Life & Career Archives | Page 51 of 88

Oct

2023

The Great Resignation, Explained

By Rebecca Lake | Life & Career, money | Comments Off

The Great Resignation is a term used to describe an increase in the quit rate among U.S. employees that began in 2021. Millions of people began leaving their jobs citing various reasons, including low pay, poor working conditions, and negative lifestyle impacts associated with the COVID-19 pandemic.

While the Great Resignation created challenges for many employers, it also presented an opportunity for companies to fine-tune their hiring and retention policies.

Here, take a closer look, including:

• What is the Great Resignation?

• What are the reasons for the Great Resignation?

• How can companies prevent employees from resigning?

What Is the Great Resignation?

The Great Resignation refers to the fact that millions of people opted to quit their jobs during the height of the COVID-19 pandemic. Anthony Klotz, associate professor of management at Texas A&M University, is credited with coining the term.

Data suggests that the Great Resignation began in early 2021, reaching a peak of 4.5 million quits in November of that year, according to the Bureau of Labor Statistics (BLS). Altogether, the BLS estimates that nearly 48 million people quit their jobs in 2021.

The wave of quitting hasn’t entirely subsided, however. The Great Resignation trend persisted well into 2022, as more employees elected to leave their employers. For example, the quit rate was 4.1 million for September 2022, according to a recent Job Openings and Labor Turnover report.

Who’s Quitting Their Jobs?

The Great Resignation affected numerous industries but not always equally. According to an analysis by Zippia, for example, the industries affected most by the Great Resignation in 2021 include accommodation and food service, leisure and hospitality, and retail. Here are some other statistics on the Great Resignation and who’s quitting their jobs:

• Employees aged 18 to 29 quit more than any other demographic, with a 37% quit rate in 2021.

• Women were 11% more likely to quit their jobs than men, while Hispanics and Asians quit more often than Black or White Americans.

• Those with less education, e.g., a high school diploma, were more likely to quit than employees with some college or a college degree.

• Employees with lower incomes had a quit rate that was double that of those earning higher pay.

The range of people quitting is diverse, as are their reasons for doing so, as you’re about to learn.

Recommended: 5 Ways to Achieve Financial Security

Reasons for the Great Resignation

Now that you know what the Great Resignation is, you are likely wondering why so many people walked away from their work. There’s no single cause for the Great Resignation. Instead, employees began leaving their jobs in response to a combination of factors. Here are some of the top reasons employees chose to quit, according to Pew Research.

• Low pay. Thirty-seven percent of employees said low wages were a major reason behind their decision to quit.

• No room for advancement. Thirty-three percent of people who quit their jobs in 2021 said they did so due to a lack of opportunities to get ahead.

• Felt disrespected. Interestingly, 35% of those who quit during the first wave of the Great Resignation said they felt disrespected by their employer.

• Child care. The COVID-19 pandemic made child care a struggle for many parents as schools closed for months on end. According to Pew, 24% of quitters cited child care as a major reason for doing so.

• Lack of flexibility. Being able to work flexible job hours or put in for time off as needed is important for many employees. Pew found that 24% of those who quit in 2021 cited lack of flexibility as a major motivator.

Other reasons for quitting included lack of benefits, working too many hours, wanting to relocate, or working too few hours. A small number of employees said they chose to quit over employer requirements to get a COVID-19 vaccine.

Here’s how the top 10 reasons for resigning look in chart form:

Reason for quitting	% who said it was a major reason
Low pay	37%
Feel disrespected	35%
Lack of advancement opportunities	33%
Lack of child care	24%
Lack of flexible schedule	24%
Lack of benefits	23%
Wanted to relocate	22%
Too many hours of work	20%
Roof few hours of work	16%
COVID-19 vaccine requirement	8%

Ways Companies Can Prevent Employees From Leaving

Building a resilient workforce is important, but employee retention can be tricky, especially if workers don’t feel motivated to stick around. The Great Resignation has turned up the pressure on companies to provide employees with a more favorable working environment. Some of the ways companies may be able to prevent workers from leaving include:

• Offering flexible work schedules, including the chance to work remotely

• Focusing on building connections with employees and creating a welcoming company culture

• Getting input from employees on what’s working and what could be improved

• Showing appreciation for employees and respecting them at all times

• Offering opportunities for growth and advancement

• Enhancing benefits packages to include things like wellness perks or student loan repayment. The Great Resignation may have a significant effect on employee benefits in this way.

Offering higher salaries may be a starting point, but it could take more than just a bigger paycheck to convince employees to stay put. Thinking creatively and putting oneself in the mindset of the employee can be helpful ways for employers to figure out what’s needed most.

The Takeaway

The Great Resignation involved almost 48 million workers leaving their jobs in the wake of the COVID-19 crisis. This has taken a toll on many employers as they scramble to hire new workers to replace those who have quit. If you’re thinking of quitting, it’s important to get your financial ducks in a row first so you can maintain your standard of living during a job transition.

3 Money Tips

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.

If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.

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

What’s the Great Resignation?

The Great Resignation refers to the millions of Americans who have quit their jobs since early 2021. Almost 48 million people left their employment in 2021. Some of the most common causes for the Great Resignation include low wages, employee burnout, inflexible work schedules, and poor work-life balance.

Should you quit for a better paying job?

Not being able to make your budget work is one of the clearest signs that you’re not making enough money. If you believe a better paying job could help you reach your financial goals or, at the very least, make budgeting less stressful, then it could be worth moving on to a new employer. However, consider what you might be giving up in the way of benefits or other job perks to snag a higher salary.

