Financial Topics Archives | Page 239 of 800

May

2024

What to Do When You’re Running Out of Money

By Jamie Cattanach | Budgeting & Goals, Family Finances, money, Money & Life | Comments Off

There’s no feeling in the world quite like running out of money before your next paycheck hits — and it’s not a good sensation. It can have you feeling stressed and unsure of your options.

But, the truth is, when you’re running out of money, you still have ways to move forward. There are also steps that’ll help prevent the problem from cropping up again.

Here, you’ll get a closer look at what happens when you’re running out of money, what options you have, and how to avoid this situation recurring.

Key Points

• Running out of money before payday can be stressful, but there are ways to manage and prevent it.

• Excessive spending on fixed and living expenses often depletes funds quickly.

• Creating a tailored budget helps control finances and prevent overspending.

• Essential bills should be prioritized, and unnecessary spending should be cut.

• Exploring additional income sources and government benefits can provide financial relief.

Reasons for Running Out of Money

In order to fix a problem, we first have to understand why it’s happening. That means it’s time to take a good, hard look at your finances to learn why you’re running out of money in the first place. Here are some common causes.

Spending Too Much on Fixed Expenses

Major budget line items, like a rent or your car payment, can take a serious chunk out of the funds you have available for everything else. Although trading in your car for a bicycle or enlisting a roommate might seem like huge changes, they can also make huge differences in your financial life.

Spending Too Much on Living Expenses

Where and how you live can make a big difference in your personal finances. A person who lives in a small town with a couple of roommates will probably be able to stretch their paycheck a lot further than someone who has their own place in a major city where the cost of living is significantly higher.

Also, people vary: According to the USDA’s monthly estimates, a single adult might spend as little as about $275 to as much as $450 or more per month on groceries. Finding ways to cut down on non-fixed living expenses, like groceries, can pack a big punch in terms of not running out of cash before your next pay day.

💡 Quick Tip: Banish bank fees. Open a new bank account with SoFi and you’ll pay no overdraft, minimum balance, or any monthly fees.

Spending Too Much on Discretionary Purchases

Don’t beat yourself up: We live in a world in which we’re the subject of constant advertisement. (According to some estimates, we see as many as 10,000 ads each day.) So it makes sense that we often grab that new pair of boots or book a quick weekend getaway. However, making a habit out of treating yourself or making impulse purchases can wreak havoc on your bank account.

Not Earning Enough

If you’ve cut back in every way that feels comfortable (and perhaps even some ways that do not) and still feel you’ve run out of money, the answer may be to increase your income. While starting a side-hustle can make a dent, finding a better-paid full-time job or making a career change might be a more sustainable course of action.

Tips for When You’re Running Out of Money

Once you’ve figured out exactly where your monetary life is going awry, you can take concrete steps to make your personal finances better. Here are some ways that can help you get off the paycheck-to-paycheck roller coaster.

Create a Budget That Fits Your Needs

As you’ve doubtless noticed by now, if you don’t make a plan for your money ahead of time, it pretty much develops a mind of its own and walks away. Creating a budget is exactly the anecdote to this problem: planning ahead for where your money is going. And don’t worry, it doesn’t have to be tedious or boring.

Using one of the many online apps built for this purpose or a plain old pencil and paper, start the process:

• List your monthly income at the top, and then deducting your fixed living expenses. (Think: rent or mortgage payment, insurance, any car payments or other loans you pay.)

• Next, budget for living expenses whose amounts can change (like utilities and groceries.)

• It’s also a good idea to set aside at least a little bit of your money each month towards your savings goals, which is an objective that you can boost when you open a high-yield savings account.

• Finally, the rest of the money is yours to do with as you please, so be sure to budget for items and activities that are meaningful to you. You can have just about anything you want on a budget, just not everything.

Pay Your Most Important Bills

The next idea for what to do when you’re running out of money: Know how to handle bills that are threatening to go unpaid.

Not being able to pay your bills is indeed a sad and scary circumstance, but it’s not actually the end of the world. Stay calm, and prioritize. Important bills to put first include:

• Housing

• Health insurance and healthcare expenses

• Food

• Utilities.

Keep in mind, too, that you might be able to negotiate with your creditors or put your student loans in forbearance. Either way, it’s worth the phone call to find out.

Spend Money on Essentials Only

When money is (very) tight and you’re scraping the bottom of the bank account barrel, it’s not the right time to splurge on any fun extras.

Until you can build up a bit of a cushion (even a $1,000 emergency fund is better than none at all), limit your spending to only the essentials: the stuff you need to live. It may feel like a sacrifice today, but you’ll thank yourself in a few weeks when you’re breathing easier.

Limit Borrowing and Taking Out Loans

When you’re out of money, there are plenty of companies who are happy to give you some… in exchange for even more money they’ll expect you to pay them (aka interest).

As tempting as it is to borrow money or take out a loan when your well has run dry, in the long run, it can exacerbate the problem. So if you’re already in dire financial straits, it may actually be a bad time to take out a loan.

Use Credit Cards Sparingly

Similarly, you want to avoid racking up interest charges by breaking out your plastic when money is tight. Credit card debt is high-interest debt and can be a real challenge to pay off. Whenever possible, pay for items with cash or a debit card.

Also consider a balance transfer credit card if you already have an amount of credit card debt that is making you uncomfortable. It can give you a period of low or no interest that can help you pay down your balance.

Make Time to Make Extra Income

As mentioned above, your problem might be improved by earning more. Picking up a side gig, like driving for Uber or selling crafts on Etsy, is one road forward. Training and applying for a more lucrative career could be another path through this tough time.

Look at Government Benefits

Nobody should have to forego medical care, food, or shelter because of their financial situation. That’s why government benefits like the SNAP program (previously known as food stamps) and low-cost health care options exist.

Specifics vary by state, but your local government website should have details available and phone numbers to call. If your income is under a certain threshold, you may qualify for programs that can make it a lot easier to budget what you’re earning on other needs.

Downsize When Possible

Moving or changing your favored mode of transportation are big life changes, for sure… but they can also make big changes in your financial life, for the better. If you downsize your cost of living, you won’t have to struggle quite so hard to pay for it, which could be well worth the sacrifices.

Sell Items You Don’t Need

Selling things you don’t need can help you downsize and line your pockets with some extra change in the short term. You could have a yard sale, offer them on eBay or another online platform, or see if a local second-hand store will purchase them, among other options.

Take Care of Yourself

No matter how dire your financial circumstances get, don’t neglect your personal needs. Going outside for a walk, sitting down to eat nutritious foods, and talking to loved ones are imperative for your mental and physical well-being, and none of them are exorbitantly expensive. In addition, you might look into low-cost or no-fee financial counseling from a nonprofit to help you pull through this challenge.

Managing Finances with SoFi

You’ve just learned ways to cope when you’ve run out of money. Also make sure that the funds you do have are easily managed and earning some interest to help your cash grow.

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 options are available if I can’t afford to pay my bills?

If you can’t afford to pay a credit card bill, auto loan, or student loan payment, consider calling your creditor or lender and asking about ways to negotiate the payment amount or file for forbearance. Debt consolidation loans are another option if your debt is spiraling out of control, but they should be approached with caution.

