A person’s net worth describes their total financial value, and is calculated by subtracting their liabilities from their assets. Though we generally discuss net worth in relation to very wealthy individuals, it can be important for people who aren’t billionaires to know their net worth as well.
A person’s net worth can be an important reference point in understanding one’s financial position. Net worth can be negative, especially early on in one’s careers. But net worth can help an individual figure out how much they need to save, how much spending they need to cut back on, or how much they’ve saved for retirement.
How to Calculate Net Worth
If you’re wondering how to calculate net worth, it’s actually a simple formula:
Assets – Liabilities = Net Worth
The hard part is usually determining a person’s assets and liabilities. And a person’s assets can go beyond what they have in their checking account. In fact, a person’s assets can include a whole host of things.
Assets
Assets basically boil down to how much money you have, as well as the value of things you own. In order to know one’s net worth, estimate the value of each asset below:
• Money in savings accounts
• Money in checking accounts
• Money in investing or retirement accounts. Brokerage accounts or 401(k)s are in this bucket.
• Physical cash
• Value from insurance policies
• Value from business ownership or stakes
• Value of cars
• Valuable personal goods, like jewelry or art
• Value of real estate, including home
Calculating the value of a home can be a task in itself. It’s important to research the value of the homes around you, the size of your home, any deferred maintenance on the home, additional benefits like parking spots, backyard space, room count, etc. There are a number of home value calculators online, too.
• Liquid Assets: Items like stocks, bonds, mutual funds, or ETFs that are easy to sell quickly and whose sale will not greatly affect their price.
• Fixed Assets: These are items that would take a longer time to convert to cash. These assets are often deposited for extended periods of time in exchange for high interest accrual and thus cannot be cashed before their agreed-upon time frame is up.
• Equity Assets: Equity assets include your shares in a company, either private or public.
Intangible Assets, such as brand recognition for a company or any other intellectual property like patents, trademarks or even goodwill, are trickier to factor into your net worth due to the complexity of measuring their value.
Liabilities
Liabilities are debts. The following categories are what most often make up liabilities:
• Auto loans
• Student loans
• Personal loans
• Business loans (personally guaranteed)
• Credit card balances
• Mortgages
While liabilities are on the negative side of the net worth equation, it doesn’t necessarily have to symbolize something negative about your finances. For example, student loans or mortgage loans are typically seen as necessary loans that individuals take on as they reach milestones in life, like going to college, graduate school or buying a home.
Meanwhile, knowing one’s total liabilities can help with figuring out a plan to start paying off debt that has higher interest rates, like from credit card balances.
💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.
Median and Average Net Worth in US
An individual or household’s net worth isn’t set in stone, and it ebbs and flows all the time. For that reason, it can be difficult to nail down median or average net worth figures for both individuals and households in the U.S. You can find some numbers if you search for them, but they’re often several years old, and may not be accurate given the time lapse.
For instance, the Federal Reserve tracks median and average net worth data in the U.S., but generally, they do so using survey data that it publishes once every few years. So, while data from a few years ago may be fine, large-scale world events–such as a pandemic, natural disaster, recession, or similar–may have led to large changes in those numbers.
This is all something to keep in mind if you seek out average net worth numbers. It’s not that they’re inaccurate, it’s simply that the data may be hard to capture and synthesize in a reasonable amount of time.
Remember, too, that it’s important to keep abreast of your net worth because this number may fluctuate depending on factors such as stock values, interest rates, real estate trends, and other tides of the financial world. It’s important to have an idea of overall trends so you can generally understand your financial health and have an idea of your true wealth.
💡 Quick Tip: Distributing your money across a range of assets — also known as diversification — can be beneficial for long-term investors. When you put your eggs in many baskets, it may be beneficial if a single asset class goes down.
The Takeaway
True wealth can be an important factor in knowing when you might expect to retire. It’s a good idea to focus on your gains year over year, rather than the number you get at the end of the equation. If you’re concerned about your net worth or are hoping to increase it, especially for future retirement goals, then it might be helpful to consider investing.
There are a multitude of things that can have an effect on your net worth. And focusing strictly on your net worth probably shouldn’t be your focus. If you’re concerned about it, though, it may be worthwhile to talk to a financial professional.