Is it better to quit or be fired?

Quitting a job may look better on a resume than being fired. Additionally, if you’re putting in proper notice in advance, it may be easier to plan your budget as you countdown to your final paychecks. Your employer may also appreciate your giving notice that you plan to make a job transition so they have time to hire someone to replace you.

Photo credit: iStock/Prostock-Studio

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.

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.

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.

SOBK1122002

Oct

2023

Can You Rent a Car With a Debit Card?

By Timothy Moore | credit card, Family Finances, Life & Career | Comments Off

Renting a car with a debit card is possible at certain car rental agencies. For some people, this may be a preferable way to conduct this transaction, but you may have to take additional steps before you get behind the wheel.

If you don’t have a credit card, it’s a good idea to research which rental agencies allow you to use a debit card — and understand the extra steps you’ll have to take before they hand over the keys.

Learn more about what to expect here, including:

• Can you use a debit card to rent a car?

• Which companies let you rent a car without a credit card?

• What are the pros and cons of renting a car with a debit card?

• What are alternatives to renting a car with a debit card?

Is It Possible to Rent a Car With a Debit Card?

So, can you use a debit card to rent a car? Yes! You’ve just got to find rental car agencies with a debit card policy. Though their policies differ and this list is not comprehensive, these are among the agencies that allow drivers to rent a car without a credit card:

• Alamo

• Avis

• Budget

• Dollar

• Enterprise

• Hertz

• Thrifty.

Note that not every franchise follows corporate policy and that airport rental agencies may have additional requirements for renting a car with a debit card. It’s a good idea to call the specific location from which you hope to rent a car using a debit card. You can then make sure you understand what requirements must be met before you get behind the wheel.

If you’re renting a car with a debit card, a rental agency might require a security deposit and run a credit check on you. You may also have to provide multiple forms of identification and proof of return travel, be at least 25 years old, and/or have a debit card with a common logo, like Mastercard, Visa, or Discover.

Recommended: Cheapest Ways to Rent a Car

Why Do Many Car Rental Companies Require a Credit Card?

While you may be able to use a credit card like a debit card in some situations and vice-versa, renting a car is a special case. Can you rent a car with a debit card? Yes, in many situations. But do rental car companies want you to? Probably not.

Credit cards offer multiple types of assurances to a rental car agency. For starters, a credit card signals to them that you are trustworthy and responsible — two traits that a company might value before lending you a $30,000+ piece of heavy machinery.

Credit cards also enable rental car companies to collect money for any repairs, tickets, tolls, and other fees. Because of the open line of credit on the card, the rental agency knows it can charge you for incidentals as necessary — without requiring a large security deposit from you upfront.

Recommended: Can You Use a Debit Card Online?

Pros of Renting a Car With a Debit Card

Renting a car with a credit card certainly seems easier, but are there advantages to using a debit card? Most definitely. Here are some of the pros of using a debit card to rent a car:

• No credit card necessary: The biggest advantage is also the most obvious. If you can’t qualify for a credit card or simply don’t want one, using a debit card allows you to rent a car without needing a line of credit.

• No credit card interest: If you pay your credit card off in full each month, you probably aren’t worried about credit card interest. But if you suddenly have a charge for a car rental surpassing $1,000, you might be tempted to just make your minimum payment on your credit card — and rack up interest. By paying with a debit card upfront, you don’t risk accruing credit card interest.

• No impact on credit utilization: High credit utilization can drive down your credit score. By using a debit card, you won’t tap into any of your available credit. However, if the agency runs a credit check for debit card users, the hard inquiry could impact your credit score temporarily.

Cons of Renting a Car With a Debit Card

Yes is the answer to “Can I rent a car with a debit card?” But paying for a rental car with a debit card can have drawbacks. Here are some of the top downsides of renting a car with a debit card:

• No perks: By swiping your debit card, you may be missing out on credit card travel insurance offered to cardmembers. If you have a rewards credit card that earns cash back or points for every purchase, you may also be leaving money on the table by using a debit card.

• Security deposit: When using a debit card, you’ll often have to pay the full cost of the rental upfront. On top of that, an agency may hold additional funds as a security deposit. This could reduce the cash you have in your checking account to spend while on your travels.

• Credit check: Without a credit card, the rental car agency may perform a credit check before allowing you to get behind the wheel. This can result in a hard inquiry on your credit report.

• More hoops to jump through: In addition, rental agencies may require multiple forms of ID, might have age requirements, and may even need to see proof of scheduled return travel to allow you to pay with a debit card.

Is It Better to Rent a Car With a Debit or Credit Card?

Do you need a credit card to rent a car? Not necessarily. If you cannot qualify for a credit card or do not want one, renting with a debit card is the right choice for you.

That said, using a credit card can offer some perks. Doing so is likely the better approach for many drivers since it won’t require a security deposit, may have built-in car insurance, and won’t necessitate a credit check by the agency.

Is It Safer to Rent a Car With a Debit or Credit Card?

If you’re wondering about using a credit card vs. debit card, renting a car with a credit card is generally safer than renting a car with a debit card.

While paying with both debit cards and credit cards is often an option, credit cards offer a heightened level of zero-fraud liability thanks to stricter federal regulations. Your credit card may also offer rental car insurance as part of its perks, meaning extra protection on the road.

