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Using a goal-based investing strategy means to focus more on specific outcomes related to an individual’s goals, rather than trying to outperform the market or certain market benchmarks. Investment goals will and do vary from investor to investor, so a goal-based investing approach will vary as well – the specifics will all depend on an investor’s individual goals.

If goal-based investing sounds appealing, learning the basics does amount to a big lift. Read on to learn what you need to know to piece together a goal-based investment strategy.

What Is Goals-Based Investing?

Goal-based investing, also known as goals-driven investing, is exactly what it sounds like; it’s an investment approach focused on your financial goals, rather than on market benchmarks.

Traditionally, investment strategy focuses on portfolio returns and measuring risk tolerance, or, how much risk you want in your investments. Those factors would then determine your investment strategy and portfolio makeup. Investments can make money in a number of different ways, including yielding interest or dividends which translate to earnings for the investor.

What you choose to invest in, and how much, is known as your asset allocation. And your asset allocation is determined by what you want out of your investment returns and your investment timeline.

For example, your investment strategy might be different if you’re going to retire in five years compared to someone who plans to retire in 25 years. Goals-based investing, by contrast, measures your portfolio against your goals. That allows you to plan for different goals with different investment strategies.


💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.

Crafting and Implementing a Goal-Based Investment Strategy

The key to goal-based investing is figuring out short-term and long-term financial goals.

Identifying Financial Goals and Assessing Risks

In the short term, goals could include saving for a vacation or a wedding; something like a down payment on a house might be a medium-term goal; and setting aside money for retirement — whatever kind of retirement you envision — is perhaps the longest-term goal.

Some common financial goals include: saving up an emergency fund; accumulating enough for a large purchase, like a car or a trip; paying for your kids’ colleges; putting a down payment on a house; caring for elderly parents and other loved ones; and planning for retirement. These all require different strategies and different timelines.

The Process: Discover, Advise, Implement, and Track

The first step in developing your goals and implementing them into a goal-based investment strategy is to take a realistic look at your current financial situation. Talking to a financial professional or advisor may help you refine and clarify your financial objectives. Then, create targets and separate accounts for your various goals.

From there, you’ll want to actually implement your strategy as they align with your goals. That likely includes actually figuring out the investment strategy for each of your investment accounts. For example, you might have a different investment strategy for savings you’re going to use in five years, versus your retirement savings that you’re going to use in 20 years.

Tracking is the final item on the list – you’ll want to keep an eye on your accounts and make sure that you stay on track with your goals, or change gears when needed.

Practical Aspects of Goal-Based Investing

Goal-based investing has some practical advantages, such as that you can adapt your investment strategy to meet your actual needs. Many households have far more goals than just retiring — and have not, historically, had a way to plan for them. The other benefit of goals-based investing is a bit more psychological.

A number of recent studies and research also suggest goals-based investing can have a behavioral impact on how you act—including, how invested you are in your investments and how emotionally you react to market fluctuations. Having a goal helps you focus your efforts. But where to focus them?

Typical Goals and Associated Risks

Some typical investing goals include retirement, a child’s education fund, or even a vacation or new car – there really isn’t a limit. Some people may simply want to accrue a massive amount of money in a retirement account, like $1 million. For some people, that’s doable – given enough time, resources, and fortunate market swings.

But each of those goals has its own risks. For instance, investing to try and accrue enough money to retire likely involves a long-term strategy, and an aggressive one. That may mean investing in riskier assets that are more volatile. Alternatively, investing with the goal of accruing enough money to take a vacation – in three years – may mean using a less-risky strategy, and investing in different types of stocks, bonds, or other securities.

Bucketing Goals into Broad Categories

Many, if not most investors will likely have many goals. As discussed, those can include retirement (a long-term goal), with vacations, tuition, or other goals that are shorter-term. For some investors, it may be helpful to mentally “bucket” those goals into different categories to help reach them.

