Budgeting & Goals Archives

Dec

2024

How to Create a Home Budget: Step-by-Step Guide

By Kayla McCormack | Budgeting & Goals, Financial Independence, money | No Comments

Managing your everyday expenses as part of a household can sometimes get complicated. Your finances have been on track, say, but then a frigid winter arrives and sends your heating bill soaring. Or you suddenly have to account for a new sofa purchase and realize you’re perilously close to overdrafting.

Wrangling one’s cash flow and meeting financial goals can be simpler (and often less stressful) if you have a home budget, which is a method of tracking and managing your money as it comes in and goes out. Creating a realistic household budget can help you find the right balance. Learn the ropes of creating your own home budget here.

Key Points

• A household budget helps manage money by tracking income and expenses, aiding in financial goal achievement.

• There are different budgeting methods to choose among, such as the 50/30/20 rule or envelope method.

• One of the first steps is to identify all household expenses, including housing, food, utilities, and transportation, to create an accurate budget.

• Tools like bank dashboards or apps to track spending and adjust the budget can be used as needed.

• It’s wise to regularly review and tweak the home budget to accommodate changes in expenses or financial goals.

How to Create a Household Budget

A household or home budget is a plan for how you will utilize the money coming in to cover expenses and savings goals. It typically covers one month at a time, but it can be smart to tweak it to reflect how spending varies over the year. Here are the steps that can help you create a flexible, helpful household budget.

Have a partner? Collaborate on your household budget together so you can be aligned on your financial management, which may mean keeping some aspects of your money separate (say, you might have one shared pool of money and also each have your own checking account as well). And if you have roommates, a household budget can help you identify and divvy up shared expenses appropriately.

1. Choose an Ideal Budget for the Household

A vital first step for creating a household budget is picking a good system. There are many ways to budget, and the right one is the one that works for your personal money style and financial goals. It can be helpful to review some of the options such as:

• The 50/30/20 budget rule: With this popular system, you divide your take-home earnings as follows. Half or 50% is allocated for the needs in life; food, shelter, health care, minimum debt payments, and the like. Then, 30% goes toward wants: dining out, vanilla lattes to go, entertainment, travel, and fun purchases. The last 20%? That’s for savings or additional debt payments.

• The envelope budgeting method: With this technique, you think about the different categories of spending in your household and create an envelope for each with the amount of money needed per month in it. Then, each month, you use those funds to pay your bills. So if you have an envelope with $100 in it for dining out and use it all up on the 15th of the month, that’s it! You stop spending in that category or else borrow from a different envelope that has excess funds.

• The zero-sum budget: With this budget, every dollar has a job to do. The goal is to spend each dollar (and that can mean applying some to, say, building an emergency fund in a savings account.

It’s often wise to review a few different budget methods (you can likely find more online), and pick what looks like the right fit. It may be great, or you may want to pivot and try something else. Or create your own home budget method that uses the best of various techniques. Trial and error can be a valuable part of the process as you find a system that works for you.

2. Identify All Household Expenses

An integral part of almost any household budget will be accounting for your expenses. Many people are well aware of exactly how much money they earn (which is also an important component of a budget), but expenses can be variable and somewhat hard to capture.

While not an exhaustive list, here are some typical ones to note. You can tally up how each category tracks for a few months, and then divide by the number of months to get an appropriate sum for your budget.

• Housing: This category can include rent or mortgage payments and property taxes. If you are a homeowner, you may have various infrastructure expenses, such as annual HVAC inspections and the like. Don’t forget about your renters or homeowners insurance either. Need a new mattress? That can land in this category, too.

• Food: It can make sense here to consider how much you spend on groceries in one bucket and dining out (which includes things like wine with colleagues after work) in another.

• Entertainment: This can include books, movie tickets, streaming platforms, sports events, concerts, plays, downloaded music or e-books, and the like.

• Utilities: Here’s where you account for heating and cooling costs, phone, wifi, and other expenses that keep your household connected and comfortable.

• Transportation: This may include a mix of car payments, auto insurance, gas costs, public transportation, rideshare payments, and other expenses.

• Clothing: With this category, you may want to divide expenses up into necessary expenditures (a new winter coat) and fun purchases, such as an outfit to wear to a holiday party. This can help you determine how much to spend on needs vs. wants.

• Debt payments: Make sure to include such expenses as credit card payments, student loans, car payments, and the like.

As you consider your spending, don’t forget about those annual or somewhat random expenses that crop up, such as money for the holiday party you always host or gutter cleaning every year.

You’ll want to do your best to accommodate those expenses. If you don’t budget for them, you could wind up dipping into savings or adding to any credit card debt you are carrying.

3. Get the Right Tools to Track Your Expenses

Budgets involve accounting for expenses vs. your income. After reviewing at least a few months’ worth of expenses, you’ll be creating guidelines for spending vs. your income. You can chart different expenditure categories and see how much you can allocate toward them and where you can make some cuts. You might focus on lowering spending on, say, dining out so you can put more money toward debt repayment or rising property taxes.

To help you with this, you may also want to select the right tools to help you track your expenses as monthly variations can impact on your financial standing. A few options:

• A good place to start can be to check out the tools your financial institution offers. Many traditional and online banks have dashboards, trackers, alerts, and other ways to monitor (and then adjust) your spending.

• Another option is to try third-party tools available online and as apps. These can be free or may involve a fee for premium features.

• For some people, setting up a budget in Excel works well. This can involve logging your expenses regularly to see how you’re tracking.

• For others, the right tools could simply be a dedicated notebook and colored pens or an accordion folder to keep receipts.

These tools can help motivate you to dive in, similar to the way buying back-to-school supplies used to get you psyched up for the start of classes. They can keep you engaged as you work with the guardrails your budget provides.

