Jul
28
2024

Guide to Using a Personal Cash Flow Statement

By | Budgeting & Goals, money | Comments Off on Guide to Using a Personal Cash Flow Statement

If you’re often surprised (and not in a good way) when you open up your credit card and bank statements and see how much money you spent, you are not alone. In this scenario, there could be a simple solution: a personal cash flow statement.

Creating a personal cash flow statement can give you a clear picture of your monthly cash inflow (money you earn) and your monthly cash outflow (money you spend). Armed with that intel, you can determine if you have a positive or negative net cash flow.

The process is relatively simple. It involves doing some basic math calculations with a month or two worth of bank statements and bills. Once you have your personal financial statement, you’ll know where you stand and likely be better able to budget your money.

What Is a Personal Cash Flow Statement?

“Cash flow” is a term commonly used by businesses to detail the amount of money flowing in and out of a company. Companies can use cash flow statements to determine how well the business is generating income to pay its debts and operating expenses.

Just like the ones used by companies, tracking your own cash flow can provide you with a snapshot of your financial condition.

You might learn, for example, that you have less leftover at the end of each month than you thought or that you are indeed operating at a shortfall.

Once you have the numbers down in black and white, you can then make any needed changes, such as cutting your expenses to save money, increasing income, and making sure that your spending is in line with your goals.

So, how do you set up one of these cash flow statements? You may find a personal cash flow statement template or a personal cash flow statement example online, but what follows will explain how and why to create one.

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How to Build a Personal Cash Flow Statement

Here are the steps to take to build a personal cash flow statement.

Listing All Your Sources of Income

A good first step when creating a personal cash flow statement is to get out all of your pay stubs, bank statements, credit card statements, and bills or review them online.

•   Next, list any and all sources of income — the inflow, such as salaries, anything you make from side hustles, interest from savings accounts, income from a rental property, dividends from investments, and capital gains from the sale of financial securities like stocks and bonds.

•   You might want to avoid listing money in accounts that aren’t available for spending. For example, you may not want to list dividends and capital gains from investment accounts if they are being automatically reinvested or those that are part of a retirement account from which you aren’t actively taking withdrawals.

•   Since income can vary from one month to the next, you might choose to tally inflow for the last three or six months in order to come up with an average.

Once you’ve collected and listed all of your income for the month, you can then calculate the total inflow.

Listing All of Your Expenses

Now that you know how much money is coming in each month, you’ll want to use those same statements and bills, as well as any for debts (such as mortgage, auto loan, or student loans) to list how much was spent during the month.

•   Again, if your spending tends to fluctuate quite a bit from month to month you may want to track it for several months and come up with an average.

•   To create a complete picture of how much of your money is flowing out each month, you’ll want to include necessities like food and gas, and also discretionary expenses, such as trips to the nail salon or your monthly streaming services.

•   Remember to include infrequent expenses such as birthday gifts for loved ones, annual insurance premiums, and the like.

•   Once you’ve compiled all of your expenses, you can calculate the total and come up with your total outflow for the month.

Determining Your Net Cash Flow

To calculate your cash flow, all you need to do is subtract your monthly outflow from your monthly inflow. The result is your net cash flow.

•   A positive number means you have a surplus, while a negative means you have a deficit in your budget.

•   A positive cash flow is desirable, of course, since it can provide more flexibility. You can decide how to best use the surplus. There are a variety of options. You could choose to save for an upcoming expense, make additional contributions to your retirement fund, create or add to an emergency fund, or, if your savings are in good shape, consider splurging on something fun.

•   A negative cash flow can signal that you are living a more expensive life than your income can support. Some people refer to this as not living within your means. In the future, maintaining this habit could lead to additional debt.

•   When creating personal cash flow statements, it’s also possible to have net neutral cash flow (all money coming in and going out is fairly equal).

In this case, you may still want to jigger things around if you are not already putting the annual maximum into your retirement fund and/or you don’t have a comfortable emergency cash cushion.

The Difference Between a Personal Cash Flow Statement and a Budget

A personal cash flow statement provides a comprehensive look at what is currently coming in and going out of your bank accounts each month. You might think of a cash flow statement telling you where you are, financially speaking.

Whichever budget method you use, on the other hand, helps you to get where you want to go by giving you a spending plan that is based on your income and expenses. A budget can provide you with some general spending guidelines, such as how much you should spend on groceries, entertainment, and clothing each month so that you don’t exceed your income — and end up with a negative net flow.

