Jan
08
2025

Important Retirement Contribution Limits

By | Growing Wealth, Investing, Preparing for Retirement | No Comments

By saving and investing for retirement, you are working toward financial freedom — a goal worthy of your time and effort.

As you may know, there are benefits to using an account designed specifically for retirement, such as a 401(k) plan or Roth IRA.

For instance, some company retirement programs may offer a match program. Second, these accounts are designed to hold investments so that you can earn compound returns.

Retirement accounts also have tax advantages. Because these accounts have special tax treatment, there’s a limit to how much money the IRS allows you to contribute to each of them in a given year.

These retirement contribution limits vary depending on the type of account you have. For example, 401(k) contribution limits are different from IRA contribution limits.

To build a successful long-term financial plan, you’ll likely want a solid understanding of your retirement plan options. Below is a summary of these retirement accounts and their respective annual retirement contribution limits.

What Are Retirement Contribution Limits?

Ever heard someone say that they have “maxed out” their retirement account? Maxing out means contributing the total amount allowed by the IRS in a given year. In some cases, you may be able to contribute more than the allowable maximum, but that money will not qualify for the tax advantages of the money within the retirement contribution limit.

Generally, the IRS increases retirement contribution limits every few years as the cost of living increases. Many of the 2025 contribution limits were increased from the previous year.

There are a lot of different types of retirement accounts, and each comes with its own nuances, which can make it hard to keep them straight.

This list of the account types along with their contribution limits will help keep track.

Note that if you have any questions about what type of account is best for you, or whether you can use multiple accounts concurrently, you may want to consult a tax professional.


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401(k) Contribution Limits

A 401(k) plan is a tax-deferred retirement account that is typically set up through a person’s employer, usually as part of a benefits package. With a 401(k) plan, the employee can opt to have a certain percentage of their salary withheld from their paycheck on a pretax basis.

Individual 401(k) plans — also known as solo 401(k) plans — are becoming more popular. These accounts are available to people who are self-employed and have an employee identification number (EIN).

2024 Employee contribution limit: $23,000
2025 Employee contribution limit: $23,500

Plans may allow for catch-up contributions for employees age 50 and over.

2024 Catch-up contribution limit: $7,500
2025 Catch-up contribution limit: $7,500

In 2025, those aged 60 to 63 may contribute an additional $11,250 instead of $7,500, thanks to SECURE 2.0.

Some employers may offer a company match in their 401(k) plans. A typical match would see employers match around 3% of an employee’s salary when that employee contributes 6% to the plan. The company match plan is determined by the employer.

Employer contributions to a 401(k) do not count toward the employee’s contribution limits. But instead of putting a cap on how much the employer alone can contribute, there’s a total contribution limit that includes both the employer and employee contributions.

2024 Total employer plus employee contribution limit: The lesser of 100% of the employee’s compensation or $69,000 — if the employee is eligible for the catch-up contribution, then it would be $76,500.

2025 Total employer plus employee contribution limit: The lesser of 100% of the employee’s compensation or $70,000 — if the employee is eligible for the catch-up contribution, then it would be $77,500.

403(b) Contribution Limits

A 403(b) plan is similar to a 401(k) but is offered to employees of public schools, nonprofit hospital workers, tax-exempt organizations, and certain ministers.

2024 Employee contribution limit: $23,000
2025 Employee contribution limit: $23,500

2024 Catch-up contribution limit: $7,500
2025 Catch-up contribution limit: $7,500

Catch-up contributions are for employees aged 50 and older. Employees of any age who have been in service for 15 or more years with the same eligible 403(b) employer can potentially contribute another $3,000. There is a $15,000 lifetime limit for the latter catch-up provision. It may be possible to qualify for both catch-up provisions; if you think you qualify, check with the plan or your CPA to be sure.

2024 Total employer plus employee contribution limit: The lesser of 100% of the employee’s compensation or $69,000.

2025 Total employer plus employee contribution limit: The lesser of 100% of the employee’s compensation or $70,000.

It is important to keep in mind that some 403(b) plans have mandatory employee contributions. These mandatory contributions are made by the employee, but since you do not have a choice they do not count towards the employee contribution limit. If you are part of a plan like this you might actually be able to contribute your annual contribution maximum plus the mandatory contributions.

457(b) Contribution Limits

A 457(b) plan is similar to a 401(k) plan but for governmental and certain nonprofit employees. Unlike a 401(k), there is only one contribution limit for both employer and employee.

2024 Total employer plus employee contribution: $23,000
2025 Total employer plus employee contribution: $23,500

If permitted by the plan, a participant who is within three years of the normal retirement age may contribute the lesser of twice the annual limit or the standard annual limit plus the amount of the limit not used in prior years.

Thrift Savings Plan (TSP) Contribution Limits

A TSP is similar to a 401(k), but for federal employees and members of the military.

2024 Employee contribution limit: $23,000
2025 Employee contribution limit: $23,500

Tax-free combat zone contributions: Military members serving in tax-free combat zones are allowed to make the full $69,000 in employee contributions for 2024, and $70,000 in 2025.