Which budgeting methods are helpful for people that are running out of money?

One popular budget is the 50/30/20 budget rule, which says, of your take-home pay, to allocate 50% towards the musts in life, 30% to the wants, and 20% to savings and additional debt payments.

Should I contribute to my retirement fund if I don’t have the money?

As important as it is to save for a comfortable retirement, if you don’t have the money to live today, it’s hard to be focused on the money you’ll need to live tomorrow. If you’ve made all possible budget cuts and still don’t have any money to contribute to your retirement fund, so be it for the present. Consider using “windfalls” like your tax refund, bonuses, or birthday gifts to pay into your retirement accounts when they show up.

Photo credit: iStock/miniseries

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

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

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

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

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

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

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

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

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

SOBK0124052

May

2024

Checking Account Definition and Explanation

By Sarah Li Cain | Budgeting & Goals, Growing Wealth, money, Money & Life | Comments Off

A checking account is a secure place to deposit money and then withdraw funds, say, when it’s time to pay bills. This type of deposit account — either at a bank or credit union — allows you to move funds in and out using different methods. It’s typically considered the hub of a person’s daily financial life, and it’s usually much more flexible compared to other types of bank accounts.

Key Points

• A checking account is designed for frequent transactions, allowing easy deposit and withdrawal of funds.

• Various types of checking accounts cater to different needs, including student, senior, and second chance accounts.

• Features of checking accounts can include direct deposits, ATM access, and the ability to issue checks.

• Pros of checking accounts include flexible access to funds and direct deposit options; cons include potential monthly fees and low interest on balances.

• Opening a checking account typically involves selecting a suitable option, providing necessary documentation, and making an initial deposit.

What Is a Checking Account?

The meaning of a checking account is a bank account that’s designed to be used for frequent transactions. FDIC- or NCUA-insured checking accounts are considered safe, and you store your cash in the account and withdraw as needed.

The main goal of a checking account is for you to have a place to put your cash temporarily until needed. The bank expects this money to be moved into and out of your account regularly, which is why these accounts typically don’t pay interest, unlike savings accounts, where the money tends to stay put.

That said, some checking accounts may earn a modest amount of interest, especially those held at online vs. traditional banks.

You can use a checking account to deposit and withdraw funds in a variety of ways, depending on your institution (more details in a minute).

You will also likely find that there are a variety of options available: There are personal, small business, and commercial checking accounts. You can also open one in your name or with someone else as a joint account or authorized user.

How Do Checking Accounts Work?

Now that you know the meaning of a check account, consider how they operate. Checking accounts allow you to deposit and withdraw or spend your money. Depending on your bank and type of bank account, you can deposit in a variety of ways, including:

• ATM deposit

• Direct deposit

• Incoming wire transfer

• Mobile check deposit

• ACH deposits (which can include those with PayPal, Venmo, Zelle, and other services).

• Depositing funds at a brick and mortar location.

These methods can also be used to withdraw or send money to others. For example, if you want to pay for a subscription service using your checking account, you can sign up for automatic withdrawals each month. Or you might be able to send an outgoing wire transfer for your down payment for your home during closing.

5 Types of Checking Accounts

There are several different kinds of checking accounts, each one offering different features.

Traditional Checking

This is a basic checking account you can use for your day-to-day transactions like paying bills or making purchases with your debit card. There aren’t many extra features, though you’ll most likely get unlimited transactions, a debit card, checks, and access to an online or mobile banking portal as well as certain ATMs without a fee. You may need to pay an annual bank fee, maintain a minimum balance, and make a minimum initial deposit.

Interest Checking

An interest-bearing checking account is similar to a basic or traditional checking account except you’ll earn interest. The amount of interest you can earn will vary from bank to bank, but it is typically significantly less than funds in a savings account will earn.

Student or Teen Checking

These accounts are specifically geared towards students or teenagers and may earn interest. In some cases, parents or guardians will also need to have their name on the account and may monitor transactions. One perk to be aware of: These bank accounts may not charge fees.

Senior Checking

Senior checking accounts will offer features similar to basic checking accounts, except you may have more perks such as free checks and other benefits geared towards the senior population, including those on a fixed income.

Second Chance Checking

If you’ve been denied a checking account, you can try applying for a second chance account. These accounts are geared towards those who tend to have negative ChexSystems reports, which can track a person’s banking history. Keep in mind that some may charge fees and have fewer features than other types of accounts.

If you manage this kind of somewhat limited account well, your bank may upgrade you to a standard checking account down the line.

Pros and Cons of a Checking Account

If you’re considering whether a checking account is right for you and how to manage it, take a look at these benefits and downsides of checking accounts.

Pros	Cons
More flexible access to cash	Little or no interest earned on deposits
Ability to set up direct deposit	You may be subject to monthly fees
Access to a debit card	May need to maintain a minimum balance in your account

Checking Accounts vs. Debit Cards

You may wonder exactly how a checking account and a debit card are connected. A debit card is a feature you can get with your checking account that allows you to make withdrawals and deposits at an ATM machine. You can also use it to make purchases at retailers — you may see a Visa or Mastercard symbol on your card. Typically, you can tap or swipe a debit card as you go through your day, whether paying for some groceries or snapping up some new clothes on sale.

The money you spend or deposit will be linked to your checking account. Purchases you make will be deducted typically in real-time. In many cases, your bank or credit union may have limits as to how much you can spend daily, weekly, or monthly when using your debit card.

However, here’s a distinction to note: There are also prepaid debit cards that aren’t part of a checking account. In this case, you can buy one at many major retailers. The purchase price is part of the amount you have on the card.

Using a Checking Account

There are several features that you need to be aware of when you use a checking account; these can make your financial life easier or, in some cases, could literally cost you.

Overdraft Fees

Whenever you make a withdrawal and there isn’t enough money on deposit, you are in what’s known as overdraft (a negative balance). Your bank may choose to deny the transaction (due to non-sufficient funds) or cover the difference. In either case, you are charged a fee — NSF fee or overdraft fee. The amount you’ll be charged will depend on your bank, though you can expect to pay around $35 per overdraft on average.

Some banks may forgive your first overdraft fee (meaning your don’t pay the extra charge) or allow you to link your savings account from the same institution as a form of overdraft protection. That way, if you don’t have enough money in your checking account, your bank will automatically transfer the difference from your savings account.

Autopay

With autopay, you can set up automatic withdrawals from your checking account in regular intervals and in amounts you choose to other accounts. For example, you can use the autopay feature to deposit money into a savings account for your emergency fund or to pay rent every month. Setting up these seamless recurring payments can be part of what people refer to as automating your finances.

Direct Deposit

You can receive deposits automatically into your check account through direct deposit. This is a very popular way for companies to pay their employees, and it eliminates the need for you to have to deposit a paycheck. What your employer or another payor would need to do this: your banking details, such as your routing number, account number, account name, and sometimes the bank’s address and phone number. (You may need to provide a voided check as well.)

Service Charges

Aside from overdraft and NSF fees, you may be charged monthly maintenance fees to have a checking account at a financial institution. In some cases, this fee may only be assessed if you don’t meet the minimum balance requirements. These bank fees are meant to help cover the expenses required to maintain a bank account.

