Nov
28
2023

What Is Buy Now, Pay Later?

By | Budgeting & Goals, money | Comments Off on What Is Buy Now, Pay Later?

Buy now, pay later (or BNPL) is a kind of installment payment plan. It can give consumers the option of making a big purchase today and spreading out payments over subsequent weeks or months, possibly interest-free. You may find these services offered under such names as Afterpay, Affirm, or Klarna.

Many of the country’s largest retailers — including Saks Fifth Avenue, Target, Walmart, and Amazon — offer buy now, pay later services. This kind of short-term financing can be helpful for shoppers hoping to buy an item over time, but there are pros and cons to purchasing this way.

Here, take a closer look at BNPL, its benefits and drawbacks, and whether it’s a good option for you.

What Is a Buy Now, Pay Later Plan?

Buy now, pay later is a way of purchasing an item in which you pay it off over time. It’s similar to layaway, but you get to take possession of the item right away rather than wait until it’s fully paid off.

For instance, if you are buying a new refrigerator with all the bells and whistles, using BNPL means you can get the fridge delivered ASAP and pay it off over time. With layaway, you’d have to wait until your series of payments were made and then, and only then, would you get the appliance.

A couple of other important points to note:

•   BNPL can come with fees and interest, depending upon the particular program you use. In this way, it may be similar to using a credit card and not paying the full balance off at the end of the month.

•   Most buy now, pay later services run a soft credit check (which won’t affect your score) or no credit check at all. Since they don’t require strong credit, these plans can be an appealing option for consumers with a poor credit rating or no credit history.

•   Buy now, pay later services make money by charging interest and fees on delinquent payments. These lenders also typically charge the merchants fees. Retailers are often okay with this because these financing programs allow customers to spend more at their store, either in person or online.

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The Rise of BNPL Services

You may wonder how popular buy now, pay later services are? Currently, there are approximately 79 million Americans paying for merchandise this way, and research indicates that the percent of adults using this method has risen from 18% in summer of 2022 to 20% in summer 2023. The fact that one in five people in the US are paying by BNPL shows that this has become a popular option.

How Buy Now, Pay Later Works

If you are wondering how BNPL works, here’s an example. Say you want to buy a $300 Vitamix Blender, but you hesitate to fork over the entire purchase price upfront. When you click on one of these buy now, pay later apps or sign up at checkout, you can purchase and receive the item right away. You are usually able to break up the $300 into several (often four) equal, interest-free payments. Typically the first payment is due at checkout, and the remaining three are each due two weeks apart.

Process of BNPL

When opting for BNPL (a form of a short-term loan), you’ll likely be asked for some credentials, such as name, address, phone number, birthdate, and Social Security number. A soft credit check, which does not impact your credit check, is typically conducted to approve or reject your request to use these installment payments. If you get the green light, payments are typically deducted via your credit card, debit card, or bank account.

You will see this kind of BNPL option offered in various ways, whether you’re shopping for handmade jewelry on Etsy or booking a vacation.

BNPL and Fees

Short-term BNPL programs often don’t involve the consumer paying any interest or fees over, say, four payments. However, with longer-term BNPLs, interest may be charged, potentially at a high rate. In addition, if you don’t make payments on time, you can be hit with fees.

Common BNPL Providers

If you’re curious about buy now, pay later providers, here are some of the names you may see:

•   Addi

•   Affirm

•   Afterpay

•   Apple

•   Klarna

•   Laybuy

•   Limepay

•   Mastercard

•   PayPal

•   Revolut

•   Splitit

•   Sunbit

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Advantages of Buy Now, Pay Later

Now that you know what is buy now, pay later purchasing, here’s a closer look at the pros of this kind of payment service.

Enhancing Purchasing Power

Buy now, pay later can allow you to buy something pricey without paying for it upfront. You get to take the item home and have the subsequent payments paid via credit card, debit card, or bank account. Unlike layaway plans, you don’t have to wait until the item is fully paid for before taking possession.

Saving Money

Some BNPL programs may offer consumers the opportunity to save on a major purchase. For instance, if you were to buy a new couch with BNPL and pay it off over four months, drawing funds directly from your bank account, you might fare better financially than if you bought it with your credit card and didn’t pay your balance in full. In this scenario, BNPL could help you avoid paying interest on your credit card.

By reading the fine print of a BNPL offer, you may be able to avoid interest and late fees, depending on which service you use.

Quick Approval

If you apply for BNPL, you typically don’t need to wait more than a few seconds to be approved. This can be considerably quicker than seeking a line of credit via other means.

Recommended: Can You Build Credit With a Debit Card?