Creating a budget can also be a good opportunity to check in with your financial goals.

For example:

•   Are you on track for saving for retirement?

•   Are you interested in tackling the credit card debt that has been spiraling due to high interest rates?

•   Do you want to amp up your emergency fund, separate from your usual checking and savings account?

•   How are you progressing on paying off your student loans?

Whatever your goal, a well-crafted budget could serve as a roadmap to help you get there.

Recommended: 4 Smart Ways to Pay Off Student Loans

Using Your Personal Financial Statement to Create a Simple Budget

Because a cash flow statement provides a comprehensive look at your overall spending habits, it can be a great jumping off point to set up a simple budget.

When you’re ready to create a budget, there are a variety of resources:

•   Break out a pencil and paper or buy a journal for this purpose

•   Use an app that’s part of your bank’s suite of tools

•   Download an app that isn’t connected to your financial institution but offers budgeting services

•   Try out spreadsheet templates and printable worksheets.

A good first step in creating a budget is to organize all of your monthly expenses into categories.

Spending categories typically include necessities, such as rent or mortgage, transportation (like car expenses or public transportation costs), food, cell phone, healthcare/insurance, life insurance, childcare, and any debts (credit cards/loans).

You’ll also need to list non-essential spending, such as cable travel, streaming services, concert and movie tickets, restaurants, clothing, etc.

You may also want to include monthly contributions to a retirement plan and personal savings into the expense category as well.

And, if you don’t have emergency savings in place, put that on the spending list as well, so you can start saving towards that every month. How big an emergency fund do you need? Use an emergency fund calculator, and aim to cover at least three to six months’ of living expenses.

Once you have a sense of your monthly earnings and spending, you may want to see how your numbers line up with general budgeting guidelines. Financial counselors sometimes recommend the 50/30/20 budget rule, which looks like this:

•   50% of money goes towards necessities such as a home, car, cell phone, or utility bills.

•   30% goes towards your wants, such as entertainment and dining out.

•   20% goes towards your savings goals, such as a retirement plan, a downpayment on a home, emergency fund, or investments.

Improving Your Net Cash Flow

If your net cash flow is not where you want it to be or, worse, dipping into negative territory, a budget can help bring these numbers into balance.

The key is to look closely at each one of your spending categories and see if you can find some ways to trim back.

•   One of the easiest ways to change your spending habits can be to cut some nonessential expenditures. If you’re paying for cable but mostly watch streaming services, for example, you could score some real savings by getting rid of that service and its bill.

•   Not taking as many weekend getaways and cooking more often instead of getting takeout could add up to a big difference. If you tend to be a compulsive or impulsive shopper, you might take steps to understand your triggers, change your behavior, and rein in the outflow of money.

•   Living on a budget may also require looking at the bigger picture and finding places for more significant savings. For example, maybe rent eats up 50% of your income, and it’d be better to move to a less costly apartment. Or you might want to consider trading in an expensive car lease for a less pricey or pre-owned model.There may also be opportunities to lower some of your recurring expenses by finding a better deal or negotiating with your service providers.

You may also want to look into any ways you might be able to change the other side of the equation — the inflow of funds.

•   One option could be asking for a raise.

•   Another could be training for a higher-paying field.

•   Or you might find an additional income stream (making more money is a key benefit of a side hustle).

The Takeaway

One of the most important steps towards achieving financial wellness is cash flow management — i.e., making sure that your cash outflow is not exceeding your cash inflow.

Creating a simple cash flow statement can show you exactly where you and your money stand. It can also help you create a budget that can give you greater control over your finances and achieving your goals.

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FAQ

How do you create a personal cash flow statement?

To create a personal cash flow statement, gather information on how much you typically take in (income) after taxes per month and how much your outflow (spending and saving) is. That captures the amount you spend on necessities, like housing and food, as well as wants and debt payments. When you subtract the outflow from the income, you’ll see where your cash flow stands.

What is the importance of a personal cash flow statement?

A personal cash flow statement is an important way to track your personal spending and see where pain points may be. It will also reveal if you are going into debt or if you have surplus funds you can put towards future goals. Also, a personal cash flow statement can be an important factor in establishing your budget.

What is the difference between a personal balance sheet and a cash flow statement?

A personal balance sheet captures your assets (money in the bank and real estate, for instance) and liabilities (your credit card balance and any loans), which allows you to determine your net worth. A cash flow statement, on the other hand, tracks your spending versus your income, to see whether you are operating with a deficit, a surplus, or if you are breaking even.