For example, it may be helpful for some investors to group their shorter-term goals together, and utilize a higher-risk, higher-potential-reward strategy to try and reach them sooner. They could use a less-risky approach to their longer-term goals, such as retirement or funding a child’s education.

Goal-Based Investing with Professional Guidance

As discussed, some investors may find developing a goal-based investing approach to be easier with some professional guidance.

Working with Financial Advisors for Goal-Based Planning

Investors may opt to work with a financial professional for any number of reasons, and developing some goals and implementing those goals into an investing plan could easily be one of them. There are financial professionals out there who specialize in goal-based planning approaches, too.

Effectively, working with a professional to develop a strategy would likely involve identifying or tagging the specific goals or objectives an investor is trying to reach, and then creating a specialized investing plan or roadmap to get them there. Again, the specifics of such will depend on an individual investor, but in general, investors could probably expect some introspection into their hopes for the future, and some discussion as to how, specifically, to achieve those hopes.

Evaluating and Adjusting Your Investment Strategy

Many investors will implement a strategy and then need to tweak or adjust it as they go along – the market isn’t static, after all, and things change. As such, it’s important to be ready to evaluate and adjust your strategy over time.

Keeping Your Investment Plan Up to Date

While the market will see its ups and downs over time, other things will change, too. The economy will expand and contract, investors may have different jobs and income levels, and interest rates may change, too. This can all have an effect on your investment plan, and may require changes.

An investor can do those with the helping hand of a professional, of course, but the point is that a static plan likely won’t be the most efficient in a dynamic world.

Adapting to Changes in Goals and Market Conditions

Goals-based investing also gives you more buy-in as an investor, and more of a say in the process. However, the danger of goals-based investing is you might not fully know what your goals are — or, more likely, what your goals will be down the road. Researchers have found that we often fail to predict how much we will change in the next decade, and in turn, that can have a distorting effect on our goals and how we plan for them.

For example, right now, you might think you want a low-key retirement in a rural woodsy cabin, but what happens if you only invest enough to purchase a small cheap plot of land and then you change your mind in 20 years and need more money? That’s also why you want to re-evaluate your goals regularly and change your investing strategy as appropriate.

Goal-Based Investing Examples

Here’s a simple example of a goal-based investing example: Let’s say an investor’s goal is to accrue enough money to purchase a house. So, they’re aiming for a 20% down payment on a $500,000 home – a total of $100,000. And, they want to start with an initial investment of $50,000, and reach their goal within three years.

Accordingly, the aim is to return 100% over a three-year period. With that goal in mind, the next step is to implement a strategy that has the best possibility of attaining that goal. That means choosing how to deploy or allocate the initial investment to try and give themselves the best chance of reaching their goal.

Again, it may be helpful to have some professional guidance, but an investor may look at investing in specific ETFs or mutual funds, and certain stocks – there’ll be risks to consider, and a bit of tea-leaf reading to try and sense where the market is going. It won’t be easy, but it’s possible to reach that goal.

Similar strategies could be enacted for other goals, too, like building an emergency fund, or retiring. But the nuts and bolts of it all will depend on the individual investor.

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

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

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Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

Student loans are mounting for college and graduate students, with engineering majors being no exception. In fact, for the 2020-21 school year, 54% of bachelor’s degree holders left school with student loans—with a debt level of $29,100, on average. Nationally, Americans have $1.6 trillion in student debt combined. Given that engineering is the fourth most common major, many of those shouldering student debt are engineering students.

Since careers in engineering can come with salaries well into the six-figures, some students might consider taking on student loans in order to follow all the way through to a master’s degree in that area. But getting there isn’t cheap. The typical engineering grad school student can expect to spend upwards of $50,000 or more for their masters degree. And that doesn’t include possible balances carried over from their undergrad years. The average student debt for engineering undergrad students varies, but when you factor in graduate school and undergraduate debt, that could mean a substantial amount of student debt.

