Financial Topics Archives | Page 20 of 795

Oct

2024

Understanding the Risks of ESG Investing

By Laurel Tincher | Growing Wealth, invest, Investing | Comments Off

Key Points

• Companies today face material risks pertaining to environmental, social, and governance factors.

• Many investors now assess company performance in terms of sustainability, in addition to financial factors.

• Nonetheless, investors may find it challenging to assess which companies meet ESG targets, due to inconsistent frameworks, inaccurate reporting, or false claims.

• Lack of clarity around ESG standards can lead to greenwashing (the practice of claiming to meet ESG standards when you don’t).

• Companies which fail to implement effective ESG strategies may face regulatory, reputational, and financial risks.

ESG investing strategies continue to garner strong interest among investors, as well as corporate executives and governments. As recent climate and geo-political events have underscored, companies today face a range of risk factors that may be mitigated by embracing certain environmental, social, and governance standards.

And while many organizations have established methods for evaluating and scoring companies on how well they meet certain ESG benchmarks, there is still no globally accepted set of standards for evaluating and rating company performance according to ESG criteria.

Thus, investors face two potential types of risk when it comes to ESG investing. First, companies today face material challenges in regard to environmental, social, and governance factors, which require ongoing remediation.

But, owing to the lack of widely accepted ESG frameworks and metrics, it can be challenging for companies to evaluate their own progress to ESG targets — and likewise for investors to then evaluate which companies meet ESG targets and which don’t.

Despite the inconsistencies in how various ESG criteria are applied from company to company, however, industry research suggests that ESG funds are competitive with funds that adhere to more conventional strategies.

The State of ESG Standards

In the last 10 years or more, the need to identify and solve for ESG risk factors has prompted numerous organizations to try to develop ESG criteria companies must meet, as well as ways of measuring and disclosing whether they’ve attained specific ESG targets.

In theory, companies that fail to meet certain ESG criteria (e.g., efficient energy use, pollution mitigation, diversity targets, transparency in accounting) would be able to improve their efforts, and thereby mitigate those risk factors.

But the persistent challenge here has been a lack of agreement about how to define and measure — and therefore uphold — meaningful positive strides in terms of key environmental, social, and goverance factors.

A Range of Criteria

ESG criteria and metrics are almost impossible to describe, owing to the wide assortment of public and private (e.g., proprietary) frameworks.

These include the United Nations’ 17 Sustainable Development Goals, a set of non-binding principles that some organizations use as guidelines, as well as frameworks for reporting and disclosures developed by other non-profits, like the Global Reporting Initiative (GRI) and IFRS Sustainability Disclosure Standards. In addition, some financial companies themselves have their own proprietary measures.

In recent years, for example, the Securities and Exchange Commission (SEC), which oversees the securities industry in the U.S., has undertaken the task of combating the practice of so-called greenwashing by permitting financial firms to label funds “ESG” only when the vast majority of holdings (80%) includes ESG investments.

In addition, in March of 2024 the SEC announced a set of climate-disclosure rules that would apply to all U.S. companies of a certain size. But — in a testament to an industry riven by discord on how sustainable investing should be defined — just a month after issuing new rules that would standardize companies’ climate disclosures, the SEC responded to a spate of criticism and temporarily stayed the ruling.

ESG vs. Conventional Strategies

Conventional strategies tend to focus on financial and industry metrics such as profit and loss statements, competitive analysis, and so forth. ESG investing introduces new categories with which to evaluate companies beyond their financials. While ESG is a type of sustainable investing strategy, the term ESG is more specific, in that companies must focus on positive environmental, social, and governance outcomes.

The benefit of ESG and other impact investing strategies is it can help investors put their money towards ethical companies doing good in the world. Again, as noted above, ESG funds may offer returns that are comparable to conventional funds.

5 Risks of Investing in ESG Stocks

As noted, despite the steady interest in socially responsible investing strategies like ESG, the quality and consistency of reporting frameworks and metrics has lagged behind.

Industries and agencies need to establish agreement about ESG frameworks, implementation, disclosures, reporting, and compliance. Given the current hurdles, investors should bear in mind relevant risk factors.

Five key risks of ESG investing include:

Lack of Support for ESG Standards

Companies can decide to embrace ESG standards and hire third party evaluators, but if their employees and executives aren’t knowledgeable about or in support of using ESG criteria, due diligence and compliance will suffer and the company may not reach its goals.

Weak Monitoring

Related to the lack of support for ESG frameworks and standards, many companies may lack robust systems for implementing, monitoring, and tracking ESG metrics, making it difficult to produce accurate reports and ratings.

Compliance May Not Support ESG Frameworks

Even if a company has a comprehensive set of ESG standards, they may not have a thorough compliance program that keeps tabs on ESG issues — and/or ESG standards aren’t well-integrated into risk evaluation assessments.

Inaccurate Reporting

When a company decides to adhere to a certain set of ESG standards, they also need to install control mechanisms to ensure accurate reporting. The SEC reported that many companies distribute disclosures and marketing materials making them look more sustainable than they really were in practice, or with old information that needed updating, because they didn’t have adequate internal checks and balances.

Lack of Diligence Among Fund Managers

The SEC notes that portfolio managers need to review company policies and procedures in regard to ESG factors before investing in that firm.

Why Companies May Want to Reduce ESG Risks

Not only are the above risks to investors, they pose risks to the company as well:

• Strategic: The idea behind ESG is that the three pillars measure a company’s overall commitment to making positive strides in those areas. If a company fails to implement ESG strategies it could affect their long-term prospects.

