 14 months early and save $518.42 in interest.
Not owing that debt anymore can be a psychological comfort, potentially lowering bill-paying stress. If you’re able to make that money available for something else each month — maybe creating an emergency fund or adding to your retirement account — it might even turn into a financial gain.
If you no longer owe the personal loan debt, you’ll essentially be lowering your debt-to-income ratio, which could positively affect your credit score.
Disadvantages of Paying off a Personal Loan Early
If your personal loan agreement includes a prepayment penalty, paying off your personal loan early might not be financially advantageous. Some prepayment penalty clauses are for specific time frames in the loan’s term, e.g., during the first year. If you pay off the loan during the penalty time frame, it could cost you just as much money as it might if you had just paid regular principal and interest payments over the life of the loan.
You might be thinking of a personal loan early payoff so you can put your money to work somewhere else. But if the interest rate on the personal loan is relatively low, it might make financial sense to put your extra money toward higher-interest debt, or to contribute enough to an employer-sponsored retirement plan so you can get the employer match, if one is offered. If you don’t have an emergency fund yet, you might also consider starting one with a bit of extra money each month until it’s at a comfortable level.
Another thing to consider is whether paying off your personal loan early will hurt your credit. As mentioned above, making regular, on-time payments to an installment loan like a personal loan can have a positive effect on your credit score. But when the loan is paid off, and marked as such on your credit report, it’s not as much help.
Advantages of early personal loan payoff
Disadvantages of early personal loan payoff
Interest savings over the life of the loan
Possible prepayment penalty
Could alleviate debt-related stress
Extra money could be better used in another financial tool
Lowering your debt-to-income ratio
Removing a positive payment history on the loan early could negatively affect your credit
More cushion in your monthly budget
Taking money from another budget category might leave an unintentional financial gap
Things To Ask Yourself Before Paying off a Personal Loan Early
Everyone’s financial situation is different. Priorities that are important to you might be less so to someone else. Considering how a personal loan early payoff might affect you can be a good way to start making the decision.
Will Paying off a Personal Loan Early Put Me at Risk?
There can be some drawbacks to paying off a personal loan early — some that might be considered risks.
If you’re thinking of putting extra money toward a personal loan balance, but you don’t have any money set aside in an emergency fund, that’s a financial risk. If you encounter an expensive, necessary financial need without the means to pay for it, you might be tempted to use high-interest debt like a credit card.
If you consider it risky to pay more than you need to for something, then paying a prepayment penalty could be considered a financial risk. If paying a loan early will cost you extra money, you might think about where that money could be better spent.
Will Paying off a Personal Loan Early Improve My Debt-To-Income Ratio?
Lowering your debt-to-income ratio can have a positive effect on your credit score, and paying off a loan will accomplish this. But you might weigh that positive against any potential negative effect that might come with paying off your personal loan early, such as not having a positive payment history included on your credit score after your loan is closed.
Does Paying off a Personal Loan Early Have Clear Benefits?
There are absolutely clear benefits to paying off a personal loan early. Saving money in interest charges over the life of the loan is at the top of the list, as long as any savings is not offset by a prepayment penalty.
Having more money in your monthly budget — since you wouldn’t have that loan payment due each month — might lower your financial stress.
Types of Prepayment Penalties
If and how a prepayment penalty is charged on a personal loan will be stipulated in the loan agreement. Reviewing this document carefully is a good way to find out if the penalty could be charged and how your lender would calculate it.
If you can’t find the information in the loan agreement, asking your lender for the specifics of a prepayment penalty and for them to point out where it is in the loan agreement is another way to be certain you have the right information to make a decision.
There are a few different ways a lender might calculate a prepayment penalty fee.
Interest costs
In this case, the lender would base the fee on the interest you would have paid if you had made regular payments over the total term. So, if you paid your loan off one year early, the penalty might be 12 months’ worth of interest.
Percentage of your remaining balance
This is a common way for prepayment penalties to work on mortgages, for example, and you’d be charged a percentage of what you still owe on your loan.
Flat fee
Under this scenario, you’d have to pay a predetermined flat fee for your penalty. So, whether you still owed $9,000 on your personal loan or $900, you’d have to pay the same penalty.
Avoiding Prepayment Penalties
Finding out whether a prospective lender charges a prepayment penalty — and not using that lender if it does — is at the top of the list of ways to avoid a prepayment penalty.
If you’ve already taken out a loan that includes a prepayment penalty, there are some options.