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What Is Fibonacci Retracement in Crypto Trading

What Is Fibonacci Retracement in Trading?

By | Growing Wealth, invest, Investing | Comments Off on What Is Fibonacci Retracement in Trading?

Fibonacci retracement is a type of technical indicator that traders use to determine the support and resistance levels for a stock price.

The well-known Fibonacci sequence of numbers, where each number is the sum of the two previous numbers, is important to how this technical analysis tool works owing to the relationship between the numbers in the series.

These ratios, expressed as a percentage, capture how much a stock price has retraced with its recent movement. The most important Fibonacci retracement levels are: 23.6% 38.2%, 50%, and 61.8%, 78.6%, and they are applied as horizontal lines on a stock chart.

Traders can use these retracement levels to mark high and low points that may offer signals that a price is going to stall out or reverse.

What Are Fibonacci Retracement Levels?

Fibonacci retracement levels are based on the Fibonacci series where each number equals the sum of the two previous numbers. The most basic series is: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, etc.

The relationship between these numbers has created the retracement levels commonly used by traders: 23.6% 38.2%, 50%, and 61.8%, 78.6%.

For example, each number is approximately 1.618 times greater than the preceding one. As a result, some analysts refer to 61.8% as “the golden ratio,” because it roughly equals the division of one number in the series by the number that follows it. For example: 13/21 = 0.6190, and 21/34 = 0.6176, and 34/55 = 0.6181

In fact, there are similar relationships to be found between other numbers in the series, and these have become the ratios used by technical traders to determine retracement levels in stock prices. For example, dividing a number in the series by the number three places to its right roughly equals 23.6%.

Note that 50% is somewhat of an exception to the rule: It’s not mathematically part of the Fibonacci-derived number set, but traders have nonetheless found it useful when gauging support and resistance levels.

Who Created Fibonacci Numbers?

The Fibonacci sequence is based on the work of a 13th-century mathematician Leonardo Pisano Bigollo, nicknamed Fibonacci. While Fibonacci was not the first to identify this series, he transformed mathematics in the West thanks to his introduction of the Hindu-Arabic system of numbers, a place-value system.

The Hindu-Arabic system, which we use today, replaced Roman numerals and the complex calculations that required.

In 1202, Fibonacci published Liber Abaci (“Book of Calculations”) to introduce Hindu-Arabic numerals. The Fibonacci series was included here, but the observation of this pattern had been identified and worked with for hundreds of years before, in India. Over time, its pattern has been observed in everything from the spiral of seeds in sunflowers to spirals in the double helix of DNA.

Because the Fibonacci sequence occurs frequently in various natural and mathematical contexts, it has been adopted for a number of uses, including as a technical analysis tool for stock traders. That said, the reason for the common occurrence of these numbers in contexts or applications that are unrelated, is not well understood.

How Does Fibonacci Retracement Work

Fibonacci retracement levels are not based on an exact formula that gets applied to the stock price movements. Rather, traders identify two static price points for analysis, e.g., a high and a low, and apply the retracement levels from the Fibonacci sequence to determine support and resistance levels.

If a stock price movement retraces a prior move, ending on a point that is represented by a Fibonacci number, it could indicate that a reversal is in store.

The use of Fibonacci ratios as a technical indicator is somewhat subjective, however, since the underlying numbers are a part of a mathematical pattern. They aren’t inherently related to stock prices or market movements.

For example, if a stock price rises to $20 from $15, a trader might set the retracement levels at 23.6% and 50%. Those would be, respectively: $18.82 ($20 – ($5 x 0.236) = $18.82) and $17.50 ($20 – ($5 x 0.50) = $17.50).

If the stock price retraced from $20 down to one of those levels, it could signal a reversal. But Fibonacci retracements can also be used to gauge the strength of an uptrend, by noting the support and resistance in relation to the retracement levels.

Support and Resistance

Support is the price level that acts as a floor, preventing the price from being pushed lower, while resistance is the high level that the price reaches over time. Analysts often illustrate these as horizontal lines on a graph.

A support or resistance level can also represent a pivot point, or point from which prices have a tendency to reverse if they bounce (in the case of support) or retreat (in the case of resistance) from that level.

Learn more: Support and Resistance: What Is It? How to Use It for Trading

What Does a Fibonacci Retracement Do?

Markets don’t go straight up or down. There are pauses and corrections along the way. Traders can use these retracements to find optimal prices at which to enter a trade. For example, if a stock moves up, but then retraces to the 61.8% level before moving higher again, that might be a signal to buy.