If you’re studying to be an engineer, you may assume there aren’t many loan assistance programs out there for you, and it’s true that there are no federal forgiveness programs specifically for engineers. But you do have options to save money on your loans, whether through public service loan forgiveness, income-driven repayment plans, state programs aimed at professionals in your field, or student loan refinancing. Here, you can learn about some of the opportunities that exist.

Federal Loan Repayment Options

It’s true that many engineering majors go on to lucrative careers. But that doesn’t mean you necessarily earn a high salary right away. And you may choose to apply your skills at a government agency or nonprofit, or work in a different field altogether, earning less than expected.

The federal government offers four different repayment plans that cap your monthly payments at a percentage of your income in order to make your student loans affordable. Once you make the minimum number of payments required, the balance on your loans is eligible to be forgiven. Which plans you’re eligible for will depend on the types of federal student loans you have and when you borrowed them:

•  The Saving on a Valuable Education (SAVE) Plan was created to replace REPAYE. Payments on SAVE are capped at 10% of your discretionary income (in July 2024, that threshold will be 5% for undergraduate loans). Certain borrowers will have their balances forgiven after 10 years, while others will need to make payments for up to 20-25 years before receiving forgiveness. Only Direct Loans are eligible, excluding Direct PLUS loans to parents.

•  The Pay As You Earn (PAYE) plan also limits payments to 10% of your discretionary income. The balance can be forgiven after 20 years of payments. Again, only Direct Loans are eligible, except Direct PLUS loans to parents.

•  Under the Income-Based Repayment Plan (IBR Plan), your payments are limited to 10% of your discretionary income if you borrowed on or after July 1, 2014, or 15% if you borrowed before that date. In the former case, the debt can be forgiven after 20 years; in the latter, it can be wiped away after 25 years. Direct Loans are eligible (except Direct PLUS loans to parents), as well as most loans under the earlier Federal Family Education Loan Program.

•  The Income-Contingent Repayment Plan (ICR Plan) limits payments to 20% of discretionary income in most cases, and the rest can be forgiven after 25 years. Only Direct Loans are eligible, but this is the only program that also allows Direct PLUS loans to parents to qualify, as long as they are consolidated into a Direct Consolidation Loan.

If you aren’t sure which plan is best for you, ask your loan servicer for guidance. You can apply to enroll in an IDR program by filling out an Income-Driven Repayment Plan Request online or by asking your loan servicer for a paper form.

Taking advantage of programs that base your payment on your income can potentially make your monthly payment affordable in the long term if you don’t expect your salary to go up much.

Note: the amount forgiven under an income-driven repayment plan may be considered taxable income.


💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

Public Service Loan Forgiveness

There’s another way to take advantage of student loan forgiveness for engineers. If you work full-time for a government agency, non-profit, or certain other employers that serve the public interest, your federal loans might qualify for Public Service Loan Forgiveness. Those organizations include the military, as well as public safety, emergency management, and public health groups.

Under this program, once you make 120 qualifying payments (the equivalent of 10 years), the balance on your loans can be eligible for forgiveness. Make sure to submit an Employment Certification form annually or when you switch jobs. Note that only Direct Loans qualify for the program.

If you have older loans, you may be able to make them eligible by consolidating them through a Direct Consolidation Loan. You need to be enrolled in an income-driven repayment plan if you want to apply for Public Service Loan Forgiveness.

State Loan Assistance Programs for Engineers

Engineering is an in-demand profession. The U.S. Bureau of Labor Statistics estimates that 140,000 new engineering jobs will be created between 2016 and 2026. The fastest growing sub-specialties are civil, mechanical, and industrial engineering.

With this in mind, a couple of states have created programs that provide student loan assistance to people in the Science, Technology, Engineering, and Math (STEM) fields as incentive for professionals to reside there and pursue jobs in these areas.

For example, the Rhode Island Wavemaker Fellowship provides funds to college graduates who are pursuing a STEM-related career or starting a business in Rhode Island. Qualifying individuals receive a refundable tax credit certificate worth the value of their annual student loan burden for up to four years. Fellows are also invited to participate in various personal and professional programs and events.