First, you could simply decide not to pay the loan off early. This means you’ll need to continue to make regular payments on the loan rather than paying off the balance sooner, but this will allow you to avoid the prepayment penalty fee.
You could also talk to the lender and ask if the prepayment penalty could be waived, but there is no guarantee that this strategy will succeed.
If your prepayment penalty is not applicable throughout the entire term of the loan, you could wait until it expires before paying off your remaining balance.
Another strategy is calculating the amount of remaining interest owed on your personal loan and comparing that to the prepayment penalty. You may find that paying the loan off early, even if you do have to pay the prepayment penalty, would save money over continuing to make regular payments.
Types of Personal Loans
In general, there are two types of personal loans — secured and unsecured. Secured loans are backed by collateral, which is an asset of value owned by the loan applicant, such as a vehicle, real estate, or an investment account. Unsecured personal loans, on the other hand, are backed only by the borrower’s creditworthiness, with no asset attached to the loan.
You might hear unsecured personal loans referred to as signature loans, good faith loans, or character loans. Typically, these are installment loans the borrower repays at a certain interest rate over a predetermined period of time.
Personal Loan Uses
Acceptable uses of personal loan funds cover a wide range, including, but not limited to:
• Consolidation of high-interest debt.
• Medical expenses not covered by health insurance.
• Home renovation or repair projects.
• Wedding expenses.
While there are benefits to borrowing a personal loan, it might not always be the right financial move for everyone. Personal loans offer a lot of flexibility, but they are still a form of debt, so it’s a good idea to weigh the pros and cons before signing a personal loan agreement.
Awarded Best Personal Loan of 2022 by NerdWallet. Apply Online, Same Day Funding
Personal Loans at SoFi
If you’re looking for an unsecured personal loan with no prepayment penalties, a personal loan from SoFi might fit your financial need. There are no application fees, no origination fees, and no hidden fees attached to unsecured personal loans with SoFi.
A SoFi Personal Loan can be used to consolidate credit card debt, make home improvements, pay for relocation costs, repair your vehicle, make a major personal purchase and more.
The Takeaway
If you’re in a secure enough financial position to be able to pay off your personal loan early, that’s terrific. But before you do, it’s a good idea to calculate whether it’s a good financial decision or not. A prepayment penalty could take a bite out of any savings you might see on interest costs.
Comparing interest rates for a personal loan, along with lenders’ fees and other charges, including prepayment penalties, is a good way to find the lender that meets your financial needs.
Ready to explore SoFi personal loans? Check your rate in just one minute.
FAQ
Is it good to repay a personal loan early?
Paying off a personal loan early can be a good financial decision, as long as any prepayment penalty charge doesn’t cost more than you might pay in interest.
If I pay off a personal loan early do I pay less interest?
Paying off a personal loan early doesn’t affect the interest rate you’ve been paying up until that point. It would mean, however, that the total amount of interest you’d pay over the life of the loan would be less than anticipated.
Does paying off a personal loan early hurt your credit?
Because making regular, on-time payments on an installment loan such as a personal loan is a positive record on your credit report, removing that history early can have a slight negative affect on your credit.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal. SOPL0222017
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Are you living by the mantra, “New Year, new you?” Year after year, we set these resolutions and goals – for them to get tossed out before the year can fully bloom. Looking for ways to elevate your life? Maintain the things you’ve started? Produce real results? Check out the tips below to secure your future and your bag in the year to come.
Write down your goals
As much as we’d like to consider ourselves computers, it’s nearly impossible for us to remember every single thing we’d like to do. In order to stay focused and remain organized, it’s best to simply jot down your goals.
Try your best not to overthink and begin to write everything that comes to your head. Essentially, this is a brain dumping exercise that allows you to clear your mind as much as possible. Often times confusion doesn’t necessarily come from us not knowing, it’s simply because we haven’t written down our thoughts.
Once this is finished, the second step is refining. Go through everything you’ve listed and organize it into categories. From there you’ll be able to highlight the top 3-5 goals you’d like to accomplish. This allows you to only focus on the goals with priority – and as those items are completed, the next ones in line will be yours for the conquering!
Are you wanting to start a new career or business venture? Write down all of the to-do items needed to accomplish that goal and assign a certain number of tasks per day, week or month. In this way you’re not overwhelming yourself with unrealistic expectations but creating an actionable guide that navigates you straight to the finish line.
Self-assess and readjust as needed
Let’s take a moment to reflect on 2021. What are the things you did exceptionally well? What are a few items that need improvement? Are you able to recall the goals that didn’t have any traction at all?