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Your credit score is one of the most influential measures that determine whether you’ll be approved for loans and credit cards. A number of factors go into calculating a credit score, including your history of on-time payments and how much debt you owe as well as what types of credit you have and how long your credit history is.
Knowing what affects your credit score is the first step to ensuring your score stays high so you can qualify for financing opportunities when they arise. We’ll address all your questions about what affects your credit score, as well as how to keep track of it.
In a nutshell, having a good credit score provides opportunities for you financially and can help you spend less overall on financing. If you want to buy a car, a good credit score can help you secure an auto loan at a low rate. Similarly, having good credit is key to opening a credit card.
Having a bad credit score — generally anything under 500 on the scale of poor to exceptional credit — can limit your financial opportunities. If you have bad credit, you may not qualify for loans that you apply for, or if you do, you may have higher interest rates. You also may not get approved for a credit card, unless it’s a secured card, which requires a deposit and has a low credit limit. A bad credit score could even hamper your job search, particularly if the job involves handling money.
The bottom line is that having bad credit hinders your ability to grow financially, so it’s important to do what you can to maintain a good credit score.
The first step toward building your credit score is understanding what factors help to determine it. In general, these are the five credit score factors that shape your score:
Factor #1: Credit Utilization
When it comes to what affects your credit score, one of the most important factors is how much credit you have available versus how much debt you currently have. It’s called your credit utilization, and you can calculate this number by dividing your outstanding debts by your total credit available.
Let’s say you have three credit cards with a total credit limit of $30,000. You owe $3,000 in total. So your credit utilization would be:
3,000 / 30,000 = 0.10
Your credit utilization of 10% (you’re using 10% of your total available credit) is great, as lenders generally want to see a utilization rate below 30% to approve a loan application.
Factor #2: Payment History
You might not feel like an occasional late payment on a credit card is a big deal, but it can impact your credit score negatively. In fact, payment history accounts for 35% of your FICO score (the scoring system for the credit bureau Experian).
The easiest way to raise your credit score? Pay your bills on time. Many loans and credit cards will allow you to set up autopay, which is a foolproof way to make sure you never miss a payment.
Factor #3: Credit History Length
You’re not born with a credit history; it has to be built over time. Many college students start the journey by opening their first credit card account. This is a great place to start, though remember that good habits like paying on time and keeping your credit utilization rate down will help build good credit.
And lest you think if you want a new credit card you need to close an old one, you don’t. The longer you have relationships with credit companies, the better your credit.
Factor #4: Types of Credit
While this factor isn’t nearly as important as the others, the types of credit you have can impact your credit score. Having a nice mix of credit — such as credit cards, a home mortgage, and an auto loan — can contribute positively to your credit scores, though it isn’t required.
Whenever you apply for credit, whether that’s a car loan or a credit card, there is what’s called a “hard inquiry” on your credit report. If you make several applications within a few days or weeks of one another, it may be seen as derogatory on your report, and your credit score might dip a bit.
Consider your credit needs carefully and try to look for lenders that let you see if you prequalify, since that is considered a “soft inquiry” and won’t impact your credit the same way.
Remember, There Are 3 Main Credit Scores to Consider
While the factors above are what generally affect your credit score, you actually have three different credit scores, each of which may be calculated slightly differently. These three credit scores come from the following three personal credit bureaus that track your financial activity:
• TransUnion
• Experian
• Equifax
Each bureau has its own credit scoring system that it uses to determine your score. Some loans and credit card companies report to one or two bureaus — or even all three — so it’s important to know that your activity may show up slightly differently depending on the reporting agency.
How to Track Your Credit Score
Now that you understand what affects your credit score, it’s your responsibility to stay on top of your score so you know when it changes. Each credit scoring bureau updates scores on a different schedule, but you can expect updates roughly every 30 to 45 days.
There are several places you can check your credit score. Some banks and credit card issuers offer the service free to customers. Additionally, you are entitled to one free credit report a year from AnnualCreditReport.com , which provides your credit reports and scores from each of the three credit bureaus.
Tracking your score is important even if you don’t plan to take out a loan or open a credit card any time soon. Make sure to regularly review your report to ensure there are no discrepancies, such as a late payment you know you didn’t make, or an open account you closed. If you see anything that is incorrect, contact the credit bureau immediately to get it resolved.
