Jun
25
2024

Savings Account Advantages and Disadvantages

By | Budgeting & Goals, money, Money & Life | Comments Off on Savings Account Advantages and Disadvantages

If you’re looking for a place to safely store (and grow) money you don’t need right away, a savings account could be a great choice. These accounts are typically federally insured, pay interest on your deposits, and allow easy access to your funds when you need them.

That said, savings accounts also have some downsides. The interest rates can be low and may not keep up with inflation, which means your money could lose spending power over time. Many savings accounts also put limits on how often you can access your refunds, such as six withdrawals or transfers per month.

Depending on your needs and savings goals, a savings account may or may not be your best option. Here’s a look at the pros and cons of a savings account, plus alternatives that could be a better choice for growing your nest egg.

What Is a Savings Account?

A savings account is a deposit account held at a bank or other financial institution that earns interest over time. These accounts are designed to help people save money while providing easy access to funds when needed. This makes them well-suited for emergency savings and money you’re setting aside for an upcoming goal like a large purchase or vacation.

Unlike checking accounts, which are primarily used for daily transactions, savings accounts are intended for longer-term deposits, and you may be limited to a certain number of transactions you can make each month, such as six or nine.

Savings accounts at banks in the U.S are typically insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor per institution. In the case of joint accounts, each co-owner can get up to $250,000 in FDIC coverage across their joint accounts at the same bank. Savings accounts at credit unions have similar protections through the National Credit Union Administration (NCUA).

Recommended: Reasons to Keep Money in a Savings Account

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*Earn up to 4.00% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.30% APY as of 12/23/25) for up to 6 months. Open a new SoFi Checking and Savings account and pay the $10 SoFi Plus subscription every 30 days OR receive eligible direct deposits OR qualifying deposits of $5,000 every 31 days by 1/31/26. Rates variable, subject to change. Terms apply here. SoFi Bank, N.A. Member FDIC.

Savings Account Pros and Cons

Savings accounts offer a range of benefits, as well as some drawbacks. Understanding these can help you make an informed decision about whether a savings account is the right choice for your needs and goals.

Pros

•   Earns interest: Savings accounts earn interest, which means your money can grow over time. The interest rate is expressed as an annual percentage yield (APY), which tells you how much you’ll earn on your deposits over one year, including compound interest. APYs vary depending on the bank and the type of savings account. Online savings accounts generally offer higher APYs than traditional savings accounts.

•   Safety and security: Funds in savings accounts are usually federally insured. This means you’re protected (up to at least $250,000) if the bank were to run into financial trouble or shut its doors.

•   Liquidity: While not as liquid as checking accounts, savings accounts still allow easy access to your money. You can withdraw money or transfer it to other accounts relatively easily and quickly.

•   Low or no opening deposit required: Unlike some savings and investment vehicles, you can often open a savings account with little or no money. Many online banks have no minimum deposit requirements; traditional banks may require a deposit, but it’s often as low as $25.

•   Encourages saving: By keeping money in a savings account separate from your daily spending funds, you may be less tempted to spend it. Some institutions allow you to set up an automatic transfer from your checking account to your savings for a set amount on a set day (such as right after you get paid). This allows you to save without thinking about it.

Recommended: What Is a Long-Term Savings Account?

Cons

•   Variable interest rates: The interest rates for savings accounts aren’t fixed, which means they can vary with the federal funds rate, the benchmark rate set by the Federal Reserve. If the Fed raises the federal funds rate, APYs on savings accounts tend to increase. However, if the Fed lowers rates, your savings account APY may go down.

•   Relatively low returns: Compared to other investment options, savings accounts generally offer lower interest rates. This means your money grows more slowly than it might in higher-risk investments. As of May 20, 2024, the national average yield for savings accounts is 0.45%. However, many online banks have savings interest rates higher than the national average for savings accounts.

•   Limited transactions: A federal rule called Regulation D used to limit withdrawals from savings accounts to no more than six a month. That changed in April 2020 when the Federal Reserve announced that it was removing the requirement that banks enforce the limit. Even so, banks and credit unions have largely kept restrictions in place.

•   Inflation risk: The interest earned on savings accounts may not always keep pace with inflation. Any time your savings isn’t growing at the same rate as inflation, you are effectively losing money because the real value of your money is diminishing.