• Regulatory: Failure to comply with regulations, such as those that reduce environmental risks and prevent illicit practices, can directly impact a company’s ability to do business and meet shareholder expectations.

• Reputational: If a company misleads investors, consumers, and other stakeholders, it could taint their reputation and can lead to financial losses.

• Financial: It has been shown that strong ESG metrics may help a company financially. Not only can false ESG reporting lead to fines, failure to implement ESG plans can mean a company hasn’t maximized their chance to offset certain risks and increase profits.

How ESG Mitigates Some Risk Factors

While there are risks involved with ESG-focused investing, companies that seek to embrace ESG standards may also mitigate some risk factors for investors.

Investors may benefit by investing in companies that are proactively addressing the challenges of a changing world. For example, implementing a regular risk-assessment review process may help companies identify and plan for emerging risks that may include:

• Environmental: Preventing pollution and other hazards, complying with regulations, mitigating and adapting to climate risks, investing in renewable energy and energy-efficient systems.

• Social: Maintaining a diverse workforce, building relationships with communities, governments, and other stakeholders.

• Governance: Maintaining a strong leadership culture, preventing fraud and illicit activity, supporting transparency in accounting and management practices.

With this in mind, investors may research companies or funds to assess if they’re meeting their own commitments. What are their reporting and disclosure practices? Are they using one of the more well-known standards? Is their information verified by a third party?

The Takeaway

Understanding ESG risks can help investors make more informed decisions about their investment choices. Investors interested in putting their money into sustainable companies can use existing ESG metrics to evaluate the best options, but should be aware of the potential downsides.

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Oct

2024

Financial Consulting Services 101

By Rebecca Lake | Budgeting & Goals, Growing Wealth, invest, Investing | Comments Off

When you need help putting together a solid plan for your money, you might seek out financial consulting services. A financial consultant can offer advice and guidance on things like investing, retirement planning, and building wealth. You may also hear financial consultants referred to as financial advisors, as the terms are often used interchangeably, though there may be some slight differences.

What is financial consulting designed to do? In simple terms, it’s all about helping clients formulate a strategy for managing their money. What working with a personal finance consultant looks like for you can depend on your situation and goals.

Key Points

• Broadly speaking, financial consultants help clients identify strategies to help them reach financial goals.

• Services offered by financial consultants may include investment management, estate planning, tax planning, and retirement planning, among others.

• Financial consultants and financial advisors may hold certificates or designations that reflect advanced training, such as Certified Financial Planner (CFP) or Accredited Financial Planner (AFP).

• Choosing the right consultant requires evaluating the scope of services they offer, their professional certifications and designations, their fee structure, and more.

What Is a Financial Consultant?

Broadly speaking, a financial consultant is someone who offers advice about money – be it retirement planning or buying stocks or other securities – in a professional capacity. A financial consultant may work independently or be employed by a financial consulting firm, and they may offer services online or in-person.

Examples of Financial Consulting Services

Financial consultants can offer a variety of services to their clients. Again, those clients may be individual investors, business owners, or even a non-profit organization. The types of services a financial consultant may offer can include:

• Basic financial planning, such as creating a household budget

• Estate planning

• Tax planning and legacy planning

• Retirement planning

• College planning

• Succession planning for clients who own a business

A financial consultant’s overall goal is to help clients create a comprehensive plan for managing their money. Financial consultants may work with a diverse mix of clients, or niche down to offer their services to a specific demographic or client base, such as dual income couples, with no kids or members of the LGBTQ community.

Financial Consultants vs. Financial Advisors

The terms “financial consultant” and “financial advisor” are often used interchangeably, as their meaning is roughly, but not quite, the same. There are some important differences, including the licensure that each is required to hold in order to practice, and the regulators each operates under. Generally, they both offer financial advice and guidance in a professional capacity, though.

Other Names for Financial Professionals

Financial consultants and financial advisors can go by more specific names, depending on which professional certifications they hold. Certifications and designations signify that a consultant or advisor has completed advanced training and education in a particular area. Here are some of the most common designations for financial professionals:

• Certified Financial Planner (CFP®)

• Chartered Financial Consultant (ChFC)

• Certified Public Accountant (CPA)

• Accredited Financial Planner (AFP)

• Registered Investment Advisor (RIA)

• Certified Annuity Advisor (CAA)

• Certified Financial Consultant (CFC)

• Certified Tax Advisor (CTA)

• Chartered Financial Manager (ChFM)

Navigating the alphabet soup of designations for financial consulting services can be confusing and it helps to understand what type of advice you need.

For instance, if you want to work with an advisor who can help with everything from budgeting to retirement planning, then you might choose a Certified Financial Planner. On the other hand, you might want to work with a registered investment advisor if you’re specifically seeking investment help.

The main thing to know about financial consulting services is that there’s more than one option to choose from. Taking time to research a consultant or advisor’s background and qualifications can make it easier to find the right person to work with when you need consulting services.

When Would You Need Financial Consulting?

Working with a financial consultant is a personal decision. With that in mind, you might start working with a consultant at any time if you feel that you need help managing your finances. If you need more specific examples of when it makes sense to hire a financial consultant, here are a few scenarios to consider:

• Your parents pass away, leaving you $500,000 in assets. You might work with a financial consultant to figure out the best way to maximize your inheritance while minimizing taxes.