Alternatives to Car Rentals With Debit Cards

You’ve just learned the answer to “Can I use a debit card to rent a car?” is often yes. But what if you don’t have a debit card or don’t want to use your debit card to rent a car? Consider some alternatives:

• Using a credit card: The main alternative is paying for a car rental with a credit card. In fact, this is usually the better option for the driver and the rental agency.

• Riding with another driver: If someone else in your party has a credit or debit card and is willing to pay for the rental, let them get behind the wheel. Many companies allow you to pay an additional fee to add a second driver if you’d also like a turn in the driver’s seat.

• Paying with a prepaid card or cash: While rental car agencies will likely require a credit or debit card to secure the rental, some agencies may allow you to pay with a prepaid gift card, money order, or even cash at the end of the rental agreement — once the car has successfully been returned.

Recommended: Common Misconceptions About Money

Ways to Protect Yourself While Renting a Car

Renting a car can be stressful, but it also enables you freedom to travel, allows you to put miles on a car that isn’t yours during road trips, and may come in handy when your vehicle is being worked on. Here’s how you can protect yourself when renting a car:

• Research the car before driving it: Once you know the year, make, model, and trim of your rental, you can research it online to understand any nuances to how it works, especially if you aren’t accustomed to newer safety technologies. The owner’s manual should be in the glove compartment and is worth reviewing if you’re uncomfortable driving an unfamiliar vehicle.

• Carry insurance: Before renting a car, it’s a good idea to check with your car insurance agent and your credit card company to see what coverage you have. If you don’t have coverage for the rental through any other means, make sure you opt in for the insurance offered by the rental agency.

• Follow the rules of the road: You should always abide by traffic laws, but they’re especially important when you’re learning a new vehicle. If you’re traveling in a foreign country, it’s a good idea to study their laws and traffic signs at home before your trip.

The Takeaway

Renting a car with a debit card is possible, but you’ll miss out on some of the perks of paying with a credit card — like potential cashback rewards and car insurance. Plus, rental agencies may require you to fulfill more requirements to get behind the wheel, like paying a security deposit or agreeing to a credit check.

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.

Unlock the benefits of the SoFi debit card with your own SoFi Checking and Savings Account.

FAQ

Which rental car companies allow you to use a debit card?

Alamo, Avis, Budget, Dollar, Enterprise, Hertz, and Thrifty are just some of the rental car companies that allow you to pay with a debit card. However, these and other rental car companies may have additional criteria for renting the car using a debit card, like paying a security deposit or providing multiple forms of identification.

Are there any restrictions when renting with a debit card?

Each rental car company may have its own restrictions when you rent a car with your debit card. For example, they may require you to be 25 or older, pay a security deposit, and/or agree to a credit check. It’s a good idea to call the specific agency before arriving to understand what you’ll need in order to rent a car with a debit card.

What is the process of renting a car with a debit card?

Rental agencies have varying processes for renting a car with a debit card. It’s a good idea to check online and even to call the specific agency to understand the process ahead of time. In general, companies may require full payment plus a security deposit upfront, they may run a credit check, and they might want to see multiple forms of identification. If you’re renting at an airport, they may also require you to provide proof of a return plane ticket.

Photo credit: iStock/Khaosai Wongnatthakan

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.

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.

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.

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.

SOBK1222007

Oct

2023

Tips to Avoid Schemes Disguised as Multi-Level Marketing Companies

By Timothy Moore | Family Finances, Life & Career, money | Comments Off

Multi-level marketing businesses— also called direct sales, direct marketing, or network marketing — are legitimate enterprises that involve selling products or services to a network of peers (i.e., friends and family) and recruiting more salespeople.

The problem? According to the Federal Trade Commission (FTC), many illegal pyramid schemes disguise themselves as legal multi-level marketing (MLM) companies. Even legal MLMs can be bad news; most people make little or no money with MLMs, and some even lose money.

Read on to learn:

• What’s an MLM?

• What are the differences between MLMs and pyramid schemes?

• How can you avoid multi-level marketing companies?

What Is a Multi-Level Marketing (MLM) Company?

A multi-level marketing business, or MLM for short, is a legitimate business that sells products and services through independent distributors. These companies rely on such distributors to sell to networks of peers, typically friends and families. The distributors, often called “participants” and “contractors,” must also recruit new distributors for the program.

The companies are found in a variety of categories. They might be selling supplements, personal-care products, kitchen utensils, or any other number of items.

Recommended: Common Credit Card Scams

How Do Multi-Level Marketing Companies Work?

What is an MLM company, and how does it operate? In a multi-level marketing business, distributors must first buy the products wholesale from the company. They then make commissions off the products that they sell at retail prices.

Distributors also earn a commission from their recruits’ sales, which incentivizes distributors to recruit more people into the business. Those at the top of the company, with multiple levels of distributors beneath them, thus earn the most money without even needing to purchase more products to sell.

Multi-Level Marketing vs. Pyramid Schemes: What’s the Difference?

Though sometimes questionable, multi-level marketing programs are legal. Pyramid schemes, however, are illegal types of money scams. Unfortunately, many pyramid schemes disguise themselves as legitimate MLMs. Here are key differences:

• Pyramid schemes are more focused on recruiting than actually selling the products. While MLMs do ask you to recruit more distributors, the focus is on sales.

• Pyramid schemes may also require distributors to buy more products at regular intervals, even if they have not sold all the products they already have. Sometimes, in a pyramid scheme, you have to buy more products just to get paid or earn a bonus. This is a major red flag.

In the end, most people who are swindled into pyramid schemes run out of money, are stuck with products that they can’t sell, and quit — meaning they lose everything they invested in the business.