•   May have minimum balance requirements: You might need to keep a certain amount of money in your savings account in order to avoid monthly maintenance fees and/or earn the top interest rate.

Pros of Savings Accounts

 Cons of Savings Accounts
Earns interest Interest rate can change
Money is safe Low return
Easy access to funds Rates may not beat inflation
Automatic savings Transaction limits
Takes no or little money to start Might have fees and account balance minimums

Savings Accounts vs Checking Accounts

While both savings and checking accounts serve essential roles in personal finance, they have different purposes and distinct features.

Checking accounts are designed for spending money. Therefore they generally offer little to no interest, come with debit cards, and allow unlimited transactions. Savings accounts, on the other hand, are set up to encourage saving. They pay interest on your deposits, don’t come with debit cards, and may place some limitations in how, and how often, you can access your cash.

Here’s a look at how these two accounts types compare side-by-side.

Savings Account

 Checking Account
Main purpose Save money and earn interest Manage daily transactions and spending
Interest earned Earns interest Low or no interest
Transaction limits Yes (typically six withdrawals/transfers per month) No
Fees Low or no fees with minimum balance May have monthly and other fees
Accessibility Moderate (designed for less frequent use) High (designed for frequent access and use)
Check-writing No Yes
Debit Card No (just ATM card) Yes

Is a Savings Account Right for You?

Whether a savings account is right for you depends on your financial needs and savings goals. A savings account could be the right place to stash your cash if you are:

Building an emergency fund: Due to its liquidity and security, a savings account can be a good place to keep your emergency savings.

Saving for a short-term goal: If you are saving up for a goal that is a few months to a few years in the future — such as a vacation, home improvement project, or a down payment on a car —- a savings account can be a great option.

Looking for low-risk savings: If you prefer a low-risk place to store your money while still earning some interest, a savings account can make sense. Just keep in mind that for mid- to long-term savings goals (defined as roughly five years or more), investing in the market may be more appropriate, though there is risk involved.

Recommended: How Much Should I Have in Savings?

Choosing a Savings Account

Savings accounts are offered by different types of financial institutions, including traditional banks, online banks, and credit unions. There are also many different types of savings accounts, including traditional savings accounts and high-yield savings accounts. Which to pick?

When choosing the right savings account for your needs, it helps to consider the following factors:

•   Interest rate: APYs offered by savings accounts can vary widely, so it pays to shop around. While rates are generally low, some institutions offer higher rates, particularly online banks.

•   Fees: Ideally, you want to open a savings account with no (or very low) fees. Be sure to check if there are any requirements to avoid fees, such as maintaining a minimum balance.

•   Accessibility: Consider how easy it will be to access your funds and if the account comes with any limitations on how many withdrawals or transfers you can make per month. You may also want to look for accounts with user-friendly online and mobile banking options.

•   Insurance: You’ll want to make sure that the institution offering the savings account is insured by the FDIC or NCUA.

Recommended: Understanding High-Yield Savings Accounts

Alternatives to Savings Accounts

A traditional or high-yield savings account isn’t the only place to put your savings. Depending on your goals, you may want to consider other options. Here are some alternatives.

•   Money market accounts (MMAs): MMAs often offer higher interest rates than traditional savings accounts, plus a debit card and/or check-writing privileges. However, they might require a higher opening and ongoing minimum balance.

•   Certificates of deposit (CDs): CDs typically offer higher interest rates than traditional savings accounts in exchange for locking your money in for a set period of time (anywhere from a few months to a few years). They can be a good option if you don’t need immediate access to your funds. However, you may be able to find a high-yield savings account that offers the same or better APY with fewer restrictions.

•   Investment accounts: For longer-term goals, you may want to consider investment accounts like individual retirement accounts (IRAs), mutual funds, or stock portfolios, which can offer higher returns but come with greater risk.

•   Treasury securities: U.S. Treasury securities, such as bonds and bills, are low-risk investments backed by the federal government. They offer different maturity terms and interest rates.

SoFi Savings Accounts

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What are the cons of a savings account?

Savings accounts, while beneficial for many reasons, do have some drawbacks:

•   Relatively low interest rates: Savings accounts generally offer lower interest rates compared to other investment options.

•   Limited transactions: You may be limited to six withdrawals and transfers per month. Exceeding this limit can result in fees.