Why? Because the price retraced to a Fibonacci level during an uptrend. A trader could also use that retracement point to set a stop-loss order at the 61.8% level (remember, that’s the boundary of the price retracement, not the price itself). If the price drops down below that level, the rally may be a bust.

In other words, the Fibonacci retracement levels, while static, help to indicate potential inflection points where a stock might see a break or a reversal.

What Is a Fibonacci Extension?

As discussed, Fibonacci retracements may help indicate a price reversal. Fibonacci extensions apply the same logic to price moves in an upward trend.

With a Fibonacci extension, the trader uses three points to assess whether the price will continue on its trend. The first two points are similar to those used for a Fibonacci retracement: the trader picks two price points, a start and an end (e.g. a high and a low). The third point is the retracement level, which sets up the potential extension (if there is one).

Some of the key ratios used to calculate Fibonacci extensions are 61.8%, 100%, 161.8%, 200%, and 261.8%.

Limitations of Fibonacci Retracement

Fibonacci retracements may indicate potential price movements, especially when employed by experienced traders who are familiar with the application of this particular indicator. But over-relying on them can be counterproductive:

•   Fibonacci retracements, like other indicators, are most informative when paired with at least one other technical analysis tool, such as moving averages.

•   The use of Fibonacci retracement levels and extensions is generally a subjective endeavor. Although the numbers themselves do occur in a range of contexts in the natural world and in mathematics, there is no objectively tested rationale for how or when to use the Fibonacci numbers with stock prices.

•   Fibonacci retracement sequences are often close to each other, therefore it may be tough to accurately predict future price movements.

Fibonacci Retracements and Trading

Traders typically use Fibonacci retracement levels to help anticipate price reversals, to set entry and exit points for trade, to create stop-loss orders, and more.

•   Trend prediction. Fibonacci retracements have been known to predict the price reversals of a stock at early stages.

•   Flexibility. Fibonacci retracement works for assets in any market and any time frame. Longer time frames could result in a more accurate signal.

•   Gauge of market psychology. Fibonacci levels are built on both a set of mathematical calculations and the psychology of the market. Combined, these may convey a fair assessment of market sentiment.

The Takeaway

The Fibonacci retracement technical indicator can help identify hidden levels of support and resistance so that analysts may be able to better time their trades. The Fibonacci retracement levels are derived from the well-known mathematical phenomenon known as the Fibonacci sequence: a series where each number is the sum of the previous two numbers.

From this sequence, mathematicians dating back centuries were able to derive ratios based on the relationship between one number and another in the series. What makes these ratios significant is that they recur in a range of contexts, from the natural world to the stock market.

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FAQ

How accurate is Fibonacci retracement?

Fibonacci retracement levels can be useful for traders, although no indicator is perfect and they are best used in combination with other technical indicators. The accuracy levels often increase with longer time frames. For example, a 50% retracement on a weekly chart is a more important technical level than a 50% retracement on a five-minute chart.

What are the advantages of using Fibonacci retracement?

Fibonacci retracement is relatively easy to apply to any price chart. It’s not a formula, but a set of measurements that may help traders assess the importance of certain price movements and trends. When an experienced trader uses the Fibonacci ratios in combination with other technical indicators, it may be possible to set entry and exit points for trades and anticipate reversals.

What are the disadvantages of using Fibonacci retracement levels?

Although it’s well established that the Fibonacci numbers occur in plants, in galaxies, and in stock market movements, it’s not well understood why that is. Therefore, the use of the Fibonacci retracement levels tends to be subjective. For that reason, it may be more effective in combination with other indicators that can help confirm price trend analysis.

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financial charts

What Is Stagflation & Will It Happen Again?

By | Growing Wealth, invest, Investing, Terminology | Comments Off on What Is Stagflation & Will It Happen Again?

Stagflation is an economic term that is actually a combination of the words stagnation and inflation — and describes an economy that is both stagnant, and experiencing inflation. For investors, it’s worth being aware of what it means, because of the threat it poses to economies and markets.

Stagflation creates potentially disastrous conditions where people experiencing a decline in purchasing power also feel discouraged against investing. It can create a chain reaction of wealth-destroying events where unemployment climbs and economic output slows, contributing to a national economic malaise.

What Is Stagflation?

Stagflation is a term used to describe a situation when the economy is growing slowly (stagnation) and prices rise rapidly (inflation).