Recommended: 50/30/20 Budget Calculator

4. Monitor and Change Your Budget As Needed

Setting up a budget is all about having a framework for managing your money. It helps you keep spending in check and achieve your financial goals. A few points to note as you live with a household budget:

• It often takes tweaking to get your budget balanced. For instance, when inflation is surging, you may find expenses like groceries, gas, and utilities rising. You might have to trim elsewhere to keep your budget humming nicely along. Or life happens: Your sister gets engaged, and you run out and buy her a great gift that requires some budget retooling.

• It can be wise to check in with your budget every week or so to see how you’re tracking and make any changes needed. For instance, if your rent goes up when you renew your lease, you might find a lower-priced health insurance and be able to rebalance your household budget.

• If you discover that you’ve made your home budget too intricate and are avoiding it for any reason, switch to a different system.

At the end of the day, how to set up a household budget is about making your money work for you, so that you can spend it on the things (and people) you love. Make changes as you see fit. Flexibility in a budget is important to its success. If you find that you are having a hard time sticking to your budget, you might decide to work with a financial counselor to help you with professional advice.

Recommended: 10 Most Common Budgeting Mistakes

The Takeaway

Creating a household budget can be a good way to monitor your earnings and expenses. The process typically involves picking a budgeting method, accounting for expenses (such as utilities and food costs), using tools to track your spending, and then adjusting your budget as needed. Developing a household budget can be a path to managing your money better and meeting your financial goals.

FAQ

What is the 50/30/20 budget rule?

This popular budget technique involves allocating 50% of one’s take-home pay to the needs of life (such as food, shelter, transportation), 30% to the wants of life (fun spending on dining out, entertainment, and more), and 20% to savings or additional debt payments.

How do you start a household budget?

To start a household budget, a person can pick a budgeting method and then allocate their earnings toward expenses each month. Tracking one’s spending and working toward goals (such as an emergency fund) can be an important part of the process.

What is usually the biggest household expense?

For most Americans, the biggest household expense is housing. Research shows that this can typically account for 33% or more of the average person’s spending, and that figure can soar higher in certain areas, such as major cities.

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Dec

2024

27 Weird Ways to Make Money

By Ashley Kilroy | Budgeting & Goals, Growing Wealth, money | Comments Off

If you’re interested in bringing in more cash, you may be happy to know there are countless weird ways to make money, from selling your hair to testing food to beekeeping. With today’s high cost of living and inflation chipping away at paychecks, many consumers are seeking extra income by starting part-time work or a side hustle.

So, if you want to pad your wallet with extra cash, here are some odd ways to make money in your spare time.

Key Points

• Renting out your backyard for campers can provide a unique earning opportunity.

• Participate in sleep studies, clinical trials, and market research to earn extra cash.

• Earn by testing websites and providing usability feedback.

• Help people move their belongings as a professional mover.

• Compete in food challenges or writing contests to win cash prizes.

Benefits of Weird Ways to Make Money

Generating additional income is a key benefit of starting a side hustle, and sometimes you need to be creative about how to do that. When you hit on an idea that pulls in more cash, you can use that to afford some small splurges (go ahead and get that pricey salad you love twice next week), but it can also help in a more lasting way. Whether you bring in an extra $100 or $1,000 per month, you can reap the following advantages:

• Repay debt. High-interest debt, especially from credit cards, can gobble up your income and inhibit financial growth. Paying off debt can be a huge step forward in your financial health.

• Boost retirement savings. Take advantage of the power of compounding returns by stashing more money into your IRA or 401(k) — your retired self will thank you!

• Achieve financial stability. Your extra money can build an emergency fund that allows you to handle unexpected expenses or survive for a few months without work, protecting you from the consequences of sudden job loss or a downshifting economy.

• Follow your passion. While your day job might not be the career path of your dreams, a side hustle allows you to explore what you love and earn money along the way. For example, your woodworking hobby or love of knitting can become a profitable business.

• Accomplish a financial goal. Whether you want to take an overseas vacation or update your kitchen, making extra money can help you afford a financial goal without taking on debt or dipping into your savings.

• Grow professionally. Although your second job might be unusual, such as becoming a professional eater, it can allow you to make new connections, acquire new skills, and open the door for career opportunities.

• Structure time intentionally. Another job will cut down your free time, but this can be a net positive — for example, it can help you direct the hours you have to yourself to what matters most, such as spending time with friends and family. Hard work can help highlight the good times with the ones you love.

💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.00% APY, with no minimum balance required.

Making Money: 27 Unusual Ways

If you’re looking for ways to make money from home or in the outside world without loads of special training, check out this list of weird ways to make money.

1. Renting Your Backyard for Campers

No matter where you live, if you’re in a house, your lawn could be a sought-after destination for adventurers and budget vacationers. Via websites like Hipcamp, you can advertise a comfortable, affordable place to stay for a couple of nights for backpackers or vanlifers. Bonus points if you’re near popular attractions. At Hipcamp, the average active host pulls in between $8,000 to $15,000 per year.

2. Becoming a Professional Sleeper

Another one of the strange ways to make money is by sleeping (seriously!). Despite its necessity and benefits, sleep is mysterious to us, and the scientific community has much to research about it. For instance, you could become a subject for researchers trying to better understand sleep. One University of Colorado study paid almost $3,000 for a study to be completed in less than a day. Sleeping also has commercial utility in various situations. For example, you might try out a company’s products, such as a prototype pillow or sleep mask. To find gigs, set up some search-engine alerts with keywords such as “sleep study” or “sleep tester” and also comb job boards, especially at universities doing research.

3. Renting Out a Shed

Have enough room on your property for extra boxes, appliances, or tools? An app like Neighbor lets you rent out your extra storage space for other people’s possessions, processes payments for your services, and is free to use. It’s like Uber or Airbnb — but with your attic or garage.