You can avoid fees by choosing a checking account with no monthly fees, or try calling customer service to waive fees, like an overdraft charge if it’s your first time doing so.

ATMs

You can use your debit cards at ATM machines to make deposits or withdrawals. Some bank accounts may charge fees if you’re using one that’s out of network and/or when you’re making withdrawals abroad. It can be wise to read the fine print on your agreement with your bank about your account so you understand what charges may be assessed. Also, you may want to check if fee-free ATMs are conveniently located near where you live and work.

Interest

Not all checking accounts earn you interest, but some do. Granted, they’re probably not as high as compared to savings accounts, but earning some money is better than none. Just be sure to check if minimum balance requirements exist in order for you to reap that interest.

4 Steps to Opening a Checking Account

Though opening a checking account is generally the same across all financial institutions, the specifics may differ. Here, the four basic steps:

1. Review Your Options

Before signing up for an account, shop around to find one that offers the best fit for your needs. Review such features such as fees, interest rates, minimum balance requirements (if any), ATM network accessibility, and whether you want a brick-and-mortar location. Some banks may offer signing bonuses and the like to get your business.

2. Gather Relevant Documentation

Once you’ve chosen your bank and the kind of checking account you want to open, you’ll need to make sure you have the right information available to sign up. This includes your address, name, and Social Security number. You may need to have a government-issued photo ID (like your driver’s license) available. If you’re opening a joint account or adding an additional user, you’ll need that person’s information as well.

3. Fill out the Application

Go to the bank’s website and fill out an application form. In some cases, you may be asked to create an online account before you can complete your checking account application. Another option is likely to go to a bank branch, if you’re applying at a traditional bank, and fill out forms there.

4. Make Your First Deposit

Once your application is approved, you’ll be asked to make your first deposit. Depending on the bank, you can do this in different ways, from mailing in a check to transferring funds online. You may also need to wait several days to allow for the account to be fully opened and your new debit card to arrive in the mail.

Can You Be Denied a Checking Account?

Your application for a checking account may be denied in some cases. Your ChexSystems report — similar to a credit report, but for banking — could show negative remarks that could result in the bank not approving your application.

• Some of these reasons could include:

• Too many overdrafts

• Unpaid banking fees

• Negative balances

• Suspected identity theft or fraud.

If you are denied, you can ask the bank for the reason and ask them to reconsider. Otherwise, you can apply for a different type of checking account to see if that works.

In addition, some banks might deny you an account because you lack the requested forms of identification. In that case, you may want to look into other banks that accept alternate forms of ID.

Checking vs Savings Accounts

Though checking and savings accounts are both types of deposit accounts held at a financial institution, there are some critical differences between the two.

Unlimited Withdrawals

Checking accounts generally provide more flexibility in terms of how many withdrawals you can make. You should be able to take money out as often as you want as long as you have the funds to do so.

Savings accounts used to be limited to six withdrawals per month as mandated by Regulation D, but the regulation has since been dropped during the pandemic. Some financial institutions may still impose this limit — check with your bank to make sure.

Use of Debit Cards

Savings accounts usually don’t provide debit cards, whereas checking accounts do. Having one can make it more convenient to spend your money, since you can use it to make purchases at most retailers.

Interest Rates

Interest rates for savings accounts tend to be higher (often, considerably so) compared to those for checking accounts. That’s why it’s usually recommended that if you’re holding on to your cash, you may be better off depositing it in a savings account. Banks pay you higher interest for the privilege of having that money on deposit and being able to lend some of it out for other purposes.

Creating a Checking Account With SoFi

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

WWhat is the difference between a savings and checking account?

The definition for a checking account is that it offers flexible ways to deposit and then withdraw your money, allowing you to make frequent additions and subtractions to your account with a minimum of fees. A savings account, however, is meant to store your cash for longer periods of time. Another key difference: Many checking accounts earn no interest, unlike savings accounts, where interest does accrue.

Is a debit card a checking account?

A debit card is not a checking account, but a feature that may come with your checking account. A debit card allows you to transfer funds from your checking account to a merchant, but it is not the account that actually holds your funds.

Is it OK to save money in a checking account?

You can save money in a checking account and it will likely be FDIC- or NCUA-insured, but you may not earn as much interest (if any) as you would with a savings account.

Is there a minimum credit score for a checking account?

A bank most likely won’t check your credit score when reviewing your application for an account. However, it will often look at your ChexSystems report. If you have any past negative behavior such as a large number of overdrafts or negative balances, it could cause your application to be denied.

What is the difference between a checking account and current account?

A checking account is a secure place to deposit and withdraw money for daily use; it tends to earn little or no interest. A current account is either a similar account but used for business purposes or, in macroeconomics, a record of a nation’s financial transactions with the rest of the world.

Photo credit: iStock/Delmaine Donson

SOBK0324008

May

2024

14 Side Hustles for Couples Who Want to Make Extra Income

By Jackie Lam | Budgeting & Goals, Family Finances, money | Comments Off

If you and your significant other are interested in making some extra cash without sacrificing time together, you might consider a joint business venture. Side hustles for couples allow you to meld forces and level up your earning power. It can also strengthen your relationship and help you achieve your shared financial goals.

Whether you’re looking to save for a special occasion or a major purchase, or just want to increase your cash flow, here’s a look at 14 of the best side hustles for couples.

Key Points

• Couples can combine resources and skills to start side hustles, potentially increasing their income.

• Joint ventures like real estate investing or starting a food truck can be profitable.

• Online platforms facilitate side hustles such as reselling items or renting out cars.

• Service-based side hustles like pet-sitting or home improvement can utilize complementary skills.

• Digital ventures like blogging or social media can grow into significant income sources over time.

Benefits of a Side Hustle

There are a number of advantages to starting a side hustle as a couple versus pursuing your own solo gigs. Working together allows you to:

• Combine resources to cover the startup costs like equipment, materials, and supplies

• Potentially earn twice (or more) than you could alone

• Work nights and weekends without sacrificing time together

• Tap into complementary skills and talents

• Discover new things about your partner

• Ease the stress of managing a business

• Balance the workload

• Increase your ability to communicate and work together

• Test the waters on a passion that could potentially lead to a larger couple’s business venture

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

14 Side Hustles for Couples

To get started with a couple’s side hustle, you’ll want to consider your combined interests, passions, skills, resources, and availability. To help you brainstorm ideas, here’s a look at sidelines that can work well for couples looking to combine forces.

1. Investing in Real Estate

If you and your mate are interested in real estate and understand the market, you might team up to invest in rental properties, which can generate passive income.

Partnering up to invest in real estate gives you more capital to work with. Plus, if you are co-borrowers on a mortgage, it could potentially help you get a loan with a better interest rate if it lowers your debt-to-income ratio. Once you invest in real estate together, you can divide up property management, maintenance, and repair tasks based on your skills and availability.

2. Reselling Items

A relatively simple way to earn extra income as a couple is by reselling items you already own and no longer need, or things you snag for low prices at estate sales, yard sales, or through online marketplaces. Working as a team can be useful with reselling, especially if you buy and sell larger items locally. To maximize your earning potential, you may want to zero in on a specific type of item you want to resell, such as clothing, furniture, or collectibles.