Considerations Before Using BNPL

Now that you know about the upsides of BNPL services, dig into the potential drawbacks.

Potential for Overspending

This type of payment plan can be so appealing, it may entice people who are already struggling to pay their bills to splurge. It can be quick to apply and be approved, and consumers may overlook the possibility of being charged interest and fees (or even being put in for collection) if payments are late.

Paying Interest and Fees

If a BNPL plan is paid off as planned, the shopper may not incur any interest or fees. But if funds aren’t paid on time or a longer-term plan is chosen, an interest rate of up to 36% may be assessed. Late fees can run anywhere from one dollar to 25% of the purchase price. As you see, it can wind up being a very expensive proposition if you cannot stick to the original schedule of paying for your item.

BNPL and Your Credit Score

The other factor to consider is that BNPL may mean that you miss the opportunity to build your credit score. For instance, if you make on-time payments with a credit card, it can contribute to building your score. Those payments are reported to the credit bureaus, but many BNPL providers do not update the bureaus about funds they receive on-time.

Possible Loss of Rewards

You can earn credit card rewards and cash back if you use your plastic to pay for a purchase. When you pay via a BNPL service, you miss out on that opportunity.

Comparing BNPL With Other Payment Options

If you’re contemplating using BNPL on a major purchase, take a moment to compare options.

Credit Cards vs BNPL

As noted above, BNPL plans may be able to help you avoid credit card interest fees if you pay the amount due on time and don’t wind up adding it to the balance on your plastic.

However, these plans could encourage you to overspend and possibly add to your credit card debt. In addition, if you pay your BNPL bills on time, you may be missing out on the opportunity to build your credit score. You may also not receive the cash back or other rewards that could be coming your way when you use your credit card.

Personal Loans vs BNPL

If you are making a single big purchase and feel confident you can stick with the terms of paying off a buy now, pay later plan, that may be a fine option.

However, if you are, say, redoing a kitchen and need to replace every major appliance, you may not want to wade into that many BNPL payments. If you can’t wait to save the money from your salary either, you might want to look into a personal loan, which can offer a more affordable interest rate vs. credit cards, and help you pay for what you need.

Worth noting that you will likely have a hard credit check vs. a soft pull if you go the personal loan route.

Is BNPL Right for You?

To decide if a BNPL is right for you, consider the following:

•   Is a buy now, pay later offer encouraging you to buy something you really cannot afford right now?

•   Do you feel confident you can fulfill the schedule of BNPL payments, avoiding interest and fees?

•   Do you really want or need to take the item home now vs. later via layaway?

•   Is it a concern that you will probably miss out on the opportunity to build your credit by paying with a credit card?

•   Are you comfortable with using BNPL vs. a credit card and thereby not reaping any of the rewards you might get via using plastic?

The Takeaway

Buy now, pay later plans can allow people to make purchases that they might not be able to easily afford otherwise. If you purchase an item this way, you will be spreading your payments out over a number of weeks or even months. This can be an attractive option; most of the time, there will be no interest.

However, your installment payments won’t build your credit history, and if you miss payments, you’ll likely be stuck with fees and may damage your credit score.

Another way to afford a major purchase is to simply save up in advance by putting some money aside each month in your bank account until you have enough to pay in full.

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.

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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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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28
2023
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How to Stick to a Budget: 6 Ways to Stay on Track

By | Budgeting & Goals | No Comments

Building a budget isn’t hard, but it does require time and effort. And once it’s completed, it’s something you should be proud of. Yet, many people have trouble sticking to a budget, essentially throwing all their work out the window as a result of impulse buys, unrealistic expectations, or a lack of discipline. Here’s a look at some of the reasons budgets can fail and tips for making a budget you can stick to.

Understanding the Importance of Budgeting

A budget allows you to organize your money according to your priorities and plays a key role in achieving financial goals. Those goals can be anything from taking a vacation and buying a new car to funding future education and retirement. With a well-crafted budget, you can work on multiple goals at the same time.

A budget is also one of the top tools to help you stay out of debt or rein in any outstanding debt you may already have. In addition, having a budget can help simplify your spending decisions, making it easier to determine which purchases are worth making and which you don’t actually need.

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Overcoming Common Budgeting Challenges

Budgeting usually begins with the best of intentions. However, it’s all too easy to get sidetracked. Temptations and unexpected expenses can cause a budget to go off the rails, leading to overspending, missed bill payments, and debt. Here’s a look at some of the most common reasons why budgets fail.