• After 15 years of marriage, you and your spouse have decided to divorce. You decide to hire a financial consultant to help you create a plan for managing the assets that you’re leaving the marriage with.

• You’re a parent to a child with special needs who will require long-term care after you’re gone. You reach out to a financial consultant to discuss setting up a trust to pay for their care when the time comes.

Financial consulting services can be an appropriate choice when you have a difficult financial decision to make or you’re trying to navigate a situation that feels overwhelming. Winning the lottery, for instance, could leave you paralyzed with indecision about what to do with the money.

A financial consultant can also help you move through changing life stages. That can include getting married or divorced, having a child, starting or selling a business, or changing careers. Financial consultants can look at the bigger financial picture to help you get through the changes while keeping your long and short-term goals in sight.

Finding the Right Financial Consultant

Finding a financial advisor starts with taking inventory of your needs to determine what kind of advice is appropriate. Once you’ve figured out what kind of help you need, the next step is creating a list of advisors in your area that you might want to work with.

Asking questions can help you get a feel for how an advisor operates. Here are some examples of the types of questions you might want to ask:

• What kind of financial consulting services do you offer?

• Do you hold any professional certifications or designations?

• Do you specialize in working with a particular type of client?

• What is your investment style?

• How are your fees structured and what do you charge for consulting?

• What is your preferred method of communication?

• How often will we meet?

If you’re considering a robo-advisor, then it may be a good idea to look at how the platform manages portfolios, what benefits or features are included, and what you’ll pay for consulting services. Should you choose a robo-advisor vs. financial advisor? There are some pros and cons to consider.

On the pro side, a robo-advisor can be a less expensive way to get financial consulting services. The typical financial advisor cost is around 1% of assets under management per year. Robo-advisors may cost much less, with some offering services charging a fraction of what a human advisor would.

Of course, there’s a trade-off to consider, since you’re not getting financial advice with a human element behind it. For instance, if market volatility sets in and you’re tempted to sell off stocks in a panic, a robo-advisor wouldn’t be able to talk you through it the way a human advisor could. Taking that into consideration can help you decide which one might be right for you.

The Takeaway

A financial consultant’s job is to help you feel more secure and confident when making decisions about your money. Whether you need a consultant’s services or not can depend on where you are financially right now and where you want to go in the future.

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FAQ

Is a financial consultant the same as a financial advisor?

Financial consulting and financial advisory services are typically grouped together, as they generally mean the same thing. A financial consultant or a financial advisor can provide advice about things like investing, retirement planning, and estate planning. The difference is that consultants may offer their services on a one-time basis, while financial advisors may work with clients long-term.

What does a financial consultant cost?

What you’ll pay for financial consulting services can depend largely on the type of professional you’re working with. A typical financial advisor’s fee is around 1% annually, though it’s possible to pay more or less, depending on the kind of services you receive. Robo-advisor financial consulting can cost less, though it does lack the human element.

What does a financial consultant do?

Financial consultants help their clients create a plan for managing money. A financial consultant may work with individual investors, businesses, or organizations to offer financial advice. Financial consulting services may cover a broad scope of topics or concentrate in just one or two areas of financial planning.

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Oct

2024

The Average 401(k) Balance by Age

By Rebecca Lake | Growing Wealth, invest, Investing, Preparing for Retirement | Comments Off

Table of Contents

Average 401(k) Balance: Overview
Average 401(k) Balance: Under Age 25
Average 401(k) Balance: Ages 25-34
Average 401(k) Balance: Ages 35 to 44
Average 401(k) Balance: Ages 45 – 54
Average 401(k) Balance: Ages 55 to 64
Average 401(k) Balance: Ages 65 and Older
How Much Should I Have in My 401(k)?
Tips for Catching Up If You’re Behind

Key Points

• Establishing the habit of investing in a retirement plan early, even small amounts, may help you benefit from compounding returns.

• Aim to contribute enough to your 401(k) to get the full employer match, so you don’t leave money on the table.

• Automating contributions can make it easier to consistently build retirement funds over time.

• If you’re over 50, making catch-up contributions can boost your retirement savings.

• Paying attention to asset allocations, investment performance, and fees can help you make regular adjustments to target your goals.

What’s the Average 401(k) Balance?

The average 401(k) balance for all ages is $134,128, according to Vanguard’s How America Saves Report 2024. However, the average 401(k) balance by age of someone in their 20s is very different from the balance of someone in their 50s and 60s. That’s why it’s helpful to know how much you should have saved in your 401(k) at different ages.

Seeing what others are saving in their 20s, 30s, 40s, 50s, and beyond can be a useful way to gauge whether you’re on track with your own retirement plans and what else you can do to maximize this critical, tax-deferred form of savings.

Average and Median 401(k) Balance by Age Group

Pinning down the average 401(k) account balance can be challenging, as only a handful of sources collect information on retirement accounts, and they each have their own methods for doing so.

Vanguard is one of the largest 401(k) providers in the U.S., with nearly 5 million participants. For this review of the average and median 401(k) balance by age, we use data from Vanguard’s How America Saves Report 2024.

It’s important to look at both the average balance amounts, as well as the median amounts. Here’s why: Because there are people who save very little, as well as those who have built up very substantial balances, the average account balance only tells part of the story. Comparing the average amount with the median amount — the number in the middle of the savings curve — provides a reality check as to how other retirement savers in your age group may be doing.