3. Pet-Sitting

Is one of you a people person and the other more of an animal lover? You might combine forces with an in-home pet-sitting business. One partner can focus on bringing in business, communicating with clients, and scheduling, while the other can take charge of providing personalized care, feeding, walking, and attention to your furry clients.

If having pets in your home doesn’t appeal, you might start a neighborhood dog-walking service. This will allow you to get some exercise and spend time together, while also bringing in some extra income.

Recommended: 19 Tips to Save Money on Pets

4. Rent Out Your Car

If you each have a car and one sits idle most of the time, you might consider monetizing it by listing it on a car sharing marketplace, such as Turo or HyreCar. These peer-to-peer car-sharing services make it easy to rent out your car when you’re not using it to make some extra income. Turo claims that the average annual income generated by renting out one car is $10,516.

Before signing up, however, you’ll want to make sure you understand all the legal details, such as protection plans, auto insurance coverage, liability insurance, and rental service agreements.

5. Cleaning and Home Improvement

If you and your mate enjoy maintaining and fixing up your home, you might consider offering your services to others. Perhaps you’re handy around the house while your partner excels at housekeeping tasks or interior painting. You might combine forces by offering a range of services. You can get clients by advertising in your local area or could list your services with a platform like TaskRabbit, Thumbtack, or Care.com (though known for babysitting, the site now also includes housekeeping).

6. Babysitting

Babysitting can be another lucrative side hustle for couples, especially since there is currently a childcare shortage. If you and your partner enjoy children, you might offer to look after kids in the evenings or weekends to allow parents to catch up with chores or errands. If you’re considering the prospect of starting a family in the near future, babysitting can give you experience while earning some extra cash.

To get clients, you might post your services on a local parent group or sign up with a platform like Care.com or Sittercity. To charge a higher rate, consider getting certified in CPR or offering special activities for the kids.

7. Starting a Food Truck

Are you and your partner big foodies? Maybe one (or both) of you loves to cook and you’ve always dreamed of owning your own food business together. If so, a food truck might be a good place to start. It requires lower overhead costs than opening a restaurant and allows you to travel to where the crowds are, rather than waiting for them to come to you.

You’ll need a fair amount of capital to get going (for the truck, equipment, supplies, POS machine, etc.). And since you’re serving food and beverage, you’ll also need to get the necessary permits and adhere to regulations. But the time and money you invest could pay into a lucrative side business.

8. Blogging

If you and your mate enjoy writing and have expertise in a particular area (such as travel, food, interior design, or fashion), you might consider starting a blog together. You can tap your shared passions and knowledge to produce engaging content, collaborate on articles, and expand your audience together.

While it won’t provide a revenue stream overnight, blogging is a low-cost side hustle that may become lucrative if you can build up a large following. Bloggers generally earn money through ads (which pay per view or click) or affiliate sales (if you promote a product or service and a visitor clicks on the link and completes a purchase, you get paid a commission).

9. Becoming Virtual Assistants

If you both have strong organizational skills and are looking for a way to make extra money while working from home, you might look into becoming virtual assistants. This sideline involves providing administrative support to businesses remotely, such as email management, scheduling, data entry, and booking travel. If you each have different strengths, you might divide up the tasks based on skill/preference, or each pick different types of clients.

To get started, you may want to use a virtual assistant app, such as Fiverr and Upwork; these platforms can help you market your services and manage gigs and payments. But because apps often take a considerable cut, you may want to eventually break out on your own and create a website that markets your virtual admin services.

10. Delivering Items to People

Side hustling by way of delivering food and groceries allows you and your significant other to work your own hours and make money just by driving. Working as a delivery duo also enables you to pick up and deliver items more efficiently than working solo (no parking necessary for quick pick-ups and drop-offs).

You might deliver groceries using a platform like Instacart or Shipt or deliver food via DoorDash or UberEats. Generally all you need to get started is to have a driver’s license and a car, download the app, and set up an account. Once you’re approved, the apps will alert you to new delivery jobs and you can and your partner can choose to work when you want to.

11. Renting Your Home Out to Others

If you have a spare room, basement, or guest house, or you travel often, you might consider renting part or all of your home to travelers as a couple. You can easily make extra monthly income this way by booking through Airbnb. How much will depend on your location, size of your home, and amenities.

To start your side hustle as an Airbnb host, you’ll need to create a profile and listing on the site and have it verified. You and your partner can then collaborate on guest communication, cleaning, and ensuring a comfortable, and welcoming experience for your guests.

12. Charging Public Scooters

If you live in an area that has public scooters, you might be able to earn extra cash as a couple by charging them. Many companies (such as Lime, Bird, and Spin) hire independent contractors to collect, charge, and distribute their electric scooters in different areas around the city. If you and your honey are game, you’ll need to sign up on the app and complete a short training session. Once approved, you will receive a charger kit with all the necessary tools and equipment to get started.

Recommended: How to Earn Residual Income

13. Social Media Monetizing

Similar to blogging, monetizing your social media can be a lucrative couple side hustle, depending on the number of followers you have and their level of engagement. If you and your partner have managed to establish yourself as social media influencers, you may be able to earn money running ads before and after your video content and/or through brand partnerships and affiliate links.

Popular couple accounts include couples working on a major home renovation project, building a business together, sharing their journey to reach a certain goal or overcome a struggle, or spreading positive messaging. You can also offer information and useful tips around a particular topic.

Recommended: How To Make Money Even With No Job

14. Offering Lessons

If you and your mate have a particular skill or talent, such as academic, musical, sports, gardening, or fine arts expertise, you might consider starting a tutoring or personal instruction business together. This is a flexible side hustle since you can offer in-person or virtual lessons, market your services to children and/or adults, and choose to work daytime or evenings. Plus, the start-up costs are typically minimal. Apps like Wyzant, Skooli, and TakeLessons.com can help you market your services and manage gigs and payments.

The Takeaway

By brainstorming side hustle ideas with your significant other, you may be able to find synergies that can take your freelance business to the next level. Combining forces also allows you to work together toward your shared financial goals.

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 beneficial to have a side hustle with your significant other?

Starting a side hustle with your significant other offers multiple benefits. These include combining your resources to cover the startup costs, sharing responsibilities, increasing your potential profits, and allowing you to spend time together while also working nights and weekends.

Are there any drawbacks to starting a side hustle as a couple?

A potential drawback to starting a side hustle as a couple is that it can put added stress on your relationship. It can also lead to arguments over how to run the business and divvy up responsibilities.

How can I choose the right side hustle?

The right side hustle for you depends on your interests, goals, and availability. You also want to factor in what you’re qualified to do, and if you have any skills, experience, tools or equipment that could give you a competitive advantage.

Once you’ve narrowed down the side hustles that match your interests, skills, and resources, you can examine the costs and profit potential to find the best fit for you.

Photo credit: iStock/PeopleImages

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

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

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

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

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

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

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

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.

SOBK0124060

May

2024

The Most Important Components of a Successful Budget

By Jackie Lam | Budgeting & Goals, Family Finances, money | Comments Off

Financial gurus, your money-savvy friend, and personal finance books and articles all say the same thing: You need a budget. Why? Because without any guardrails to guide your spending decisions, you can end up overspending (and, in turn, running up debt). You may also find it difficult to reach important financial goals, such as building an emergency fund, going on vacation, or buying a home.