Real-Life Examples of Multi-Level Marketing Companies

Some products marketed and sold through network marketing companies are from legitimate MLM businesses — and you can feel comfortable purchasing them. In other cases, recognizable products can emerge from pyramid schemes.

Here are some real-life examples of legal, established MLMs. You may be surprised to learn that what is an MLM can be a familiar and trusted brand:

• Amway

• Avon

• Herbalife

• Vorwerk

• Mary Kay

• Infinitus

• Perfect

• Quanjian

• Natura

• Tupperware

• Nu Skin

• Primerica.

Why Is Multi-Level Marketing Legal?

Multi-level marketing businesses must adhere to strict FTC guidelines to be considered legal. The FTC regularly goes after suspicious MLM companies that may actually be pyramid schemes.

Though sometimes seemingly predatory, MLM is just a form of direct sales. When adhering to FTC guidelines, these businesses aren’t breaking any laws.

Recommended: What’s a Pump-and-Dump Scheme?

What Is the 70% Rule?

Though not technically a law, the 70% rule is a common term in MLM discussions. It arose in a 1979 case against Amway.

In analyzing the business structure of Amway, the FTC determined that, because Amway required distributors to sell at least 70% of the products they bought in a given month to earn a bonus, Amway was attempting to operate as a legitimate MLM. Their business model involved profited from sales, not shady recruiting tactics.

Now, the 70% rule is a loose term that means an MLM is focused on sales, rather than requiring distributors to buy more products or recruit more people to earn bonuses. The trouble with this rule is that it is difficult to enforce: MLMs typically trust their distributors to tell the truth about how much product they’ve sold but cannot always verify the numbers.

Are the Products That MLMs Sell Legitimate?

The products and services that MLMs and even pyramid schemes sell can be completely legitimate. Just think of that trusty Tupperware in your kitchen cabinet or your favorite lipstick from Mary Kay.

But even if a product is good, the distributor requirements of a legitimate MLM or shady pyramid scheme can still cause the seller to lose money.

Recommended: A Guide to Credit Card Protection

Can You Create Financial Freedom by Joining an MLM?

Multi-level marketing companies require a lot of entrepreneurial hustle from distributors to make money. As contracted sellers, distributors don’t earn a salary but instead make commissions.

While someone with a true sales spirit may make some money in an MLM, most do not make enough money to achieve any kind of financial freedom without another source of income. In fact, the FTC says some people even lose money from legitimate MLMs.

Pyramid schemes are worse, having left some people in economic ruin.

Tips for Recognizing Predatory MLMs and Pyramid Schemes

While MLMs are legitimate, they may not be worth the effort and could also cause you to lose money. Illegal pyramid schemes, however, are usually designed to hurt the low-level distributor.

So how can you spot a predatory MLM or pyramid scheme? Here are a few warning signs:

• Hyperbolic claims of excess income: If a brand promoter is promising outlandish amounts of income — even saying you can quit your day job and retire early — that’s typically a red flag.

• “Act fast” pressure: You should be able to think about any financial decision and be given the time to talk it over with friends and family. Brand promoters of pyramid schemes and predatory MLMs may use high-pressure tactics, like telling you that you must act now or you’ll lose out on the opportunity.

• An emphasis on recruiting: In a true MLM where you at least have the potential to earn money, the emphasis should be on sales. If during initial conversations with a promoter, the emphasis is on recruiting other members, this is likely an indicator of a pyramid scheme.

Recommended: How to Verify a Check

Tips for Avoiding Predatory MLMs and Pyramid Schemes

The first step to avoiding a shady MLM or full-on pyramid scheme and protecting your finances is recognizing them when you see them.

Here’s what you can distinguish what are MLMs from pyramid schemes and avoid the latter:

• Researching the company: Take the time to conduct research online. The FTC recommends googling the name of the company with terms like “scam” or “complaint” and then analyzing the results. The FTC even suggests reaching out to your state attorney general to inquire about complaints for a specific company. Uncovering evidence of lawsuits during your research is often a tell-tale sign.

• Analyzing the products: Legitimate MLMs can sell good products. Pyramid schemes might even have products that you recognize. But if any company has poor-quality products that they expect you to sell, there’s a good chance it’s a pyramid scheme. Watch for products that are priced too high, claim to have “miracle” ingredients, or “guarantee” results.

• Asking good questions: If the promoter is unwilling to answer very basic questions, like how refunds work or what happens if you can’t sell the product, they are likely hiding something.

• Not making decisions in a vacuum: It’s a good idea to discuss all major financial and business decisions with a trusted friend or family member. If you have paperwork for an MLM that you’re unsure about, you can even have a personal accountant or lawyer review it before you sign.

Recommended: Jobs That Pay for Your College Degree

The Takeaway

Multi-level marketing companies are legitimate and legal direct-sales businesses, but they rarely enable a distributor to make good money; some distributors may even lose money. Pyramid schemes are typically disguised as MLMs and can lead to financial ruin. Such schemes are illegal. In general, it’s a good idea to avoid any kind of MLM company if you are unsure of their trustworthiness.

Looking for other ways to grow your finances? Open an online banking account with SoFi to take advantage of our super competitive APY and the fact that we don’t charge account fees, which can help your money grow faster.

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

Is it legal to join an MLM?

Yes, it is legal to join an MLM. However, very few people earn enough money from multi-level marketing companies to make them worth the effort. In fact, some people lose money in MLMs.

What makes an MLM illegal?