Lack of Discipline

Though people often get excited about putting their financial house in order, it can be easy to slip back into the lifestyle they led before putting a budget in place. If you already live within your means, that might be okay. But if you’re a habitual overspender, it’s important to recognize that those behaviors have to change to keep your budget on track.

Unrealistic Expectations

Many people think budgeting requires drastic measures. For example, if you’ve been living beyond your means and want to rein in your spending, you may decide you must go from spending more than you make to living off half your income. But that may not be a viable option, at least at first. When you fail, you might give up on budgeting altogether. It’s important to set achievable expectations.

Discounting Irregular Expenses

While building your budget, you probably remember to factor in regular expenses like your monthly electricity bill and grocery shopping. But it can be easy to forget to include expenses that occur on a more infrequent schedule, such as quarterly or annually.

Annual membership fees, homeowners’ association fees, and kids’ camp tuition may come up only once a year, and that can make them easy to forget. Failing to account for these costs can throw your budget off once they come due and you may have to scramble to find the cash to pay them. You can try to account for these expenses by saving a little each month to help cover them.

Recommended: Determining the Right Spending/Budgeting Categories

Getting Lost in the Weeds

While it’s important to take a thorough accounting of your expenses when making a budget, it is possible to go overboard with so many line items that can make your head spin.

A budget with too many line items can be tedious to update and track. It can be more productive to have broad line items that encompass a wider array of expenses, so if you spend a bit too much on one small item, it won’t make much difference.

Your Social Circle

The people you surround yourself with, including your friends, family, and partner, can have a huge impact on your spending. If these people tend to be big spenders, you might be tempted to spend when you’re around them. It would be a shame if one big night on the town threw off a whole month’s worth of budgeting plans.

If you’re saving for a specific goal, like putting a down payment on a home, you might let your friends know that you’re trying to stick to a budget, so maybe they won’t tempt you with expensive sushi dinners or weekends in Vegas. In their excitement to help you achieve your goal, they may be willing to trade nights at the bar for cheaper activities like game nights in.

Creating a Realistic Budget

One of the most important tips for how to stick to a budget is to start with a realistic budget — or, in other words, a budget that is easy to stick with. These three steps are key to starting off on the right foot.

Assessing Income and Expenses

To create a realistic budget, you need to first assess where you currently stand. That means calculating how much, on average, is coming in each month and how much, on average, is going out each month.

You can do this by gathering bank statements from the past several months, then adding up all of your (after tax) monthly income. This is how much you have to spend each month. Next, add up what you are spending each month to come up with a monthly average. If your average monthly spending exceeds your average monthly income (meaning you’re going backwards) or is about the same (meaning you’re not saving), you’ll need to find places to cut back.

Setting SMART financial goals

Whether your goal is to build an emergency fund or go on a great vacation, setting clear, achievable financial goals will help you create — and stick to — your budget. Strong goals serve as reminders for why you’re choosing to spend less in some areas, which can make sticking to your budget feel more rewarding.

Consider using the SMART framework when setting goals. You’ll want your goals to be:

Specific: Rather than saying, “I’d like to save more,” try to be more specific, such as “I’d like to put a downpayment on a car in four months.”
Measurable: You want your goals to have a measurable outcome, such as a set amount of money you’d like to save by a certain date.
Attainable: If a goal is too hard to achieve, you might give up before you get very far. Strive to set goals that are attainable given your current income, expenses, and time frame.
Relevant: It’s key that your goals address your top needs and concerns. Consider what will give you the most security and value to your life right now.
Time-based: Having a set timeline to reach your goals can help you stay on track.

Recommended: Smart Financial Strategies to Reach Your Goals

Prioritizing Essential and Non-Essential Expenses

A budget is an opportunity to align your spending with what’s most important to you. You’ll want to have three main categories for spending:

•   Essential expenses (“needs”) These are your necessities, such as groceries, housing, healthcare, and transportation.

•   Nonessentials (“wants”) These are the expenses that aren’t necessary for survival but enhance your quality of life.

•   Savings This is the money you separate from spending each month and allows you to reach the financial goals you established earlier.

A very basic approach to budgeting is the 50/30/20 budget rule, which divides your net income into the above categories, spending 50% on needs, 30% on wants, and 20% on savings. Those percentages may not be realistic for everyone, however, If you live in an area with steep housing costs, for example, you may need to spend more than 50% on needs and take some away from the “wants” and/or “savings” categories.

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

Practical Tips to Stick to Your Budget

Once you have a basic budget in place, you’ll need to stick to it — or you won’t see any progress towards your goals. Here are six ways to keep spending and saving on track.