•   Inflation risk: The interest earned may not always keep pace with inflation, potentially reducing the purchasing power of your savings over time.

•   Opportunity cost: Funds in a savings account might earn less compared to higher-yield investments, representing a missed opportunity for greater returns.

What is the benefit of a savings account?

Savings accounts offer significant benefits. They provide a safe and secure place for your money (since your deposits are typically insured up to $250,000). These accounts also earn interest, allowing your money to grow over time, albeit often at a modest rate. In addition, savings accounts offer easy access to your funds when needed. And many come with minimal or no fees, though a minimum balance may be required.

Is it worth putting money in a savings account?

Yes, putting money in a savings account can be worth it, especially for specific financial needs. For example, savings accounts can be the ideal spot for building an emergency fund due to their safety, liquidity, and ease of access. They can also be a good choice for short-term savings goals, such as vacations or major purchases. Since interest rates are relatively low, however, they are generally not ideal for long-term savings goals like retirement or a child’s college fund.

Photo credit: iStock/Ridofranz

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

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Jun
25
2024

Guide to Education IRAs

By | Growing Wealth, invest, Investing | Comments Off on Guide to Education IRAs

There are many different ways you can save for education expenses, and each one comes with its own pros and cons. Depending on your situation, you may want to explore 529 college savings plans, Roth IRAs, or education IRAs — also known as Coverdell Education Savings Accounts (or ESAs).

Education IRAs — more commonly called Coverdell ESAs today — provide a tax-advantaged way to save for primary, secondary, and higher education expenses. Unlike 529 Plans, you can only save $2,000 per year, per beneficiary in an ESA, and your contribution limit is determined by your income.

🛈 Currently, SoFi does not offer education IRAs.

What Is an Education IRA, or ESA?

Despite sometimes being called an education IRA, this is not a retirement account like a traditional IRA, but is rather intended for education-related expenses, including tuition, tutoring, books, and more.

It’s possible for a parent to consider using retirement funds to pay for college, but it’s generally unwise to compromise your own retirement.

Fortunately, there are many tax-advantaged ways to save for a child’s education. It’s even possible to use an education IRA in combination with a 529 plan, especially if you’re looking for creative ways to save for college.

ESA Basics

It’s important to know that different rules apply to each type of educational account. For example, parents, grandparents, and other individuals can open ESAs on behalf of an eligible beneficiary (the student) and make annual contributions.

But contributions are not tax deductible (as they sometimes are when creating a college fund, depending on the state); and contributions are limited to $2,000 per year, total, per beneficiary. So, if a grandparent opens an ESA for a child, and an uncle opens an ESA for the same child, the total contribution amount per year in those two ESA accounts cannot exceed $2,000.

The perks of a 529 savings plan include: No annual contribution limits; no income limits; contributions are tax deductible in some states. But you can only use up to $10,000 in 529 funds for primary and secondary education expenses.

How Do Education IRAs Work?

ESAs have two primary people involved — the custodian, who manages the account, and the beneficiary, or student. The custodian sets up the education IRA and manages the funds on behalf of the student beneficiary.

An education IRA is a self-directed account, where the custodian can invest the money in assets like stocks, bonds, real estate or mutual funds. The appreciation and interest earned in an education IRA is tax-deferred, which means that appreciation is not subject to tax on capital gains or income. Distributions for qualified educational expenses are also not subject to taxes.

ESA Rules

Here are a few of the rules for setting up education IRAs (i.e., Coverdell ESAs):

Funds Must Be Contributed Before the Beneficiary Turns 18

All funding to an education IRA must be contributed before the beneficiary turns 18 years old, unless they’re a special needs beneficiary per the IRS.

Funds Must Be Distributed Before Age 30

You must distribute all funds in an education IRA before the beneficiary turns 30 (again, this doesn’t apply to those with special needs). However, the custodian may name a new beneficiary if there are still funds in the account when the original beneficiary reaches age 30.

Contribution Limits

Each account may only receive $2,000 in funding each year, total. Additionally, if your modified adjusted gross income (MAGI) is between $95,000 to $110,000 ($190,000 to $220,000 for those filing jointly), you can contribute a partial amount, not the full $2,000. If your MAGI is above $110,000 (or $220,000 for joint filers), you are not permitted to contribute to an ESA.