Before you can execute, you need to know where you’re currently starting from. Be honest with yourself – this isn’t an exercise to stir up negative and non-productive emotion. This is to chart your next steps and make them effective.
If you overspent this year on discretionary items, test out the cash method for your purchases. Looking to increase your earning potential? Update your resume, network and explore the opportunities that interest you. Saving for a large purchase? Create a reasonable savings plan that lays out the steps to ensure you’re successful.
Keep in mind this is not a one-day exercise. Carve out some time over the course of a week to truly reflect.
Avoid impulsive behavior and identify the root cause
Each and every one of us have thorns in our side that derail us from our goals – big or small. In order to identify the true problem, we must tap into our self-awareness and discuss some ugly truths. For example, if you are on a fitness journey and have a desire to become healthier– a routine is mandatory. Schedules allow us to operate more efficiently. So, let’s say you want to workout at least three times a week. This means there’s a certain window of time that needs to be allotted for the actual workout. After that you need time to eat, prepare food and continue flowing through the day. If one of these links are missing in the routine, it could tempt you to skip the workout completely.
What needs to happen? Have food readily available on the days you workout. Get sufficient rest the night before to make sure you’re energized to conquer the day. Try your best to eat the right foods to avoid feelings of sluggishness or irritation. Have your exercise clothes ready the night prior to avoid any mishaps in the morning. No matter how crazy and insane these little things may seem they’re very impactful. It creates a smoother workflow which decreases anxiety, worry, frustration and irrational decision making.
Let’s talk money!
If you have an issue with overspending; consider this. Do you spend more money when your emotions fluctuate? Adopt some self-care techniques to relax and unwind before making hash decisions. Try adopting yoga within your weekly routine. Step away from the computer when the feeling of work stress occurs. Swap out the impulse to spend with something positive, like taking a quick walk or simply log off social media. Unsubscribe from retail emails so there won’t even be an urge to spend. When you’re healthy mentally and physically – your finances have no choice but to positively benefit.
Let’s talk retirement
Before the year is up evaluate your retirement account, savings methods and/or investments. Are your selections aligning with the financial goals you’ve set for the upcoming year? Assess your contributions and adjust as you see fit. If there are things you’re unclear on or are in need of further guidance, solicit the assistance of a financial advisor. Don’t allow yourself to get hung up as challenges arise! There’s always a solution. Take a deep breath and revisit your goals in moments of frustration.
Create an accountability tribe
We cannot live life alone and in confinement, so what better way to engage the people closest to you than create an accountability tribe? Establish some safe meetups or virtual check-ins as schedules permit to discuss hiccups, successes and lessons. In this way, it establishes a sense of community and support. It’s almost like having your own personal cheerleaders ushering you through all phases of life. You can gain multiple perspectives while also having a safe space that doesn’t judge you for your mistakes.
Remain positive and stay the course
In this upcoming year, don’t settle for less. The key to achieving all of your goals fall into two main categories: consistency and discipline. Will the work always be easy? Absolutely not. Your goals will stretch you in new ways and will create a new level of resilience.
2022 is ours for the taking. You have the tools; now do the work and secure the life you truly desire to live!
Save more, spend smarter, and make your money go further
Marsha Barnes is a finance guru with over 20 years of experience dedicates her efforts to empower women worldwide to become financially thriving. Financial competency and literacy are a passion of Marsha’s, providing practical information for clients increasing their overall confidence in their personal finances. More from Marsha Barnes
Want to hone your DJ skills? Or maybe show them off?
Wedding DJs are in high demand these days.
Industry experts expect 2022 to be the busiest wedding season in 40 years, thanks to lockdown romances and postponed ceremonies during the pandemic.
A wedding DJ is the focal point of great wedding receptions. They set the mood, engage with the crowd and keep the couple happy.
They make good money, too. Wedding DJs make $1,000 per gig on average, according to WeddingWire, with experienced pros fetching upward of $2,000 or more.
But it takes a lot of hard work and planning to DJ a wedding. To start a successful wedding DJ business, you’ll need seed money for gear, reliable transportation — and great people skills.
How to Start a Wedding DJ Business in 9 Steps
Nick Smith started DJing weddings in southwest Indiana when he was 20 years old. His first set of speakers and audio equipment came from a bar that was going out of business.
Sixteen years later, Smith’s business has booked over 200 weddings.
“It’s a great gig if you love people and music,” he said.
Ready to spin up your own side hustle? Follow these nine steps to start a wedding DJ business.
1. Research and Talk to Other DJs
Before you invest major money into gear and advertising, make sure you’re comfortable with this type of gig.