2024 Catch-up contribution limit: $7,500
2025 Catch-up contribution limit: $7,500

According to the “spillover” method for TSP catch-up contributions, for those eligible to make catch-up contributions, any contributions made that exceed the annual employee contribution limit will automatically count toward the catch-up contribution limit of $7,500 in 2024 and 2025.

Traditional IRA Contribution Limits

The traditional IRA is a tax-deferred account that is set up by the individual. IRA stands for individual retirement account. Unlike workplace retirement plans, IRA accounts tend to have lower contribution limits. These contribution limits are combined totals for both your traditional and Roth IRAs.

2024 Contribution limit: $7,000
2025 Contribution limit: $7,000

2024 & 2025 Catch-up contribution limit: $1,000 (for a total of $8,000 in 2024, and $8,000 in 2025) for those age 50 or over

Additionally, there are income limits for tax deductions on contributions that vary based on whether or not you are covered by a retirement plan at work.

Calculate your IRA contributions.

Use SoFi’s IRA contribution calculator to determine how much you can contribute to an IRA in 2024.

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Roth IRA Contribution Limits

Similar to a traditional IRA, a Roth IRA is set up by the individual.

Unlike tax-deferred retirement accounts, Roth IRA contributions are not tax deductible. The trade-off is that you will not need to pay income taxes on qualified withdrawals. Again, these contribution limits are combined totals for both your traditional and Roth IRAs.

2024 Contribution limit: $7,000
2025 Contribution limit: $7,000

2024 & 2025 Catch-up contribution limit: $1,000 (for a total of $8,000 in 2024, and $8,000 in 2025) for those age 50 or over

There are income limitations for who is able to use a Roth IRA. These limits exist on a phase-out schedule and ability to use a plan slowly tapers off until the final income cap.

Single-filer income limit: Under $161,000 for tax year 2024, and under $165,000 for tax year 2025.

Married, filing jointly income limit: under $240,000 for tax year 2024, and under $246,000 for tax year 2025.


💡 Quick Tip: Did you know that you must choose the investments in your IRA? Once you open a new IRA and start saving, you get to decide which mutual funds, ETFs, or other investments you want — it’s totally up to you.

SEP IRA Contribution Limits

A simplified employee pension simplified employee pension (SEP) IRA is a tax-deferred retirement account for employers and self-employed individuals.

2024 Contribution limit: An employer’s contributions to an employee’s SEP IRA can’t exceed the lesser of 25% of the employee’s compensation or $69,000.

2025 Contribution limit: An employer’s contributions to an employee’s SEP IRA can’t exceed the lesser of 25% of the employee’s compensation or $70,000.

Catch-up contributions are not permitted in SEP plans.

SIMPLE IRA

A savings incentive match plan for employees (SIMPLE) IRA is a retirement savings plan for small businesses with 100 or fewer employees.

2024 Employee contribution limit: $16,000
2025 Employee contribution limit: $16,500

2024 Catch-up contribution limit: $3,500 for savers age 50 and older
2025 Catch-up contribution limit: $3,500 for savers age 50 and older

Employer contribution limit: The employer is generally required to make a 100% match for each employee’s contributions up to 3% of the employee’s compensation. In certain circumstances, an employer may choose to make a matching contribution of less than 3%.

Also, under a SECURE Act 2.0 provision, an employer can make an additional 10% nonelective contribution to eligible employees, up to $5,000.

Maxing Out Your Retirement Contributions

Now that you know how much you can contribute to an account, you may be wondering how one actually goes about contributing the full amount.

For some people, it may help to understand the monthly dollar figure necessary to max out your annual retirement plan contributions. If you have a 401(k), you would need to contribute $1,916.67 each month to reach the $23,000 limit for 2024. With IRAs, that number is $583.33 per month to reach the annual $7,000 contribution limit for 2024.

A bit of good news: When you are making pre-tax contributions to a tax-deferred account such as a 401(k), the money is entering into the account before income tax deductions. Therefore, the difference in your post-tax paycheck might not be as drastic as you think.

There are several tactics you can take when working to increase how much you’re contributing to your retirement plan.

But whether you increase your contribution each month, quarter, or year, you may want to consider automating the saving process. Automation removes human emotion from the equation, which may help you save.

You may want to try to avoid massive lifestyle creep as your income increases over the years. It’s a balance to take care of both your current self and your future self. When you get raises or bonuses, consider allocating those funds to your retirement instead of a material purchase.

The most successful savers will likely have a strategy that focuses on earning more and cutting costs.

Opening Your Own Retirement Account

If you have a retirement account through work, this may be the easiest option, as contributions are taken directly from your paycheck and you can take advantage of a company match program if it’s offered.

Ease of use shouldn’t be discounted; the most important characteristic of a retirement plan is that you actually use it.

For those without a workplace retirement plan, getting set up with an account may take slightly more initiative. Luckily, opening an account doesn’t have to be hard. An account like a traditional IRA, Roth IRA, SEP IRA, or Solo 401(k) can be set up at a brokerage firm of your choosing.

Another way to save for retirement is through a general investment account, like SoFi Invest. With SoFi Invest, you can either make trades on your own through active investing or you can use an automated investing service which invests your money on your behalf using your goals as a guide.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Invest with as little as $5 with a SoFi Active Investing account.