1. Sleep on Big Purchases

Impulse buys can quickly throw your budget off course. To avoid the problem, try the 30-day rule: If you see something nonessential you want to buy either online or in person, put the purchase on a one-month pause. Tell yourself that if, after 30 days, you still want the item, and you can afford it, you’ll buy it. This gives you time to reflect. You may well decide that you don’t need or want the item that badly and forgo the purchase.

2. Aim to Never Spend More Than You Have

Getting into debt can be a vicious cycle that is tough to get out of. Just paying the minimum on your credit card balance, for example, means you’re never getting ahead of your debt. Running a balance also means you’re going to end up paying far more for your purchases than the original price tag.

If you want something you can’t afford right now, plan for it, and start setting money aside for it each month. When you have enough, you can splurge without guilt — or throwing off your budget.

3. Set up Auto Draft for Bills and Savings

To make sure you never miss a payment (and avoid late fees), consider setting up autopay for all of your regular bills. You can apply the same principle for paying yourself (a.k.a saving). Simply set up a recurring transfer from your checking account to your savings account for the same day each month (ideally, right after you get paid). Even small amounts will grow into something larger, which can ultimately buy that vacation or cover an unexpected car repair.

💡 Quick Tip: Want a simple way to save more each month? Grow your personal savings by opening an online savings account. SoFi offers high-interest savings accounts with no account fees. Open your savings account today!

4. Plan Your Meals to Curb Impulsive Spending

When you’re hungry and there’s no food in the house, it’s hard to resist the call of the drive-through or your fave local take-out spot. You can avoid this temptation by planning your meals (including breakfast, lunch, dinner, and snacks) each week, making a grocery list, and sticking to that list in the store. Meal planning saves you from blowing your weekly food and restaurant budget. Bonus: You’ll probably eat healthier, too.

5. Utilize Technology for Tracking and Managing Your Budget

One of the best ways to stick to a budget is to harness technology. Putting a budgeting app on your phone, for example, can help you keep track of your spending and savings. These apps connect with your financial accounts (including bank accounts, credit cards, and investment accounts), so you don’t have to manually enter your purchases and transactions.

Apps can help you monitor bank accounts, credit card spending, and even keeping track of how much you spend in cash. Some apps allow you to split your spending into your own categories and can send you alerts when you start to max out your budget to help keep you from going over. Even better, many budgeting apps are free (at least for the basic service).

6. Revisit and Adjust Your Budget as Needed

A successful budget is rarely a one-and-done proposition. As your income, expenses, and/or financial goals change, it’s a good idea to revisit your budget and make adjustments.

You may want to check in on your budget every six to 12 months to reflect on your budgeting journey. How well is your budget working to advance your goals? Is it still relevant to your life? Maybe you’re spending more in certain categories and less in others. Perhaps you can siphon off a bit more to savings each month and reach your goals faster. Picking up changes in your financial habits can help ensure that your budget reflects your current priorities.

The Takeaway

Learning how to stick to a budget means starting with a realistic budgeting plan, setting SMART goals, picking the right tools, and keeping a watchful eye on your money as your income and expenses change. Remaining agile and staying disciplined with your budget will allow you to meet your expenses, enjoy extras like travel and entertainment, and achieve your future 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.


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.

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2023
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Wedding Gift Etiquette: 8 Rules to Follow As a Guest

By | Budgeting & Goals, Life & Career, money | No Comments

Getting invited to a wedding is an honor — it means you are seen as a valued part of the couple’s life. However, it also means you’ll need to start thinking about what to give as a wedding gift and, the thorniest of wedding etiquette issues, how much you should spend. You may also wonder when to give a wedding gift (do you really have a year?) and, if you’re not going to be able to attend, if you still need to send a gift.

Navigating the intricacies of wedding gift etiquette can be tricky for everyone. But don’t stress. What follows is a modern day guide to wedding gift etiquette that will help ensure you give an appropriate wedding gift without going broke.

8 Wedding Gift Rules to Follow

What follows are eight essential wedding gift etiquette rules and customs all guests need to know.

1. Spend an Appropriate Amount

Some people think that how much to spend on a wedding gift should be based on how much is being spent on you — in other words, cover your plate. For example, if you think a reception costs a couple $150 per person, that should be your gift value. But, the truth is, how much you spend on a wedding gift should depend more on your relationship to the couple, how far you’re traveling for the wedding, and your own financial situation.

On average, guests spent $160 on a wedding gift in 2022, according to The Knot. But that may not make sense for everyone. If you’re younger or just out of college, spending $50 on a friend’s wedding might be just right. If you are very close to the couple and attending with your spouse or a date, you might give $250 or more. There is no one “right” amount to give as a wedding gift.