The term was coined by British Conservative Party politician Iain Norman Macleod in a 1965 speech to Parliament. At the time, the United Kingdom was in the midst of simultaneous high inflation and unemployment. In the speech to Parliament, Macleod said, “We now have the worst of both worlds – not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of ‘stagflation’ situation and history in modern terms is indeed being made.”

Usually, economists and analysts will use the unemployment rate as a proxy for economic activity when discussing stagflation. So, a period of stagflation is when unemployment rises while inflation — as measured by the consumer price index (CPI) — accelerates above normally acceptable levels of price growth.

However, like many economic concepts, there is no standard definition of stagflation. Policymakers, elected officials, and investors will use the term stagflation in various economic scenarios.

Recommended: Understanding the Different Economic Indicators

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Stagflation vs Inflation

Inflation is a general increase in the average prices of goods and services. In contrast, stagflation is a combination of stagnant economic growth and rising inflation.

Low levels of inflation are normal for an economy; there’s a reason why movie theater tickets cost more today than they did in the 1950s. Inflation doesn’t become an issue until prices get out of control and spiral upwards. Policymakers within the Federal Reserve like inflation to rise about 2% each year.

You can have inflation without stagflation, but you can’t have stagflation without inflation.


💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.

Has Stagflation Ever Happened?

Before the 1970s, economists didn’t think stagflation — a period of rising unemployment and inflation — was possible. Theoretically, inflation should decrease when unemployment increases because workers have less bargaining power to get higher wages. So, the theory goes, stagflation shouldn’t happen.

However, stagflation did occur in the United States from the mid-1970s. During the 1973-1975 recession, the U.S. experienced five quarters where the gross domestic product (GDP) decreased. Inflation peaked at 12.2% in November 1974, and the unemployment rate rose to 9.0% in May 1975.

This stagflation cycle was part of a larger sequence of events called the Nixon Shock.

Responding to increasing inflation in 1971, President Richard Nixon imposed wage and price controls and surcharges on imports. This created a perfect-storm condition where, when the 1973 oil crisis hit, those surcharges on imports made prices at the gas pump — and across many U.S. industries — skyrocket to then-record prices. The rising prices helped lead to a wage-price spiral, where inflation led to workers asking for higher wages, which led to more inflation, and so on.

The Federal Reserve raised interest rates to combat the inflation of the early-70s, but this only created a recession and high unemployment without tamping down inflation. Thus, a prolonged economic stagnation accompanying inflation occurred — a stagflation situation.

While the economy recovered slightly in the late 1970s, inflation remained a problem for the rest of the decade. Federal Reserve chairman Paul Volcker eventually hiked interest rates to 20% by 1981, triggering a recession to get inflation under control.

Recommended: Here are some ways to hedge against inflation.

Will Stagflation Happen Again?

There are debates about whether stagflation will or could occur again in the United States. There’s always a chance, but the circumstances need to be just right for it to happen.

Most recently, the economy was in a precarious situation in early 2022, with inflation running high after the fallout of the Covid-19 pandemic, and the Federal Reserve raising interest rates at a historic pace to combat it. The Fed was trying to curb inflation with the hope of a soft landing, in which an economy slows enough that prices stop rising quickly but not so slowly that it sparks a recession.

As of July 2024, inflation has moderated, and the economy has not slipped into a recession – but things can always change. So, the economy has not, so far, seen widespread stagnation, and inflation has come down – it appears that stagflation has been avoided.

While no one can predict the future, it stands to reason that events that have happened in the past can happen again. Stagflation may occur again, but this doesn’t have to be a dire situation as long as you prepare your financial situation.

How Can Stagflation Impact Investors?

Economic stagnation can have several impacts on investors. Firstly, it can lead to lower returns on investment as companies are less likely to grow and expand in a stagnant economy. This can lead to investors becoming more risk-averse as they seek out investments that are more likely to provide stability and income.

Secondly, stagnation can also lead to higher levels of unemployment, which can, in turn, lead to social unrest and political instability. This can make it more difficult for companies to operate in a given country and lead to investors losing confidence in the economy.

A slowdown of economic activity lasting several months sounds like it can only be a bad thing. But a recession does not necessarily mean the death knell for your finances. For some investors, there are, perhaps surprisingly, compelling strategies to consider when the market is down. Volatility may allow investors to buy low and then make appreciable gains as the market corrects itself.

Recommended: How to Invest During Inflation

The Takeaway

Stagflation occurs when an economy experiences simultaneous high inflation and high unemployment. It’s a situation that often leads to decreased spending by consumers and businesses, which can further stall economic growth and investment returns.