MLMs are legal, but pyramid schemes are not. Pyramid schemes often disguise themselves as legitimate MLMs. However, with pyramid schemes, the emphasis is on recruiting new members and forcing distributors to buy more products, rather than focusing on empowering distributors to successfully sell to customers.

Are MLMs the same as pyramid schemes?

No, MLMs are not the same as pyramid schemes, but pyramid schemes often disguise themselves as MLMs. Multi-level marketing companies are legitimate businesses that require distributors to buy products and earn commissions by selling them to a network of peers. Pyramid schemes are more focused on recruiting new distributors and forcing them to buy products than empowering distributors to sell the products.

Photo credit: iStock/Makhbubakhon Ismatova

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.

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.

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.

SOBK0822005

Oct

2023

What Is a Freelancer? Guide to Freelancing

By Timothy Moore | Building Your Career, Life & Career, money | Comments Off

A freelancer is a self-employed worker who provides services for a client or multiple clients as an individual contractor. Freelancers typically have flexible hours, work remotely, and can be involved in as many or as few projects as they would like. Think about people you may know who provide social-media consulting for a few businesses, drive an Uber, or take catering gigs. All of them are freelancers.

Because freelancers are not employees, however, they do not receive typical work benefits like health insurance and paid time off. They are also subject to self-employment tax and are responsible for paying taxes entirely on their own.

Are you committed to being a freelancer or just curious about how it works? In this piece, you’ll get the answers you need to move ahead, including:

• What is a freelancer?

• How does freelancing work?

• What are common types of freelancers?

• What are the pros and cons of freelancing?

What Is Freelancing?

So what does freelancing mean? Freelancing is when a self-employed individual offers professional services to a company in exchange for payment. Unlike a traditional employee, the freelancer can set their own rates and hours. They can work for one or multiple companies.

In exchange for this flexibility, freelancers must be prepared to fund their own benefits like health insurance. They also typically pay their own taxes which are potentially higher.

Some people freelance as their sole source of income. If they work on a large or long-term project, you may hear the term “independent contractor” used (you’ll learn more about different terminology below).

However, it is possible to freelance on top of a regular salaried or hourly position. Such freelance work is commonly referred to as a side hustle or side gig and can help people bring in more cash.

Recommended: 15 Low-Cost Side Hustles

How Does Freelancing Work?

Now that you know the answer to “What is freelancing,” here’s more detail on how this kind of employment works. Freelancers make money by selling a service to another individual or company (i.e., a client). Typically, freelancers and their clients will enter into a contract with one another that specifies the nature of the work, the duration of the professional relationship, and the payment for services rendered.

After completing the work, a freelancer will usually submit an invoice to the client, who will then pay the freelancer by a predetermined method (direct deposit, paper check, peer-to-peer transfer, etc.). During tax season, a freelancer will receive an IRS 1099 composite form from each client instead of a W-2. This form will detail the total compensation the freelancer earned from the client.

Because freelancers are self-employed, they are solely responsible for paying federal, state, and local taxes on all earned income. In addition to paying what an employee would traditionally have withheld from their paycheck, a freelancer must also pay what an employer usually contributes toward taxes (typically Social Security and Medicare taxes). And because there is no steady paycheck from which funds are being withheld for taxes, freelancers are responsible for paying quarterly estimated taxes to avoid a penalty from the IRS.

If you decide to become a freelancer, it is a good idea to work with a certified accountant to ensure you are handling your taxes correctly. Not only can an accountant help you with quarterly taxes, but they can also point out important freelancer tax deductions you can be taking.

Recommended: Passive Income Options

Common Fields for Freelancing

Traditionally, freelancers have been thought of as roles like writers, photographers, consultants, and coaches. But today’s gig economy has broadened the definition of freelance work. Rideshare drivers, dog walkers, and online tutors — these just scratch the surface of jobs one can do as a freelancer.

In terms of what a freelancer is specifically, take a look at some common fields and roles:

• Editorial

◦ Copywriters

◦ Journalists

◦ Bloggers

◦ Proofreaders

◦ Editors

• Creative

◦ Graphic designers

◦ Photographers

◦ Podcasters

◦ Vloggers

◦ Animators

◦ Videographers

◦ Social media influencers

◦ Musicians

• IT and Development

◦ Web developers

◦ Mobile developers

◦ Software developers

• Admin

◦ Virtual assistants

◦ Transcribers

◦ Administrative assistants

• Financial and Legal

◦ Accountants

◦ Bookkeepers

◦ Tax preparers

◦ Lawyers

• Sales and Marketing

◦ Social media marketers

◦ Public relations specialists

◦ Digital advertisers

◦ SEO marketers

• Consultants

◦ Business consultants

◦ Medical consultants

◦ Legal consultants

• Gig Economy

◦ Delivery drivers

◦ Rideshare drivers

◦ Dog walkers

◦ Babysitters

◦ House cleaners

◦ Fitness instructors

The important thing to remember: Most of these jobs can be done as an actual employee, and many other jobs not listed here can now be done by freelancers. Many businesses rely on a healthy mix of freelancers and independent contractors to achieve success.

Recommended: How to Make Money Through Social Media

Types of Freelancers

You may hear different terms used and wonder what does freelancing mean exactly? Are independent contractors and freelancers the same thing? Here, the answer to that question as well as clarity on some other phrases you may encounter that describe this kind of work:

1. Independent contractor: Most freelancers are independent contractors. They provide their services to multiple clients and companies, as specified by the contracts they agree to. An independent contractor may do a short, one-off project with a client, but it tends to be used (as noted above) when one is contracted to provide a service on an ongoing basis or does a larger scale project.