4. Test Websites

You can be a professional web surfer by testing websites for companies wanting to improve their online capabilities. Tasks range from clicking a link to finding a specific page on a website. A few minutes a day could earn you income (anywhere from 10 cents to 10 dollars per assignment, depending on the time required), and payments usually come to you through a convenient app like Venmo or PayPal.

5. Being a Professional Mover

Moving is a challenge and can be a very stressful experience. People will often pay big money for help packing, cleaning, and transporting items. This job is physically demanding, so it may not be for everyone. You can work weekends for a moving company or become an independent mover with a company like U-Haul. You might also advertise your services locally if you have a van and access to moving supplies.

6. Professional Eating

Here’s another odd way to make money: If you can gulp down food in a matter of minutes, professional eating is a viable side hustle. Local restaurants might give rewards for accomplishing food challenges. In addition, Major League Eating hosts food challenges across the United States with cash prizes for winners. Want to aim high? The annual Nathan’s hot-dog eating contest pays a $10,000 prize.

💡 Quick Tip: Want a simple way to save more everyday? When you turn on Roundups, all of your debit card purchases are automatically rounded up to the next dollar and deposited into your online savings account.

7. Cuddling

Today’s modern, fast-paced world can deprive people of physical touch, a vital factor in mental and emotional health. Cuddle Comfort is a secure website that sets up platonic cuddling sessions. At around $80 per hour, you could be well-compensated for helping others snuggle up and feel less isolated.

8. Befriending a Stranger

If you’re personable and love embarking on new experiences, being a professional friend may be right for you. RentAFriend.com is a website helping those lacking companionship. Whether you’re walking through a park or attending an evening event, your job is to spend time with people looking for friendship, make interesting conversation, and let your personality shine. Rates typically range from $20 to $50 an hour.

9. Being a Test Subject

Looking for more crazy ways to earn money? According to Ziprecuriter, the average income for a test subject nationwide is $53 an hour. By participating in market research, psychology studies, and clinical trials, you can turn your spare time into profitable experiences where you can reap the financial rewards.

10. Selling Plasma

Blood plasma is helpful for medical studies and healthcare procedures. It can save lives during surgery complications and aid scientific breakthroughs. Your body naturally produces this valuable substance, which you can sell twice per week in a process that’s similar to donating blood (but takes longer). For most people, the process has no side effects.

Plasma donors typically receive payment in a prepaid card and can earn around $100 per donation. Plus, companies like CSL Plasma pay new donors up to $700 for their first month of service to sweeten the deal.

11. Joining Writing Contests

If you have a way with words, a writing contest could be right up your alley. Whether you write as a creative outlet or to explore new ideas, you can get paid for your passion by entering a writing contest. Dozens of fee-based contests exist, meaning you can likely find your niche, enter your pieces, and hopefully win the top prize. As a bonus, you may receive reviews of your work and pointers for sharpening your craft. Search online for opportunities.

12. Being a Food Tester

Who doesn’t love to eat? This delicious pastime could become a weird way to earn money if you become a food tester. You might test new snacks and meals for a “sensory testing company” like Matrix Sciences. You can generally earn a minimum of $25 to $30 per session, though it could be more depending on the type and length of the test.

13. Reviewing “Sensitive Content”

Another unusual way to make quick cash is to review sensitive content for websites like YouTube and Reddit. Millions of users post content every day, making it almost impossible to review all of it. Therefore, large companies often hire people to review sensitive content to ensure everything is appropriate for the internet.

Remember, though; you may have to view some vulgar and upsetting content. So, if you have a weak stomach, this might not be your side hustle.

14. Recommend Items You Love

We all have our go-to essentials, like a preferred makeup brush or olive oil brand. Rather than just waxing poetic to your friends about them, you can write or post videos about your recommendations. Affiliate links online can earn you commissions. How it works: You direct your web audience to your favorite company’s website and receive cash rewards when they make purchases.

15. Cleaning Pet Poop for Others

While not the most appetizing of propositions, that poop needs to get taken care of somehow. Pet owners without the time or physical ability to clean up after their beloved animals can make good use of your services. All you need is transportation and clean-up equipment to get started. You can build your clientele base by posting flyers around your neighborhood or advertising online. Consider charging between $40 and $80 to clean up a messy yard.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure mobile banking app.

16. Host City Tours

Another unusual way to make money: If you live in a town that attracts tourists, you can conduct tours for visitors. You might have a passion for your city’s beloved parks or knowledge of its history. Whatever your specialty, you can build a website advertising your services or use an app like Showaround or FreeTour (where you earn money via tips) to put your skills to work.

17. Waiting in Line for Someone

While it’s boring when doing this for yourself, waiting in line in someone else’s place can be a profitable side hustle. Apps like Spotblaze or TaskRabbit allow you to connect with customers looking for someone to wait in line for a concert ticket, new tech gadget, or parking permit renewal. The more popular the event or product, the more you can charge (some people report having made $80 per hour). Plus, you can listen to an audiobook, podcast, or music while you wait.

18. Losing Weight

Here’s a weird way to earn money that’s also potentially healthy. Shedding pounds can also mean big capital gains with websites like HealthyWage. Here’s how it works: You set your weight loss goal and then wager a dollar amount of your choice that you’ll be successful. This setup gives you extra motivation by putting your money where your mouth is. If you hit your goal, you win prize money and receive your initial investment back. However, failing to hit your goal means losing your wager.

Recommended: 39 Passive Income Ideas to Build Wealth

19. Selling Your Hair

This opportunity is more selective, as you’ll have to grow your hair at least 10 inches long in most cases to sell it for a significant profit. However, if your hair grows quickly, you can pair this side hustle with others to generate income. Human hair is excellent for weaves, wigs, and scientific uses, and you can sell yours on websites like Hairsellon or eBay.