Talk to other wedding DJs and ask what challenges they faced in the beginning — and how they overcame those hurdles.
If you’re new to DJing in general, it’s a good idea to shadow a professional wedding DJ. Search Google, Yelp or the Knot to find some in your area.
Send a friendly email asking if you can help them out at an event or two because you’re interested in being a wedding DJ.
On the day of the wedding, show up early and stay for the entire event. Observe how the wedding DJ interacts with the crowd and the type of music they play. Take notes.
Ask yourself the following questions:
How do they make announcements?
What do they do when the dance floor thins out?
How do they handle requests?
What equipment do they have?
In exchange for the experience, offer to help the other DJ by unloading gear from the car and setting up the speakers.
2. Hone Your Skills
Practice makes perfect. You need to be comfortable behind the booth before you’re ready to book gigs.
Play for family and friends first. You can also book other, smaller events — like birthday parties and company parties — to get your feet wet. Online classes are another way to grow your knowledge base.
Practice playing songs, using a microphone and flowing from one song to another.
If you’re not ready to start your own wedding DJ business quite yet, consider working for a multi-op — a mobile DJ company that employs several disc jockeys.
3. Create a Business Plan
Creating a business plan is important if you plan to invest time and money into becoming a wedding DJ.
Your business plan should include:
Your business name and location
Customer demographics and target audience
Price points
Suppliers for your equipment
Initial start-up costs and how long until you’re profitable
Competitors
You can use one of these templates from the U.S. Small Business Administration to create a more detailed business plan.
Looking for more tips? Check out these 10 things you should know before you start a business.
Setting Your Rate
The best way to set your initial rates is by researching prices for wedding DJs in your area, then offering a lower price.
How much you charge also depends on where you live: A wedding DJ in a big city earns more money than a wedding DJ in a small town.
Still, a good starting rate for a novice wedding DJ is roughly $500. You can raise your rates as you gain more experience. According to The Knot’s Real Weddings Study, couples spent an average of $1,400 on a DJ in 2021.
Wedding DJs usually pick one or more of the following pricing structures:
Flat fee or hourly rate
Packages
A la carte services
Custom quote
You should also be open to negotiating when you first start out.
Decide What DJ Services to Offer
Smith said offering additional services to clients is one of the best ways to make extra money as a wedding DJ.
“Additional services can really help add value,” Smith said. “You can offer things like uplighting, or doing sound for both the ceremony and the reception.”
Consider add-ons that earn you extra money with minimal effort. For example, some DJs offer photo booth services for guests, but Smith said photo booths are labor intensive to transport and set up.
“Unless you have someone else helping you, you want to keep things simple,” he said.
4. Buy Your DJ Gear
A big hurdle for many new DJs is acquiring equipment. It can cost a couple thousand dollars to purchase all your DJ gear.
“It’s a big cost up front for sure,” Nick said, “but you’ll earn it back quickly with gigs.”
While you don’t need state-of-the-art equipment to be a great wedding DJ, you do need a solid foundation to get started.
Wedding DJ gear checklist:
Laptop with at least 6 GB of internal memory and three USB inputs
DJ software, like Serato or Traktor
PA system (amplifier and speakers)
DJ controller / mixer
Over-the-ear headphones
Cables
MP3 music files
On a budget? Smith recommends looking for deals on sites like eBay and Craigslist. Check out sales at your local music store, too.
You could even borrow equipment from a friend or neighborhood church for your first couple gigs.
“You can start with a cheaper set-up, then upgrade it up over time,” Smith said.
You’ll also need to be comfortable setting up and tearing down your own DJ equipment. Figuring out how to efficiently store and transport your gear is also important if you want to be a mobile DJ.
Buy the Music
Buying music is important if you want to run a successful wedding DJ business.
Professionals caution against using streaming services like Spotify or YouTube. It isn’t technically legal and you shouldn’t rely on anything that requires Internet access anyway.
You have several options to legally purchase music for your wedding DJ business:
Buy mp3s through Amazon or iTunes/Apple Music.
Subscribe to a DJ pool like Promo City. This is a paid service that gives you access to volumes of modern music for download.
DJ subscription service like Virtual DJ or Pulselocker.
Buy used CDs and rip them to your laptop.
Set aside a little money from each gig to buy more music, and it won’t take long to compile a competitive professional DJ library.
5. Market Yourself
You have the gear. You have a plan. Now it’s time to get some customers.
You’ll need to create a DJ website and social media accounts to attract potential customers. Look at websites for other wedding DJ businesses to get ideas.