Age Group	Average 401(k) Balance	Median 401(k) Balance
Under 25	$7,351	$2,816
25-34	$37,557	$14,933
35-44	$91,281	$35,537
45-54	$168,646	$60,763
55-64	$244,750	$87,571
65+	$272,588	$88,488

Source: Vanguard’s How America Saves Report 2024

Average 401(k) Balance for Ages 25 and Under

• Average 401(k) Balance: $7,351

• Median 401(k) Balance: $2,816

• Key Challenges for Savers: Because they are new to the workforce, this age group is likely to be making lower starting salaries than those who have been working for several years. They may not have the income to put towards a 401(k). In addition, debt often presents a big challenge for younger savers, many of whom may be paying down student loan debt, credit card debt, or both.

• Tips for Savers: While being debt-free is a priority, it’s also crucial to establish the habit of saving now — even if you’re not saving a lot. The point is to save steadily, whether that’s by contributing to your 401(k) or an investment account, and to automate your savings.

By starting early, even small contributions have the potential to grow over time because of the power of compounding returns.

Average 401(k) for Ages 25 to 34

• Average 401(k) Balance: $37,557

• Median 401(k) Balance: $14,933

• Key Challenges for Savers: At this stage, savers may still be repaying student loans, which can take a chunk of their paychecks. At the same time, they may also be making big — and expensive — life changes like getting married or starting a family.

• Tips for Savers: You’ve got a lot of competing financial responsibilities right now, but it’s vital to make saving for your future a priority. Contribute as much as you can to your 401(k). If possible, aim to contribute at least the amount needed to get your employer’s matching contribution, which is essentially free money. And when you get a raise or bonus at work, direct those extra funds into your 401(k) as well.

Average 401(k) for Ages 35 to 44

• Average 401(k) Balance: $91,281

• Median 401(k) Balance: $35,537

• Key Challenges for Savers: While your late 30s and early 40s may be a time when salaries range higher, it’s also typically a phase of life when there are many demands on your money. You might be buying a home, raising a family, or starting a business, and it could feel more important to focus on the ‘now’ rather than the future.

• Tips for Savers: Even if you can’t save much more at this stage than you could when you were in your early 30s, you still may be able to increase your savings rate a little. Many 401(k) plans offer the opportunity to automatically increase your contributions each year. If your plan has this feature, take advantage of it. A 1% or 2% increase in savings annually can add up over time. And because the money automatically goes directly into your 401(k), you won’t miss it.

Average 401(k) for Ages 45 to 54

• Average 401(k) Balance: $168,646

• Median 401(k) Balance: $60,763

• Key Challenges for Savers: These can be peak earning years for some individuals. However, at this stage of life, you may also be dealing with the expense of sending your kids to college and helping ailing parents financially.

• Tips for Savers: The good news is, that starting at age 50, the IRS allows you to start making catch-up contributions to your 401(k). For 2024, the regular contribution limit is $23,000, but individuals ages 50 and up can make an additional $7,500 in 401(k) catch-up contributions for a total of $30,500. While money may be tight because of family obligations, this may be the perfect moment — and the perfect incentive — to renew your commitment to retirement savings because you can save so much more.

If you max out your 401(k) contributions, you may also want to consider opening an IRA. An individual retirement account is another vehicle to help you save for your future, and depending on the type of IRA you choose, there are potential tax benefits you could take advantage of now or after you retire.

Average 401(k) for Ages 55 to 64

• Average 401(k) balance: $244,750

• Median 401(k) balance: $87,571

• Key Challenges for Savers: As retirement gets closer, this is the time to save even more for retirement than you have been. That said, you may still be paying off your children’s college debt and your mortgage, which can make it tougher to allocate money for your future.

• Tips for Savers: In your early 60s, it may be tempting to consider dipping into Social Security. At age 62, you can begin claiming Social Security retirement benefits to supplement the money in your 401(k). But starting at 62 gives you a lower monthly payout for the rest of your life. Waiting until the full retirement age, which is 66 or 67 for most people, will allow you to collect a benefit that’s approximately 30% higher than what you’d get at 62. And if you can hold off until age 70 to take Social Security, that can increase your benefit as much as 32% versus taking it at 66.

Average 401(k) for Ages 65 and Older

• Average 401(k) balance: $272,588

• Median 401(k) balance: $88,488

• Key Challenges for Savers: It’s critical to make sure that your savings and investments will last over the course of your retirement, however long that might be. You may be underestimating how much you’ll need. For instance, healthcare costs can rise in retirement since medical problems can become more serious as you get older.

• Tips for Savers: Draw up a retirement budget to determine how much you might need to live on. Be sure to include healthcare, housing, and entertainment and travel. In addition, consider saving money by downsizing to a smaller, less costly home, and continue working full-time or part-time to supplement your retirement savings. And finally, keep regularly saving in retirement accounts such as a traditional or Roth IRA, if you can.

Recommended: When Can I Retire?

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How Much Should I Have in My 401(k)?

The amount you should have in your 401(k) depends on a number of factors, including your age, income, financial obligations, and other investment accounts you might hold. According to Fidelity’s research on how much is needed to retire , an individual should aim to save about 15% of their income a year (including an employer match) starting at age 25.

To get a sense of how this looks at various ages, the chart below shows the average 401(k) balance by age, according to Vanguard’s research, as well as Fidelity’s rule of thumb for what your target 401(k) balance should roughly be at that age. Note that these are just guidelines, but they can give you a goal to work toward.