The New Jersey STEM Loan Redemption Program incentivizes professionals to build careers in certain high-growth STEM fields in New Jersey. Program participants receive up to $2,000 to cover eligible student loan expenses each year, for up to four years, up to a maximum of $8,000. Half of each payment is funded by the New Jersey Higher Education Student Assistance Authority (HESAA), and the balance is matched by an equal contribution from the participant’s current employer.

When looking for student loan relief, steer clear of any scams promising fast, easy solutions at a hefty cost. Many of these companies end up filling out paperwork you could’ve completed yourself for free, or providing no services. Focus on official programs administered by federal or state governments, or by legitimate foundations or employers.


💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.

Look to Your Employer

With employers looking to retain talent, some companies offer loan assistance for engineers. For example, PriceWaterhouseCoopers, the professional services firm, pays $1,200 in student loans for associates and senior associates, for up to six years. Its employees include software engineers, data engineers, cloud security engineers, DevOps engineers, and more.

Abbott, a health technology company, assists with student loans in a slightly more indirect way. For full-time and part-time workers who qualify for the company’s 401(k) plan, and who are paying at least 2% of their salary toward student loans, the company will deposit its 5% match in the 401(k) plan even if the employee doesn’t contribute anything.

This way, it helps employees avoid the tradeoff between paying off loans and saving for retirement. Abbott hires for roles like engineering director, senior manufacturing process engineer, mechanical engineer, and more.

These are just a few examples of companies that offer loan repayment help to engineers. It’s worth keeping a lookout for this benefit throughout your job search.

The Benefits of Student Loan Refinancing

The above options may not be enough: Perhaps you don’t live in the right place or work for the right employer, or maybe you earn too much for an income based plan to make sense. If you don’t qualify for loan assistance, or even if you do have some benefits but not all of your loans are covered, refinancing your student loans can be a good way to potentially save money.

You can refinance federal loans or private loans with a variety of lenders and other financial institutions, often nabbing a lower interest rate or reduced monthly payment in the process. (You may pay more interest over the life of the loan if you refinance with an extended term.) And you may get a better rate if you have a good credit score, earn a decent income, and have a solid employment history. It takes just a couple of minutes to see if you pre-qualify online.

Engineer a Better Future

Student loans represent an investment in a solid career path, but they can be a burden even for people in thriving professions. If you’re an engineer, check out what options are available to reduce your student loans, whether that’s loan forgiveness, assistance from your state or employer, or student loan refinancing.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

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

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If you’re exploring career options, pharmacy might have popped up on your radar — and for good reason. Not only can pharmacists command a good salary, they also have job security, as the pharmaceutical industry is one that won’t vanish any time soon.

That said, how much does a pharmacist make? Is it worth all the trouble of going through pharmacy school to become one? Let’s find out.

What Are Pharmacists?

You’ve likely picked up a prescription or two at a pharmacy, but maybe you didn’t give any thought to the person behind the counter. This individual is your local pharmacist, and it’s their job to prepare and dispense prescription medications.

Pharmacist Job Responsibility Examples

In addition to doling out prescription drugs, pharmacists also consult with patients, provide instructions for how to take medications, and help patients find low-cost medications. Some also give health screenings and immunizations.

Keep in mind, a pharmacist often needs to be outgoing, since their work involves speaking with patients throughout the day. If that’s not your personality, you may want to look into jobs for introverts.

💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

How Much Is a Starting Pharmacist Salary?

As with most professions, pharmacists tend to earn more money as they gain more experience. But what is a good entry-level salary for pharmacists?

Pharmacists with less than a year of experience generally earn, on average, about $54 per hour. That’s $112,320 per year.

Of course, how much you actually can earn depends on where you live, what your duties are, and whether you work for an independent pharmacy or a chain. It can also help to research the highest-paying jobs by state.

Recommended: Is a $100,000 Salary Good?