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SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

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.

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Jan
08
2025
Condo vs Townhouse: 9 Major Differences

Condo vs Townhouse: 9 Major Differences

By | Home Ownership, mortgage | Comments Off on Condo vs Townhouse: 9 Major Differences

If you’re looking to buy a condo or townhome, understanding the distinctions may help you home in on the choice that better suits your lifestyle and needs. Read on to learn the major differences between these two kinds of property.

What Is a Condo?

A condominium is a private property within a larger property, whether that be a single building or a complex. Residents share amenities like clubhouses, gyms, pools, parking, and the common grounds, and pay homeowners association (HOA) dues to support those shared assets. If you buy a condo, you’ll own your interior space only.

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What Is a Townhouse?

A townhouse is a single-family unit that shares one or more walls with another home, usually has two or more floors, and may have a small backyard or patio. If you buy a townhouse, you’ll own the interior and exterior of the unit and the land on which it sits. Upkeep of the exterior could be split between you and the homeowners association (HOA).


💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

Condo vs Townhouse: Differences

Both are part of a larger structure, unlike some other house types, and both usually share one or more walls, but some similarities end there. Here are the key differences.

1. Construction

In the condo vs. townhouse debate, construction differs. A townhouse will share at least one wall with a property next door. A condo could have another unit below and above it, in addition to neighbors on either side. That could mean sharing all surrounding walls and floors/ceilings.

2. Actual Ownership

If you’re considering townhouse vs. condo, what would you actually own? With townhomes, the buyer owns the land and the structure. That could mean some creativity with decorating the lot or the home’s exterior. With condos, the buyer owns the interior of the unit and an “interest” (along with all of the other owners) in the common elements of the condominium project.

3. Community

With both condos and townhouses, residents will have fairly close contact with their neighbors. With shared walls and spaces, residents may have more social relationships with their community than they would with a single-family home. That means it’s important for buyers to research the community when condo shopping. Is the condo social? Does it plan a lot of events, or do people generally keep to themselves? Since there are many shared spaces, understanding how the community functions could directly affect living there.

If a townhome isn’t part of an HOA, living in the complex could feel similar to living in a single-family home. In that case, it could be up to the buyer to create a sense of community.

4. Homeowners Associations

Condos come with an HOA, a resident-led board that collects ongoing fees that can range from $200 to thousands of dollars, and mandates any special assessments. The HOA also enforces its covenants, conditions, and restrictions (CC&Rs).

Not all townhouse communities have an HOA, but if they do, townhouse owners usually pay lower monthly fees than condo owners because they pay for much of their own upkeep.

5. Obligations and Regulations

What’s the difference between a townhouse and a condo when it comes to rules and regulations? Condo owners will be required to meet all HOA standards. That could dictate anything from what residents want to hang on their front door to whether they can have pets, how many, and whether Biff needs to be registered as a service animal or emotional support animal. If an owner wants to renovate their condo, they may have to get the work approved by the HOA.

If a townhome is part of an HOA, many of the above restrictions could apply. However, if it’s not an HOA community, townhouse owners have more freedom to decorate the exterior of their home or maintain their landscape as they see fit.

6. Insurance

Condos have their own form of property insurance. HO-6 provides coverage for the interior of a condo and the owner’s personal belongings. In addition, the entire building needs to be insured, which is paid for with HOA dues.

If a townhouse is part of an HOA community, each property requires HO-6 insurance and coverage for the community through HOA dues. When a townhouse isn’t part of an HOA, buyers are typically required to have homeowners insurance.

7. Fees and Expenses

HOA fees for condos are usually higher than for townhouses because they cover exterior maintenance and shared amenities. If townhouse owners are part of an HOA, they’ll usually pay lower monthly fees because they pay for much of their own upkeep.

Condo owners don’t have to worry about repairing the roof or replacing siding. Everything exterior-facing is managed collectively and paid for with HOA dues, but those fees may be high and are periodically reevaluated, and so may rise over time.

8. Financing

It can be harder to obtain financing for a condo than for a townhouse. Condos may be eligible for conventional mortgage loans and government-insured loans. (Study the mortgage basics to learn more about the difference between these types.) Lenders of conventional loans will review the financial health of an HOA, whether most of the units are owner-occupied, and ownership distribution. Interested in an FHA loan or a VA loan? Both agencies maintain respective lists of approved condos.

In the case of a townhouse, the financing process is similar to that of a traditional mortgage because a townhouse includes the land it’s built on. Its value is factored into the process.

9. Resale Value

A large factor in a condo holding value is the management, which isn’t always in the hands of the owner. Strong management can help a condo maintain or grow in value. Additionally, where the condo is located will influence resale value. Condos generally hold value but don’t see the boost in resale expected with single-family homes. Similarly, buying a townhouse may not usher in the appreciation of most single-family homes.


💡 Quick Tip: Your parents or grandparents probably got mortgages for 30 years. But these days, you can get them for 20, 15, or 10 years — and pay less interest over the life of the loan.

Condo vs Townhouse: Which May Be Right for You?