Age Group	Average 401(k) Balance*	Approximate Target 401(k) Balance**
Under 25	$7,351	Less than 1x your salary
25-34	$37,557	1x your salary by age 30
35-44	$91,281	2x your salary by age 35 3x your salary by age 40
45-54	$168,646	4x your salary by age 45 6x your salary by age 50
55-64	$244,750	7x your salary by 55 8x your salary by 60
65+	$272,588	10x your salary by age 67

*Source: Vanguard’s How America Saves Report 2024
**Source: Fidelity Viewpoints: How Much Do I Need to Retire?

Tips for Catching Up If You’re Behind

If your savings aren’t where they should be for your stage of life, take a breath — there are ways to catch up. These seven strategies can help you build your nest egg.

1. Automate your savings.

Automating your 401(k) contributions ensures that the money will go directly from your paycheck into your 401(k). You may also be able to have your contribution amount automatically increased every year, which can help accelerate your savings. Check with your employer to see if this is an option with your 401(k) plan.

2. Maximize 401(k) contributions.

The more you contribute to your 401(k), the more growth you can potentially see. At the very least, aim to contribute enough to qualify for the full employer matching contribution if your company offers one.

3. Make catch-up contributions if you’re eligible.

As mentioned, once you turn age 50, you can contribute even more money to your 401(k). If you can max out the regular contributions each year, making additional catch-up contributions to your 401(k) may help you grow your account balance faster.

4. Consider opening an IRA.

If you’ve maxed out all your 401(k) contributions, you could open a traditional or Roth IRA to help save even more for retirement. For 2024, those under age 50 can contribute up to $7,000 to an IRA or up to $8,000 if they’re 50 and older.

5. Make sure you have the right asset allocations.

The younger you are, the more time you have to recover from market downturns, so you may choose to be a little more aggressive with your investments. On the other hand, if you have a low risk capacity, you may opt for more conservative investments.

Either way, you want to save and invest your money wisely. Consider using a mix of investment vehicles, such as stocks, bonds, exchange-traded funds (ETFs), and mutual funds, to help diversify your portfolio. Just be aware that investing always involves some risk.

6. Pay Attention to Fees.

Fees can erode your investment returns over time and ultimately reduce the size of your nest egg. As you choose investments for your 401(k), consider the cost of different funds. Specifically, look at the expense ratio for any mutual funds or ETFs offered by the plan. This reflects the cost of owning the fund annually, expressed as a percentage. The higher this percentage, the more you’ll pay to own the fund.

7. Conduct an Annual Financial Checkup.

It can be helpful to check in with your goals periodically to see how you’re doing. For example, you might plan an annual 401(k) checkup at year’s end to review how your investments have performed, what you contributed to the plan, and how much you’ve paid in fees. This can help you make smarter investment decisions for the upcoming year.

The Takeaway

The average and median 401(k) balances and the target amounts noted above reflect some important realities for different age groups. Some people can save more, others less — and it’s crucial to understand that many factors play into those account balances. It’s not simply a matter of how much money you have, but also the choices you make.

For instance, starting early and saving regularly can help your money grow. Contributing as much as possible to your 401(k) and getting an employer match are also smart strategies to pursue, if you’re able to. And opening an IRA or an investment account are other potential ways to help you save for the future.

With forethought and planning, you can put, and keep, your retirement goals on track.

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FAQ

What is a good 401(k) balance?

A good 401(k) balance is different for everyone and depends on their age, specific financial situation, and goals. The general rule of thumb is to have 401(k) savings that’s equivalent to your salary by age 30, three times your salary by age 40, six times your salary by age 50, 8 times your salary by age 60, and 10 times your salary by age 67.

How much do most people retire with?

According to the Federal Reserve’s most recent Survey of Consumer Finances, the average 401(k)/IRA account balance for adults ages 55 to 64 was $204,000. Keep in mind, however, that when it comes to savings, one rule of thumb, according to Fidelity, is for an individual to have 8 times their salary saved by age 60 and 10 times their salary saved by age 67.

Photo credit: iStock/kate_sept2004

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INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SOIN-Q324-047

Oct

2024

How to Save on Your Electric Bill This Summer

By Dan Miller | Budgeting & Goals, Family Finances, Home Ownership | Comments Off

If you feel like your electricity bills get a little higher every summer, it’s not your imagination. For the June-through-September period of 2024, the average U.S. electric bill is projected to be $719, a nearly 8% increase year over year and the highest average in 10 years.

Fortunately, there are some simple things you can do to shrink your bills back down to size. Better yet, they don’t involve sacrificing comfort. While some measures require a small upfront investment, others are completely free. Read on for some of the most effective ways to save on your electric bill this summer.

Review Your Summer Electric Usage

If high electric bills are impacting your bank account this summer, a good first step is to review your electricity use patterns. Many utilities offer dashboards where you can view your daily and monthly usage to learn when you use the most energy. Some utilities even offer a mobile app that allows you to see your electricity usage in monthly, daily, and 15-minute time intervals to help you manage your energy consumption.

Knowing when you tend to use the most electricity — and how this is impacting your bill — can help you become more mindful of your energy usage. It can also give you motivation to make some changes.

Recommended: 8 Ways to Organize Your Bills

Optimizing Your Air Conditioning System

Air conditioning accounts for about 19% of electricity consumption in U.S. homes, according to the U.S. Energy Information Administration’s most recent statistics. So one of the best ways to save on utility bills is to maximize the efficiency of your air conditioning system.