Tax-free for Qualified Expenses

While contributions are not deductible, assets in an education IRA are considered tax-advantaged, which means you do not pay any capital gains or income tax over time on the money within the account. And as long as you withdraw the money for qualified education expenses, you won’t pay any taxes on the withdrawals either. Nonqualified withdrawals, however, are subject to taxes and a 10% tax penalty.

Pros and Cons of an Education IRA

Pros of an Education IRA

 Cons of an Education IRA
Withdrawals for qualified education expenses are tax-free Limited to $2,000 in contributions per year
Are self-directed, meaning contributors can choose their own investments Ability to contribute is limited by contributors’ MAGI
Can be used for educational expenses from kindergarten through college Can’t contribute after the beneficiary reaches age 18*
Beneficiary of an ESA can be changed to a family member of the original beneficiary Must distribute all funds before the beneficiary turns 30*

*This does not apply to special needs beneficiaries.

Alternatives to Education IRAs

Here are a few alternatives to education IRAs:

529 Plans

A 529 plan is one of the most common ways that people save for college and other educational expenses. Earnings in 529 plans are also tax-deferred and qualified educational expenses can be withdrawn tax free, but in contrast to education IRAs, 529 plans have no limitations on the age of the beneficiary.

Roth IRA

You can also set up a Roth IRA for a child as a way to save for higher education expenses like college. While a Roth IRA is mostly intended for retirement savings, it can also be used for higher-education expenses because you can withdraw your contributions at any time (but there are restrictions on withdrawing investment earnings from a Roth before age 59 ½ ).

High-Yield Savings Account

It is also possible to put some or even the majority of your college savings money in a high-yield savings account. While you lose some of the tax advantages that come with Coverdell ESAs, IRAs, or 529 plans, you also have more flexibility since the money in a savings account can be used for any purpose without penalty. Also, these accounts are typically FDIC insured.

FAQ

Is an education IRA the same as a 529 savings plan?

While education IRAs (now called Coverdell ESAs) and 529 savings plans are both ways to save for education expenses, they are not the same thing. The aggregate contribution limits for 529 plans are much higher than they are for an ESA, so you could save more — and you’re not required to stop making contributions once your child turns 18.

What are the benefits of an education IRA?

An education IRA allows you to save money for a beneficiary and watch that money grow tax-free. And as long as you withdraw that money for qualified education expenses, you won’t ever have to pay income tax or capital gains tax on that money.

What is the income limit for an education IRA?

Education IRAs do limit who can make a contribution based on the adjusted gross income (MAGI) of the donor. Currently, the income limits for an education IRA are $95,000 for single taxpayers and $190,000 for married taxpayers. Single taxpayers with an MAGI of $95,000 to $110,000 and joint filers with an MAGI of $190,000 to $220,000 can contribute a lesser amount due to a phaseout rule. Single taxpayers and join filers whose MAGI exceeds $110,000 and $220,000, respectively, are not eligible to contribute to an educational IRA.

Photo credit: iStock/Jacob Wackerhausen

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SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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

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: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

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Jun
25
2024
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5 Tips If You Are Nervous About College

By | Going to College, Student Loans, student_loan | Comments Off on 5 Tips If You Are Nervous About College

Big life changes can mean both excitement and nervousness. It’s normal to feel both happy and anxious about starting college. New experiences can introduce a lot of pressure. And it may be the first time that many students leave home and are surrounded by new people.

Not only is feeling nervous about college normal, it’s also manageable. For high school students still getting ready for college, here are five tips that may help ease the nerves.

1. Make a List and Pack Early

To lessen anxiety, preparation for college is key. For students who are planning to live on campus, packing can feel like a monumental task. It’s already stressful to imagine living away from home, and on top of that students don’t want to forget anything important.

One of the best ways to help ensure a smooth transition is to make a list early and start packing ahead of time. When dealing with a large task, it helps to break it down into smaller pieces that are easier to tackle.

For example, students who are nervous for college could break up their packing list into sections like clothing, school supplies, and living essentials. Even just taking the small step of making the lists could ease some of the worries.

Some schools will provide guidelines for packing and lists of items that are prohibited on campus, so it can be worth checking the website or contacting a rep from Residential Life, a program that helps students with on- and off-campus housing. Once students know what they’ll need to purchase, they can go through the items they already have and make a list of which of these are coming with them, and which items are staying behind with Mom and Dad.