20. Give Your Opinion With Online Surveys

If you love giving your opinion, filling out online surveys can be a great way to earn extra cash. Platforms like Survey Junkie and Swagbucks want people to share their detailed opinions on specific topics. Surveys can take anywhere from five minutes to one hour to complete. If you complete three surveys daily, you can earn as much as $40 a month.

21. Selling Digital Templates

Folks with a knack for design can enjoy selling digital templates and potentially make thousands of dollars monthly. You can create e-book page layouts, brand kits, social media packages, and more. Using a site like Canva, you can create endless digital templates that you may be able to sell from the comfort of your own home.

22. Beekeeping

Here’s another offbeat way to bring in money: Beekeeping is the practice of caring for bees so they can contribute to the growth of your garden or the environment. Before you can start making money, you will need to gain some experience (if you don’t have any). Once you gain experience, you can make money by selling bee products such as honey, providing pollination services, or educating others on beekeeping.

23. Organize Other People’s Things

We can thank The Home Edit and Marie Kondo for encouraging everyone to live a life of organization. But, while it comes easy for some, others may struggle to get started. So, if you enjoy organizing the closet, cabinets, papers, or anything, you could make between $30 and $130 per hour organizing people’s homes. To get started, sign up for sites like Thumbtack and Westtenth and let people know about your services.

24. Being a Statue

Believe it or not, you can make money without even lifting a finger, or actually moving at all. Acting as a statue on a busy street can help you earn some extra dough from passers-by and tourists who leave tips. Depending on the time and traffic of the location you choose, you can make as much as $60 to $80 per hour.

25. Taking Notes for Others

Another unusual way to make money is to sell your college lecture notes. Sites like EduBirdie allow you to sell your notes to students who missed a lecture or need help getting through course material. Keep in mind that notes need to be typed, not handwritten. Pay runs around $1 per lecture note.

26. Mystery Shopping

When you become a secret shopper or mystery shopper, you can earn cash by shopping at local retailers, completing shopping surveys, or taking photos of displays. Registering for an account with apps like Mobee or Marketforce can help you start earning extra money shopping.

27. Review Music

Music lovers can make extra money by reviewing unsigned artists online at Slicethepie. Some categories will pay more than others. However, all payments will be listed at the top of the category page so you can decide if the review is worth your time. Typical pay for those just starting out is less than 20 cents per review, but if you love listening, this could bring in some extra pocket change.

The Takeaway

Using these weird ways to make money can help you boost your savings, pay off debt, or allow you to get paid for doing something you love. So whether you make extra cash sleeping, eating, shopping, or giving your opinion, you can inch one step closer to your financial goals.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

Where can I sell weird things?

Websites like Ecwid, Facebook Marketplace, Etsy, and eBay are just a few platforms where you can sell weird items like keychains, eccentric jewelry, or clothes. People have even marketed air on some of these sites.

How much money can I make from these weird ways to make money?

The amount of money you make in these weird ways will depend on the gig you choose and how much time you invest in it. For example, if you choose to start reviewing music and only post a few critiques, you might only make a dollar; if you clean up someone’s messy yard of dog poop, you might earn $80 per session after proving to be a competent and reliable provider.

Are any of these weird ways to make money illegal?

No, all of the crazy ways to make money above are legitimate and legal.

Photo credit: iStock/Diamond Dogs

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBNK-Q424-091

Dec

2024

Do You Have Sound Money Values?

By Rebecca Lake | Budgeting & Goals, Financial Independence, money | Comments Off

Money values are a set of beliefs about money and how it’s meant to be used. Do you see money as something that is meant to be spent and enjoyed in the moment? Or is watching your pennies so you can retire early your ultimate financial goal?

Whether someone’s financial values are positive or negative can influence the decisions they make with money. For example, research suggests that children who learn positive money lessons early on are more likely to be better with money and have stronger relationships as adults.

But where do money values come from? And are they set in stone or can they change over time? Understanding the impact of money values is an important step in improving your financial health. Read on to learn more about how money values are formed, and how you can better align your values and finances.

Key Points

• Money values are core beliefs about how money should be used and often drive financial decisions and habits.

• Money values are typically formed in childhood but can be changed over time.

• Positive money values lead to disciplined financial habits like budgeting and goal setting, while negative values can be detrimental to financial health.

• Aligning your financial habits with your money values involves identifying your beliefs, setting goals, and making spending decisions that reflect these values.

• Communicating money values with your partner can prevent conflicts and help you find compromises when managing finances together.

What Are Money Values?

When talking about values in finance or in general, you’re talking about beliefs. Specifically, values are beliefs that motivate people to action in some way and drive behavior. If you apply that concept to finance, you could define money values as a set of beliefs that drive financial decision-making.

Financial values can be formed in childhood through your first-hand experiences with money. For example, if you grew up in a household that emphasized saving and avoiding debt, then you might be more inclined to value the importance of stashing cash in a savings account and delayed gratification as an adult. On the other hand, if you grew up in a home with a parent who was a compulsive shopper, then your money values might tell you that buying things constantly is normal behavior.

Financial values can vary widely from one person to the next, and it’s possible that you may have developed money values without being consciously aware of them. But those values can affect the decisions you make when it comes to saving, spending, and handling debt.

How Do Money Values Work?

Money values work by shaping your decision-making with money. They act as a guide to tell you what’s acceptable behavior for managing money and what isn’t. So again, someone with positive money values might believe that carrying excessive amounts of debt or making unnecessary purchases are bad financial habits to avoid.