What Is the Average Salary for a Pharmacist?

Now that you see what starting salaries are for pharmacists, let’s address the next question: How much money does a more experienced pharmacist make?

Generally speaking, pharmacists are usually paid by the hour. A pharmacist with 10 years of experience earns an average of $67.05 per hour. That adds up to $139,464 per year.

What Is the Average Pharmacist Salary by State for 2023?

The amount you make will depend on where you live, among other factors. Here’s a look at the average pharmacist salaries by state, from highest to lowest.

State	Salary
California	$161,597
Oregon	$155,710
Washington	$149,466
New Hampshire	$141,041
Nevada	$140,869
Maine	$139,517
Vermont	$137,658
Delaware	$136,276
Maryland	$135,894
Connecticut	$134,175
Alaska	$134,044
Massachusetts	$131,978
Rhode Island	$131,960
New Jersey	$131,698
New York	$131,594
Pennsylvania	$129,724
New Mexico	$129,145
Wisconsin	$128,918
Minnesota	$128,502
Virginia	$128,380
Hawaii	$128,245
Arizona	$126,174
Idaho	$125,760
North Carolina	$125,068
Michigan	$124,768
Colorado	$120,986
Illinois	$120,887
Kansas	$118,122
Ohio	$117,573
Kentucky	$117,448
Indiana	$117,338
Missouri	$116,513
Nebraska	$116,366
Utah	$116,009
South Carolina	$115,570
West Virginia	$115,339
Texas	$115,089
North Dakota	$114,359
Georgia	$114,118
Tennessee	$112,879
Wyoming	$112,326
Montana	$111,924
Iowa	$110,405
Florida	$109,106
Alabama	$106,271
Mississippi	$105,677
Louisiana	$102,542
South Dakota	$100,246
Oklahoma	$98,951
Arkansas	$89,660

Source: Zippia

Recommended: Pros and Cons of Raising the Minimum Wage

Pharmacist Job Considerations for Pay & Benefits

Where you live is one factor that can determine how much you earn as a pharmacist. Your on-the-job responsibilities may also play a role. For example, there are different job titles, and each has its own set of responsibilities, requirements, and salary ranges. Examples include:

•   Staff pharmacist

•   Pharmacy specialist

•   Clinical pharmacist

•   Pharmacy manager

•   Director of pharmacy

Some pharmacists may have roles and responsibilities beyond filling prescriptions, such as offering immunizations and health screenings. Some may be in charge of hiring and managing other employees. Some may work in traditional pharmacies, while others may work for companies focusing on chemotherapy, nuclear pharmacy, or long-term care.

Recommended: 25 High-Paying Trade Jobs in Demand

Pros and Cons of Pharmacist Salary

While being a pharmacist can be a rewarding job, there are potential drawbacks to keep in mind. Let’s look at some pros and cons.

Pros of Being a Pharmacist

Naturally, the high salary pharmacists tend to command may be one reason to consider this career path. Because many pharmacists get paid by the hour, they’ll be compensated fairly for their time even if they work more than 40 hours a week.

Another perk is that you may have a flexible schedule that allows you to work part-time or during certain hours. There could even be opportunities to work remotely, which may be useful if you’re working in a rural area.

You might also be able to open your own pharmacy instead of working for someone else. This brings freedom and flexibility to you as a business owner.

Finally, you’ll be a valuable member of your community, since it’s your job to help people on their path to wellness.

Cons of Becoming a Pharmacist

If becoming a pharmacist was easy, everyone would do it! For starters, you’ll need to have about six years of education after high school. And the cost of pharmacy school can range anywhere from $5,000 to $30,000 a year for an in-state public college, or $20,000 to $95,000 a year for a private school.

Depending on your financial situation, this could require you to tap into savings or take out student loans. (Creating a budget while you’re in school or just starting out can help you keep track of where your money is going. A money tracker app can help make the job easier.)

Another possible drawback? Some pharmacies may not guarantee a certain number of hours a week, and in that case, being paid hourly may not come with the big paycheck you’d expect.