Condos and townhomes have their fair share of differences, as well as some similarities. Overall, condos can offer a low-maintenance property where owners simply look after their condo interior. With condo ownership comes the added perk of shared amenities. But condos come with monthly HOA fees, which must be factored into any purchase. Additionally, the community association and its management of the property will likely have a large impact on what life is like in a particular condo complex. Condo buyers may be more community-minded, as they share space with their neighbors. (If a condo feels like the right choice, read a guide to buying a condo as you embark on your search.)

Townhouses offer more freedom and privacy than condos. Owners may have the option of personalizing their exterior and enjoying outdoor space if the property has a patio or backyard. Townhomes generally require more responsibility and upkeep than a condo, even if there’s an HOA involved. Exterior maintenance will be required. If this sounds like a good fit, dig deeper by reading a guide to buying a townhouse.

Of course, you may be better suited to a different living situation altogether. House or condo? Take a quiz to learn which of these options might be best for you.

The Takeaway

When it comes to finding a home, the perfect fit is up to the individual, but buyers may want to take a hard look at monthly fees, community rules, how social they intend to be, and precisely what they own and must maintain.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.


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FAQ

Between condos and townhouses, which is cheaper to buy?

The cost of a condo and townhome will vary based on location and size, but condos are often less expensive than townhouses because they come with no land.

Do you own the land around a condo if you buy it?

No. The purchase of a condo only includes the interior.

Is the resale value higher for a condo or townhouse?

In general, condos and townhomes don’t appreciate as quickly as single-family homes. The value will vary based on area, upkeep, and other conditions.

Between condos and townhouses, which has better financing options?

Financing a townhome is like financing a single-family home. A buyer can choose from multiple types of mortgages.

Financing a condo, on the other hand, involves a lender review of the community or inclusion on a list of approved condominium communities. Because a private lender could see a condo as a riskier purchase, the interest rate could be higher unless a large down payment was made.

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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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

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Jan
08
2025
11 Tips for Saving Money While in the Military

11 Money Management Tips for Military Members

By | Budgeting & Goals, money | Comments Off on 11 Money Management Tips for Military Members

Are you a member of the military? Whether you’re on active duty or a veteran, serving in the Reserve or National Guard, you have unique opportunities to build financial security. Taking advantage of things like military discounts and special mortgage loans can help you save money. There are also a number of other actions military members and their families can take to protect and grow their finances. Here’s what you need to know.

Key Points

•   To make the most of your money while serving, set up a budget, open a savings account, and automate savings.

•   Utilize military discounts and shop on base to reduce expenses.

•   Use VA home loans for low-interest rates and no down payment.

•   Explore educational benefits like the GI Bill and military student loan forgiveness.

•   Learn about tax breaks and life insurance options available to military personnel.

The Importance of Saving Money in the Military

Saving money is always a good thing when planning for your future. Members of the military — whether single, in a relationship, or married with kids — may especially benefit from making some careful money moves now. This helps ensure that your finances are in good shape after the final deployment ends.

11 Tips for Military Members to Manage Their Money

Wondering how to save money while in the military? We’ve got 11 money management tips that you may find useful if you’re a military member thinking about your financial future.

1. Creating a Budget

Having a monthly budget is a good way to track your expenses against your income. While it may be tempting to spend all of your paycheck each week during deployment, you might want to consider funneling away some money into savings or retirement to help achieve long-term financial goals and build wealth. A budget can help you do this, whether you use a journal, a spreadsheet, or an app to keep tabs on your money.

Budgeting for beginners can be overwhelming, but it’s an important step. Seeing your finances laid out in a clear budget makes it easier to determine how much you can afford to set aside from your paycheck, whether it’s to pay down debt or build your savings.

Recommended: 50/30/20 Budget Calculator

2. Opening a Savings Account

As part of your budget, it’s a good idea to open a savings account, if you don’t already have one. You can set aside money here for everything from a down payment on a house after your service to a new car to a wedding. If you intend to leave money in the account for the duration of your deployment, it’s especially wise to find a high-yield savings account that pays an above-average interest rate on your deposits.

3. Automating Your Savings

Once you have a savings account, you might benefit from automating your savings, if your financial institution offers this. When you set up automatic transfers from checking to savings, the money gets whisked away before you see it sitting there, connected to your debit card, and tempting you to spend it.

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4. Avoiding Overspending

An important reason to create a budget is to avoid overspending, especially with credit cards. When you build a budget, you’ll be able to identify how much you can safely spend each month while working toward your goals. Whether actively deployed or in between deployments, it’s a good idea to rein in any unnecessary expenses and recognize common reasons for overspending.

Before making a major purchase, you might try the 30-day rule: Wait a full 30 days to see if the urge to buy the item passes. If it does, you’ve avoided an unnecessary expense.

5. Utilizing Military Resources (Like Military Discounts)

How else to save money in the military? Many retailers, restaurants, and services offer discounts to members of the military, usually if you provide military identification. While military discounts may seem small, they can add up over time. They can be especially helpful when making larger purchases, like a new car.