Depending on the weather where students are moving to, they can start by packing the clothing they know they won’t need to wear for the next few weeks. If it’s currently warm, start packing up those winter clothes!

This is one task that high school students not ready for college can tackle early on to build some confidence and feelings of preparedness.

💡 Quick Tip: Make no payments on SoFi private student loans for six months after graduation.

2. Learn About Independent Living

Students who are planning to go away for college should spend time before they go learning what they can about living independently. This can cover a wide range of tasks, such as learning how to cook, how to make a doctor’s appointment, and how to use public transportation. It can help students to work with their parents to make a list of tasks that the students need to get familiar with.

Some ways to get ready for college and living on their own can include:

•   Gathering a list of important phone numbers and addresses and entering them into their phones (doctor’s office, school counselor, roommate, etc.).

•   Making a few simple meals so they feel confident in the kitchen.

•   Practicing household chores like doing laundry and dishes if they don’t already.

If students are nervous about finding their way around campus, it may be helpful to explore the campus before classes start and find their classes.

For students who will be attending online classes, they will need to develop extra self-discipline and get familiar with online programs like Zoom. Doing this ahead of time can help minimize the stress of trying to log on the first time.

Recommended: 11 Strategies for Paying for College and Other Expenses

3. Develop Coping Skills

Students who are feeling nervous or anxious about beginning college can take the time before classes start to develop coping skills that will help them manage those feelings. Setting up a self-care routine that includes taking care of physical and mental health can help students manage the stress of college more easily.

Parents can also get involved in this process by sharing the coping skills that work for them and providing emotional support. Teens who know their parents are supportive are more likely to open up and actually use that support.

Recommended: College Planning Guide for Parents of High School Students

4. Ask Questions

Sometimes, not knowing what to expect can contribute to feelings of anxiety, but this can be minimized by asking questions. Students who have family members that went to college or are currently in college may want to set aside time to chat with them about their experiences.

High school guidance counselors can also be helpful in preparing students for college and easing their nerves.

There may also be an opportunity to go on a campus tour and ask questions there. High school students nervous about college may also benefit from attending their college’s orientation, so they show up on their first week prepared. Asking questions from others who’ve been to college will take away some of the scary mystery of the experience and may increase feelings of preparedness for high schoolers.

5. Focus on the Positives

Is college going to be tough? Of course! The classes will be more intense than high school level classes, and there will certainly be an adjustment period. In addition to these things, though, there are also numerous positives. College will give students opportunities to meet new people, learn about themselves, and have fun!

Some students may be overwhelmed at first at the prospect of making friends on a large campus, but there are many clubs and organizations that students can join. Getting involved in extracurricular activities can help students to form friendships and build a support system that may make their college experience more positive.

It may be a challenging four years, with adjusting to adult life and tackling finals every semester, but college can also be fun. High schoolers can help ease their nerves by embracing this aspect of college as well. Having a more realistic and balanced view of the experience may help them enter into it with less apprehension.

💡 Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a lower rate.

Paying For College

Another source of anxiety when it comes to preparing for college is the finances. College can be expensive, and figuring out how to pay for tuition, books, and living expenses is a confusing process. Luckily, there are multiple options that students can utilize to help cover the cost of their education.

The Free Application for Federal Student Aid (FAFSA) allows students to apply for federal student aid. This aid can come in the form of scholarships, grants, work-study, or federal student loans. Grants from the government usually do not need to be repaid, whereas loans do need to be repaid.

Students who are eligible to take out federal loans may benefit from doing so before looking into private student loans. Federal loans come with certain benefits, such as deferment and income-based repayment plans, that private loans may not.

If students are not eligible for federal aid or the aid isn’t enough to cover their costs, applying for additional scholarships is one option. Scholarships are widely available and the eligibility criteria varies for each scholarship. Some scholarships are need-based, whereas some are merit-based. Scholarships are offered by schools, private corporations, community organizations, religious groups, and more.

Taking out private student loans is another option for helping to fund a college education. The eligibility for private loans will usually depend on a student’s (or cosigner’s) credit history and income. When considering private student loans, students should remember that each institution will have its own terms for the loans.