At the bare minimum, your website should include:
Your rates
Where you’re located (and how far you’re willing to travel)
A contact email address and phone number
What makes you unique from other DJs in the wedding industry
Testimonials and positive reviews
You can use a service like Wix or Weebly for free, or hire a professional to design a website for you.
Word of mouth is huge in the wedding business, Smith said. It’s about who you know and who knows you.
“Recommendations are everything,” Smith emphasized.
Give discounts for referrals. Make it easy for the bride and groom to leave glowing reviews about your wedding DJ business on Google and Facebook.
You’ll want to create some business cards and maybe some flyers, too.
Leave a space in your budget for marketing costs. Advertising on sites like The Knot and WeddingWire can really help pull in new customers because couples often visit these sites to find venues and vendors.
6. Meet the Couple for a Consultation
Meet up with the wedding couple several weeks before the event to discuss the playlist.
Ask about their favorite genres and bands, then create a short list of must-have songs, including their pick for the first dance and other important dances.
Perhaps more importantly, get a list of songs they don’t want played. The Chicken Dance, for instance.
“Get an idea of what they’re looking for,” Smith said, “then execute that to the best of your abilities.”
Print a questionnaire for the couple to fill out at the consultation with a timeline of the wedding, names of important people in the wedding party and other key details you should know.
You’ll also want to create contracts you can customize for each couple.
Your business contract should cover things like cancellation fees and damaged equipment policies. Make sure to discuss these policies with clients during the initial consultation.
Finally, prepare to spend several hours communicating back and forth with the couple before the wedding. Smith said he usually spends about 10 hours total preparing for the big day.
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7. Create the Playlist
Your goal as a wedding DJ is to create a memorable experience for the couple and keep the party going.
Don’t slide your original deep house remix into the wedding playlist. Remember, focus on the bride and groom — not your personal taste in music.
Play music to match the festivities. Break your songs into different blocks for the ceremony, cocktail hour, introductions, dinner and dance floor.
Each block should have different music to the atmosphere: Classical music at the ceremony, light jazz for the cocktail hour and soulful tunes for dinner, for example.
You can flex more creativity and play new music for the dance floor. But remember: You’re playing for a diverse audience. Don’t be afraid to bust out crowd favorites like “Don’t Stop Believin’” and “Livin’ On A Prayer.”
“People are at a wedding to have a good time,” Smith said. “Your job is to play the right music and create a fun atmosphere for everyone.”
8. Be On Time and Professional
You can’t be late to the party when you’re the DJ. Get there early, set up on time and prepare for a late night.
Before the wedding, write out a script of everything you plan to say. Practice pronouncing names. You don’t want to butcher the best man’s last name on stage.
Make sure to bring backup chargers, cables and other necessary gear. Things go wrong, break and run out of battery. Don’t let something unexpected (but easily preventable) ruin your wedding gig.
9. Work the Crowd and Keep the Party Going
Successful wedding DJs set the tone and vibe for the entire reception.
Be friendly, energetic and don’t forget to smile!
It’s not all about the music, though: You’ll be in charge of making announcements, calling for special dances and fielding song requests from (often intoxicated) guests.
You’ll need to communicate with other vendors at the wedding, too. You don’t want to start playing music for a special dance, for example, without the photographers and videographers in place.
Be observant, flexible and keep the party going.
It’s a lot to manage but pulling off your first successful gig can be the start of a rewarding and lucrative wedding DJ business.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder
Do you ever wonder why it’s so hard to save money — even when you’ve cut the cable and the meals out, and you’ve never even had a latte habit?
One reason it’s so hard to save is that your fixed expenses — the ones that stay the same each month, like your rent or mortgage, car payment, property taxes and insurance premiums — tend to be your biggest bills. These aren’t exactly easy to reduce. Sure, you could lower your rent by moving to a smaller place, but moving itself is also expensive.
We don’t have a magic money-saving trick that will send your bank account balance soaring, but there are plenty of small ways you can scale back. And the little things do add up. Read on if you’re ready to start saving.
How to Start Saving: Set Your Goals First
We get that making a budget ranks right up there with a dentist appointment or trip to the DMV in terms of things you’d rather do. But it’s your essential first step when you want to start saving money.
Fortunately, the best budgeting apps make it easy to keep track of your spending and identify areas where you can cut back. Just be sure to comb through several months’ worth of expenses to get a true sense of where your money is going. Don’t forget about the expenses you don’t encounter every month, like holiday gifts and car registration.