Also keep in mind that some pharmacists work long hours, which can have a negative impact on your health and mental wellbeing.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

If you’re looking for a rewarding and potentially lucrative job, becoming a pharmacist might fit the bill. You’ll help your local community get healthier, and depending on where you live and your level of experience, you could earn competitive pay, too.

FAQ

What is the highest pharmacist salary?

The state where pharmacists tend to earn the most is California. The average annual income of a pharmacist there is $161,597.

Is it hard to be hired as a pharmacist?

Becoming a pharmacist requires six years of education after high school. The workload is challenging, and pharmacies looking to hire generally have high expectations of applicants.

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Photo credit: iStock/ADragan
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*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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

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

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When it comes to your money, the more you know, the better equipped you are to make informed financial decisions. One piece of your overall financial picture that you may want to understand is how much you’re “worth.” This information can help you understand where you are with your finances now and what you need to do to reach your goals for the future.

Before we look at a net worth growth calculator table that shows you how you compare against other people your age, let’s dive a bit deeper into what net worth is and why it’s important.

What Is Net Worth?

You may hear this term being batted around in conversations surrounding billionaires, but in reality, everyone has a net worth. It’s simply a total of all your assets minus any debts you have.

Those assets can include cash, real estate, intellectual property, and other items like jewelry, stocks, insurance policies, and bonds. The cash may come from a job you have or from unearned income, such as your Social Security payment

Having a lot of assets does not necessarily mean you have a high net worth, particularly if you also carry a lot of debt. For example, you may have a million-dollar mansion, but if you have debts of $500,000, your net worth dwindles rapidly.

💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

How Does a Net Worth Calculator Work?

There are many personal net worth calculators available online, though you don’t need one to calculate your net worth. Just take the total amount of all your assets and subtract the total amount of your liabilities:

Assets – liabilities = net worth

Some calculators will also factor in future growth so you can understand what your net worth will be in the future, as the value of your assets grows.

Recommended: What Is Disposable Income?

How to Calculate for Net Worth

As you can see, it’s fairly easy to calculate your net worth, though it may take time to gather the values of all your assets, such as the current value of a piece of high-end jewelry. But once you do, you can add up all your assets and then subtract your liabilities to calculate your net worth.

What Is the Average American Net Worth?

Knowing your own net worth is one thing, but where does it stand against other people in your age bracket? Generally, people see an increase in their net worth the older they get, and it can be helpful to use a net worth percentile calculator by age to see your percentile rank.

For example, if your net worth was $100,000, you would be in the 46.92 percentile for people between the ages of 18 to 100. The median net worth for this age bracket is $121,760.

Here’s the average net worth by different age groups, according to the most recent data available from the Federal Reserve.

Age	Average Net Worth
18-24	$112,104
25-29	$120,183
30-34	$258,075
35-39	$501,295
40-44	$590,710
45-49	$781,936
50-54	$1,132,497
55-59	$1,441,987
60-64	$1,675,294
65-69	$1,836,884
70-74	$1,714,085
75-79	$1,629,275
80+	$1,611,984

Source: Federal Reserve’s 2022 Survey of Consumer Finances

Why Is Net Worth Important?

Calculating your net worth is smart because it can help you understand where you’re strong financially (maybe you have little debt) and where you’re weak (maybe you’ve overextended your credit to buy your home).

It may also help you make plans for the future. For example, if your net worth is high, you might explore strategies for reducing taxable income, such as contributing more to a tax-deductible retirement account. And if your net worth isn’t where you’d like it, you can take steps to improve it.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

How to Increase Your Net Worth

If you’ve used a liquid net worth calculator, or compared your net worth to the table above and don’t feel like your numbers are as high as you’d like them to be, you can do a few things to increase your net worth.