The main characteristics of any budget are estimates of how much money you’ll make and how much you’ll spend over a certain period of time, typically a month. Trouble is, it can be hard to predict every expense that may come up in a given month. That can make it hard to know what to include in your budget. But don’t give up — read on. What follows are eight key components of a successful and realistic budget.

Key Points

• A successful budget includes estimates of income and expenses over a specific period, typically monthly.

• Emergency funds are crucial, ideally covering three to six months of expenses.

• Budgets should account for irregular and one-off expenses by setting aside funds monthly.

• Debt repayment is a key component, with strategies like the 50/30/20 rule guiding spending.

• Accurate tracking of monthly income is essential for effective budget allocation.

The Importance of Budgeting

While a budget may sound restrictive, it’s really nothing more than a plan for how you will spend your money. Why bother making one? Here’s a look at some of the benefits of putting together a basic budget:

• Lets you know if you’re spending more than, less than, or about the same as you’re earning each month.

• Gives you a birds-eye view at where exactly your money is going each month.

• Helps you avoid spending more than you have or want to spend.

• Alerts you to subscriptions or services you’re paying for but may no longer need.

• Ensures you stay on top of debt payments.

• Allows you to make adjustments in your spending and saving so you can align your financial habits to reach your goals.

• Can prevent you from going into debt should there be an unexpected, emergency expense or if you get laid off

• Helps you feel more secures and less stressed about money

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

Key Characteristics That Make a Budget Successful

While there are many ways you can approach managing your money, all budgeting styles share some of the same key elements. Let’s take a look at the main characteristics of a budget that can help you stay on track and boost your overall financial wellbeing.

Emergency Funds

The bedrock of any type of budget is an emergency fund. Without a cash reserve set aside specifically for unplanned expenses or financial emergencies, any bump in the road — say a car repair, trip to the ER, or a loss of income — can force you to run up credit card debt. This can lead to a debt spiral that can take months, potentially years, to recover from.

A general rule of thumb is to keep three to six months’ worth of basic living expenses in a separate savings account earmarked for emergencies. If you’re self-employed or work seasonally, however, you might want to aim for six or 12 months of expenses to feel secure and protected.

Recommended: Where to Keep Emergency Funds

Irregular Expenses

When creating a budget, you likely won’t overlook your recurring monthly expenses, such as rent, utility bills, and food. What’s easy to forget about are your one-off and irregular expenses.

To set up an accurate budget, you’ll want to be sure to jot down any annual or seasonal expenses you anticipate, such as membership dues, holiday gifts, insurance payments, car and registration fees, or kid’s camp expenses. Scanning through your monthly checking account statements for a year should help you suss out your irregular expenses.

To adequately account for these expenses, determine the annual cost, divide by 12, and build that amount into your monthly budget. You may want to transfer that money into a separate account so you can pay those expenses when they’re due.

Repaying Debt

For a budget to be successful, you want to make sure you’re accounting for debt repayment, including minimum monthly payments and (if you’re carrying high-interest debt) additional payments. The 50/30/20 budgeting rule, for example, recommends putting 50% of your money take-home income toward needs (including minimum debt payments), 30% toward wants, and 20% toward savings and debt repayment beyond the minimum.

Once you’ve paid off your balances, the money you were spending on debt/interest each month can now go towards other goals, such as a vacation, large-ticket purchase, or down payment on a house.

Recommended: See how your money is categorized using the 50/30/20 Budget Calculator.

Monthly Savings

Even if you tend to live paycheck to paycheck, a key element of a budget is putting at least something into savings each month. For example, with the “pay yourself first” approach to budgeting, you set up a recurring transfer from your checking account into your savings account on the same day each month, ideally right after you get paid.

Once you’ve fully funded your emergency saving account, you can funnel this extra money into a high-yield savings account to work towards your short-term savings goals.

And it’s fine to start small. If you save $20 a week, in a year you’ll have accumulated $1,040. If you commit to the 52-week savings challenge, where you save $1 the first week, $2 the second week, and so forth for an entire year, you’ll have stashed away $1,378 by week 52.

💡 Quick Tip: Most savings accounts only earn a fraction of a percentage in interest. Not at SoFi. Our high-yield savings account can help you make meaningful progress towards your financial goals.

Accurate Monthly Income

Without knowing exactly how much money hits your bank account each month, you won’t be able to allocate your funds accordingly and create an accurate budget. Besides your paycheck, you’ll want to factor in any other income streams, such as freelance work, government benefits, alimony, or child support.

If you’re self-employed and your income varies from month to month, determining your monthly income can be a bit trickier. One solution is to use your lowest monthly income over the past year as your baseline income (minus any taxes you will owe). This gives you a margin of safety, since you will likely make more than that.

Money for Vacations and Free Time

While it’s important to save for an emergency fund and pay off your debt, a key component of budgeting is money for fun and leisure. Without it, you likely won’t stick to your budget at all.

Think about what activities bring you the most joy and offer the most value in your life. What hobbies would you like to invest more time, energy, and resources in? Where would you like to vacation next? From there, you can set some “fun” savings goals. Consider how much you will need and when you want to reach your goal to determine how much to set aside for fun each month.

Recommended: 15 Creative Ways to Save Money

Retirement

Retirement might seem far off but failing to start saving early can put you in a tough predicament later on. Thanks to compound interest — the interest earned on your initial savings and the reinvested earnings — it’s much easier to amass a comfortable nest egg when you start early. Even if you’re still paying off your student loans, retirement is an important element of a budget that can make a huge difference in your future.

If you work for a traditional employer, you likely have a company 401(k) you are eligible to participate in. If your employer offers a company match, it’s wise to contribute at least up to match — otherwise you’re leaving free money on the table.

Realistic Goals

While many people don’t write down specific goals when creating a budget, this is actually an important element of budgeting. By setting realistic goals, such as building an emergency fund, saving for a downpayment on a car or a home, getting out of debt, or saving for retirement, you can begin to find ways to save for those goals and track your progress towards achieving them.

Having specific and realistic money goals can give you the motivation to take control of your spending. It also gives all the money that comes into your account a purpose.

Keep in mind, though, that goals and budgets are ever-evolving. When changes arise in your situation, you can tweak your goals accordingly. For instance, maybe you suffered a financial setback. In that case, you might want to put your foot off the pedal on aggressively paying off debt, and focus on replenishing your emergency fund.

Tips on Starting a Budget

If the idea of creating a budget feels overwhelming, here are some stimple steps that help jump start the process.

• Determine your after-tax income. If you get a regular paycheck, the amount you receive is probably just that, but if you have automatic deductions, such as 401(k) contributions or health and life insurance, you’ll want to add those back in to give yourself an accurate picture of your earnings.

• Tally your monthly expenses. You can scan your bank and credit card statements for the past three to six months to get an idea of what you typically spend each month and on what. You can then make a list of spending categories, how much (on average) you spend on each per month, and then break down those expenses into two main categories: “needs” and “wants.”