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2. Budget for Other Expenses

When considering how much to spend on a wedding gift, you’ll also want to look at other costs related to the wedding. For example, you may be invited to other events that call for giving a gift, such as an engagement party and shower. In that case, you might allocate a certain percentage of your total gift budget for each event, such as 20% each for the engagement and shower gift and 60% on the wedding gift.

Also consider travel-related expenses and the cost of attire. If you are in the wedding party and have already maxed out your budget due to other costs, like hosting a bachelorette/bachelor party or buying a bridesmaid dress/groomsmen suit, then it is okay to simply give a small token gift for the ceremony.

Also keep in mind that if you’re invited to a destination wedding, your presence may actually be enough of a present. It’s likely that the couple will understand if you give a thoughtful handwritten note in lieu of a gift, or give them a smaller gift.

Recommended: Destination Weddings: 8 Awkward Money Questions, Answered

3. Use the Couple’s Wedding Registry

While you aren’t required to purchase a gift off the couple’s registry, doing so can make your life a lot easier. For one, the registry is a curated list of items the couple actually wants. It also typically offers gift ideas at a variety of price ranges, giving you a lot of flexibility. What’s more, you won’t have to worry about how you’ll actually get the gift to the couple (see rule # 6). You simply need to write a short note, input your credit card information, and hit “buy.” The store will do the rest. The registry is also a great resource for engagement and shower gifts.

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4. Consider Chipping in on a Group Giftsticking to your budget. Just be sure that everyone who contributes to the gift signs the wedding card.

A group gift can be especially helpful for members of the wedding party, who may have already bought multiple shower and engagement gifts and paid for wedding attire and bachelorette/bachelor parties.

Recommended: Why Saving Money Is Important

5. Cash is Completely Acceptable

When it comes to wedding gift etiquette, it’s perfectly acceptable to give money as a wedding gift. In fact, many couples prefer cash gifts, and will even register for cash funds to help pay for their honeymoon or a down payment on a home. If giving cash through the registry isn’t an option or not your preference, you can also give cash by writing a check and inserting in an envelope with a thoughtful note.

If you do go the check route, it’s a good idea to write only one of their names on the check (to avoid potential confusion at the bank) and include both names on the memo line, and in your note, so it’s clear this is a gift for both of them. You can either mail your check in advance or bring it to the wedding (the one time you can break rule #6).

💡 Quick Tip: If your checking account doesn’t offer decent rates, why not apply for an online checking account with SoFi to earn 0.50% APY. That’s 7x the national checking account average.

6. Don’t Bring the Gift to The Wedding

In some communities and cultures, it’s customary to bring your gift to the wedding and there will be a table at the reception where you can leave it. Generally speaking, however, it’s not considered proper wedding gift etiquette to bring a gift to a wedding (the exception being a card with a check). While you should bring a shower gift to the actual shower, it’s easier for the couple if you send a wedding gift to their home.

7. Send a Gift Before (or Soon After) the Wedding

The old rule that you have up to a year to send a gift is no longer considered proper wedding gift etiquette. Thanks to digital registries, online shopping, and two-day free shipping, it’s generally expected that guests will send a gift before the wedding or within three months of the couple getting married. This is respectful, and also avoids the awkwardness of running into the couple six months after the reception knowing that you still haven’t given them a gift to acknowledge their wedding.

8. Send Something Even if You Don’t Go

A wedding invitation is a thoughtful gesture that tells you that the couple appreciates your friendship and wants to include you in their celebration. If you are close friends or family to the bride or groom, you generally want to recognize that honor with a thoughtful note and gift, even if you are not able to attend the wedding. It doesn’t have to be a large gift. You might choose an item of nominal value from their registry or for their new home.

There is an exception to this etiquette rule, however. if you are not particularly close to the couple, you can likely get away with simply dropping a thoughtful note in the mail — and skipping the gift.

Recommended: Understanding Discretionary Expenses

The Takeaway

Just like weddings themselves, wedding gift etiquette has evolved over time, which can make purchasing a wedding gift all the more confusing. To avoid running afoul of any etiquette rules, you generally want to pick out a gift from the registry or give a cash gift (either through registry or via check). As for how much to spend on a gift, consider your relationship to the couple, what you can feasibly afford, and other costs involved (such as traveling to attend the wedding).

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

What is proper wedding gift etiquette?

Proper wedding gift etiquette involves several considerations. First, you’ll want to consult the couple’s gift registry to find out what they would like to receive. Giving a cash gift is also perfectly acceptable, and often preferred by couples. You might also consider going in on a group gift.

Ideally, you’ll want to send a physical gift before the wedding or within three months of the event. It’s fine to bring a card with a check to the celebration.