The Takeaway

It’s normal to be nervous about attending college. To help settle your nerves, you can make a list of all the essentials you’ll need, learn about living independently, develop coping skills, ask questions, and focus on the positive aspects of attending college.

If finances are stressing you out, you have options, too. You can work a part-time job to help cover expenses, apply for grants and scholarships, and rely on federal and private student loans. It’s recommended to take out federal loans first, as they come with borrower protections that private student loans do not.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.


Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


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

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

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Jun
25
2024
38 Daily Money Affirmations for Financial Abundance

39 Daily Money Affirmations for Financial Abundance

By | Budgeting & Goals, Financial Independence, relay | Comments Off on 39 Daily Money Affirmations for Financial Abundance

If you’re finding it hard to be optimistic about increasing your riches, you may want to start adding financial affirmations to your everyday routine. Affirmations specifically targeting money have the power to change self-defeating or negative self-talk when it comes to your finances. And when you start replacing a pessimistic mindset about earning, spending, and getting out of debt with a positive one, you’re more likely to take the needed steps to attract the wealth you want — or so the thinking behind daily affirmations goes.

Reciting affirmations may seem awkward at first and the truth is, some people won’t find daily money mantras a game-changer. The good news is, daily money affirmations don’t cost anything and you control the story. Here’s the lowdown on financial affirmations so you can decide if they’re right for you.

What Are Money Affirmations?

Money affirmations are positive words, phrases, and sentences designed to turn discouraging thoughts about money into positive ones. The hope is by regularly speaking these uplifting statements to yourself, either in your head or out loud, you’ll reprogram your brain. When you swap out the old notions for the new thoughts and they become your new truth, you can get busy putting them into action.

The types of financial affirmations vary depending on what your money goals are. For example, you can create statements about increasing your income, getting out of debt, saving money, and expressing gratitude for the financial abundance you already have.

Creating your own personal affirmations are all about dealing with your specific money issues or blocks and how you can move forward.

While there’s no set rule on how many times a day you should verbalize your money affirmations, it helps to be consistent so it becomes a habit. A good start might be picking one powerful affirmation and repeating it throughout the day. Or you could choose three to five affirmations that you recite for five minutes or several times in a day.

Be forewarned that taking on too many at once may feel overwhelming and scatter your focus. Once you get the hang of it and it feels more doable, you can try adding more.

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Optimizing Your Money Affirmations

Positive affirmations may work better if you put them in present tense, such as “I can,” “I am,” or “I have” instead of using language such as “I will,” “I should,” or “I could.” Why? Statements promising future outcomes suggest you could be a certain way instead of dealing with the reality of where you are now.

It can take a while to retool your thinking, so try not to get discouraged if in the beginning, progress seems slow or non-existent. Remember, it took years to shape your current beliefs, so it can take some time to adjust to new ones.

Pros and Cons of Money Affirmations

As mentioned earlier, affirmations don’t always appeal to or work for everyone. Depending on your current state of mind and life circumstances, financial affirmations may seem trivial, frivolous, or simply not a priority. If you’re experiencing some stressful times or financial hardships, you may not have the emotional or mental bandwidth to take them on.

On the flip side, many people find that daily practice empowers them, provides clarity, and motivates them to take more financial control and responsibility.

Before you take the plunge, here’s some pros and cons to consider:

Pros of Using Money Affirmations

•   Give you a wider perspective on your core values surrounding your finances

•   Assist in setting personal boundaries

•   Help in creating a realistic budget

•   Cultivate a positive relationship with money

•   Keep you focused on your vision and financial goals

•   Home in on your strengths

•   Boost your self-image and confidence

•   Celebrate past financial successes and current achievements

•   Encourage problem-solving

•   Allow you to explore other possibilities to expand your wealth

Recommended: Does Net Worth Include Home Equity

Cons of Using Money Affirmations

•   Can feel inauthentic if they fail to align with your personal core beliefs or you don’t believe what you’re saying

•   Put too much self-applied pressure to transform your financial picture quickly

•   Can be time-consuming and easy to let slide if you’re busy

•   Require daily financial discipline, commitment, and persistence

•   May not cause any positive shifts in your thinking and lead you to feel you’ve wasted valuable time