If you have central air, it’s a good idea to have a professional HVAC specialist perform annual maintenance on your equipment. This can go a long way in ensuring your air conditioner runs at peak efficiency. There are also some simple things you can do yourself to optimize the performance of your air conditioning system:

• Vacuum air intake vents regularly. This will remove any dust buildup and allow the unit to function at a higher efficiency.

• Regularly clean or replace air filters. Dirty air filters can restrict airflow, causing air conditioners to work harder and less efficiently.

• Keep outdoor units clean. If you have a central unit outside, you can optimize performance by keeping your outdoor unit clear of debris and plant growth. The outdoor unit needs space to release heat, so make sure it has at least two feet of clearance on all sides.

• Use fans to your advantage: Utilizing ceiling fans to circulate air can help you maintain a comfortable temperature while reducing the load on your air conditioner. For the most cooling effect, be sure the fan is turning counterclockwise (if it’s going the other way, you can typically change it by flipping a switch on the fan body).

• Click up the thermostat: While the most energy efficient temperature is 78°F, that may not be cool enough to keep you comfortable. However, any uptick in your thermostat is helpful. In fact, you’ll save about 3% on your utility bill for every degree you raise the set temperature for your central air.

• Install a smart thermostat. A smart thermostat can learn your schedule and adjust temperature automatically, ensuring energy is not wasted.

Recommended: How to Split Bills With Roommates

Energy-Efficient Cooling Alternatives

While air conditioning is effective, it is not the only way to keep your home cool. Consider these energy-efficient cooling alternatives to reduce your reliance on AC and lower your electric bill.

Attic Fan

Air from a hot attic can seep into your house and make your air conditioner work harder and more often. Not only does that increase your electricity bill, but it can also shorten the life of your AC system. An attic fan can help by circulating air and pushing stuffy, warmer air out of the house. This, in turn, can keep the entire house cooler. On days when it’s not too hot, it could be all you need.

Geothermal Heating/Cooling

Geothermal systems rely on stable underground temperatures for heating and cooling. They work by circulating liquid through buried tubes, exchanging heat between your home and the ground. It’s an efficient process that uses 25% to 50% less electricity than traditional HVAC systems, according to the Department of Energy. This can lead to a significant savings on utility bills over time.
On the downside, installing a geothermal system involves substantial digging to bury the pipes, which can be costly. Despite the initial expense, however, the long-term energy savings can make it a worthwhile investment.

Recommended: 15 Easy Ways to Save Money

Evaporative Coolers

In dry climates, evaporative coolers (also known as swamp coolers) can be an efficient, cost-effective cooling option. These units work by using a fan to blow air through a water-soaked pad, cooling the air before it enters your home. By cracking windows, hot air can escape, and cool air circulates effectively.

These coolers use less energy and water compared to traditional air conditioning, leading to lower utility bills. However, they are generally only effective in low-humidity climates.

Reducing Heat Gain in Your Home

One of the best ways to use less air conditioning is to reduce the overall heat that comes into your home. If you stop heat from coming inside in the first place, then you don’t have to pay to cool it. This can be one way to lower your energy bill when you’re working from home or if you’re home a lot during the day.

Some strategies include:

• Ensure you have adequate insulation in the attic and walls. This greatly reduces the flow of heat into your home in the summer.

• Seal up any cracks. Adding weatherstripping or caulk around doors and windows can help seal up any openings. This prevents the warm exterior air from leaking into your home.

• Close windows and doors. Whenever it’s warmer outside than inside, it’s wise to close all windows and doors and latch them tightly to reduce heat gain.

• Cover the windows. Another way to keep the heat outside is to cover windows with shades, blinds, or curtains during the day to block out the sunlight.

Smart Appliance Usage and Vampire Energy

Vampire energy refers to electricity that devices consume while not actively in use but in “standby mode.” Common offenders include TVs, desktop computers, printers, device chargers, and kitchen appliances. While each device uses a small amount of power, when added all together, it can make up a significant source of your home’s electricity use.

The simplest way to cut standby power consumption in the summer (and year round) is to unplug devices, or turn off the power strips they are plugged into, when you’re not using them. Another option is to get some smart power strips. These strips help reduce energy waste by automatically turning off power to connected electronics when they are not in use.

When it comes time to replace an old appliance, consider purchasing an Energy Star-certified device. These appliances are designed to minimize phantom loads and improve your home’s efficiency.

The Takeaway

If you’re seeing significantly higher electric bills this summer, know that there are several steps you can take to save on the cost of electricity, even during the hottest months of the year. Some strategies — like cleaning your AC unit or reducing heat gain in your home — require just a small upfront cost, if any. Others (like replacing your heating/cooling system) call for a more significant investment, but can pay off over time by cutting your electricity bills both in the summer and year round.

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 4.20% APY on SoFi Checking and Savings.

FAQ

What temperature should I set my thermostat to save money?

To save energy, as well as money, the U.S. Department of Energy recommends setting the thermostat to between 68°F and 70°F while you’re awake, and then making it a higher temperature (or, if it’s winter, a lower temperature) while you’re sleeping or away from home.

Are ceiling fans effective in lowering electric bills?

Yes, ceiling fans enhance air circulation and create a cooling effect, allowing you to raise the thermostat by about 4°F without sacrificing comfort.

During the summer, be sure your ceiling fan is turning counterclockwise — this creates a downward draft and circulates the cool air around you. If your fan blades are turning clockwise, you can typically reverse it by turning off the fan and flipping the switch on the fan body. You may also be able to do this using your ceiling fan’s remote.