If you don’t set goals, the only thing that budget will do is make you feel terrible about just how little money you’re saving. To get motivated to make saving a priority, spell out why you’re saving.
Think about the short-term goals you’re hoping to accomplish within the next year or two. Building an emergency fund for your family, making a down payment on a home or saving for a vacation may fit in here. Also consider your long-term goals, like putting more money in a 529 plan for your child or saving for retirement.
25 Tips for How to Save Money — Even When Times Are Tight
Here are 25 ideas for saving more money. The good news is that there’s no one thing you have to cut out. If it really matters to you, go ahead and keep spending on it. You can find other things to eliminate that won’t cause too much pain.
1. Time your purchases like a pro.
You may not be able to time a car repair or vet bill, but with discretionary purchases, knowing when to get the best deals can mean big savings. Need a TV? Wait until January, when last year’s models are discounted to make room for the new ones. Looking for new furniture? Retailers often clear out their stock around Independence Day, making July prime time for scoring cheap furniture.
Robin Hartill scored a free birthday sub she got from Jersey Mike’s Subs in St. Petersburg, Fla. Tina Russell/ The Penny Hoarder
2. Master the art of getting stuff for free.
Becoming a hermit isn’t the only way to save money. There are plenty of ways to get free stuff or have fun on the cheap. Some of our favorite ideas:
Use Facebook and Nextdoor. Before you shell out for things like furniture or baby gear, check out buy- nothing groups on platforms like Facebook and Nextdoor to see if one of your neighbors is looking to get rid of something similar.
Score free food by downloading an app. Plenty of restaurant chains offer freebies or BOGO deals for downloading their apps. You can always delete them after you take advantage if you don’t want temptation at your fingertips.
Get free stuff just for being born. You can score tons of birthday freebies if your big day is coming up — often not just on your actual birthday, but any time during your birth month.
Check out your local library for free entertainment. Your library card isn’t just a pass to check out books made from dead trees. Plenty of free library apps allow you to access ebooks, movies, music and more without paying a cent.
Swap goods or services with someone else. Learning how to barter can help you get what you need without spending money.
3. Smash your credit card debt once and for all.
The average APR for people who carry credit card debt is well over 16%. Your bank jumps for joy when you don’t pay off your balance because it’s getting rich off all that interest. Quit padding your bank’s coffers and break up with your credit card debt forever. Some tactics to try:
The debt snowball method, where you attack the smallest balance first.
The debt avalanche method, where you focus on the card with the highest interest rate.
A debt consolidation loan, where you merge your debts into a single payment. This is only a good option if you’re lowering your interest rates.
A balance-transfer credit card, where you transfer your balances to a card with a 0% promotional interest rate. That zero-interest period typically only lasts 12 to 18 months, though, so this approach is best if you don’t have tons of debt.
4. Flex interest rates to your advantage.
Although they may be on the rise, interest rates are still low, especially if you haven’t refinanced your mortgage in a number of years. One good rule of thumb: Refinance when you can lower your interest rate by 1 percentage point or more, since you’ll have to pay closing costs.
5. Lower your student loan payments.
If you’re struggling to pay off student loans, take advantage of the freeze on interest and payments during the forbearance period to talk to your servicers about whether an income-driven repayment plan is an option for your federal loans. These plans will stretch out your repayment over the standard 10-to-20 years — and if you still have a balance after 20 years, it will be forgiven, though you’ll still owe income taxes. If you have private student loans, check with your servicers about whether there’s a way to lower your debt payments.
To save time and money on eating out, Shane and Melissa Courtney prepare their lunches and dinners in their Tampa home. They shop at a local farmers market and use cheaper vegetables like cabbage. They also buy bulk items like rice noodles from Amazon. Chris Zuppa/The Penny Hoarder
6. Do meal prep. Don’t go overboard.
Grocery stores play all kinds of sneaky mind games with you, and you’re most vulnerable if you shop while you’re harried and hangry. A great way to combat their money-snatching tactics is to make a shopping list and devote a few hours to meal prep every week.
But don’t get too ambitious here. If you’re an UberEats addict whose pantry consists of three spices, you’re setting yourself up for failure if you plan to cook 21 meals a week. Start with a more reasonable goal, like making your own breakfast and lunch each day, plus dinner three nights a week.
Pro Tip
Only buy in bulk if you’re purchasing products that have a long shelf life or ingredients that you have enough freezer space to store for future recipes.