Some businesses extend military discounts to spouses as well. If you are deployed with a spouse back home, make sure your partner knows to ask about military discounts when shopping as well.
Wondering how to find the best military discounts? One route is to check out Military.com’s discount page and subscribe to their deals and discounts newsletter.

6. Shopping on Base

Shopping on base can be a great way to scale back your expenses as a member of the military. For example, gas is typically cheaper on base, and you can usually get great discounts on groceries by shopping at the commissary because it doesn’t charge a sales tax.

Recommended: Feeling Guilty About Spending Money?

7. Investing in Education

If you want to pursue education after your service, check out the GI Bill. This bill can help veterans pay for college, graduate school, and training and certification programs. Head to the VA website to find out how you can take advantage of this education assistance and potentially save money by being in the military.

You can also see if you qualify for military student loan forgiveness.

8. Taking Advantage of Veterans Administration (VA) Home Loans

Buying a home can be a stressful experience, from saving for a down payment to getting approved for a mortgage loan to making an attractive offer fast enough to actually get the house you want.

As a servicemember, veteran, or surviving military spouse, you likely have unique access to a Veterans Administration (VA) home loan through private lenders.

When you purchase a home using a VA home loan, you typically don’t need a down payment, you’ll get a low interest rate, you won’t have to pay for private mortgage insurance, and closing costs are limited. And this isn’t a one-time deal: You can use a VA home loan for multiple homes over the course of your life.

9. Getting a Life Insurance Policy

The U.S. Department of Veterans Affairs offers Servicemembers’ Group Life Insurance (SGLI). In fact, if you qualify as a servicemember, the VA automatically signs you up (but note – it isn’t free!). You can update the life insurance coverage as you see fit, change your beneficiaries, and extend coverage beyond your service, all by logging in with your CAC or DS Logon.

Learn more on the official SGLI page . But remember: SGLI is not your only life insurance option during and after your service. You might find better terms by shopping around for other life insurance policies.

10. Learning About Tax Breaks

The IRS offers unique tax benefits to members of the U.S. Armed Forces. These include tax breaks, tax deadline extensions, free tax help from volunteers, and more. If you’re unsure of how your service affects your tax situation, browse the free IRS resources or work with a certified tax professional.

Recommended: Tax Write-Offs for Young Adults

11. Planning for Retirement

Retirement may seem like a long way off, especially if you have just enlisted. But it’s a good idea to start planning for retirement early to maximize your income in retirement. A popular option for members of the military is the Thrift Savings Plan (TSP), a federally sponsored retirement and investment plan. This plan is akin to an employee-sponsored 401(k). Some members of the military supplement this coverage with other retirement plans.

The Takeaway

Managing your money wisely while serving in the military can set you up for a secure future. Smart moves to make during your service include setting up a budget, saving for future expenses and retirement, and taking advantage of military discounts and programs designed exclusively for servicemembers.

If you’re looking for a new banking partner, see what SoFi has to offer. 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

Is it easy to save money in the military?

Saving money while in the military can be easy if you take advantage of several helpful military programs, including VA home loans, military discounts, federally sponsored retirement plans, and even cheaper gas and groceries on base.

What expenses do military members have?

Members of the military may incur the same expenses as the average person, including housing, food, and clothing. However, in addition to a servicemember’s paycheck, the Department of Defense also offers allowances that members of the military can use for basic necessities, which can help lower daily expenses.

How much do military members earn?

Members of the military make different amounts depending on their rank and years of service. However, servicemembers’ full payment includes not only their basic pay and military benefits but also military allowances, which go toward the cost of basic necessities like food and housing. Military members, whether servicemembers or officers, can earn additional pay through the Department of Defense’s Special and Incentive Pays program.

Photo credit: iStock/YakobchukOlena

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.

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Jan
08
2025
What Are Green Banks?

What Is Green Banking?

By | Family Finances, money, Terminology | Comments Off on What Is Green Banking?

Green banking is a branch of the financial industry that focuses on promoting environmentally-friendly practices. Similar to sustainable investing, green banks emphasize the importance of reducing negative environmental impacts as they go about their business.

The latest data indicates that global warming is likely increasing, and, in response, so is the market for renewable energy sources and other green solutions. The emergence of green banking may also reflect this rising interest in being more eco-conscious.

Read on for a closer look at what green banking is and how it works, plus some examples of green banking.

Key Points

•   Green banking focuses on environmentally-friendly financial practices.

•   These banks fund clean energy projects using both public and private investments.

•   These also focus on ways to reduce a bank’s environmental footprint.

•   Other objectives include financing green jobs and expanding solar power.

•   Over 20 U.S. green banks have driven significant clean energy investments.

What Are Green Banks?

There is no standard way to define what a green bank is. According to the Environmental Protection Agency (EPA), green banks are public, semi-public, or nonprofit financial institutions that use public and private funding to pursue clean energy projects. More broadly speaking, green banks are mission-driven. They work to further environmentally sound goals alongside financial goals. Those objectives can include:

•  Financing projects that will create green jobs

•  Expanding solar power

•  Lowering energy costs

•  Reducing greenhouse gas emissions

•  Building green infrastructure

•  Closing funding gaps for green energy retrofitting projects

•  Advancing sustainability

As of 2023, there were over 20 financial institutions in the U.S. operating as green banks, according to the Green Bank Consortium. Collectively, those banks have helped to drive $9 billion in clean energy investment over the past 10 years, using only $2 billion in public funds.