2. Part-time freelancer: People who hold down a full-time job but make extra money on the side — like a weekend wedding photographer or a doctor who does some medical consulting with clients — are considered part-time freelancers.

3. Small business owners: Some freelancers may earn enough work that they need to hire actual employees to keep up with it. For example, a freelance writer may attract enough clients to eventually form an agency.

4. Temporary workers: Individuals who find temporary work, often through a temp agency, are considered freelancers. Sometimes, businesses need to fill a full-time role but only for a set number of months or years, like to cover for a full-time employee’s parental leave. The contracted worker who temporarily fills that role is also considered a freelancer but may enjoy some company benefits during their tenure, depending on contract specifics.

Recommended: 5 Ways to Achieve Financial Security

Tips on Becoming a Freelancer

Thinking about becoming a freelancer? The following tips may help you find success:

• Finding clients: Before quitting a full-time job with steady income and benefits, it’s a good idea to have some clients as a freelancer. Many freelancers start out part-time and transition to full-time freelancers once they have enough steady work.

• Understanding the financial implications: Knowing how you will pay taxes as a freelancer is an important requirement before transitioning into this career. It’s also wise to have a plan for health insurance, disability insurance, and other benefits that you may be losing by transitioning out of full-time work.

• Staying organized: Having an organizational system to keep track of clients, projects, communication, and deadlines can be crucial. Successful freelancers often make their own work schedule with standard hours and stick to it, even if no one else is holding them accountable.

• Networking: Word-of-mouth referrals are a great way to earn business as a freelancer; networking on sites like LinkedIn and in person with potential clients and others in your field is a great strategy. Depending on your line of work, having a website and portfolio advertising your services can make it easier to win new business.
Feeling unsure about the transition to independent contractor? Consider researching and following some financial planning tips for freelancers.

Pros of Freelancing

Freelancers enjoy plenty of perks, including:

• Setting your own rates: As a freelancer, you can determine how much you’ll charge a client per project or hour. Just remember that if you set the price too high, companies may go with another contractor.

• Setting your own hours: You can also work as much or as little as you’d like — and at the time of day you’d prefer. You don’t have to ask for permission to go to the grocery store, take a mental health day, or go to yoga class in the morning.

• Diversifying your client list to keep work interesting: You can choose which clients you work with and have more freedom to define your job responsibilities.

• Flexible time off: Freelancers may not get paid for their time off, but as long as you fulfill contractual obligations to clients, you can take vacation (or just lazy days) whenever you like.

• Freedom from regular meetings and office politics: While freelancers may hop on a call or meet up with a client for lunch on occasion, there is typically more freedom to do the actual work instead of sitting through unnecessary meetings. This may not apply to some freelancers, like consultants.

• Remote work: Most freelancers are able to work on the go or from a home office.

Cons of Freelancing

But there are also downsides to freelancing, like:

• Lack of company-paid benefits: Freelancers are responsible for getting their own health insurance and can’t count on a company’s 401(k) match. (That’s where the solo 401(k) comes in!) Freelancers also won’t get paid while they’re on vacation.

• Higher and more complicated taxes: If you’re self-employed, you’ll need to cover some taxes beyond those you would pay as a traditional employee. Freelancers must also pay their taxes quarterly to avoid fines from the IRS.

• Less job security: Because freelancers are not employees, it is easier for a company to sever ties. Freelance work is sometimes on a per-project basis, so as a freelancer, you may need to spend a significant portion of your time just trying to market your services to find more work.

• Lack of steady income: As a freelancer, you might not be able to depend on the same amount of money every week; it can vary by the type and amount of projects you take on. This can make it more challenging to build a monthly budget.

• Loneliness: Working from a home office as a freelancer can be isolating. If you feed off other people’s energy and really enjoy networking and socializing with coworkers, you may find that freelancing isn’t right for you.

• The constant need for “hustling”: Workers who do an average job might be able to skate by as a traditional employee and still earn a paycheck. To turn a profit as a freelancer, you must constantly impress clients with high-quality work and no missed deadlines. Otherwise, they might look elsewhere.

Here’s a look at the pros and cons of freelancing in chart form:

Pros of Freelancing	Cons of Freelancing
• Set your own rates • Set your own hours • Choose your clients • Have flexibility with time off • Avoid meetings and office politics • Can work remotely	• Don’t get benefits • Must cover more taxes • Lack job security • Don’t receive steady paycheck • May be lonely • Must constantly be pitching new work

Pros of Freelancing

Cons of Freelancing

• Set your own rates

• Set your own hours

• Choose your clients

• Have flexibility with time off

• Avoid meetings and office politics

• Can work remotely

• Don’t get benefits

• Must cover more taxes

• Lack job security

• Don’t receive steady paycheck

• May be lonely

• Must constantly be pitching new work

Banking With SoFi

Freelancers rely on many tools to turn a profit, including a bank account that puts their hard-earned money to work. If you sign up for an online bank account with SoFi, you’ll enjoy a suite of tools that makes organizing your earnings, spending, and saving super convenient. Plus you’ll earn a hyper competitive interest rate and pay no monthly fees, so your money can grow faster.

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

Is freelancing better suited for full-time or part-time?

Many freelancers are able to turn their work for a client or clients into a full-time career. If you are just starting out, it might be a good idea to freelance part-time and then transition to full-time if you feel confident that you can sustain a freelance career.