7. Squeeze every cent you can out of your employer.
We aren’t just talking about negotiating your salary and asking for a raise when you’ve earned it — though both are essential, albeit awkward. To build your long-term savings, make sure you’re not leaving free money on the table. Contribute enough to get your employer’s full retirement match if they offer a 401(k) plan. If you have a health savings account, take advantage of any matching contributions to that as well. You can use the money you save for your own expenses, your spouse’s or a dependent family member’s.
8. Got a raise? Congrats, but don’t spend it.
Do your tastes get fancier every time you get a raise? This phenomenon is called lifestyle inflation, and it’s a notorious savings killer. You don’t have to live like you’re on an entry-level salary forever, but make a plan for your future raises so your living expenses increase at a slower rate than your salary. For example, plan to save half of your next pay increase and sock the rest in savings.
9. Be skeptical when something seems like a deal.
Free shipping if you spend just another $11? Step away from the digital shopping cart. If you’re being coaxed into shelling out another few bucks for something that’s “free”… well, it really isn’t free.
Playing the credit card rewards game is another good example. Yes, you can score free airfare and cash back. But it’s only free if you don’t spend more to get those rewards, and if you pay your balance in full every month. Otherwise, you’ll shell out way more in interest than you’re getting in rewards.
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10. Cancel automated purchases for non-necessities.
Curbing mindless spending isn’t just about cutting out late-night Amazon purchases and impulse grocery buys. You probably have monthly subscriptions and memberships that are draining your bank account each month for things you rarely, if ever, use.
One of the best ways to save money is to look carefully at gym memberships, streaming services, subscription boxes and anything else that you automatically pay for each month. If you haven’t used it in the past month, it probably belongs on the chopping block. Also be on the lookout for any free trials you forgot to cancel.
Pro Tip
Avoid storing your credit and debit card information on websites you frequently shop on. You’ll make it harder for yourself to spend mindlessly.
11. Find energy suckers that are driving up your electric bill.
No, we aren’t going to tell you to invest thousands of dollars on solar panels for your home as a way to save money on your electric bill. But there are a few inexpensive tricks that can help you save money on utilities. Simple things like regularly changing air filters and switching to more efficient light bulbs can make a big difference on energy costs.
12. Repair what’s broken instead of buying new.
Just because something’s broken doesn’t mean it’s destroyed. By learning some basic DIY techniques, you can make your lightly damaged goods like new again without shelling out for repairs. For instance, learning a few basic sewing stitches will help you repair your clothing for you and your family, even if you don’t have a sewing machine. There are plenty of ways to learn home repair skills for free online.
But for major repairs, know when to call a pro. It’s worth the cost when you’re repairing a big-ticket item or doing anything that could jeopardize your safety.
13. Save money on prescription drugs.
Whether you have health insurance or not, it often pays to do some detective work before filling your prescriptions. If you don’t have insurance, you can save up to 80% on generic medications and 40% on name-brand drugs through Amazon Pharmacy or find medications nearly at-cost at Mark Cuban’s Cost Plus Drug Company. Even if you have insurance, a prescription drug card could help you save money. You can ask your pharmacist to run the cost using your insurance and the card to find out which option is cheaper.
If a medication is expensive because you have to pay for it out of pocket or your insurance company puts it in a pricy tier, talk to your doctor or pharmacist. A lower-cost alternative may be available. For over-the-counter meds, always buy generic. The FDA requires generic drugs to be chemically identical to their more expensive name-brand counterparts.
14. Ditch your cell phone plan if you have a major carrier.
You don’t have to worry about spotty service when you switch to a discount cell phone plan. Most discount plans run on the network of one of the four major carriers, so the only thing you have to lose is your out-of-hand bill. Depending on the plan, you may have data restrictions. Some also require an unlocked device.
15. Find money you’ve long forgotten about.
Some money-saving strategies require a ridiculous amount of discipline. So here’s a super easy trick that could give you a quick savings boost in just three minutes. Find out if someone owes you money by searching your state’s unclaimed property website.
At least 1 in 10 Americans has missing money waiting to be claimed. You could find money from old security deposits or bank accounts, or even a life insurance policy you didn’t realize a loved one left you. The key to making a one-time windfall work for you is to use it purposefully. That can mean saving or investing your money, or putting it toward debt.
16. Get cash for switching banks.
Another way to get a quick cash infusion: Switch bank accounts. Some of the best bank promotions will give you $500 or more just for opening a new account. Just be sure to read the fine print, since a bank account with ridiculous fees or minimum balance requirements could cost you big.