If you have poor money values as an adult because of your childhood experiences with money, then you might not see anything wrong with being in debt. Or you might simply think that having lots of debt is a fact of life, and there’s nothing you can do to change it. For that reason, having negative money values can be dangerous to your financial health, today and tomorrow.

The good news is that it’s possible to change your money values over time. It can take an effort to learn new values and behaviors and adopt a new money mindset. However, the effort can be worth it if you’re not happy with your financial situation and you’d like to change it for the better.

Why Are Money Values Important?

There are certain fundamentals for personal finance that can help you to get ahead financially. These include things like budgeting, avoiding high interest debt, and saving consistently. Your money values matter because they can determine how committed you are to practicing good financial habits.

Here are some things that positive money values can do for you:

• Help you to be more disciplined with your money, rather than allowing money to control you

• Make it easier to keep track of money because you’re committed to sticking to a monthly budget and avoiding unnecessary spending

• Give you clarity when setting up financial goals so that you know exactly what it is you want to achieve with your money

• Underscore your purpose for pursuing those goals so that you stay motivated and on track

• Make decisions confidently with your money, whether it’s where to invest or what to say to a friend who asks for money

Financial values can act as a guidepoint or compass for you so that you don’t feel like you’re operating in the dark with money. Understanding your personal values toward money can also help with navigating relationships with people who might have different financial values. The clarity you have about how you want to manage your money can help you stay the course to meet your goals.

Tips for Determining Your Money Values

If you’re not sure what your money values are or you’re questioning what they ought to be, figuring it out doesn’t have to be difficult. There are some simple exercises you can do to drill down to your financial values and what money means to you.

Creating a List of Where Money Impacts Your Life

When setting up a financial plan that revolves around money values, it’s helpful to first understand how money affects your life. Making a list of areas where money impacts you the most can give you perspective on what money values you have and how they drive your decision-making.

For example, consider how money affects you on these levels:

• Friendships

• Romantic relationships

• Family relationships

• Work and career decisions

• Hobbies and recreation

• Health

• Long-term planning (whether that means home ownership or retirement)

Also, think about how money affects you mentally and emotionally. If money is a constant source of stress, for example, that could be a sign that your money values might be getting in the way of good financial habits.

Creating Goals for What You Want to Accomplish

Setting goals can motivate you to make changes to your financial outlook, whether big or small. It can also help you to determine what your money values are and how your goals align with those values.

Making two lists — one for short-term goals and one for long-term goals — can give you an idea of what you’d like to do with your money. For example, financial short- term goals might include:

• Saving an emergency fund

• Setting aside money for a vacation

• Saving up for new furniture

Financial long-term goals on the other hand might be things like saving for retirement or putting a large down payment on a home. You can never have too many money goals, but it’s important to be realistic about what you can achieve at any given time.

Visualizing Where You Will Be in 5-10 Years

Many people use a five-year plan to map out their goals and financial progress. If you’ve never tried this before, consider where you’d like to be five or 10 years from now.

The idea is to create as vivid a picture as possible. For example:

• Where will you live?

• Will you rent your home or own it?

• What kind of work will you be doing? Will you be working a 9-to-5 job, be in grad school, or running your own business?

• How much money will you have in savings?

• How much debt will you have?

• Where will you be in terms of progress towards your long-term money goals?

Visualizing your future self is an important exercise because it gives you something to aim for. You can start working toward it now by adapting your money values to reflect where you want to go.

Prioritizing Your Goals

If you have multiple financial goals, you might not be able to knock them all out at once. So you’ll have to decide which ones are most important to focus on first.

For example, many people question whether it makes sense to save or pay down debt. Saving first can give you a small cushion so that you don’t have to turn to a credit card if an emergency comes along. On the other hand, putting off debt repayment can mean paying more in interest over time. Which side of the debate you land on can clue you in as to what your money values are.

You can go through each of your goals and ask yourself how urgent that goal is for you. That can help you to better organize your list so you know what to focus on first.

💡 Quick Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

Living Out Core Values

Once you’ve identified what your money values are, you can work on living them out in your daily life. In other words, that means making sure that your behaviors with money match up with your beliefs about money.

So, let’s say early retirement is one of your long-term financial goals; specifically, you’d like to retire 15 years from now. Ask yourself what you need to do on a daily basis to reach that goal. It might mean finding ways to make more money or prioritizing debt payoff. Or it could be as simple as saying no to a night out with friends in order to save some cash.

When you consider how even seemingly small decisions might affect you financially, you’re living out your core money values. The more consistently you can do that, the easier it becomes to create the kind of financial life you want.

Tips for Aligning Your Values With Your Finances

Getting into some simple routines with your finances can make it easier to align them with your money values. Here are some of the best ways to make sure your financial values are reflected in how you manage your money:

• Make a monthly budget and and then stick to it

• Review your spending regularly

• Use credit cards responsibly by keeping balances low and paying in full whenever possible

• Start a regular savings plan

• Contribute to a retirement account if you’re not doing that already

• Choose investments that match up with your values

• Consider ways that you can reduce expenses and save money

• Surround yourself with people who have similar money values.

Communicating about money with your spouse or partner is another important step. If their financial values are different from yours, then talking things over can help you to avoid conflict. You may not be able to persuade them to accept your values or vice versa. However, you might be able to reach a compromise on how to manage your money that you’re both comfortable with.

The Takeaway

Having sound money values can pay off if you’re able to feel financially healthy and enjoy the kind of lifestyle you want without racking up debt. Or perhaps positive money values will help you buy a house sooner or retire earlier.

Part of managing your money successfully involves choosing the right place to keep your money. When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

Can you be financially stable without money values?

It’s possible to be financially stable even if you aren’t aware that you have any money values. You can still make good decisions with money without realizing that values are driving those decisions. But having clear financial values to follow can help make stability easier to achieve.