How much can LED bulbs reduce my summer electric costs?

Lighting accounts for around 15% of an average home’s electricity use, so switching out your incandescent bulbs with more energy-efficient LED bulbs can lead to significant savings over time. According to the U.S. Department of Energy, the average household can save about $225 in energy costs per year by using LED lighting.

Photo credit: iStock/pinstock

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.

*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.

SoFi members with direct deposit activity can earn 4.20% 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 4.20% 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 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. 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.

SOBNK-Q324-014

Oct

2024

Top Cosmetology Scholarships in 2024

By Ashley Kilroy | Going to College, Student Loans, student_loan | Comments Off

Cosmetology scholarships can be a game-changer for students who want to pursue their passion for hair, makeup, or skincare but worry about the cost. Scholarships are free money for your education, and you do not need to pay them back.

Cosmetology school costs can range quite a bit, but most programs cost less than $20,000. That’s still a significant amount of money, especially if you’re just starting out. Fortunately, cosmetology scholarships are out there to help lighten the financial load.

To help you offset the costs, here are some of the top cosmetology scholarships in 2024 and where to find them.

How to Find Scholarships for Cosmetology Students

When searching for scholarships for cosmetology school, there are plenty of resources available, including:

• Free scholarship search tools, such as SoFi’s Scholarship Search Tool

• High school guidance counselors

• The financial aid office at your college or career school

• Local resources, like libraries, businesses, and community groups

• Nonprofits like the Professional Beauty Association

• Your employer or your parents’ workplace

• Professional organizations in your field of interest

How to Qualify for Cosmetology Scholarships

Every cosmetology scholarship has unique eligibility requirements, so make sure to review them carefully before applying.

Requirements might include things like:

• Maintaining a minimum GPA

• Completing a certain amount of community service

• Being a U.S. citizen

• Planning to enroll (or being enrolled) in an accredited cosmetology program

• Demonstrating leadership skills or potential

• Providing letters of recommendation

• Submitting your resume

• Submitting the FAFSA® (Free Application for Federal Student Aid)

Top Cosmetology Scholarships

Here are some top cosmetology scholarships to help you fund your education so you can kick-start your beauty career.

Buy-Rite’s Annual Beauty School Scholarship

Scholarship amount: $1,000

Application deadline: November 1

Buy-Rite’s Annual Beauty School Scholarship is a $1,000 scholarship for cosmetology and barber students who best embody Buy-Rite Beauty’s core values. To apply, you must submit an essay detailing your most meaningful achievement and explain how it relates to your future career in cosmetology.

Great Clips Great Scholarship Program

Scholarship amount: Up to $5,000

Application deadline: March 1

The Great Clips Great Scholarships Program is for future stylists and barbers in the U.S. and Canada, offering up to $5,000 to help launch their careers. To apply, answer the question, “What is exciting to you about a career in the cosmetology or barbering industry? Why?”

Beauty & Wellness Professionals Scholarship

Scholarship amount: $2,500

Application deadline: March 1

BeautySchoolDirectory.com offers a $2,500 Beauty & Wellness Professionals Scholarship twice a year for students and professionals passionate about making a difference in beauty and wellness. It’s open to both U.S. residents and international students. To be considered, you must submit a three-minute video answering one of the prompts on the application.

The Rosy Rewards Scholarship

Scholarship amount: $250

Application deadline: October 1

The Rosy Rewards Scholarship, offered by Rosy Salon Software, awards two $250 scholarships each year to cosmetology students who are passionate about the industry. To qualify, you must be enrolled in a cosmetology, barber, or esthetics program, and submit a letter of recommendation, resume, and two of your best pictures to showcase your skills.

The Joe Francis Haircare Scholarship

Scholarship amount: $3,000 or more

Application deadline: June 1

The Joe Francis Haircare Scholarship is a $3,000 scholarship (or more) that supports students pursuing a career in the beauty industry. To apply, you must fill out the application and submit two letters of recommendation.

Elevate Your Education Scholarship

Scholarship amount: $1,400 value

Application deadline: March 1, July 1, November 1

Elevate your education with Dermalogica offers scholarships to support passionate and talented new skincare professionals. These scholarships cover the cost of either the Expert Program or the Product Expert Program workshops, valued at over $1,400.

Sallie Mae Scholarship

Scholarship amount: $2,000

Application deadline: December 31

The Sallie Mae Scholarship Sweepstakes awards $2,000 to U.S. beauty students who are over 17 years old. A sweepstakes scholarship is a random drawing where winners are picked by chance, giving every eligible student an equal shot at the award.

SoFi Scholarship Giveaway

Scholarship amount: $2,500

Application deadline: Monthly

The SoFi Scholarship offers students a chance to win $2,500 every month through a sweepstakes. It’s an easy, monthly drawing that can provide some extra financial support for your education.

Recommended: How to Pay for College

Can You Get a Federal Student Loan for Cosmetology School?

Yes, as long as your cosmetology program is accredited, you can apply for federal student loans and other types of aid. To check if your school is accredited, you can use the Database of Accredited Postsecondary Institutions and Programs or just call the school directly.

Federal aid includes grants, work-study, and federal student loans. To find out what aid you qualify for, complete the Free Application for Federal Student Aid (FAFSA®). The FAFSA for the 2025-26 academic year will be available to all students on or before December 1, 2024.