Stagflation has occurred before in the U.S. — notably during the Nixon Shock of the early 1970s — and there is no reason to think it won’t happen again at some point.

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.

SoFi Invest®

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

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

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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28
2024
stock market amsterdam

When Is the Stock Market Closed?

By | Growing Wealth, invest, Investing, Terminology | Comments Off on When Is the Stock Market Closed?

The stock market is closed on weekends and many holidays. Accordingly, in a general sense, investors can buy and sell stocks Monday through Friday between 9:30am-4pm ET, but the exact schedule can vary based on time zone, market, and holiday season. Additionally, the major stock exchanges may close or stop trading unexpectedly due to several reasons, like natural disasters or technical glitches. It’s all a part of how the stock markets work.

While a person can always access stock market data, the stock exchanges have strict operating hours during a typical work week. Knowing the stock market schedule and when the stock market is closed may help investors make better investment decisions.

U.S. Stock Market Holidays

Even with standard operating hours, stock markets will close their markets completely for certain holidays. The New York Stock Exchange and Nasdaq recognize the following holidays:

•   New Year’s Day

•   Martin Luther King, Jr. Day

•   Washington’s Birthday

•   Good Friday

•   Memorial Day

•   Juneteenth National Independence Day

•   Independence Day

•   Labor Day

•   Thanksgiving Day

•   Christmas Day

Additionally, the stock market closes early (at 1pm ET) on the following dates:

•   Black Friday

•   Christmas Eve, if the holiday falls on a weekday

Stock exchanges in other countries might have different national holidays and operating schedules. Investors can buy and sell stocks or other securities during open market hours outside of these major holidays.

Is the Market Closed the Following Monday After a Holiday?

For holidays with a fixed date, like Juneteenth (June 19), Independence Day (July 4), and Christmas (Dec. 25), the stock market will be closed on the preceding Friday if the holiday falls on a Saturday or the following Monday if the holiday falls on a Sunday.

However, if New Year’s Day (Jan. 1) falls on Saturday, the holiday is not observed; the stock market will be open on the preceding Friday and the following Monday.

Other Times the Stock Market Closes or Is Halted

In addition to planned holidays, historically, the stock market has closed trading in times of crisis or technical challenges.

For example, at the beginning of the Covid-19 pandemic in early 2020, markets were halted multiple times due to unprecedented drops in the market. Called trading curbs or circuit breakers, these are temporary pauses mandated by the Securities and Exchange Commission in 2012. Each level follows different criteria:

•   Level 1: A 7% drop in the S&P 500 Index compared to closing the day before will trigger the market to be paused for at least 15 minutes.

•   Level 2: A 13% drop in the S&P 500 compared to closing the day before will trigger at least a 15-minute pause in the market.

•   Level 3: A 20% drop in the S&P 500 compared to closing the day before will trigger a premature close on trading for the rest of the day.

Trading curbs can occur for a single stock and a whole market. It’s more common for the curb to be tripped on a single stock, but unprecedented events can spark a whole market pause. Covid-19 caused three trading curbs in just over a week.

The stock market may also close unexpectedly due to unprecedented events. For example, the terrorist attacks of Sept. 11, 2001, caused the NYSE to close for a week, while Superstorm Sandy forced the NYSE to close for two days in Oct. 2012.

Additionally, the markets may close down to honor the death of a world figure, as was the case with George H.W. Bush and Martin Luther King Jr.

The market has also closed unexpectedly due to technical glitches and cybersecurity threats; in July 2015, the NYSE temporarily stopped trading because of a technical issue on the floor.

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*Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

Stock Market Operating Hours

In the United States, the major stock exchanges are generally open Monday through Friday, with core trading hours between 9:30am-4pm ET. The stock market does not operate during the weekend.

Because the different stock exchanges operate on eastern time, these trading hours are different throughout the U.S., depending on time zones and daylight savings time.

However, with so many global stock exchanges, a market may always open if an investor is interested in trading in foreign markets. Most markets operate during their time zone’s business hours.

Recommended: Pros & Cons of Global Investments

Why Does the Stock Market Close Each Day?

The stock market closes each day for several reasons, notably because it allows for the settlement of all trades that have occurred. The close gives market professionals time to calculate the day’s trading results and prepare for the next day.

Additionally, the stock market close is helpful for investment brokers and traders to catch up on paperwork and other administrative tasks.

While the stock market closes each day at 4pm in the United States, other markets, like cryptocurrency and foreign exchange markets, offer trading 24 hours a day.