What are bad money values?

Bad money values are values that lead to poor decisions with money. For example, someone who carries a large amount of credit card debt or relies on expensive payday loans to cover the bills may never have learned how to properly budget. Poor money values don’t have to be set in stone, however; it’s possible to turn them into positive financial values.

Do wealthy people have good financial values?

Just because someone is wealthy doesn’t automatically mean they have good financial values. A billionaire who runs a Ponzi scheme, for example, might have money values that tell them that it’s okay to defraud others for their own benefit. While having good money values can help you build wealth, you don’t need to be rich to make good financial decisions.

Photo credit: iStock/MicroStockHub

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

SOBNK-Q424-094

Dec

2024

How Timeshare Financing Works for Vacation Property

By Austin Kilham | Budgeting & Goals, Family Finances, Home Ownership, invest, personal_loan | No Comments

Many of us would love to own a vacation home, but the added expense is not always doable. Because we can’t all own multiple properties, vacation timeshares continue to be a popular choice for solo travelers, couples, and families who want more space, amenities, and “a place to call home” at their locale of choice.

We’ll give you an honest rundown of how timeshares work, their pros and cons, and a few financing options.

Key Points

• Timeshares offer a shared vacation property, providing a cost-effective alternative to owning a vacation home.

• Various types of timeshare ownership exist, including deeded and non-deeded, with different use periods.

• High-interest rates often accompany timeshare financing, but alternatives like home equity and personal loans may offer better terms.

• Timeshares can be transferred to heirs or gifted, but selling them may result in financial loss.

• Renting out a timeshare depends on the agreement, requiring a check of specific terms.

What Is a Timeshare?

A timeshare is a way for multiple unrelated purchasers to acquire a fractional share of a vacation property, which they take turns using. They share costs, which can make timeshares far cheaper than buying a vacation home of one’s own.

Timeshares are a popular way to vacation. In fact, nearly 10 million U.S. households own at least one timeshare, according to the American Resort Development Association (ARDA). The average price of a timeshare transaction is $23,940. This figure can vary widely depending on the location, size, and quality of the property, the length of stay,

How Do Timeshares Work?

If you’ve ever been lured to a sales presentation by the promise of a free hotel stay, spa treatment, or gift card, it was probably for a vacation timeshare. As long as you sit through the sales pitch, you get your freebie. Some invitees go on to make a purchase. You can also buy a timeshare on the secondary market, taking over from a previous owner.

What you’re getting is access to a property for a set amount of time per year (usually one to two weeks) in a desirable resort location. Timeshares may be located near the beach, ski resorts, or amusement parks. You can trade weeks with other owners and sometimes even try out other properties around the country — or around the world — in a trade.

In addition to the upfront cost of the timeshare, owners pay annual maintenance fees based on the size of the property — about $1,120 on average — whether or not you use your timeshare that year. These fees, which cover the cost of upkeep and cleaning, often increase over time with the cost of living. Timeshare owners may also have to pay service charges, such as fees due at booking.

Recommended: Loans With No Credit Check

Types of Timeshares

There are two broad categories of timeshare ownership: deeded and non-deeded. In addition, you’ll find four types of timeshare use periods: fixed week, floating week, fractional ownership, and points system.

It’s important to understand all of these terms before you commit.

Deeded Timeshare

With a deeded structure, each party owns a piece of the property, which is tied to the amount of time they can spend there. The partial owner receives a deed for the property that tells them when they are allowed to use it. For example, a property that sells timeshares in one-week increments will have 52 deeds, one for each week of the year.

Non-deeded Timeshare

Non-deeded timeshares work on a leasing system, where the developer remains the owner of the property. You can lease a property for a set period during the year, or a floating period that allows you greater flexibility. Your lease expires after a predetermined period.

Fixed-Week

Timeshares offer one of a handful of options for use periods. Fixed-week means you can use the property during the same set week each year.

Floating-Week

Floating-week agreements allow you to choose when you use the property depending on availability.

Fractional Ownership

Most timeshare owners have access to the property for one or two weeks a year. Fractional timeshares are available for five weeks per year or more. In this ownership structure, there are fewer buyers involved, usually six to 12. Each party holds an equal share of the title, and the cost of maintenance and taxes are split.
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Points System

Finally, you may be able to purchase “points” that you can use in different timeshare locations at various times of the year.

Is a Timeshare a Good Investment?

Getting out of a timeshare can be difficult. Selling sometimes involves a financial loss, which means they are not necessarily a good investment. However, if you purchase a timeshare in a place that your family will want to return to for a long time — and can easily get to — you may end up spending less than you would if you were to purchase a vacation home.

Benefits of Timeshare Loans

The timeshare developer will likely offer you financing as part of their sales pitch. The main benefit of a timeshare loan is convenience. And if you’re happy to return to the same vacation spot year after year, you may save money compared to staying in hotels. Plus, for many people, it may be the only way they can afford getting a vacation home.

Drawbacks of Timeshare Loans

Developer financing offers often come with very high interest rates, especially for buyers with lower credit scores: up to 20%. And if you eventually decide to sell, you will probably lose money. That’s because timeshares tend not to gain value over time. Finally, if you’re not careful about running the numbers before you commit, you can end up paying more in annual fees than you expect.

Recommended: What Is Revolving Credit?

Financing a Timeshare

Developer financing is often proposed as the only timeshare financing option, especially if you buy while you’re on vacation. However, with a little advance planning, there are alternative options for financing timeshares. If developer financing is taken as an initial timeshare financing option, some timeshare owners may want to consider timeshare refinance in the future.