17. Be strategic about your tax refund.
Some personal finance types will shame you for getting a big tax refund because you’re giving Uncle Sam an interest-free loan. We say, do whatever works for you. Opt to have less money withheld from your paycheck if you’ll actually save it or apply it toward debt. But if the idea of a giant tax refund motivates you, it’s OK to make the IRS play piggy bank. Just make a plan for how to spend your tax refund that will pay off in the long run. Some of our favorite ideas:
Put it in your savings account for an emergency or upcoming expense.
Pay down your highest-interest credit card.
Make an extra mortgage or car payment.
Give your Roth IRA a boost.
Put it in your child’s college fund.
Aileen Perilla/The Penny Hoarder
18. Travel by two wheels whenever possible.
Even if it’s not feasible to ditch your car, bike commuting a couple days a week can help you save money on obvious expenses, like gas and parking. But there’s a bonus here: When you’re on your bike, you can fit a lot less in your basket or backpack than you can in your car trunk. So if you have a habit of making extra trips to the grocery store or stopping for takeout on your way home, traveling by bike reduces the temptation.
19. Cancel the insurance you don’t need.
Insurance can seem like a money-sucker, because hopefully, you don’t need to use it very often. Having sufficient homeowner insurance or renters insurance, car insurance and medical insurance is one of the best ways to prevent an emergency from destroying your finances.
That said, some types of insurance are a waste of money. For example, you probably don’t need collision insurance or comprehensive insurance on a car that’s paid off if it’s older and one fender-bender away from scrapyard heaven. You may not want to shell out for accident insurance or critical illness insurance either, because the circumstances they’ll cover you for are so limited. Even life insurance may not be worth the cost if you’re single with no dependents.
Pro Tip
You can often get discounts on insurance by bundling your coverage. For example, you may save money by getting your car and renters insurance from the same company.
20. Do a no-spend challenge
Duh. It sounds so easy: To save money, just don’t spend it. But doing a no-spend challenge, where you commit to not spending any money over a certain period — be it a month, a week or even a single day — can help you reign in your spending.
Or you could try a modified version. Do a pantry challenge, where you avoid the grocery store and use the ingredients you have on hand to feed your family. Or build a capsule wardrobe, where you select a certain number of clothing items and make those your only wardrobe for the time frame of your choosing.
Students work on patients at the Dental Hygiene Clinic at St. Petersburg College in Pinellas Park, Fla. Chris Zuppa/The Penny Hoarder
21. Find discounted services at vocational schools
If you’re looking for ways to save money on expensive services, sometimes it pays to let a student practice on you. You can get services like beauty treatments, sonograms and massage therapy at steep discounts from local vocational schools. If you live near a university and you’re truly brave, you could even get low-cost dental work from a student dentist.
22. Get free or low-cost financial help
If you’re struggling to stick to your budget or keep your spending in check, it’s OK to ask for help. You don’t need to spend big bucks to work with a financial pro. Unlike financial planners and advisers, who often cater to people with a higher net worth, a financial counselor is trained to help regular people manage their money from day to day. Many offer their services at little to no cost through a bank, school or nonprofit, or they practice on their own and use a sliding scale based on your income.
23. Find ways to earn extra money.
There’s no way around this one: Even when you have a bare bones budget, sometimes saving money just isn’t possible. One reason is that your fixed costs, like your rent or mortgage, medical insurance and car payments are often your biggest expenses — and those are the hardest to lower.
If you’ve cut everything you can and still can’t save, it’s time to find ways to make extra money. Switching to a higher-paying job isn’t always realistic, but you can still take on a side hustle, find a work-from-home job you can do part time or make extra cash selling stuff online.
24. Find cheap ways to treat yourself.
Any successful savings plan has a little built-in flexibility so you can treat yourself from time to time. Rather than downing drinks at happy hour, buy yourself a good but cheap bottle of wine to enjoy at home. Have a DIY spa day using simple ingredients you probably have on hand. If you’ve been stuck at home for too long, you can refresh your home’s look without spending a dime.
25. Talk about your struggles and your successes.
One of the best ways to save money is to tell other people that you’re trying to save money. Doing so can help you prepare your friends and family for when they hear you say no to joining them when they suggest expensive plans.
But that’s not the only advantage. It’s easy to feel like you’re the only one who’s struggling to save money, especially when you scroll through Instagram. But you’re far from alone. Find other people who are trying to save money, either within your social circle or by connecting with a like-minded online community. You can swap tips for saving money and find encouragement when times are rough.
And when you reach your savings goals, no matter how big or small? Pay it forward. Talk about it. Let others know exactly how you managed to save money — and that they can do it, too.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. Send your tricky money questions to [email protected].