If your debt levels are high, you can increase your net worth by decreasing that debt. Get a plan for paying off credit cards, student loans, car loans, and home mortgages. Consider increasing the amount you pay on each slightly to shorten your repayment period and decrease the amount of interest you pay on these loans and credit cards.

Creating a budget is one way to keep tabs on your finances as you’re paying off debt. A money tracker app can help make the job easier.

If you don’t have an abnormally high amount of debt but want to increase your assets, you might explore making more money. If you’re still in the workforce and have the ability to make a career change, you might consider cultivating potential high-income skills that could help you command a higher salary.

If you’re retired, you could take on part-time flexible work.

Recommended: How to Negotiate Your Signing Bonus

Examples of Celebrity Net Worths

Not that you need to compare yourself to celebrities when it comes to net worth, but it can be fun to see how the other half lives. Keep in mind that while A-list celebrities often command millions of dollars for their work, they’re usually also smart with their money. They don’t typically blow their money on sports cars and mansions (though certainly some do). Many are financially responsible, investing in multiple income streams and spending responsibly.

Let’s look at the net worth of a few celebrities.

Reese Witherspoon

Reese Witherspoon didn’t limit her career to acting. She also founded a lifestyle brand called Draper James and a media brand called Hello Sunshine. Today her net worth is about $300 million.

J.K. Rowling

The well-known author of the Harry Potter books has an estimated net worth of $1 billion, and she’s the first author in history to reach this height. Before she was published, however, she struggled financially, which makes hers a true rags-to-riches story.

Jay-Z and Beyoncé

Superstar artists Jay-Z and Beyoncé reign supreme when it comes to net worth. Thanks to touring, albums, clothing lines, movies, endorsements, merchandise, and more, the couple’s combined net worth is $3 billion.

The Takeaway

You may not be able to match the likes of Jay-Z and Beyoncé when it comes to net worth, but knowing yours can help you make smart financial decisions for the future. To figure out your net worth, you can subtract the total amount of your liabilities from the total amount of your assets. You can also use a personal net worth calculator; some will even factor in future growth.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How do I calculate your net worth?

Net worth can be calculated by subtracting all your liabilities from your assets. In other words, subtract everything you owe (debts, loans, credit card debts) from everything you have (cash, property, real estate, jewelry, stocks).

What is a good net worth by age?

A “good” net worth depends on your financial goals and age. For example, the average net worth for 40-44 year-olds is $590,710. Yours may be higher or lower than this.

What net worth is considered rich?

According to a 2023 survey conducted by Charles Schwab, Americans need an average net worth of at least $2.2 million to feel wealthy. However, that amount varies based on where you live.

Photo credit: iStock/Kanatip Chulsomlee

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

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Raising a child could be one of the most rewarding experiences you’ll ever know, from watching your little one grow, seeing their interests take shape, and sharing all kinds of experiences with them, from baby’s first trip to the beach to high school graduation.

But there are practical matters to consider as well when a baby arrives, including paying for your child’s care. Those expenses start coming at you quickly after your little one is born. Daycare, for instance, can be an urgent expense. Currently, the average weekly cost of daycare is around $216, which is just over 17% of the median national household income.

Making ends meet can be a challenge for many families. Perhaps your budget was running smoothly but now you have to accommodate this expense. Or maybe you are wondering how you can move ahead with saving for a house when you’ll have less money to stash into savings. Read on to take a closer look at the kinds of daycare available and wise strategies for making ends meet.

Types of Daycare

Yes, there’s a considerable cost to raising a child, and daycare is part of that. It can allow you to continue to work or attend to other priorities and ensure your little one is well cared for.

That said, there are a number of different types of daycare, but one of the most important distinctions is the difference between home-based care and formal daycare programs.

Home-based Daycare

Home-based, or informal, care is typically cheaper than formal daycare options, but there can be some drawbacks so it’s important to thoroughly review your options.

Each state determines their own regulations for home-based daycares. Most require providers to meet a certain level of training in order to provide care. Before you select a home-based daycare, you can check the requirements and regulations on sites like this one at Childcare.gov or visit your state’s website. You can likely find the information you are seeking via the Office of Children and Family Services.