Home Equity Loan

If you have equity built up in your primary home, it may be possible for you to obtain a home equity loan from a private lender to purchase a timeshare. Home equity loans are typically used for expenses or investments that will improve the resale value of your primary residence, but they can be used for timeshare financing as well.

Home equity loans are “secured” loans, meaning they use your house as collateral. As a result, lenders will give you a lower interest rate compared to the rate on an unsecured timeshare loan offered at a developer pitch. You can learn more about the differences in our guide to secured vs. unsecured loans.

Additionally, the interest you pay on a home equity loan for a timeshare purchase may be tax-deductible as long as the timeshare meets IRS requirements, in addition to other factors. Before using a home equity loan as timeshare financing, or even to refinance timeshares, be aware of the risk you are taking on. If you fail to pay back your loan, your lender may seize your house to recoup their losses.

Personal Loan

Another option to consider for timeshare financing is obtaining a personal loan from a bank or an online lender. While interest rates for personal loans can be higher than rates for home equity loans, you’ll likely find a loan with a lower rate than those offered by the timeshare sales agent.

Additionally, with an unsecured personal loan as an option for timeshare financing, your primary residence is not at risk in the event of default.

Getting approved for a personal loan is generally a simpler process than qualifying for a home equity loan. Online lenders, in particular, offer competitive rates for personal loans and are streamlining the process as much as possible.

Awarded Best Online Personal Loan by NerdWallet.
Apply Online, Same Day Funding

The Takeaway

Timeshares offer one way to secure a place to stay in your favorite vacation destination each year — without having to buy a second home. And timeshares may save you money over time compared to the cost of a high-end hotel. However, beware of timeshare financing offered by developers. Interest rates can be as high as 20%. There are other ways to finance a timeshare that can be more affordable, including home equity loans and personal loans.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Can I rent my timeshare to someone else?

Whether or not you can rent your timeshare out to others will depend on your timeshare agreement. But in many cases, your timeshare resort will allow you to rent out your allotted time at the property.

Can I sell my timeshare?

Your timeshare agreement will give you details about when and how you can sell your timeshare. In most cases, you should be able to sell, but it may be hard to do so, and you may take a financial loss.

Can I transfer ownership of my timeshare or leave it to my heirs?

You can leave ownership of a timeshare to your heirs when you die and even transfer ownership as a gift while you’re living. Once again, refer to your timeshare agreement for rules about what is possible and how to carry out a transfer.

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Dec

2024

Can You Use Your Debit Card in Another Country?

By Timothy Moore | Budgeting & Goals, Financial Independence, money | Comments Off

You can typically use a debit card when traveling in another country as long as the merchant accepts transactions from the card issuer. Debit cards are especially useful when withdrawing cash from ATMs internationally, but cash and credit cards may make more sense for other purchases abroad.

Key Points

• Using a debit card internationally is generally possible, but you may incur foreign transaction fees and should carry multiple payment methods for convenience and security.

• Informing the bank about travel plans is crucial to prevent card freezes due to suspected fraudulent activity while abroad, ensuring uninterrupted access to funds.

• Exchanging currency before traveling can help avoid high airport exchange rates, and using ATMs in the bank’s network can minimize ATM fees while withdrawing cash.

• Prioritizing safety when using a debit card includes wearing a money belt, practicing ATM security, and memorizing PINs to protect against theft and fraud.

• In the event of a debit card malfunction abroad, contacting the bank, using alternative payment methods, or seeking assistance from a U.S. embassy can help resolve issues.

Can You Use a Debit Card Internationally?

Yes, you can typically use your debit card internationally. This means you can spend money directly from your checking account, rather than run up a balance on your credit card.

Debit cards are usually linked to a processing network, such as Visa or Mastercard, which allows them to be used anywhere cards in that network are accepted. Visa and Mastercard are almost universally accepted anywhere you can pay with plastic. However, some networks are not accepted internationally, so it’s a good idea to carry cards from more than one issuer, as well as cash, when traveling abroad. Just be sure you have details like the customer service phone numbers in case you were to lose your cards or be the unfortunate victim of a pickpocket (see more safety tips below).

Recommended: How to Deposit Cash at an ATM

Will I Face Fees If I Use My Debit Card Internationally?

While you can typically use a debit card in another country, you may have to pay a foreign transaction fee. Though these fees vary by bank and card issuer, they are usually around 1-3% of any transaction abroad.

In addition, you may be given the option by a merchant to pay in local or U.S. currency. If you opt for the latter, it is known as dynamic currency conversion (DCC), and you will likely face an upcharge, possibly a steep one. It’s usually wiser to pay in local currency.

If you want to avoid foreign transaction fees, you may need to open an international credit card designed for travelers or find a bank account offering a debit card without these fees.

While you can use a debit card for purchases abroad, experts often recommend paying with cash or a credit card as it can offer better protection if a thief gets their hands on your plastic.

Instead, debit cards are ideal for taking cash out of an ATM. If your bank offers in-network ATMs in foreign countries, you can avoid ATM fees by withdrawing money from those specific ATMs — though you may still contend with foreign transaction fees.

What to Do Before You Travel to Another Country

Traveling to another country is exciting, but there’s a lot to do before you hop on that plane. You may have to find a pet sitter, book hotels, or renew your passport, but there are also a lot of important financial moves to make before traveling internationally:

• Informing your bank: Banks and credit unions offer a wealth of services to prevent fraud. Unexpected transactions in foreign countries can be a red flag to your financial institution; in attempting to protect you from fraud, they may decline the transaction or freeze your card. It’s a good idea to let your bank and/or credit card issuer know where and when you’ll be traveling so there aren’t any interruptions to your banking service.

It can also be wise to note customer service numbers for your bank and credit cards in a safe place but not in your wallet in case you were to lose your wallet or be robbed while traveling. You can then spring into action quickly to report losses.