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

How Do Green Banks Work?

Broadly speaking, green banks work by adhering to practices that promote sustainability. Sustainable banking encompasses two different things:

•  Green banking

•  Sustainable finance

So what does that mean? When you’re talking about green banking, you’re referring to implementing practices that are designed to reduce a bank’s environmental footprint.

Sustainable finance, on the other hand, involves the use of financial products to support or encourage environmentally-friendly behavior.

Green banks work by incorporating aspects of sustainability into their operations. That spans everything from the products and services the bank offers to its IT strategy to the way it hires and retains employees. It may encompass socially responsible investing as well.

It’s important to note that it can be easy to confuse banks that are authentically green with financial institutions that engage in greenwashing. Greenwashing happens when companies have the appearance of being environmentally-friendly or sustainable, based on their marketing claims, but in reality are not. It may require a bit of consumer research to make sure you can differentiate what is a green bank and what isn’t.

Recommended: A Guide to Ethical Shopping

Sustainable Banking Examples

The number of green banks in the U.S. is still relatively low, and they don’t exist in every state yet. You may not see them among your local retail banks. However, there are some notable examples of financial institutions that are focused on sustainable banking. These include:

California Infrastructure and Economic Development Bank

The California Infrastructure and Economic Development Bank (known as IBank) offers a variety of paths to sustainable banking. The bank offers infrastructure loans, bonds, small business financing, and climate financing in order to create jobs, bolster the economy, and improve quality of life for Californians. IBank financing has provided $1 billion in infrastructure loans within the state over the last 10 years.

Connecticut Green Bank

Connecticut Green Bank is the nation’s first green bank, established in 2011. The bank evolved from the Connecticut Green Energy Fund and bases its business model on the use of sustainable financing to maximize the use of public funds. As of 2022, the bank and its partners have helped $2.26 billion in capital to find its way into clean energy projects across the state.

NY Green Bank

NY Green Bank is a state-sponsored financial institution operating in New York that works with the private sector to increase investments into clean energy markets. The bank is specifically interested in projects that are both financially sound and focus on creating energy savings or clean energy that helps reduce greenhouse gas emissions. Many of the bank’s funding projects revolve around the expansion of solar energy.

Recommended: How Are Local Small Banks Different from Large Banks?

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Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Advantages and Disadvantages of Green Banks

Green banks and sustainable banking aim to play a role in environmental preservation. However, they aren’t the same thing as your standard brick-and-mortar or online bank. While you may never use a green bank directly, it’s important to understand how they can still affect you. Here’s what to know about the advantages and potential downsides associated with sustainable banking.

Banking Advantages

Banking Disadvantages

•   Green banks help to advance the use of clean energy technology.

•   Clean energy projects funded by sustainable banking can help to increase job growth and promote economic development.

•   Green banking can attract large-scale private investment, which can help to accelerate clean energy projects.

•   Green banks are not widespread, and their reach may be limited.

•   Sustainable banking is still a relatively new subset of the banking industry, which can translate to higher credit risk.

•   Banks that engage in greenwashing can taint the image of sustainable banking and lead investors to look elsewhere.

The Future of Green Banking

Predicting the future of sustainable banking is difficult, though signs indicate a growing interest in green banks might help create a cleaner environment. At the federal level, for instance, the passage of the 2022 Inflation Reduction Act notably included a provision allowing for the establishment of a national green bank. In August 2024, the first U.S.-based national green bank opened. It’s being run by the nonprofit Coalition for Green Capital using over $5 billion in funding from the Inflation Reduction Act.

Globally, sustainable banking is increasingly in the spotlight in emerging markets. There’s growing interest in the positive environmental gains that may be made through green banking. That said, there are still questions about how to encourage sustainable finance in economies that are still developing. This could in turn lead to more global collaboration among banks in furthering sustainable finance worldwide.

One potential result of sustainable banking: There may be greater carryover in the traditional banking sector. For example, there may be a push for banks to offer personal or small business banking products and services that have a sustainable or green angle. Green loans and mortgages could end up being another byproduct of enhanced attention on sustainable finance.

As the spotlight on green banking grows, you may begin to notice changes at the retail banking level. For example, Citigroup issues an annual report on its ESG (Environmental, Social and Governance) program results. And it’s not just traditional banks showing dedication to this topic; online banks are part of the effort, too. In March 2022, SoFi announced the launch of its ESG Committee to help formulate strategies for positive environmental, social, and governance impacts.

Recommended: Online vs. Traditional Banking: What’s Your Best Option?

The Takeaway

Many people are adopting a greener lifestyle and finding ways to reduce their carbon footprint. Where you choose to bank could make a difference in your efforts if you’re keeping your money at a financial institution that advocates sustainability. Green banking is the term used to describe financial institutions that try to both make their business practices more sustainable as well as invest funds towards eco-conscious goals. This segment of the market may well grow in the years ahead.

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

What is sustainable banking?