Recommended: Is 24/7 Stock Trading Available?

When Does the Market Open for Premarket Trading?

The market opens for premarket trading at 4 am ET and operates until 9:30 am ET.

While most stock trading occurs during the normal 9:30am-4pm ET operating hours, investors can also take advantage of extended-hours trading. Investors may be interested in trading during the premarket because of the release of economic data, company earnings reports, and other major news events.

Investors must use an alternative trading system known as electronic communication networks (ECNs) to make trades during premarket trading.

However, investors must be aware of the risks associated with premarket trading. Because fewer buyers and sellers operate during the early hours, there is lower liquidity and higher volatility.

Premarket trading probably isn’t for a beginner investor; if you don’t need to buy or sell a stock immediately, you might prefer to wait until regular trading hours.

After-Hours Trading

The closing bell for the major U.S. stock exchanges might ring promptly at 4 pm ET, but there’s still after-hours trading: it’s possible to buy, sell, and trade stocks between 4pm-8pm ET. Electronic trading tools like ECNs mentioned above make it possible to conduct business after hours, but making moves during after-hours trading comes with its own risks, just like during premarket trading.

The Takeaway

Investors should be aware that the stock market is closed on weekends, designated holidays, and for world events and other disruptive circumstances. When the stock market is open, the exchanges generally operate on a 9:30am-4pm ET schedule, Monday through Friday.

Knowing when the stock market is open and closed can allow investors to strategize the best time to make trades and investments.

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.

FAQ

Is the stock market closed on holidays?

The stock market is generally closed on New Year’s Day, Martin Luther King Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

When is the stock market closed and opened?

The stock market in the United States is closed on weekends and some holidays. The stock market is generally open Monday through Friday from 9:30am-4pm ET.

Is the stock market open for extended hours?

The stock market is open for extended hours, from 4am-9:30am ET for premarket trading and 4pm-8pm for after-hours trading. However, trading during this period can be risky.

SoFi Invest®

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

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

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.

Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

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Jul
26
2024

How To Fix a Declined Debit Card When You Have Money

By | Credit, Financial Independence, money | Comments Off on How To Fix a Declined Debit Card When You Have Money

Debit cards make it easy to complete purchases without using cash, writing checks, or charging to credit. Just tap or insert your card, enter your PIN, and the funds will immediately get debited from your checking account. You then grab your goods and go. Simple, no?

Not always. Every once in a while, a debit transaction gets declined. This can be incredibly frustrating (and embarrassing), especially when you know there is money in the account. On a positive note, the issue is often easy to resolve. Here are some simple steps to take when a debit transaction doesn’t go through.

Make Sure Your Card Is Good

Every debit card has an expiration date. Once the date passes, the card gets blocked automatically and becomes useless to the account holder. If you’ve just started using a new debit card because your old one expired, it may not be activated yet. Until it is, you won’t be approved for any debit transactions that require a PIN.

To get your card working again, you may need to get it replaced or, if it’s new, activate the card either online or by phone. When you start using a new card, you’ll want to be sure to update any online payment information. This ensures uninterrupted services for recurring payments you have set up through your card, such as online payments for your cell phone, car loan, streaming and subscription services, and utilities.

Check Your Account Balance

While you may believe you have enough money to cover a purchase, unexpected debits, merchant holds, and pending deposits might have reduced your available balance. That’s why it’s critical to check the balance of your checking account.

You can do this by logging into your account using your banking app or computer, then looking at both your “current balance” and “available balance.” What’s the difference? Pending transactions (which have not yet posted to your account) are included in your “current balance” but not in your “available balance.” It may look like you have enough funds to cover a purchase, but if the money isn’t part of your available balance, you can’t spend it.

If your available balance is lower than you thought, scan your recent transactions and look for:

•   Pending deposits: You may have deposited a check or have a direct deposit that has not fully cleared yet. This means the bank is still verifying that the incoming deposit is valid.

•   Merchant holds: A hold is a way for merchants to reserve a certain amount of funds in a customer’s account to ensure a future transaction can be processed successfully. This can happen for transactions where you won’t know the final amount of the charge until later, such as hotel reservations or a car rental, and can temporarily lower your available balance.

•   Recent withdrawals: Look for any recent withdrawals or debits that you might have forgotten.

•   Errors or fraudulent activity: Check for any errors or unauthorized transactions that could have depleted your funds. If you notice any, reach out to your bank right away.