• Make adjustments. If your average monthly income is less than your average monthly spending (meaning you are going backwards) or is about the same (meaning you aren’t saving anything), you’ll want to look for places to cut back. You likely find it easier to cut back spending in your “wants” categories, such as cooking a few more times a week (and getting take-out less often) or cutting the cord on cable and opting for cheaper streaming services.

• Choose a budgeting plan. Once you’ve done the basics, you can take it a step further by selecting a budgeting plan. Any budget must cover all of your needs, some of your wants and — this is key — savings for emergencies and the future. The 50/30/20 budget (mentioned above) often works well for beginners. But there are many different types of budget — including the envelope system and zero-based budget. You might choose a budgeting app, such as YNAB or Goodbudget, to automate the process.

Banking With SoFi

Knowing exactly what elements go into a successful budget can help you create a spending plan that’s in step with your goals and help you do a lot more with the money you have.

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

How do I stick to a budget?

The best way to stick to a budget is to never spend more than you have. Running up high-interest debt can be a vicious cycle that is tough to get out of. You also end up spending a lot more on your purchases than if you have held off and saved up.

If you can’t afford something you want right now, it’s generally a good idea to put it off until you can. If you want to go on vacation or buy new furniture, for example, plan for it and save regularly so it doesn’t throw off your budget.

What is the best budgeting method?

The best budgeting method is the one you’re most likely to stick with. If you prefer to not worry so much about where you’re spending each dollar, you might prefer the 50/30/20 budget. If you like to get granular with your spending, then a zero-sum budget might be a good choice.

What are the benefits of budgeting?

Budgeting is a tool that helps ensure you’re spending your money in a way that aligns with your priorities. If you simply spend here and there without any type of plan, you can end up spending on things you don’t care all that much about, and never saving up enough for the things that you do — such as buying a car, going on vacation, or putting a downpayment on home.

Budgeting also helps ensure you can pay all your bills, have a cushion for the unexpected, and avoid running up expensive debt.

Photo credit: iStock/AndreyPopov

SOBK0124056

May

2024

17 Tips for Surviving on Minimum Wage

By Marcy Lovitch | Budgeting & Goals, Financial Independence, money | Comments Off

There’s no doubt about it, trying to live on minimum wage is no easy feat. This is especially the case with the cost of living consistently increasing while the federal minimum wage hasn’t budged since 2009. And, according to the Economic Policy Institute, the value of the federal minimum wage is now at the lowest point since 1956, when it was 75 cents an hour, which is equal to $7.19 today.

However, if you are making minimum wage, don’t despair. How to survive on minimum wage can be difficult, but it’s not impossible. The key is not only keeping track of your spending and cutting costs where necessary but also creating and sticking to a realistic, doable budget.

If you’re living on minimum wage, learn how you can stretch your dollars and even manage to sock some money away for that rainy day fund.

Key Points

• Living on minimum wage is challenging due to stagnant federal rates and rising living costs.

• Budgeting and tracking expenses are crucial for managing finances on a low income.

• Saving small amounts regularly can build a financial cushion over time.

• Government assistance programs can help cover essential costs like food and healthcare.

• Additional income through side jobs or higher-paying positions can alleviate financial strain.

What is Considered Minimum Wage?

The federal minimum wage, created by Congress in 1938 under the Fair Labor Standards Act (FLSA), establishes a base hourly rate at which employers are required to pay their employees. The current federal minimum wage is $7.25, and as noted earlier, that’s an amount that’s remained the same since 2009.

Many states, cities, and municipalities have realized the federal minimum wage is extremely low. They have therefore passed their own minimum wage laws, offering a higher amount, generally ranging from about $10 to $16 an hour. In addition, many companies (such as Amazon, Costco, Target, and Walgreens) have also enacted their own higher minimum wage, eclipsing the federal minimum wage.

In situations where an employee is subject to both federal and state minimum wage laws, the worker is entitled to the higher of the two minimum wages. For instance, Georgia’s basic minimum wage is $5.15 per hour, but since the federal rate is higher, employers must pay the federal wage of $7.25.

What about tipped employees, such as waitstaff? According to the U.S. Department of Labor, employers may pay the employee no less than $2.13 an hour in direct wages. There is a condition, though. If that amount plus the tips don’t add up to at least the federal minimum wage, the employer must make up the difference. In a number of states, the direct wage for tipped employees is higher than $2.13 per hour to help ensure a livable wage. Worth noting: When an employee is subject to both the federal and state wage laws, they are also entitled to the provisions providing the greater benefit.

Is Minimum Wage Livable?

The term living wage refers to the amount of earnings a person or family needs to cover basic expenses. These can include groceries, utility bills, housing, healthcare, transportation, and childcare. The goal of paying employees a livable wage is to prevent people from falling into poverty and allow them to have a decent, satisfactory standard of living.

Unfortunately, the cost of living in the U.S. has risen over the decades, especially during recent inflationary times, and the minimum wage has failed to keep up with the prices of goods and services. According to a 2021 report from Drexel University, individuals working full-time at minimum wage cannot afford the above mentioned basic necessities in any location across the country. The bottom line: For most people, earning $7.25 an hour doesn’t cut it as providing a living wage.

For instance, before taxes, a full-time employee working 40 hours a week on federal minimum wage takes home only $15,080 a year, falling $4,640 well below the $19,720 poverty line for a family of two. A full-time worker getting minimum wage with a family of four falls $14,920 below the poverty line of $30,000.

The report also says a true living wage, one that supports a basic standard of living without housing or food insecurity, would fall between $20 and $26 or higher per hour, depending on the state.

Raising the federal minimum wage to $15 an hour has been an ongoing hot-button issue. The Raise the Wage Act of 2021 is a bill that proposes increasing the minimum wage for regular employees over a five-year period. While the bill is currently being debated in Congress, many companies (as noted above) have taken it upon themselves to pay their workers a higher wage.

17 Tips for Living on Minimum Wage

So, how to live on minimum wage? Here are 17 ways that can make it easier to survive on a minimum wage salary and even set aside some money for savings:

1. Evaluate Your Overall Spending

A first step to getting a hold on your finances is to know how much you’re bringing in per month versus how much is going out. One way to do this is to record all of your expenses. Begin tracking your spending for 30 days. Include everything, including the change you put in the tip jar at a coffee shop.

Doing so will give you an overview of exactly where your money is going and help you determine where you may need to make some cuts. Seeing a spending pattern may also pinpoint any causes of overspending, like not being able to say no to a restaurant invite when you really can’t afford it.

2. Create and Stick to a Budget

Having a budget provides you with a structure so you can organize your finances and live better within your means. When you’re not bringing home a lot of bacon, it’s vital to make sure you know exactly where your money is being spent each month. A line-item budget can help you track your spending in various categories and make adjustments as needed.

One common budgeting method to consider is the 50/30/20 rule. With this, you allocate 50% of your income to your needs (essentials), 30% for wants (nonessentials), and the remaining 20% towards savings. This guideline can help you manage your money better.

3. Put Some Money Towards Savings

The thought of saving when you’re barely scraping by can seem impossible. But if you’re making minimum wage, even putting $5, $10, or $20 a paycheck towards savings can add up over time. You might even set up an automatic transfer from your checking account into savings a day or two after every payday. It’s as effortless as automatic bill payments and can help you build up a nest egg.