•   May make you feel foolish, self-conscious, or uncomfortable reciting them

•   May bring up painful emotions about money you may not be ready to address, even with with financial therapy

•   Create self-doubt or self-defeating feelings if you’ve chosen affirmations that aren’t realistic or attainable

•   May overwhelm you and zap your emotional energy, especially if you’re going through difficult times

•   Probably won’t provide instant gratification if you want or need a quicker mental money fix

39 Ways to Think Your Way to Being a Millionaire

Want to give daily affirmations a try? Reciting any of these to yourself daily may help transform negative thoughts into positive ones:

1.    I choose to only have positive thoughts about money.

2.    I release my fears around money.

3.    I have the power to create and build the wealth that I desire.

4.    I am open to receiving financial abundance.

5.    I’m worthy and deserving of a wealthy life.

6.    If others can be wealthy, so can I.

7.    Prosperity is drawn to me.

8.    I trust I’m on a path to becoming more financially solvent.

9.    I believe I can achieve my financial goals.

10.    I am capable of handling money.

11.    I’m working to build a strong money foundation and achieve financial wellness.

12.    I find the positives in my current financial situation.

13.    My debt doesn’t control me, I can manage it, and I can become debt free.

14.    I overcome all obstacles that lie in my way of financial success.

15.    I want more money and that’s OK.

16.    Saving money is a positive challenge.

17.    I can make my dreams a reality by sticking to a budget.

18.    Starting an emergency fund to protect myself is something I can do.

19.    Every dollar saved puts me closer to financial freedom.

20.    Each day is an opportunity for me to change my money story.

21.    Money well-spent is a source of good and positive things.

22.    The more I give, the wealthier I become.

23.    I use money to improve my life.

24.    Wealth flows into my life consistently.

25.    There are countless ways I can bring more money into my life.

26.    Everything I need to build wealth is available to me right now.

27.    I choose to focus on money coming to me with ease.

28.    My income can exceed my expenses.

29.    I deserve to increase my income.

30.    There are no limits to the amount of money I can make.

31.    I can profit off of my skills.

32.    I’m happy to pay my bills for all they provide me.

33.    I’m grateful for the money I have now and the money that’s on its way to me.

34.    Money can expand my life opportunities and open me up to new experiences.

35.    The money I earn and spend makes me happy.

36.    My net worth is not my self-worth.

37.    I move from poverty thinking to financial abundance thinking.

38.    My life is full of riches beyond money and my happiness is surging.

39.    I have a millionaire mindset. I think like a millionaire, I act like a millionaire, I feel like a millionaire, I am a millionaire.

The Takeaway

Changing long-held, entrenched beliefs about money can be challenging. Incorporating a regular routine of financial affirmations offers the possibility of changing your mindset to a positive and hopefully productive one. While these affirmations may not appeal to everybody, if you feel stuck and want to take some baby steps toward improving your money picture, affirmations may be worth a try.

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

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

FAQ

How do you write affirmations for money manifestation?

A review of affirmations on the internet found that they generally have two things in common: they often start with “I” and they are in the present tense. Some people feel money mantras should be short (mo’ money!); others think they just need to resonate with the people who recite them.

How do you attract the abundance of money?

Of course, the idea of attracting something like the abundance of money is based more on belief than anything else. If you believe you can attract it, that belief may lead you to take action – perhaps, to start a business or at least to make a plan. So to attract the abundance of money, you may want to start by believing that you are capable of becoming rich.

How do I get a millionaire mindset?

The first step of getting a millionaire mindset is ridding your mind of self-defeating thoughts. But just being positive isn’t enough. You likely want to develop attitudes associated with successful people: being open to learning, not fearing failure, and being proactive.

Photo credit: iStock/atakan

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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

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.

SORL-Q224-1921026-V1

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Jun
25
2024
Why Did My Credit Score Drop After a Dispute?

Why Did My Credit Score Drop After a Dispute?

By | Credit, relay | Comments Off on Why Did My Credit Score Drop After a Dispute?

Under federal law, you are allowed to dispute information that shows up on your credit report both with the company that reported the information and with the reporting bureau that recorded it. There’s no fee for filing a dispute, and the credit reporting bureaus may make changes based on the information that you provide.

This can be great news if your credit report changes in your favor and your credit score gets a boost. However, it is possible that when information on your reports gets changed, your credit score actually takes a hit.