How to Make Money While in Cosmetology School

While it’s important to prioritize your schoolwork, you can still find money-making opportunities that fit into your busy schedule. Options for making money while in cosmetology school include:

• Find a full-time or part-time job. There are numerous jobs for students to make money during school. For example, you may consider working at a salon as an assistant or receptionist. By choosing a job within your field of study, you can earn money and gain hands-on experience.

• Start a side hustle. If a flexible gig is more your style, think about ways to generate income in your free time, like driving for Uber, delivering food, or offering freelance beauty services for events. With a side hustle, you can usually set your own hours, allowing you to work around your cosmetology school schedule.

• Offer your services to friends and family. Providing haircuts, manicures, and makeup services to people you know is another good way to make money and build your experience.

• Start a beauty YouTube channel. If you love sharing beauty tips, consider starting a blog or YouTube channel. You can create tutorials, conduct product reviews, and feature other content so you can grow your audience and earn money through sponsorships and ads.

The Takeaway

If you’re looking for ways to pay for cosmetology school, applying for cosmetology scholarships can be a good option. While some scholarships are competitive, many others go unclaimed each year. It’s always worth it to apply since it doesn’t cost you anything and may significantly lower your out-of-pocket expenses.

You can also consider exploring other ways to cover college costs to find what works best for you. Options include cash savings, grants, federal student loans, and private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

When should I start applying for cosmetology scholarships?

When it comes to applying for cosmetology scholarships, the earlier you start, the better. Applying early gives you access to more opportunities and helps you avoid that last-minute rush. It might feel a bit overwhelming at first, but starting early makes the whole process much more straightforward.

Can I get a scholarship for cosmetology school?

There are many scholarship opportunities available for students pursuing a career in the beauty industry. Whether you’re just starting or already enrolled, you can find scholarships tailored to support aspiring cosmetologists, estheticians, and other beauty professionals.

Does the FAFSA cover cosmetology?

If you’re enrolled in an accredited cosmetology school, you might qualify for federal financial aid by filling out the FAFSA. This can help cover tuition, fees, and other expenses, so it’s worth applying to see what kind of funding you can receive.

Photo credit: iStock/Sergey Pakulin

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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.

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.

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SOISL-Q324-091

Understanding the Risks of ESG Investing

The State of ESG Standards

A Range of Criteria

Get up to $1,000 in stock when you fund a new Active Invest account.*

Access stock trading, options, alternative investments, IRAs, and more. Get started in just a few minutes.

ESG vs. Conventional Strategies

5 Risks of Investing in ESG Stocks

Lack of Support for ESG Standards

Weak Monitoring

Compliance May Not Support ESG Frameworks

Inaccurate Reporting

Lack of Diligence Among Fund Managers

Why Companies May Want to Reduce ESG Risks

How ESG Mitigates Some Risk Factors

The Takeaway

Financial Consulting Services 101

What Is a Financial Consultant?

Examples of Financial Consulting Services

Get up to $1,000 in stock when you fund a new Active Invest account.*

Access stock trading, options, alternative investments, IRAs, and more. Get started in just a few minutes.

Financial Consultants vs. Financial Advisors

Other Names for Financial Professionals

When Would You Need Financial Consulting?

Finding the Right Financial Consultant

The Takeaway

FAQ

Is a financial consultant the same as a financial advisor?

What does a financial consultant cost?

What does a financial consultant do?

The Average 401(k) Balance by Age

What’s the Average 401(k) Balance?

Average and Median 401(k) Balance by Age Group

Average 401(k) Balance for Ages 25 and Under

Average 401(k) for Ages 25 to 34

Average 401(k) for Ages 35 to 44

Average 401(k) for Ages 45 to 54

Average 401(k) for Ages 55 to 64

Average 401(k) for Ages 65 and Older

Get a 1% IRA match on rollovers and contributions.

Double down on your retirement goals with a 1% match on every dollar you roll over and contribute to a SoFi IRA.1

How Much Should I Have in My 401(k)?

Tips for Catching Up If You’re Behind

1. Automate your savings.

2. Maximize 401(k) contributions.

3. Make catch-up contributions if you’re eligible.

4. Consider opening an IRA.

5. Make sure you have the right asset allocations.

6. Pay Attention to Fees.

7. Conduct an Annual Financial Checkup.

The Takeaway

FAQ

What is a good 401(k) balance?

How much do most people retire with?

How to Save on Your Electric Bill This Summer

Review Your Summer Electric Usage

Get up to $300 when you bank with SoFi.

Optimizing Your Air Conditioning System

Energy-Efficient Cooling Alternatives

Attic Fan

Geothermal Heating/Cooling

Evaporative Coolers

Reducing Heat Gain in Your Home

Smart Appliance Usage and Vampire Energy

The Takeaway

FAQ

What temperature should I set my thermostat to save money?

Are ceiling fans effective in lowering electric bills?

How much can LED bulbs reduce my summer electric costs?

Top Cosmetology Scholarships in 2024

How to Find Scholarships for Cosmetology Students

How to Qualify for Cosmetology Scholarships

Top Cosmetology Scholarships

Buy-Rite’s Annual Beauty School Scholarship

Great Clips Great Scholarship Program

Beauty & Wellness Professionals Scholarship

The Rosy Rewards Scholarship

The Joe Francis Haircare Scholarship

Elevate Your Education Scholarship

Sallie Mae Scholarship

SoFi Scholarship Giveaway

Double down on your retirement goals with a 1% match on every dollar you roll over and contribute to a SoFi IRA.¹

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