As for how much to spend, you’ll want to consider your budget, relationship to the couple, and how far you’re traveling for the wedding.

What should you avoid giving as a wedding gift?

According to proper wedding gift etiquette, you’ll want to avoid giving overly personal items (since everyone’s preferences are different) and anything that could potentially offend or cause discomfort to the couple. Also consider avoiding gifts that are overly extravagant or impractical, especially if they might burden the couple with maintenance or storage issues.

Is it rude to attend a wedding and not give a gift?

It’s customary to give a gift if you are attending a wedding. How much you spend, however, is flexible. If you have significant budget constraints, it’s perfectly okay to give a modest gift, along with a thoughtful note wishing the couple well.

Is it ever okay to not give a wedding gift?

If you are attending the wedding, it’s customary to give a gift to commemorate the couple’s special day. Even if you’re not attending the wedding, you generally still want to send a note and a gift. However, if you’re not attending the wedding and don’t know the couple well, it’s acceptable to send a thoughtful note without a gift.

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.

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9 Money Hacks To Try This Year

By | Budgeting & Goals, Financial Independence | No Comments

Financial wellness doesn’t have to be complicated. While you’ll eventually want to work up to a financial plan that includes a detailed budget, savings goals, and a retirement plan, there are small things you can do today to set you off on the right foot. What follows are nine hacks for money that can help you get organized, save more, knock down debt, and master the basics of personal finance.

9 Money Hacks to Help Save You Money

These simple moves can help you boost your financial health, reach your goals, and avoid financial pitfalls like impulsive spending and unmanageable debt spirals.

1. Use Multiple Savings Accounts

Having a different savings account for each one of your goals — whether it’s a new car, a down payment on a house, or even a big vacation — can be a great way to keep track of your progress. If you only have one account, it can be difficult to know what money is earmarked for which goal. For example, if you have $15,000 in your savings account, it may be hard to track that you have $5,000 saved for an emergency fund and $10,000 for a home purchase.

Separate savings accounts makes it easier to prioritize the goals you’re eager to reach, allowing you to fund those accounts first. It also decreases the chances you will raid the account to cover another expense. If an account is clearly labeled Emergency Fund, you may think twice about using it for a trip to Tulum.

And since many banks now offer savings accounts that feature the same interest rate, no matter how low your balance, you don’t need to put all your savings in the same account to get the highest yield.

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

2. Ditch Your Low-Interest Savings Account

Is there anything better than money you don’t have to work for? The interest you’re paid for keeping money in a bank account is basically that. If you’re still using your first savings account, however, chances are you’re getting a low interest rate.

Right now, the best online savings account interest rates are around 5%. Traditional brick-and-mortar banks, on the other hand, generally offer rates that are close to the national average, which is currently 0.46%. If you have a $10,000 savings balance, choosing an account that pays 5% will earn you about $500 in a year. If it stays in a bank account that pays 0.40% APY, you would earn about $40. The difference increases the more you deposit and the longer you keep the money in the account.

Failing to open a high-interest savings account means you’re giving up free money.

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3. Put Saving on Autopilot

Automating your savings is a great way to separate your savings from your spending without any extra effort on your part. If you wait to see what you have left at the end of the month to make a manual transfer to savings, you may forget or, worse, you may have nothing left to move.

There are two ways to automate your savings: One is to split up your direct deposit and funnel part of it into a savings account; the other is to set up a recurring transfer from your checking account into a savings account for the same day each month (ideally right after you get paid). If you have different savings accounts for different goals, you can choose to have a set amount for each account.

4. Pay Down High-Interest Debts

Credit card annual percentage rates (APRs) are now averaging a record 28.93%, up from 26.72 percent in 2022. To whittle down high-interest debt, consider making at least one extra payment on your credit cards per month. If you have multiple balances, here are two ways to knock them down:

•   The snowball method With this approach, you make your extra payment on your smallest debt, while maintaining minimum payments on the others. When that debt is paid off, you focus on paying off the next-smallest debt, and so on.

•   The avalanche method Here, you put your extra payment towards the debt with the highest interest rate, while making minimum payments on the others. When that debt is paid off, you focus on the debt with the next-highest rate, and so on.
The money you save in interest payments can then go towards saving (and earning interest).

5. Audit Your Subscriptions

There’s a good chance you are paying monthly for things you no longer need or use. To find out, review your credit card or bank statement to see what subscriptions services you’re paying for each month. Do you have cable, but only watch streaming services like Netflix and Hulu? Are you paying for streaming services you never, or rarely, watch? You might also audit your music services — if you are paying for more than one, you might keep your fave and get rid of the others.