Once you understand what affects your credit score, you have the power to improve your score by taking steps such as reducing your credit utilization and paying your bills on time. As you build your credit, you will qualify for better loan offers and interest rates on credit cards, which can empower you to purchase what you need without high expense.
Take control of your finances with the SoFi money tracker app, which allows you to track your spending, set goals, and monitor your credit, all in one place.
See how SoFi can help you easily keep track of your credit score and what affects it.
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If you’re living paycheck to paycheck or just wish there were more wiggle room in your finances, you may want to consider some money-wise tips like budgeting, negotiating your bills, and lowering your debt.
Making your dollars go further may also involve finding ways to help grow the money you do have in the bank (and there may soon be more of that). You’ll learn a dozen smart and simple tactics here.
Simple Ways to Stretch Your Money Further
Read on for money-stretching strategies that may help make it easier to make ends meet, plus have a little bit of extra.
1. Tracking Your Money
If you want to do more with your money, it helps to first figure out what you are currently doing with your money.
You may have a good sense of your fixed monthly expenses (such as rent/mortgage, car payments, groceries, student loans), but smaller everyday expenses have a tendency to slip through the cracks — yet, nevertheless, add up.
A good exercise is to track how much you’re actually spending each day (that includes every cash/debit/credit purchase you make, plus every bill you pay) for a month or so.
You can do this by carrying around a notebook or saving all of your receipts and putting them into a spreadsheet on your computer. There are also a number of apps that can make the process of tracking your daily spending easy.
This can be an eye-opening exercise. Spending is so frictionless these days, many of us really don’t have a handle on how much money we are actually spending.
Seeing it all in black and white can help you think twice before buying something nonessential, and help you start becoming much more intentional with every dollar.
2. Setting up a Budget
Once you’ve done the work of tracking your monthly expenses, you may next want to compare this to how much money (after taxes) is coming in each month.
If you are consistently spending more than you are bringing in, you may want to set up a budget to help you get these two numbers better aligned.
The process requires grouping all of your spending into categories, seeing where you may be able to cut back, and then setting up some monthly spending parameters.
There are a number of tools and apps that can help you create — and stick with — a household budget, but even just keeping a ledger or a basic spreadsheet can help you gain more control over where money is falling through the cracks.
While the idea of living on a budget may sound like a drag, the truth is that planning how you want to spend your money can often lead to having more money to spend on the things you want. Plus, there are many types of budgets, and one of them probably suits your personal and financial style well.
A budget can also help guide your money toward short- and long-term financial goals like an emergency fund, a down payment for a house, and retirement savings.
3. Paying Bills on Time
Knowing when your bills are due and paying them on schedule could save you money in a few different ways.
Second, It might also maintain your credit score. A good credit score is important because it can help you qualify for the best interest rates on credit cards and loans.
And the less money you have to pay in interest, the faster you’ll be able to pay off debts – and the more money you’ll have to spend on other things.
4. Negotiating a Better Deal
Some of those recurring bills (like cable, internet, your cellphone, car insurance) may not be set in stone.
It might take some research — and a little nerve — but you may be able to negotiate for a lower rate from some of your service providers, especially if you’re dealing with a company that’s in a competitive market.
Before you call or email a business or provider, it can help to know exactly how much you’re paying for a service, what you’re getting for your money, and how much the competition is charging for the same or similar service.
It’s also a good idea to make sure you are communicating with someone who actually has the power to lower your rate and, if not, ask to speak with someone who does.
It may also be helpful to let a provider know that if they can’t do better, you may decide to switch to another company (and you might).
You can also try to talk your way to a better deal with other expenses, such as negotiating medical bills.
If you can pay down that debt, you could use the money you’re now throwing away on interest to pay other bills, build an emergency fund, invest for the future, or save for a vacation or some other goal.
Reducing debt is easier said than done, of course — but choosing the right debt reduction strategy may help.
• Since credit card debt typically costs the most in interest, you might consider chipping away at these debts first or, if possible, wiping them out completely. You could then move on to the debt with the next-highest interest rate, and so on.
• Another approach to reducing debt is to pay the minimum toward all your accounts, and then pay any extra you can toward the debt with the smallest balance. When that debt is paid off, you can move on to the next smallest balance, and so on.
• If you can qualify for a lower interest rate, another option might be to take out a personal loan that consolidates all those high-interest debts into one more manageable payment.