Sustainable banking encourages environmentally-friendly practices, products, and services. A sustainable bank or green bank may be committed to specific environmental goals, such as reducing greenhouse gas emissions, promoting the advancement of clean energy, or funding green building projects.

How can banks be more sustainable?

Banks can encourage sustainability by reviewing their environmental footprint and addressing areas that could improve. The types of changes banks can implement may be large or small, but the end goal is fostering a cleaner environment. Reducing paper waste, for example, is one simple way to be more sustainable.

Which banks are green banks?

There are a handful of banks operating in the U.S. that are designated as green banks, according to the Green Bank Consortium. Whether a bank is considered “green” or not can depend on the type of certifications they hold. Examples of green banks include IBank, Connecticut Green Bank, and NY Green Bank.

Photo credit: iStock/baona

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.

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Jan
08
2025
Beautiful Small-Kitchen Remodel Ideas

Beautiful Small-Kitchen Remodel Ideas

By | Home Ownership, mortgage | Comments Off on Beautiful Small-Kitchen Remodel Ideas

Navigating a small kitchen can be challenging, especially if you love to entertain or have numerous mouths to feed. If your snug cooking area needs an upgrade, you might be craving ways to create more elbow room and storage areas.

Fortunately, choosing from the buffet of small-kitchen remodel ideas can help you expand your culinary space without breaking the bank.

Key Points

•   U-shaped kitchen designs optimize space and workflow, enhancing cooking efficiency.

•   Incorporating a breakfast bar adds functional seating without sacrificing space.

•   Strategic use of light colors and contrasting elements visually expands the kitchen area.

•   Recessed lighting maintains a clean, uncluttered look, improving the kitchen’s overall aesthetic.

•   Compact appliances and smart storage solutions maximize utility in small kitchens.

What Is the Average Size of a Small Kitchen?

Today, the average small kitchen is considered to be 70 square feet. Many apartments in big cities have kitchens of 50 square feet or less.

Isn’t that a shame? Not always. Unsurprisingly, millennial homebuyers, who have constituted the biggest share of buyers for years, are far less likely than baby boomers and Gen Xers to cook dinner at home.

A little kitchen might suit them you, but you still may like the idea of zhuzhing it up.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

10 Small-Kitchen Remodel Ideas on a Budget

You don’t need to demo a wall or take out a reverse mortgage to improve your cozy canteen. At an average of $150 per square foot for both materials and labor, a homeowner might spend $10,500 for a 70-square-foot kitchen remodel. Some will spend much more, and some, much less.

Here are 10 small-kitchen remodel ideas on a budget that will work for most kitchen configurations.

1. Go for a New Backsplash

Installing a festive new backsplash can range from $10 to $95 per square foot. Stick with ceramic tile, brick, or tin for more affordable options than marble or glass. Adding a backsplash with geometric patterns can make a small kitchen seem larger.

2. Install Open Cabinets and Shelves

Open cabinets and shelves offer a contemporary feel and a chance to display your favorite dishware. The look can also be a less expensive option than traditional cabinets while lending a sense of airiness to a once-cramped kitchen.

3. Change the Flooring

Installing a new floor can be an affordable way to revamp the look of your small kitchen. Vinyl kitchen flooring comes in a variety of snazzy colors and patterns, and costs between $1 and $5 per square foot, or up to $12 for high-end materials.

4. Paint With Light Colors

A fresh coat of paint can give an instant facelift to any small kitchen. But dark colors tend to absorb light and constrict the space. By choosing light colors, you can brighten and open up the room.

5. Add Style and Storage Above

Maybe you bought a starter home, and the kitchen isn’t all that. Or perhaps downsizing your home seems like the thing to do, little kitchen and all.

Whatever the case, small kitchens generally need more storage space. Inexpensive stylish bins or decorative baskets on top of kitchen cabinets can help.

6. Hang a Ceiling Rack for Pots and Pans

Create vertical storage for your pots and pans with a rack hung from the ceiling. Moderately priced pot racks range from modern to rustic-chic in style.

7. Hang Your Kitchen Utensils

Carve out more room in your kitchen with a magnetic knife rack. Decorate a wall with your most-used wooden spoons and cutting boards.

8. Use the Space Under Your Cabinets

To free up more counter and cabinet space, install a paper towel holder or a wine rack underneath the upper kitchen cabinets. You could also add an extra shelf for spices or coffee mugs.

9. Opt for a Single Sink

If you have a small kitchen, you probably don’t want a sink eating up a big chunk of your counter space. Single butler sinks can provide plenty of depth for dishwashing and come in a variety of prices for the budget-conscious.

10. Choose Compact Appliances

Compact dishwashers are ideal for small kitchens and can cost less than standard-size options. And if you are a one- to two-person household, a slimline refrigerator can be a great space saver; they come in fun colors and retro styles.



Recommended: 33 Inexpensive Ways to Refresh Your Home Room by Room

10 Small U-Shaped Kitchen Remodel Ideas

A U-shaped kitchen, also called C-shaped or horseshoe-shaped kitchen, can provide a great layout for small kitchen spaces, giving one or more chefs room to maneuver.