Doing so can also get you in the habit of saving and even help improve mental health. One University of Arizona study found people who save money report less psychological distress and have improved financial satisfaction.

4. Look Into Government Benefits

Another “how to survive on minimum wage” tip: Millions of low-wage earners in the U.S. qualify for federal and state government assistance benefits. This aid can help lower costs of food, healthcare, housing, and more for those surviving on minimum wage.

Some of the most popular programs include Medicaid and Child’s Health Insurance Program (CHIP), Supplemental Nutrition Assistance Program (SNAP) or food stamps, Temporary Assistance for Needy Families (TANF), and more. To see what benefits you might qualify for, visit benefits.gov .

5. Save on Food

Obviously, minimizing dining out and ordering takeout will lower your food bill. Some other ideas:

• People and families living on minimum wage can qualify for SNAP or food stamps to help offset grocery costs.

• Consider shopping at less expensive supermarkets, using coupons, buying the store or generic brand, and if applicable, ask if the store has a customer club card so you can get additional discounts.

• Buying in bulk and stocking up on frozen foods and pantry staples such as bread, milk, eggs, peanut butter, pasta, beans, rice, tuna, and canned soups can help when money is particularly tight.

• Food banks or pantries can be another resource. You can search for one in your area at FeedingAmerica.org .

6. Find Additional Ways to Increase Your Income

If you are struggling to make ends meet, you might also think about how you could bring in more income.

• This might be the time to look for a higher-paying job or simply ask your boss for a raise.

• Investigate getting a side hustle on your off hours like driving for Uber, Lyft or delivering food for DoorDash, GrubHub, or Instacart. You could also consider house cleaning, babysitting, dog walking, or pet sitting for extra money.

• Have a marketable craft or hobby? Try selling your creations on Etsy or at a craft fair.

• If you have unwanted stuff that others might want, put it up for sale on Facebook Marketplace, eBay, or your community’s neighborhood group. A garage or yard sale can also bring in some bucks if you’ve got enough to peddle.

7. Lower Your Housing Costs

Housing is where Americans spend the largest share of their paycheck, according to the U.S. Bureau of Labor Statistics. With the prices to rent or own a home consistently rising across the country, this can be a major issue for those living on minimum wage.

A 2022 report by the National Low Income Housing Coalition found that the average minimum-wage worker must work 79 hours per week (the same as approximately two full-time jobs) to afford a one-bedroom rental home at the fair market rent.

If you’re paying more than you can afford for housing, there are ways to cut the costs.

• Consider downsizing to a smaller home or apartment, moving to a more affordable area in your town or city, getting a roommate, or living with a friend or family member while you save.

• Look into applying for affordable public housing in your area, specifically established for eligible low-income people. The U.S. Department of Housing and Urban Development (HUD) oversees public housing agencies in your state or city. You can find your local housing authority office at hud.gov or by calling 800-955-2232.

8. Work Towards Reducing Your Debt

When you’re not bringing in a lot of money, it’s easy to accumulate debt, especially by using credit cards to get by till the next paycheck. This can leave you with high credit card bills due at the end of the month and increase the chance of a minimum payment you can’t afford. You can tackle the problem in a few ways:

• Consolidate your debt by rolling multiple debt payments into one.

• Consider a balance transfer onto one credit card with a zero or low-interest promotional rate. These can provide a period of time during which you can pay down debt before the interest rate rises.

• Seek out help from a reputable non-profit organization such as the National Foundation for Credit Counseling (nfcc.org ), a professional credit counselor, or certified financial planner who can help you create a plan to start tackling your debt.

9. Minimize Healthcare Costs

Healthcare can take a big bite out of a tight budget. These moves may help lower those expenses:

• Medicaid and the Children’s Health Insurance Program (CHIP) are among the government programs providing free or low-cost health care to some low-income families and individuals. To determine if you’re eligible, go to Healthcare.gov where you can also fill out an application.

• Work towards saving on prescription drug costs at participating pharmacies with a discount card or coupons offered by companies such as GoodRx, SingleCare, or America’s Pharmacy.

• Try a variety of free things you can do to stay healthier. Take a walk, ride your bike, pick up a basketball game, or do free workout videos on YouTube.

10. Look to Save on Transportation

Owning a car and maintaining it can be costly. Here, some ways to lower expenses:

• Consider the alternatives to car ownership, such as public transportation, carpooling, walking, or riding a bike.

• When you drive, try to limit extraneous trips to reduce mileage and wear and tear on your car.

• Save money on gas by comparison shopping at your local fuel stations.

• See if you can lower your car insurance payment with good driver discounts or by skipping extras that you don’t really need, like car rental coverage or emergency roadside assistance.

11. Make the Most of Tax Breaks

When it comes time to file your taxes, make sure you’re taking advantage of whatever tax credits and deductions are offered for low-to-moderate-wage employees, such as the Earned Income Tax Credit, Child Tax Credit, or the Child and Dependent Care Credit. If you qualify, you can use the credits to help reduce the amount of taxes you owe and possibly increase your refund.

Recommended: What Tax Bracket Am I In?

12. Check Your Paycheck Withholding Amount

When you start a new job as a regular employee, your employer will have you fill out a W-4 form to determine how much tax money should be withheld from your pay and sent to the IRS for you. This is determined by what your tax filing status is (single or married, for example) and whether you have any dependents.

If you choose to have too much money taken from each paycheck, yes, you’ll get it back in the form of a tax refund, but it might be more useful to have that extra money during the year. You can change or update the withholding information on your W-4 form with your employer at any time. What’s more, you should do so if you experience any type of personal life change, such as marriage, divorce, or having a child.

13. Mind Your Utility Usage

Americans pay up to $613.00 a month for utility costs, according to a study from Move.org. This can add up to half a minimum wage-earner’s monthly paycheck.

Fortunately, there are many ways to lower your utility bills that can help with the challenge of how to live on minimum wage.

• Switch to using more energy-efficient light bulbs and you can save on average $225 a year, recommends the U.S. Department of Energy.

• Avoid phantom energy usage: Turn off or unplug any appliances not in use, even those sitting idle still drain some energy from the outlet.

• Save up to 10% on heat and cooling costs by setting your thermostat back seven to 10 degrees back from its normal setting for eight hours a day (such as when you are out at work).

• Switching to doing cold water washes can save on gas and electricity needed to heat water.

• If you need new appliances, opt for ENERGY STAR labeled machines that use less water and energy than standard ones.

• Get rid of any extra cable channels you don’t watch or downsize to a more basic plan.

• If you’re having trouble making payments, call your utility companies and see if you can negotiate rates or be put on a financial assistance payment plan.

14. Take advantage of any employer-sponsored benefits

Make sure you use any plans your employer offers, such as health insurance, retirement accounts like a 401(k), daycare services, or paid time off. These things can be priceless to any employee but especially if you’re surviving on minimum-wage.

15. Look for Cheap or No Cost Things to do

Living on a low-income salary doesn’t mean you have to sit home and give up on fun. But instead of pricey entertainment and eating out, consider these ideas.

• Check to see if any museums have a day where admission is free.