The monthly fee for each streaming service may seem small but, when you pay it every month, year after year, it can seriously add up.

Recommended: How to Track Your Monthly Expenses: Step-by-Step Guide

6. Put a Free Budgeting App on Your Phone

Keeping tabs on how much is going in and going out of your accounts is crucial to financial wellness. But who wants to spend hours coming through statements? A budgeting app does the work for you, and many are free (at least for the basic service).

Popular budgeting apps, like Goodbudget, EveryDollar, and PocketGuard, allow you to connect with your financial accounts (including bank accounts, credit cards, and investment accounts) and give you a bird’s eye view of your finances. Right from your phone, you can see what’s in your bank account, your current credit card balance, what you’re spending the most money on, how your spending compares to last month, and more. This can be eye-opening and help you make smarter financial decisions.

💡 Quick Tip: Want a simple way to save more everyday? When you turn on Roundups, all of your debit card purchases are automatically rounded up to the next dollar and deposited into your online savings account.

7. Practice the 3-Day Rule

Online shopping has made it easier than ever to impulse buy. You’re only one click away from a new jacket, blender, or television. So try this smart spending hack: Whenever you see something you want to buy, either online or in-person, DO NOT buy it that day. Put the purchase on pause for at least three days. Tell yourself that if, after three days, you still want the item, and you can afford it, you’ll buy it. This gives you time to reflect. You may well decide that you don’t need or want the item that badly. If you’re worried about missing a “one-day” or “flash” sale, don’t — retailers run sales all the time.

Recommended: How to Stop Spending Money: 7 Strategies to Curb Overspending

8. Use Cash

This may sound counterintuitive, but spending cash can actually help you save money. The reason: When you spend in cash, you actually have to physically give up your money when you spend it, unlike with a credit or debit card.

You might try taking out a set amount of money for discretionary spending for the week, and when the money is done, you’re done spending. Or, consider using the envelope budgeting system, where you take out a certain amount of cash for the week and divide it into envelopes for food, gas, etc. As you see the money go down in each envelope, you’ll have to think hard about every purchase.

9. Gradually Boost Retirement Savings

.
You may have heard that you “should” be putting 15% of your income into your 401(k) or other retirement fund each year. It’s a solid goal. But for many young people, it may not be remotely realistic. That said, you shouldn’t give up on the whole idea. Why not try baby steps? You might start by putting just 1% of each paycheck into your retirement fund, then increase it by 1% every three to six months.

While 1% is a small percentage of your annual earnings today, after 20 or 30 years it can make a big difference in your account balance when you retire. That’s because the longer you give your money a chance to grow, the better.

Recommended: When Should You Start Saving for Retirement?

The Takeaway

Getting a better handle on your finances may perennially be on your to-do list. The problem is that this goal can seem too vague and too overwhelming to even know where to begin. The good news is that you don’t have to overhaul your personal finances overnight. Simply adopting some smart money habits (or hacks) can snowball into long-term financial stability and wealth. And there’s no better time to start than today.

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.


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.

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How to Prepare Financially for a Divorce

By | Family Finances, Life & Career, money | No Comments

Going through a divorce can be an overwhelming experience. There’s already the emotional pain of divorce, and then partners must also divide up money and assets and break down the financial structure that they’ve built together.

Piled on top of the logistics of divorce, some people may find themselves managing money on their own for the first time in their lives. These added financial stressors can make a difficult situation even more challenging.

Fortunately, there are some simple things you can do prior to getting a divorce that can take some of the stress out of the process. While every couple’s situation is different, what follows is a basic roadmap for how to prepare for a divorce financially.

7 Steps to Financially Prepare for a Divorce

Divorces can range from being hard-fought battles in court to peaceful mediation that happen outside of the courtroom. Either way, when it comes to divorce and finances, the money eventually needs to be split up. Here’s how to make the process of dividing up assets go as seamlessly as possible.

💡 Quick Tip: Make money easy. Enjoy the convenience of managing bills, deposits, and transfers from one online bank account with SoFi.

Step 1: Gather Your Financial Statements

A good first step to preparing for a divorce is to gather current and past financial statements so you can get a full picture of your shared and individual accounts. Having quick access to all this information can also save time (and, in turn, money) when you consult a lawyer. Here’s what you may need:

•   Checking, savings and investment account statements (past year)

•   Current statements for retirement plans (IRAs, 401k plans, or pensions)

•   List of assets acquired before and during your marriage (real estate, vehicles, boats, etc.)