What skills are necessary for freelancing?

Beyond the actual job skills required by whatever field you’re freelancing in, being a successful freelancer requires several key skills, including:

• Excellent communication

• Strong organization

• A commitment to deadlines

• The ability to network

• A solid understanding of finances.

Is freelancing difficult?

Freelancing can be difficult: You won’t enjoy employer-sponsored benefits, you’ll have to pay self-employment taxes, and you’ll need to “hustle” to win clients — and then deliver impressive work that convinces clients to keep you around. That said, freelancing offers freedom and flexibility and can be lucrative if your business is successful.

Photo credit: iStock/AleksandarNakic

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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.

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.

SOBK0822038

Oct

2023

Is Money Really Everything?

By Timothy Moore | Family Finances, Life & Career, money | Comments Off

Some people may believe that money is everything, but is it actually? After all, money is embedded in a sense of well-being, from healthcare to the ability to pursue one’s passions. Money grants security and freedom — and, at its core, it ensures basic survival.

But research also suggests that having more money is correlated with depression and can lead to more stress. Comparing money with one’s peers can create dissatisfaction, and money arguments are the second-highest cause of divorce.

So is money really everything in life? Here’s a closer look at:

• Is money everything in life?

• What can money do for us?

• What can money not do for us?

Needing Money to Survive

Money has the ability to improve one’s life, but it can also create complications and lead to unhappiness. The question of whether a person needs more money to be happy is certainly up for debate (and researchers continue to conduct new studies about this very topic), but amid all the misconceptions about money, there is a fundamental truth: We need money to survive.

According to the American Academy of Family Physicians (AAFP), poverty and low-income status can lead to shorter life expectancy, higher death rates for the 14 leading causes of death, and higher infant mortality rates.

From food and shelter to health care and education, money provides the things needed to survive.

What Money Can Do For Us

Is money everything? Probably not: Things like love, friendship, time, and passion are all important aspects of life (though money can help in those areas —for example, money can enable you to pursue passions and afford experiences with family and friends).

But even if money isn’t everything, it can do a lot of important things, such as:

Meeting Basic Needs

Money allows us to meet our most basic needs, like food, shelter, and health care. Without those things, we would die.

On Maslow’s hierarchy of needs — a popular tenet of psychology — humans must satisfy such basic needs before they can focus on more complex needs like love and belonging, esteem, and self-actualization.

Recommended: How to Manage Your Money

Paying Down Debts

Multiple studies indicate that carrying debt is bad for your mental and physical health. Adverse effects include high blood pressure, anxiety, depression, and even a weakened immune system.

On top of that, debt can lead to money fights with a significant other. It can also impact your ability to secure credit in the future — whether for a car, house, or even a credit card.

Thus, having enough money to pay down your debts can help avoid a lot of figurative and literal headaches.

Recommended: Paying Off Debt: 9 Strategies to Try

Improving Our Quality of Life

Beyond meeting basic needs, money can help improve quality of life. Having more money makes it easier to see expensive doctors, join a gym, and buy healthier foods. It also enables the pursuit of higher education without needing to open a student loan.

Money also allows you to afford experiences with friends and family — whether it’s going to a concert, affording a family vacation, or just having a drink with a coworker. Beyond that, money allows a person to pursue passions and hobbies, such as gardening, woodworking, painting, playing in sports leagues, and fixing up cars.

Feeling Secure and Free

Having enough money to pay the bills and provide for your family can create a sense of security. With a well-padded emergency fund, you may not worry about the cost of emergencies like unexpected vet bills or car trouble like those living paycheck to paycheck might.

Not only can money provide you with a sense of security, but it can also give you more freedom to pursue passions and buy material goods you enjoy without worrying about the price tag.

Recommended: 5 Ways to Achieve Financial Security

Making a Difference

Parents with more money may be able to provide things for their children that others cannot — like better education for a more promising future. Beyond your own family, money can allow you to make a difference in the world through charitable donations to causes you care about.

What Money Can’t Do For Us

After reading the list above, you may wonder, Is everything about money? While money can purchase material possessions and enable certain experiences, there are some things money simply cannot do.

Buying More Time

No matter how much money you have, no one can buy more time. If you spend a large chunk of your life working at a job you don’t like — and miss out on experiences and memories with people you love — you can’t buy that time back. And while deep pockets can perhaps enhance one’s health and healthcare, it’s not as if it can necessarily extend your life.

Creating Real Relationships

You cannot buy connections with true friends and family. You may win new friends with more money, but real relationships are based on love and respect for one another. The more time you spend trying to make money, the less time you’ll have to focus on building relationships with people you care about.

Recommended: How to Change Your Money Mindset

Fulfilling Passions

Some people may have high-paying jobs and love what they do. But others may take high-paying jobs just for the paycheck, even if there’s something else they’d rather be doing.

While it’s important to earn money to care for yourself and family, remember that it’s also valuable to allow yourself to do things that make you happy.

Can Money Buy You Happiness?

Is money everything in life? Clearly, money can offer security and opportunities — and allow you to meet basic needs — but there are other things in life worth pursuing.

But can money buy you happiness? Science says yes, though researchers continue to debate the extent to which it can.

More than a decade ago, Daniel Kahneman and Angus Deaton released their now-famous research that indicates money does buy you happiness, to a certain point. According to this research, money no longer improves emotional well-being and happiness beyond $75,000 a year.