• Grab a slice of pizza with a friend for a cheapie lunch.

• Take a walk or bike ride; visit the library to check out free books and DVDs.

• Host a potluck gathering with friends.

16. Check Out Your Local “Buy Nothing” Groups

Neighborhood “buy nothing” groups, where people post things they want to give away, have become popular. These community networks can be a great way to get clothing, food, toys, appliances, and furniture absolutely free.

Not sure where to start? Visit BuyNothingProject.org or search Facebook to see if there’s a buy nothing group near you.

Recommended: 15 Creative Ways to Save Money

17. Be Kind to Yourself

Living on a minimum wage income can be a constant source of anxiety and stress. But think about thriving rather than just surviving on minimum wage. Be sure to practice self-care. There are lots of low-cost or free ways to reward yourself, from camping out to treating yourself to a fancy coffee to finding free live music in your area.

The Importance of Having a Savings Account

When you’re living paycheck to paycheck, saving money can feel like an impossibility. But opening a high APY savings account is a wise move. It’s a place where your money can securely grow over time, thanks to the interest it earns. It’s also a place that may be less tempting to tap into than your checking account, and it’s less risky than, say, investing in the stock market.

You can save for a specific financial goal, such as moving to a bigger apartment, or let it build as a nest egg for your retirement. Another reason it’s important to have some savings? You need an emergency fund for life’s unexpected and expensive moments, such as having a sick pet, needing a car repair, or suddenly losing your job.

Financial experts generally advise having at least three to six months’ worth of living expenses socked away. This cash can help prevent your using credit cards or money in your checking account slated for bills when an urgent need crops up.

Can You Open a Bank Account While Earning Minimum Wage?

Yes. You don’t have to have a high-paying job in order to open a bank account. Anyone in the U.S. who is 18 years old or older can open a bank account on their own, and that includes people who are unemployed or have no income at all.

It’s important to know that many traditional banks require you to make a minimum deposit when opening a bank account, which can be anywhere between $25 and $100. However, some banks, especially online ones, will allow you to open an account with no minimum balance required.

What to Look for in a Bank on a Minimum Wage Salary

If you earn a minimum wage, you’ll likely want a bank that doesn’t have a lot of hurdles to opening an account or charge a lot of fees. Look for these features:

• No extra fees: Some banks tack on extra fees for different reasons, such as using an ATM not in their network, overdraft fees for having to cover for insufficient funds, or a monthly maintenance or service fee. Look for a bank that doesn’t charge these fees.

• Interest-bearing account: A bank account that allows you to earn money on your deposits can only help your money grow. Many banks don’t pay interest on checking funds, or pay a sliver of a percentage on savings. Shop around for a better annual percentage yield (APY).

• No monthly minimum balance requirements: Many banks charge a monthly fee if you don’t keep a minimum balance in your account. Search for one without any rules on how much money you’re required to have in there.

• Low-to-no minimum deposit requirements: You may find some banks have a minimum amount of money you have to deposit in order to open an account. It could be as low as $10. However, you can also find banks that don’t require any deposit at all to start an account.

Banking with SoFi

People who live on a minimum-wage salary can benefit from creating and sticking to a budget, finding ways to cut costs, knowing about financial assistance programs, and finding a trusted online bank offering zero account fees, no balance or deposit minimums, and no service charges.

Banking with SoFi can help your money grow, whether you’re earning a lot or a little. When you open an online bank account with direct deposit, you’ll earn a competitive APY, have no monthly minimum balance requirements, and pay no account fees. Another plus? Qualifying accounts get paycheck access 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 minimum wage a liveable salary?

It can be, depending on where you live, your expenses, and how much of a minimum wage you’re earning. Many states, cities, and even companies offer a higher minimum wage than the federal wage of $7.25, making it easier for people to survive. That said, in some parts of the country, you would have to work almost two full-time minimum wage jobs just to afford a one-bedroom rental.

What are some tips for lowering expenses when earning minimum wage?

Housing, transportation, and food are the biggest expenses for the average American household. Some ways you can lower these costs is downsizing your housing situation or getting a roommate, limiting restaurant meals, cutting grocery costs, and opting for public transportation. In addition, it can be worthwhile to research local and federal programs that can help you lower expenses and get more for your money, from food stamps to Medicaid.

Can you open a bank account when earning minimum wage?

Yes, you can, but it’s wise to shop around for a bank that doesn’t charge any excess fees or require a monthly minimum balance requirement. Also look for ones that pay a competitive APY on your savings and possibly your checking balance as well.

Photo credit: iStock/AsiaVision

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

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

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

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

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

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

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

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

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.

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.

SOBK0123016

What to Do When You’re Running Out of Money

Reasons for Running Out of Money

Spending Too Much on Fixed Expenses

Spending Too Much on Living Expenses

Spending Too Much on Discretionary Purchases

Not Earning Enough

Get up to $300 when you bank with SoFi.

Tips for When You’re Running Out of Money

Create a Budget That Fits Your Needs

Pay Your Most Important Bills

Spend Money on Essentials Only

Limit Borrowing and Taking Out Loans

Use Credit Cards Sparingly

Make Time to Make Extra Income

Look at Government Benefits

Downsize When Possible

Sell Items You Don’t Need

Take Care of Yourself

Managing Finances with SoFi

FAQ

What options are available if I can’t afford to pay my bills?

Which budgeting methods are helpful for people that are running out of money?

Should I contribute to my retirement fund if I don’t have the money?

Checking Account Definition and Explanation

What Is a Checking Account?

Get up to $300 when you bank with SoFi.

How Do Checking Accounts Work?

5 Types of Checking Accounts

Traditional Checking

Interest Checking

Student or Teen Checking

Senior Checking

Second Chance Checking

Pros and Cons of a Checking Account

Checking Accounts vs. Debit Cards

Using a Checking Account

Overdraft Fees

Autopay

Direct Deposit

Service Charges

ATMs

Interest

4 Steps to Opening a Checking Account

1. Review Your Options

2. Gather Relevant Documentation

3. Fill out the Application

4. Make Your First Deposit

Can You Be Denied a Checking Account?

Checking vs Savings Accounts

Unlimited Withdrawals

Use of Debit Cards

Interest Rates

Creating a Checking Account With SoFi

FAQ

WWhat is the difference between a savings and checking account?

Is a debit card a checking account?

Is it OK to save money in a checking account?

Is there a minimum credit score for a checking account?

What is the difference between a checking account and current account?

14 Side Hustles for Couples Who Want to Make Extra Income

Benefits of a Side Hustle

Get up to $300 when you bank with SoFi.

14 Side Hustles for Couples

1. Investing in Real Estate

2. Reselling Items

3. Pet-Sitting

4. Rent Out Your Car

5. Cleaning and Home Improvement

6. Babysitting

7. Starting a Food Truck

8. Blogging

9. Becoming Virtual Assistants

10. Delivering Items to People

11. Renting Your Home Out to Others

12. Charging Public Scooters

13. Social Media Monetizing

14. Offering Lessons

The Takeaway

FAQ

Is it beneficial to have a side hustle with your significant other?

8. Work Towards Reducing Your Debt

Student Loan
Refinancing

Personal
Loans

Online
Investments