Getting rid of that damaging debt can have long-range consequences as well.
If you can lower your credit utilization ratio, which shows the amount of available credit you have, you could build your credit. And that, in turn, could make it easier to qualify for lower-interest loans and credit cards in the future.
6. Balking at Bank Fees
Unless you’re vigilant about checking your statements, you might not even notice the fees your bank may be charging every month for your checking and savings accounts.
They might include service fees, maintenance fees, ATM fees (if you don’t use in-network machines), minimum balance fees, overdraft or insufficient funds fees, and/or transaction fees. And all those little nips can take a toll over time and could even leave you with a negative bank balance.
If you see that your bank is hitting you with one or more monthly fees, you may want to consider shopping around for a less expensive bank, which might involve switching banks to an online-only financial institution. Because online financial institutions typically don’t have the same overhead costs banks with physical branches do, they generally offer low or no fees
Get up to $300 when you bank with SoFi.
Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.00% APY on your cash!
7. Pressing Pause on Impulse Purchases
If impulse purchases are your downfall, consider trying a temporary spending freeze, during which you avoid buying anything that isn’t a must.
Or maybe pick a single category (shoes, wine, concerts) or a specific store to stay away from for a certain period of time.
To help keep you motivated, you might track the money you didn’t spend during your freeze and then put it to use paying down debt, starting an emergency fund, or saving for a down payment on a home or other short-term financial goal.
Once you start seeing the benefits of saying no to impulse purchases, you may find yourself spending less even after the freeze is over.
8. Making Lists
Another way you may be able to make your money stretch is to make a list any time you’re going to shop, keep it in your pocket or on your phone, and then stick with it in the store.
And lists aren’t just for grocery shopping. You could make one before you hit the pharmacy, the mall, the local coffee shop, the sporting goods store, or just about anywhere you might wander off course.
Keeping a list close at hand can help avoid having to go back to the store because you forgot something (keeping store visits to a minimum), and you might be less tempted by items that aren’t on your list.
9. Click ‘Unsubscribe’
If your favorite retailers tend to bombard you with emails alerting you to their latest and greatest sale, you may want to think about getting off their e-mailing lists.
Sales and great deals are happening all the time, and generally the best time to purchase something is when you really need it.
Even if you don’t find that needed item at its lowest ever sale price, you will likely end up spending less than buying more things simply because they are on sale.
If the bait to buy doesn’t constantly land in your inbox, you’ll be less likely to take it (and won’t even know what you are missing out on). This move could quickly translate into more cash or one less bill at the end of the month.
10. Maximizing the Money You Save
Another way to stretch your dollars is to consider how you might get a higher return on any money that is sitting in the bank earning little to no interest.
Higher-yield savings options you might consider include an online savings account, checking and savings account, certificate of deposit (CD), or a money market account.
For a longer-term payoff (and potentially higher rate of return), you may also want to consider putting more money into your 401(k) or other retirement fund, as well as starting or adding to a non-retirement brokerage account.
11. Keeping the Change
Loose change may seem fairly worthless, but over time it actually can add up, and might help you help you pay a bill or buy a nice dinner.
Instead of letting coins live indefinitely in the bottom of your bag or the cup holder in your car, consider setting up one money jar in your home to collect it all.
Then, every month or so, you might sort and roll the coins to take to the bank. (You can also use a coin-counting machine, available in some stores, but keep in mind that some deduct a fee, or percentage of your change.)
If you rarely use cash anymore, you may still be able to make good use of virtual change. Many mobile apps (perhaps the one your bank provides) and credit/debit card accounts offer users the opportunity to automatically round up purchases to the nearest dollar and have that money transferred into a savings account.
So, for example, if you bought a doughnut for $1.25, the purchase would be rounded up to $2, and the extra 75 cents would be sent to your account to go toward a savings goal.
12. Using Windfalls Wisely
It can be incredibly tempting to use a tax refund or a work bonus to buy something fabulous. And there’s nothing wrong with an occasional splurge.
But you may also want to consider using that money to pay down a high-interest credit card, make an extra payment on a loan, or start (or add to) a high-yield savings vehicle or other investment.
Any of these moves can help you stretch those dollars, either by cutting the amount of interest you’ll owe over time or adding to the interest you’ll earn.