A more recent study, however, throws that into question. The 2021 paper by Matthew Killingsworth demonstrates a continued, linear correlation between money and happiness beyond $75,000. That is, a person who makes $100,000 a year could scientifically be happier than one who makes $75,000.

Of course, other research demonstrates that money leads to unhappiness. For example, per capita income in the United States increased by 150% from 1946 to 1990, yet the percentage of people who considered themselves happy dropped during that time.

Research also shows that more income can mean more stress, that materialism can contribute to unhappiness, and that comparing one’s finances with one’s peers can contribute to dissatisfaction.

So can money buy you happiness? The answer: yes and no.

Recommended: 30 Low-Stress Jobs for Introverts

What’s More Important Than Money?

Science can only go so far to prove fundamental truths about the human experience. How can a person truly measure the value of love, family, and friendship to each individual? And how can you separate money from things you deem important, like your mental and physical health?

Understanding that it’s a nuanced subject, here are some things that you may find are more important than wealth; things that refute the the idea that money is everything:

• Love: For many people, sharing love and companionship with friends, family, partners, and children is paramount. It’s the most valuable thing in the world.

• Health: Having a sound body and sound mind are important. Many rely on jobs for health insurance and the money they need to afford everything from prescriptions to gym memberships to emergency room visits. However, one can overdo it at work. It can be important to remember to also focus on your mental health, especially if you’re working too much and too hard to earn your money.

• Passion: While some people would prefer to work a high-pressure job for more money, the Great Resignation (in which people left their jobs in droves as the COVID-19 pandemic progressed) has shown us that many people would rather pursue their passions and accept a lower paycheck for it. To them, a passion-filled life is more important than money.

• Time: Each person has a finite amount of time in life. If you spend too much of it focused on making money, you may miss out on life-changing experiences and wonderful memories with friends and family.

The Takeaway

Money can allow you to satisfy basic needs like food and shelter, but it may also enable you to pursue higher education, access higher-quality health care, and fund experiences and hobbies that you are passionate about. That said, money can never buy you more time or true relationships, and having more money may even make you unhappy. So while money may matter, it’s not necessarily what makes the world go around when one thinks about happiness at a basic, human level.

3 Money Tips

1. Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

2. If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

3. When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.

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 did the phrase “money isn’t everything” come from?

The origin of the phrase “money isn’t everything” isn’t clear, but it’s a common expression in the English language. The intent of the expression is that you shouldn’t focus solely on money because other things — love, friendship, time, passion, etc. — are also important and can bring you happiness.

What happens if we are too dependent on money?

Money is important for affording the basic things we need to survive, but research shows that focusing too much on money can lead to more stress, isolate us from people we care about, and even cause depression.

Is too much money a bad thing to have?

We need money to survive and to improve our quality of life. Having more money allows us to care for ourselves and the people we love. However, if you’re earning that money at the expense of your mental and physical health — and missing out on core life experiences because you’re busy with work — having more money could be a bad thing. Some research indicates that having more money can lead to unhappiness and even depression.

Photo credit: iStock/Irina Kashaeva

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.

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.

SOBK1122005

The Great Resignation, Explained

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What Is the Great Resignation?

Who’s Quitting Their Jobs?

Reasons for the Great Resignation

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The Takeaway

3 Money Tips

FAQ

What’s the Great Resignation?

Should you quit for a better paying job?

Is it better to quit or be fired?

Can You Rent a Car With a Debit Card?

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Is It Possible to Rent a Car With a Debit Card?

Why Do Many Car Rental Companies Require a Credit Card?

Pros of Renting a Car With a Debit Card

Cons of Renting a Car With a Debit Card

Is It Better to Rent a Car With a Debit or Credit Card?

Is It Safer to Rent a Car With a Debit or Credit Card?

Alternatives to Car Rentals With Debit Cards

Ways to Protect Yourself While Renting a Car

The Takeaway

FAQ

Which rental car companies allow you to use a debit card?

Are there any restrictions when renting with a debit card?

What is the process of renting a car with a debit card?

Tips to Avoid Schemes Disguised as Multi-Level Marketing Companies

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What Is a Multi-Level Marketing (MLM) Company?

How Do Multi-Level Marketing Companies Work?

Multi-Level Marketing vs. Pyramid Schemes: What’s the Difference?

Real-Life Examples of Multi-Level Marketing Companies

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Can You Create Financial Freedom by Joining an MLM?

Tips for Recognizing Predatory MLMs and Pyramid Schemes

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The Takeaway

FAQ

Is it legal to join an MLM?

What makes an MLM illegal?

Are MLMs the same as pyramid schemes?

What Is a Freelancer? Guide to Freelancing

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What Is Freelancing?

How Does Freelancing Work?

Common Fields for Freelancing

Types of Freelancers

Tips on Becoming a Freelancer

Pros of Freelancing

Cons of Freelancing

Banking With SoFi

FAQ

Is freelancing better suited for full-time or part-time?

What skills are necessary for freelancing?

Is freelancing difficult?

Is Money Really Everything?

Get up to $300 when you bank with SoFi.

Needing Money to Survive

What Money Can Do For Us

Meeting Basic Needs

Paying Down Debts

Improving Our Quality of Life

Feeling Secure and Free

Making a Difference

What Money Can’t Do For Us

Buying More Time

Creating Real Relationships

Fulfilling Passions

Can Money Buy You Happiness?

What’s More Important Than Money?

The Takeaway

3 Money Tips

FAQ

Where did the phrase “money isn’t everything” come from?

What happens if we are too dependent on money?

Is too much money a bad thing to have?

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