Recommended: How Banks Investigate Unauthorized Transactions

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Know Your Debit Card’s Purchase Limit

If you’ve made some particularly large purchases in the last 24 hours, your debit card might be denied because you’ve reached your daily purchase limit. Banks set daily purchase limits on debit cards to minimize risk if the card is lost or stolen.

The daily purchase limit for a debit card can range anywhere from $300 to $50,000 per day, depending on the financial institution. You may be able to request a temporary limit increase on your debit card to complete your purchase by calling your bank. For security purposes, the representative will ask you to verify your identity.

Check for Holds or Blocks on Your Card

Banks and merchants will sometimes place temporary holds or blocks on someone’s bank account for various reasons. These can temporarily restrict access to your funds, even if you have a sufficient balance.

Here are some reasons why your bank may have put a hold on your debit card or decline a particular transaction.

•   You repeatedly typed in the wrong PIN: If you enter the wrong password three times, your ATM card may get blocked. If this happens, you can generally just wait for 24 hours and your card will be unblocked automatically.

•   Suspected fraud: If your bank detects any suspicious activity on your card, such as an unusually large purchase or unusual use patterns, they may automatically block your card to protect against fraud. Using your card in a new location, especially internationally, can also trigger a security block.

•   Institutional security issue: If there is a security issue at the bank or credit union that holds your account, it may block your debit card to protect your money and details. In such cases, the bank will issue a new card to its customers, free of cost.

The best way to get to the bottom of a card hold or block is to speak with a customer service representative at your financial institution. In some cases, explaining that the purchase is legitimate or that you are currently traveling, and confirming your identity will immediately resolve the problem.

Informing your bank in advance about debit card usage that will be outside your regular routine can help avoid temporary holds and declines.

Recommended: Why Credit Cards Get Declined

Consider Alternate Payment Methods

If you can’t immediately resolve a declined debit card and have a crucial transaction that you don’t want to walk away from, you may need to use an alternate payment method. Here are some options to consider.

•   Credit card: Even if you prefer debit over credit, having a credit card in your wallet can serve as a backup if your debit card fails.

•   Cash: Though not every place of business accepts cash, it can be useful to have cash on hand to cover necessary transactions in the event your debit card fails.

•   Mobile payment app: If you have a payment app on your phone that is connected to a credit card or linked directly to your bank account, you may be able to use that instead of your debit card.

•   Bank transfer: For larger transactions, you may be able to make the payment by transferring money from your savings or checking account directly to the recipient.

The Takeaway

Dealing with a declined debit card can be annoying and stressful. To get to the root of the problem, you’ll want to first make sure your card is up to date and, if it is, check your account balance to confirm there are sufficient available funds to cover the purchase.

If you have enough funds, you might next call your bank to see if there’s a temporary hold on your card due to any security issues. By confirming that the transaction is legitimate and verifying your identity, they may lift the hold.

Being proactive and keeping a close eye on day-to-day activity in your checking account can minimize debit card declines and ensure smooth transactions in the future.

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 4.50% APY on SoFi Checking and Savings.

FAQ

Why would a debit card be declined even if I have money in my account?

A debit card may be declined even if you have enough money in your account to cover the transaction due to various reasons. These include:

•   Exceeding daily transaction limits

•   Multiple incorrect PIN entries

•   Using an expired card

•   Using a new card that hasn’t yet been activated

•   Suspected fraud

If your debit card gets declined despite sufficient funds, it’s a good idea to contact your bank. You may be able to quickly resolve the problem and get your card working again.

What should I do if my debit card is declined due to suspected fraud?

If your debit card is declined due to suspected fraud, you’ll want to immediately contact your bank’s customer service department. They will review recent transactions with you and, if necessary, cancel that card and issue a new one.

Once you receive the new debit card, you’ll want to change your PIN and monitor your account for any further suspicious activity. Banks often have fraud protection services to assist and safeguard your funds.

How long does it typically take to resolve a debit card decline issue?

The length of time it takes to resolve a debit card decline will depend on the cause. If the problem is insufficient funds, you may be able to quickly fix it by transferring money from another account. If the issue is suspected fraud, you may be able to clear it up right away by calling customer service, verifying your identity, and letting them know that the charge is legitimate.

Other scenarios may take longer. For example, if your debit card has been compromised or has expired, you may have to wait until you receive a new card in the mail.

Photo credit: iStock/Jacob Wackerhausen

SoFi members with direct deposit activity can earn 4.50% 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 4.50% 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 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

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*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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