The Takeaway
With a few smart savings strategies, you might be surprised at how much further you can stretch your money each month. Getting started is simply a matter of tracking your spending so you can then find ways to save.
Some money stretching moves might include negotiating with (or switching) service providers, putting a bit more money towards debt reduction, knocking down (or eliminating) monthly bank fees, reducing the temptation to make impulse purchases, and finding ways to make your savings grow faster.
Looking for a better way to manage your spending and saving so you can get the most for your money? Consider opening an online bank account. With SoFi Checking and Savings, you’ll spend and save in one place, which makes tracking your money easier. Plus, you’ll earn a competitive annual percentage yield (APY), pay no account fees, and have Roundups to help grow your cash.
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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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.
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 .
Does living on a budget sound like a bummer, all about scrimping and saving? It shouldn’t! A budget is really just a way to evaluate and keep better track of what money you have coming in and going out each month.
Having insight into the big picture of your personal finances can make it much easier to figure out where you may need to make tweaks so you can reach your personal and financial goals.
Rather than feeling restrictive, living with a budget can actually make your life easier and less stressful, while also helping you prepare for the future.
Here are some ideas to help get you going.
1. Determining What’s Coming In
The first step for creating a budget is to figure out how much money you are earning after taxes every month.
This might be easy for salaried W2 workers who automatically get their taxes taken out of every paycheck. It can be a bit trickier for 1099 freelancers who only see how much they are taxed at the end of the year.
For freelancers, there is a simple solution though: Using how much you made the previous year and what taxes you paid, you can then pay estimated quarterly taxes to the IRS. This can help give you a more accurate picture of how much you are earning on a monthly basis.
2. Listing Spending Categories
Next, you’ll want to figure out how much you’re spending each month.
This involves going through one month’s worth of expenses and dividing everything up into categories, then figuring how much you spend on each. You can do this by hand, put the info into an online spreadsheet, or use a budgeting app. Your financial institution may offer one, or you can download one.
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 television, streaming services, concert and movie tickets, restaurants, clothing, etc.
You’ll also want to include monthly contributions to a retirement plan and personal savings into the expense category as well.
In addition, you may want to have an emergency fund in place that could cover at least three to six months of living expenses just in case. If you don’t have an emergency fund, consider putting it on the spending list, so you can start putting some money towards it each month. (Putting it in a high-yield savings account can be a wise move to help it grow. You might even automate your finances and have a small sum deducted right after payday and put into the account)
3. Seeing Where You Stand
Once you have a sense of your monthly earnings and spending, it’ll be time to see how your numbers line up with general budgeting guidelines. One good budgeting method is the 50/30/20 model, 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.
By looking at your income versus your expenses, it will be easy to see what, if any, changes need to be made.
4. Making Adjustments
There are many ways to adjust how much is being spent in order to reach certain personal finance goals.
The easiest way to change your spending habits is to trim some of your nonessential expenditures. For example, perhaps internet and cable television costs $120 a month, and if cable is cut out, it would result in a savings of $60 a month.
Not taking as many trips to the mall or cooking (instead of getting takeout) more often could start adding up to a big difference.
Using coupons and promo codes when shopping, as well as or going to discount or second-hand stores can also reduce costs.
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 an older, pre-owned vehicle.
5. Negotiating With Credit Card Companies and Service Providers
If debt and bills are too high, then it’s going to be much harder to budget and save up money for the future.
One way to cut back is to negotiate with credit card companies and service providers. Credit card companies want their money back, so when cardholders call and say they can pay if some adjustments are made, they may be willing to help.
Cardholders can ask for their monthly payment to be lowered, see if their interest rate can be lowered, and/or ask if it’s possible to remove late fees.
It may also be possible to lower monthly bills for internet, cable, streaming services, medical bills, and car insurance. For instance, if you see a promotion going on for cable and internet, you can always ask your cable company if they can apply that promotional rate to your account.
You can also use a car insurance quote comparison tool to find a lower car insurance rate, or call up a hospital to negotiate a medical bill.
6. Taking on a Side Gig
Once a living budget is made, it may seem clear that additional income could be a big help. As long as someone has the time and energy, they can take on a low-cost side hustle to bring in more money. Some ideas include:
• Selling things on eBay, Craigslist, or Facebook Marketplace
• Having a garage sale.