•   Debt statements and balances (mortgages, auto loans, personal loans, credit cards, and credit lines)

•   Credit card statements (past year).

•   Recent pay stubs

•   Income tax returns (past three years)

Step 2: Document Your Assets

Since you’ll be dividing up all of your assets, it’s a good idea to take inventory of all of the assets you own (both individually and jointly), such as your home, car, and anything items with a high value. Collect receipts, photos or videos of each item, and note whether the asset is owned by you, owned by your spouse, or shared. You’ll also want to assign a value to each asset (if you own valuable antiques or collectibles, you might need to hire a professional appraiser).

Step 3: Track Your Finances

You’ll also want to begin tracking how much you’ve been spending each month — and on what. This will not only help you build a budget post-divorce, but it is also critical for your attorney (and later the judge) in deciding how to split assets and debts, and whether to award spousal or child support.

You can use your bank and credit card statements to come up with average spending from the past couple of years, including household bills, food, clothing, entertainment, home maintenance, transportation, child care, and anything else that you spend money on. Once you have a sense of what you’ve been spending, do your best to project future expenses. You can use previous years as a guide but also factor in potential future expenses (like a child’s school tuition and extracurricular activities).

Recommended: How to Track Your Monthly Expenses: Step-by-Step Guide

Step 4: Prepare to Make Some Difficult Choices

Splitting financial accounts tends to be relatively straightforward, but dividing up “real” assets like your home and any other treasured joint possessions, can be more complicated, So it’s a good idea to think of anything that falls into that category and what will make the most sense for you and your spouse moving forward.

If you own your home, that is likely going to be the largest asset you’ll need to make a decision about. If the home is being supported by two incomes, neither you nor your spouse may be able to afford to stay there on your own. Often, the simplest choice is to sell the home and split the proceeds. However, if children are involved, and it’s financially feasible, one parent might opt to buy out the other to maintain some normalcy. What will work best for you and your spouse will depend on your unique personal and financial situation.

Step 5: Be Frugal

No doubt you’re aware that divorce can be expensive. The average cost of a divorce in the U.S. is $12,900. You could spend significantly less if there are no major contested issues, or it could run a lot more should you end up going to trial over several issues.

Either way, now is probably not a good time to run up large expenses, either individually, or as a unit. If you and your spouse don’t have money set aside for hiring a divorce attorney and other related expenses, try to agree about each spending a conservative and comparable amount, while continuing to use your joint and individual accounts.

This can be a good time to eliminate or pare back your expenses where possible. For example, you might cancel unused subscriptions and memberships, attempt to dine out less, and use the clothes that you own. There are tons of creative ways to be frugal — so you can do it in a way that aligns with your values.

💡 Quick Tip: Are you paying pointless bank fees? Open a checking account with no account fees and avoid monthly charges (and likely earn a higher rate, too).

Step 6: Seek Out the Right Professional Help

If you and your spouse want to minimize legal expenses and think you can amicably split your assets, you might consider consulting a mediator. A mediator acts as a neutral third party to help you negotiate an agreement on the splitting of assets and making other arrangements (in some cases, custody of children) and could save you significant time and money.

If mediation is not an option, you’ll need to find a divorce attorney to handle your legal affairs and represent your respective sides in the negotiations (you’ll each need your own attorney). You might also consider getting help from a qualified financial adviser to make sure that all assets are divided, transferred successfully into new accounts, and reinvested, if necessary (again, you’ll likely each want your own financial adviser).

Step 7: Separate Your Finances

As you move towards divorce, you’ll want to set up your own checking and savings accounts and get your paycheck automatically deposited there. You’ll also need to redirect any direct deposits and update any automatic payment information. You can then start using the new accounts for all your own personal future deposits and expenses. The old joint accounts will need to be split between you and your spouse.

You may also want to consider opening your own retirement account (if you don’t have one). This is especially important if you are expecting to get money from your spouse’s retirement account as part of your divorce. Transferring the funds directly into your retirement account can help you avoid paying taxes on the money now.

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

How much money should I save for a divorce?

The average cost of a divorce is $12,900. However, you could spend significantly less. A divorce with no major contested issues runs, on average, $4,100. Or you might end up spending more. Divorces that go to trial on two or more issues can cost as much as $23,300.

Should you separate finances before a divorce?

If you know divorce is inevitable, it can be a good idea to start the financial separation process as soon as possible. If your money is in a joint account, you can begin by opening a new individual checking account and savings account. Next, you’ll need to redirect any direct deposits and update any automatic payment information. Use the new account for all your own personal future deposits and expenses. You might opt to keep one joint account open, however, to pay for household expenses until you are officially divorced.


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.

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