Its open configuration offers functionality, but you can lose some storage and counter space.

Here are 10 small U-shaped kitchen remodel ideas to give you a little more whisking room.

1. Implement a Triangle Workflow

To maximize the layout in your small U-shaped kitchen, a triangle workflow plan can allow for the right amount of spacing between your sink, stove, and refrigerator.

Configure your three major “work” areas at adjacent countertops, ideally placing the fridge and the stove across from each other on the peninsulas, with the sink in the connecting, middle counter.

2. Create a Breakfast Bar

Try turning one of the lengths of your U-shaped kitchen into a breakfast bar/seating area. It only needs to be wide enough to hold a cup of coffee and a cereal bowl, and deep enough to slide in some stools underneath.

3. Place Plants Over the Sink

A window over the kitchen sink is a fantastic way to bring the great outdoors into your U-shaped kitchen. But if you don’t have a window (or the funds to install one), try placing a hanging plant or small plant shelf above your sink so you can savor nature while washing the dishes.

4. Get Depth With Contrasting Colors

While dark paint colors aren’t typically the best choice for a small U-shaped kitchen, there are ways to create space by using slightly darker shades. For example, if you have white cabinets, painting the surrounding walls and backsplash area a light gray can give the illusion of depth.

5. Consider a Darker Countertop

If you have light-colored cabinets, the contrast of a rich brown or black marble countertop can trick the eye into seeing more depth.

6. Install Recessed Lighting

Hanging light fixtures can break up the flow in a small U-shaped kitchen, but recessed lighting can give a chic, streamlined look while increasing the amount of light in the room.

7. Make a Statement With a Black and White Contrast

White cabinets against black countertops and flooring can make a striking design statement while adding dimension. If you choose a reflective black paint or vinyl for the floor, it will shine when the light hits it.

8. Designate a Wall of Cabinets

You can stretch the space and amount of storage by dedicating an entire wall to cabinets. You’ll lose some counter space but reduce clutter. Try extending the cabinets to the ceiling for an elongated effect.

9. Choose Glass for Your Cabinets

Glass panes on your kitchen cabinets can reflect light, creating the illusion of more space. They also make it easy for you and your guests to find cookware and wine glasses.

10. Ditch the Cabinet Hardware

If you are replacing your cabinets, consider a style with no handles or knobs. Doing so could offer a sleek, modern look that won’t cramp the design flow.

Ways to Finance a Small-Kitchen Remodel

If you don’t have the cash to pay for your renovations, there are several financing options to help you get that new kitchen sink without draining your savings.

Home Improvement Loan

A personal loan for home improvements allows you to receive a lump sum, often the same day, with no collateral required. You’ll repay the money, plus interest, in monthly installments. This type of unsecured loan may come with a fairly high interest rate.

HELOC

If you have enough home equity, you may be eligible for a home equity line of credit (HELOC) by using your home as collateral. The rate will typically be lower than that of a personal loan or credit card. Plus, you’ll only make payments on the amount of the credit line that you use, and during the HELOC’s initial draw period, you can often make interest-only payments. (An interest-only repayment calculator can help you compute costs.)

HELOCs do have some closing costs, fees, and some may also have a minimum-withdrawal requirement. Most have a variable rate, which could eventually go up. Your home could be at risk if you default on a HELOC.

Cash-Out Refinance

With a cash-out refinance, you can use the equity in your home to help redo your small kitchen. You would refinance your mortgage for more than you owe and use the additional funds you borrow to cover the project costs.

The downsides of a cash-out refinance? Your overall debt on your house will increase, and closing costs will typically be 2% to 5% of the loan amount. If current interest rates are higher than the rate you have on your original home loan, you may want to think twice about refinancing; do the math to make sure it makes sense.

Credit Card

If you have a 0% or low-rate credit card and can pay off the debt quickly, it could be a smart way to pay for a kitchen remodel while earning some travel miles. But a high-interest card could result in hefty monthly payments, and missing even one payment damages credit scores.

Recommended: The Different Types of Mortgage Loans

The Takeaway

A small-kitchen remodel can increase the value of your home and raise your joy factor. You can put your little-kitchen project on the front burner with a range of financing options.

SoFi now offers flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively low rates. And the application process is quick and convenient.

Unlock your home’s value with a home equity line of credit brokered by SoFi.

FAQ

What is the average cost of remodeling a small kitchen?

The average cost of a small-kitchen remodel is $10,500, given an industry average of $150 per square foot for materials and labor and an average small-kitchen size of 70 square feet.

Can you remodel a small kitchen for $5,000?

A do-it-yourselfer can remodel a small kitchen for as little as $5,000 by painting the walls and existing cabinets, installing new hardware (or none at all), laying vinyl flooring, and buying white or black appliances instead of stainless.

What is the best layout for a small kitchen?

U-shaped kitchens are popular because they maximize cabinet and surface areas. If an island won’t fit, try a peninsular breakfast bar connected to the wall. In a narrow kitchen, aim for a double galley.

Can you update an old small kitchen?

Of course you can. Plan it, budget for it, and add about 20% for emergencies.

Photo credit: iStock/martin-dm

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.


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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

✝ To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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