• Creating an Etsy store and selling homemade goods
• Driving for a rideshare or food delivery service
• Giving music lessons
• Renting out a room on Airbnb
• Walking dogs
• Cleaning houses
• Babysitting
• Handling social media for small businesses
• Selling writing, photography, or videography services to clients
Setting aside additional income for necessary expenses, and not spending all of the money on wants, can be a big help when it comes to living on a budget.
It’s easy to spend money when only using credit cards and debit cards. Whenever possible, it’s a good idea to use cash as it can be easier to see the impact of your spending. You might be less likely to go into debt since money doesn’t seem invisible anymore. Consider taking out enough cash at the beginning of the week to cover your daily expenses to help you stick with your budget.
The Takeaway
Living on a budget doesn’t have to feel onerous and restrictive. In fact, the process of setting up a budget and sticking to it every month, can eventually free you from financial burdens and help you reach your life goals.
Getting started involves listing everything that is coming in, and everything that is going out each month. The next step involves figuring out where you stand, and what you can do to get closer to your personal and financial goals. This may involve cutting back in some areas and also finding some ways to boost your income.
Keep at it and soon you will be in control of your finances, rather than the other way around. Your bank can also help you stay on top of your budget. For instance, with a SoFi Checking and Savings Account, you can easily track your spending on your dashboard within the app. Plus, you’ll earn a competitive annual percentage yield (APY), pay no account fees, and spend and save in one convenient place. All of those features can help you be a better money manager.
SoFi: The smarter way to stay on top of (and grow) your money.
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.
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While prenups and postnups aren’t as romantic as discussing your honeymoon or your dream house, these agreements can be a financial lifesaver if your marriage were to end.
Both prenups and postnups help determine who would get what if you and your spouse got divorced.
These two varieties of agreements carry some significant distinctions. Depending on your circumstances, one may better suit your relationship versus the other.
Here, you’ll learn some of the key ways prenups vs. postnups differ, as well as how to decide if you and your partner would benefit from getting one.
What is a Prenup?
Short for “prenuptial agreement,” a prenup is a legally binding document set up before a couple gets married — hence the “pre” suffix. Prenups may also be known as “antenuptial agreements” or “premarital agreements,” but the bottom line is, they’re contracts drafted before vows are made.
These contracts typically list each party’s assets, including property and wealth, as well as any debts either soon-to-be-spouse might carry.
It then details how these assets will be divided in case the marriage comes to an end, either through a divorce or the death of a spouse.
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Who Needs a Prenup?
Couples who are getting married for the first time and are bringing little to no assets into the marriage may not need to bother with drawing up a prenup.
However, a prenup can be particularly useful if one spouse is coming into the marriage with children from a previous partnership, or if one partner has a large inheritance or a significant estate, or is expecting to receive a large inheritance or distribution from a family trust.
These types of agreements aren’t just used in case of divorce, but also death, which can be particularly important for couples with children from a previous marriage.
If that partner dies, the prenup can define how much of their wealth should be passed onto their children versus their surviving spouse.
Prenups can also be useful for protecting assets earned and property acquired during the course of a marriage, which, without a prenup, are generally considered “shared ownership.”
If one partner wants to maintain a separate claim to acquired wealth or possessions, a prenuptial agreement makes that possible.
A prenup can also keep a high-earning partner from being required to pay alimony to their partner in the case of a divorce. However, in some states, a spouse can’t give up the right to alimony, and the waiver may not be enforced by a judge depending on the way the prenup is drafted.
In the event of divorce, a prenup can also help protect a spouse from being liable for any debt, such as student loan payments in a marriage, the other spouse brought into the union.
What is a Postnup?
A postnup, or postnuptial agreement, is almost identical to a prenup — except that it’s drafted after a marriage has been established.
They may not be as well known as prenups, but postnups have grown increasingly common in recent years, with nearly all 50 U.S. states now allowing them.
A postnup may be created soon after the wedding, if the couple meant to do so but simply didn’t get around to it before the big day, or well afterwards, especially if some significant financial change has taken place in the family.
Either way, a postnup, much like a prenup, does the job of outlining exactly how assets will be allocated if the partnership comes to an end.
Who Needs a Postnup?
Along with being drafted whole cloth, a postnup can be used to amend an existing prenuptial agreement if there have been big changes that mean the initial contract is now outdated.