It’s likely that safety will be one of your top concerns. Check that childcare providers are fully licensed and credentialed. Since many of the home-based providers are run by a sole proprietor, you may get less oversight than at a formal facility. That is, the operator may be so small that it’s not required to be licensed.

Licensing, however, can be a very important factor. It ensures such things as:

•   Criminal background checks for the staff

•   Training in such matters as CPR, safe sleep habits for children who are young enough to be napping at daycare, and first aid

•   Proper sanitation

•   Emergency and safety preparations.

Ask about the care providers’ background and qualifications. It’s more likely that those working at formal daycare centers (more on those below) will have specialized training. For instance, the work could be a side job for a teacher.

If you do decide to go with home-based daycare, make sure to check the provider’s references carefully, even if they have the appropriate licenses. You can also talk to them about the schedule for children in their care and how they will work to stimulate your child’s learning so that they’re ready for preschool. Many parents or prospective parents may ask to visit and observe how the daycare operates.

Formal Daycare

When it comes to formal childcare programs, there are also a lot of different options. Some employers offer childcare programs on site; others are Montessori schools or affiliated with other educational institutions. There may be some that are operated as franchises in your area.

Their approaches will probably vary as well: Some formal daycares aim to provide a cozy, relaxed atmosphere, while others focus on early childhood education and skill-building.

It may be wise to tour a few different options, just to get a fuller picture of how your child will spend their day. You’ll want to see what the premises and caregivers are like and understand the flow of the day.

Often, the more additional services that a daycare provider offers, the more it will cost. For instance, if you are looking for a bilingual daycare, it will probably cost more than one in which just English is spoken, as the provider has to spend more time and energy hiring its staff. Also, the more personalized the care (as in, the lower the child-to-caregiver ratio), the more expensive it may be.


💡 Quick Tip: A low-interest personal loan from SoFi can help you consolidate your debts, lower your monthly payments, and get you out of debt sooner.

Paying for Daycare

When you start a family or expand it, the expenses can come at you in a flurry: doctor’s appointments, food, clothing, furniture, strollers, and so forth. That alone is enough to stretch your budget to the max. Add daycare to the mix, and your income can feel the pressure.

Here, some steps to help you afford childcare.

Retool Your Budget: The first thing you can do is cut back on other areas of your budget in order to free up money to put towards daycare costs. You might be able to lower your food costs, say, or have staycations for the next few years.

If you don’t have a budget or aren’t happy with how yours is working, consider the different budgeting methods available, and experiment to find one that’s the right fit.

You might also look into apps to help you monitor spending. Your financial institution, whether a traditional or online bank, may have tools to help you do this.

Save in a Dependent Care Account: If your employer provides you with a Flexible Spending Account (FSA), then you can put up to $5,000 in your account tax-free that can be used for daycare. Beware of over-contributing, however; anything you don’t use by the end of the year will be forfeited.

Check on State Money: Each state has a child care assistance program designed to help low-income parents pay for care for dependents under 13. This program is funded by the federal government. You might see if you qualify.

Use the Child Care Tax Credit: While it won’t help you pay for daycare upfront, you can get a refund on some of your daycare costs by applying for the Child Care Tax Credit. If you itemize your taxes, you can get a tax credit by including up to $3,000 in daycare expenses per year per child or $6,000 per family.

Look into a Loan: If all else fails and you can’t find the money to pay for daycare, you may consider borrowing a personal loan rather than putting your daycare expenses on a credit card. You’ll likely enjoy lower interest rates with a personal loan.

Recommended: Guide to Paying for Child Care While in School

The Takeaway

Finding the right childcare for your family is a personal choice. The main options are home-based or formal daycare. Regardless, you’ll have to balance your child’s needs with your budget and financial plan. There are options such as budgeting, taking tax credits, getting government assistance, or taking out a loan.

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

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

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Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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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.

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

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