• Exchanging your money: You’ll want cash in the local currency for your trip, but it’s a good idea to exchange your money before setting out on your travels. Airport kiosks, hotels, and train stations have notoriously high exchange rates; you’ll likely get a better rate if you exchange in advance with a bank or credit union near you.

That said, you don’t want to carry too much cash on you when traveling in another country, meaning you’ll need to exchange money as you go. You can avoid high exchange rates abroad by getting cash from an in-network ATM using your debit card. Just keep your ATM withdrawal limits in mind.

• Getting travel insurance: If you’re paying for your travel with a rewards credit card, you may already carry special credit card travel insurance. But if cash and debit cards are your primary resources, you may want to find travel insurance through a third party. Travel insurance can help with the challenges and costs of trip cancellations, lost luggage, rental car issues, and even medical care in foreign countries.

• Getting an international phone plan: Even the best laid plans can go wrong. If you get lost, want to use a translator, or need to call your bank to troubleshoot an issue with your debit card, it helps to have an international call, text, and data plan. It’s a good idea to ask your provider in advance about their international plans and see if you can work it into your travel budget.

Recommended: How to Wire Money in 5 Steps

Tips for Safely Using Your Debit Card Internationally

Taking your debit card with you abroad can be convenient, but it’s important to prioritize safety when spending money in another country. Here are a few tips for safely using your debit card internationally:

• Wear a money belt: Pickpockets can ruin a vacation in a matter of seconds. Keep your valuables (wallet, passport, smartphone, etc.) safe by keeping them out of your pockets. It’s also a good idea to avoid lugging around a purse on your shoulder. Instead, consider wearing a money belt — a pouch on a belt that keeps your money securely attached to your person. You can store your debit cards, credit cards, cash, and more in the pouch.

• Tell your bank you’re traveling: Avoid becoming stranded in another country without access to your funds by alerting your financial institution of your travels. This should prevent them from freezing your card because of unusual activity.

• Bring multiple forms of payment: Because something can go wrong — lost or stolen funds, payment type not accepted, etc. — it’s wise to have multiple forms of payment with you when traveling internationally. Ideally, your money belt may have a credit card, a debit card (from a different issuer), and cash in the foreign currency.

• Practice ATM safety: When using your debit card to withdraw funds at an ATM, there are a few things you can do to protect yourself and your money.

◦ Don’t use the ATM alone, if possible.

◦ Don’t use the ATM at night.

◦ Memorize your PIN (and make sure it’s unique); don’t write it down anywhere.

◦ Watch someone else use the ATM first; if they can successfully retrieve their card and their money, that’s a good sign that criminals haven’t tampered with the machine.

◦ Learn to check ATMs for card skimmers. If a machine looks like it’s been tampered with or has an extra bit of plastic around the card slot, don’t insert your card and find another source of cash.

Can You Withdraw Money at an International ATM?

If you’re wondering if you can use your debit card internationally, you may well be thinking about withdrawing money from an ATM while abroad. That is a top reason to bring your debit card with you when traveling overseas. Before traveling, you can research which ATMs are in your bank’s network in the country you’re visiting — and even make a list of their locations so you know where to go during your trip.

While using an in-network ATM may help you avoid ATM fees, some banks and card issuers may still charge foreign transaction fees. If you regularly travel abroad, it may be worth opening a checking account with a debit card that has no or very low foreign transaction fees.

Pro Tip: If you are worried about ATM fees abroad, you may be able to use your debit card at a store and request cash back at the register. However, foreign transaction fees may apply.

What to Do If Your Debit Card Does Not Work?

If you’re in a foreign country and your debit card isn’t working, don’t panic. There are a few things you can do to ensure you can safely spend your money abroad, like:

• Calling your financial institution. Making an international call might be expensive, but talking to someone at your bank can usually rectify any issue with your debit card. Also, some financial institutions have numbers to use when traveling internationally. It can be wise to note that information down in advance so it’s handy.

• Using another form of payment. If you’re in the midst of a transaction, it might make sense (at least temporarily) to pay with a credit card or cash until you’re in a calmer place. Then, when you’re back at your hotel or another quiet place, you can resolve your debit card issues.

• Finding a U.S. embassy. As a last resort, if you have no way of getting money and are stranded abroad, find a U.S. Embassy or Consulate. In emergencies, they may offer temporary loans to travelers.

Recommended: Credit Cards vs. Debit Cards

The Takeaway

You can typically use your debit card overseas to make purchases and/or withdraw cash at an ATM. Just keep in mind that not all U.S. debit cards are accepted internationally, and your bank may charge a foreign transaction fee. If you use an ATM that is not in your bank’s network, you may also get hit with an ATM fee.
If you’re looking for a new banking partner, it’s a good idea to consider not only interest rates but also any fees you may encounter both at home and abroad.

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FAQ

Is it better to use cash instead of a debit card internationally?

When traveling internationally, it’s a good idea to have a mix of payment methods: cash, credit cards, and debit cards. Some experts advise using credit cards and cash for purchases and relying on your debit card exclusively for ATM transactions.

Can I use my debit card in all countries?

In most cases, you can use your debit card in other countries, as long as the merchant takes credit cards and accepts cards with your logo. Visa and Mastercard are the most universally accepted, with Discover and American Express following closely behind. When you use your debit card abroad, you may have to pay foreign transaction fees and ATM fees.

Is it better to use a credit card or debit card internationally?

When traveling abroad, you may want to prioritize payment methods that do not charge foreign transaction fees, whether that’s a credit card or a debit card. However, it’s a good idea to carry both kinds of cards (plus cash). Experts generally recommend using a credit card for cash for purchases and utilizing a debit card to withdraw more money at ATMs as needed.

Photo credit: iStock/Anchiy

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