And although it’s not fun to think about, if a couple feels they’ll soon be facing divorce, a postnup can help simplify one important part of the process before the rest of the legal proceedings take place.
A postnup, like a prenup, can help separate out assets that would otherwise be considered shared, “marital property,” which can be important if one partner obtains an inheritance, trust, piece of real estate, or other possession they want to maintain full ownership over.
Postnups can also be part of a renewed effort for a couple to commit to a marriage that may be facing some obstacles and challenges.
Prenup vs. Postnup: Which is Right for Your Relationship?
While it may be a difficult conversation to face with your fiance or spouse, creating a prenup or postnup can be an important step to help you avoid both headache and heartache later on.
If you don’t make a prenup or postnup, your state’s laws determine who owns the assets that you acquire in your marriage, as well as what happens to that property in the event of divorce or death. State law may also determine what happens to some of the assets you owned before marriage.
While almost any couple can benefit from a frank discussion of who gets what in the worst-case scenario, here are the situations in which you might specifically want to consider a prenup vs. postnup.
• If one or both partners have existing children from a previous partnership, to whom they want to lay out specific inheritances in case of death.
• If one partner has a larger estate or net worth (i.e., if one spouse is significantly wealthier than the other).
• If one or both partners want to protect earnings made and possessions acquired during the marriage from “shared ownership.”
When to Consider a Postnup
• If you intended to create a prenup but ran out of time or otherwise didn’t do so before the wedding.
• If significant financial changes have made it necessary to change an existing prenup or draft a new postnup.
• If divorce is looking likely or inevitable, and the couple wishes to streamline the process of dividing marital assets before undergoing the rest of the process.
In all cases, prenuptial and postnuptial agreements can help simplify the division of assets in the case of either death or divorce — and in either of those extremely emotionally charged scenarios, every little bit of simplification can help.
However, prenups are sometimes considered more straightforward, since they’re made before assets are combined to become marital property.
Prenups may be more likely to be enforceable than postnups should one partner attempt to dispute it after a divorce.
• For a prenup or postnup agreement to be considered valid by a judge, it must be clear, legally sound, and fair.
• Couples looking to save money may be able to use a template to create a prenup or postnup themselves.
• It may still be a good idea, however, for each partner to at least have separate attorneys review the document before either one signs.
• If your estate is more complex, you may want to consider hiring an attorney to draft the agreement.
• Either way, having an attorney review the document will help protect your interests and also help ensure that a judge will deem the agreement is valid.
Reducing the Odds You’ll Ever Need to Use that Prenup or Postnup
While creating a prenup or postnup can be a smart move for even the most hopeful and romantic of couples, the ideal scenario is a happily-ever-after that leaves those contracts to gather dust.
Fighting about money is one of the top causes of strife among couples, and one of the main reasons married couples land in divorce court.
For some couples, one way to improve their odds might be waiting until they’ve achieved some measure of financial stability before tying the knot.
Walking into a marriage with a solid personal foundation, such as a well-stocked emergency fund and a well-established retirement account, can help partners feel empowered and able to focus on other important relationship goals.
Financial transparency, starting before and/or early in marriage, can also help mitigate marital tension over money.
To achieve more transparency, some couples may want to consider opening up a joint bank account, either after they tie the knot or before if they are living together and sharing household expenses.
While there are pros and cons to having a shared account, merging at least some of your money can help make it easier to track spending and stick to a household budget, while also fostering openness and teamwork.
For couples who’d rather not share every penny (or explain every purchase), having two separate accounts along with one joint account can be a good solution that helps keep money from becoming a source of tension in a marriage.
The Takeaway
Prenuptial and postnuptial agreements are both legal documents that address what will happen to marital assets if a married couple divorces or one of them dies.
A prenup is drafted before marriage, while a postnup can be drafted soon after or many years into marriage. Both agreements can make divorce or the death of a partner significantly less traumatic and help divide assets in an equitable way.
For both couples who are ready to integrate their finances or want to keep their money separate, opening a Checking and Savings account with SoFi makes things easy. Whether a joint account or not, you’ll spend and save in one convenient place, while earning a competitive annual percentage yield (APY) and paying no account fees.
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.
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.
This article is not intended to be legal advice. Please consult an attorney for advice.