Here’s a closer look at why your credit score may have dropped after a dispute, plus other common reasons your score might drop.

Can a Dispute Hurt Your Credit Score?

When you dispute your credit report, it’s important to understand that the dispute itself does not cause your credit score to drop. In other words, you aren’t punished for questioning the information on your credit report. That said, the information in the dispute could have a negative impact on your score. For example, if the information in your dispute demonstrates that you have a lower credit limit than previously reported, your credit score could take a hit.

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Common Reasons for Credit Scores to Drop

As you manage your credit score and work to build credit, there are a number of reasons your credit score may drop. Here’s what to look out for.

Recommended: What Credit Score is Needed to Buy a Car

Late or Missed Payment

Your payment history — whether you have a track record of paying off your debts on time — is a big part of how your credit score is calculated. In fact, it makes up 35% of your FICO score, which is calculated by the Fair Isaacs Corporation. Your score will likely fall if you make late payments or if you miss payments entirely.

Derogatory Remark on Your Credit Report

A derogatory mark on your credit report is a negative item that indicates you didn’t pay back a debt according to agreed upon terms with your lender. These marks tend to remain on your report for seven to 10 years. Examples include bankruptcies, missed payments, debts in collection, foreclosures, and repossessions.

Change in Credit Utilization Rate

Your credit utilization rate indicates how much of your available credit you are currently using. You can find it by dividing your available credit by your current debt. The higher your utilization rate, the more debt you are carrying in comparison to the amount of credit you have, which may suggest that you’re overextended. Banks might get worried about your ability to pay off your loans. That’s why the amount you owe makes up 30% of your FICO score, and why a higher utilization rate can hurt your score.

Reduced Credit Limit

Your credit limit has an impact on your credit utilization rate. If your limit is reduced, your utilization rate could increase, hurting your credit score. You can lower your utilization rate by paying off some of your debts.

You can also ask one of your credit card companies to raise your credit limit. They’re usually happy to do it as long as your account is in good standing.

Closed Credit Card

The length of your credit history comprises 15% of your FICO score. When you cancel credit cards — when consolidating credit card debt, for example — you may be reducing your credit history. You could also be reducing your credit mix, which makes up 10% of your FICO score.

Recommended: 10 Credit Card Rules You Should Know

Paid Off Loan

Similarly, paying off a loan might have a slight negative effect on your credit score because it can reduce your credit history and credit mix. That said, it could also have a positive effect on your record if it reduced your credit utilization rate.

Multiple Lines of Credit Opened or Applied for

New credit accounts make up 10% of your FICO score. Banks worry that when a person opens several lines of credit in a short period of time, they are at greater risk of defaulting on their loans. As a result, new lines of credit can ding your credit score.

Not only that, but simply applying for new credit can hurt your score. When you apply for a credit card or loan, your lender will make what is known as a “hard inquiry” to view your credit report. Lenders may see those seeking new credit as more risky, so hard inquiries can also have a negative effect.

Checking your own credit doesn’t lower your score. A credit check that doesn’t hurt your record is considered a “soft inquiry.”

Mistake on Your Credit Report

Mistakes on your credit report can lead to a lower score. That’s why it’s important that you monitor your credit report regularly and report errors to the credit reporting bureaus as soon as possible. You can request a free credit report from each of the credit reporting bureaus — TransUnion, Equifax, and Experian — once a year.

Identity Theft

Monitoring your credit report is also a good way to catch fraudulent behavior. If you’ve been subject to identity theft, bad actors may have used your personal information to open fraudulent accounts, which could have a negative effect on your credit score. Report these accounts immediately.

Types of Credit Report Errors to Look Out for

When reviewing your credit report, look out for the following errors:

•   Personal information errors. Check your name, phone number, address, etc.

•   Accounts that belong to another person with the same name.

•   Fraudulent accounts that you didn’t open.

•   Account status errors. Check for closed accounts that are reported as still open, accounts incorrectly reported as late or delinquent, incorrect payment information, and the same debt listed more than once.

•   Balance and credit limit information that is inaccurate or out of date.

Correcting Errors on Your Credit Report

If you spot a mistake on your credit report, you can file a dispute with the credit reporting bureau. The mistake may be on your credit report with each bureau, so you may need to file a separate dispute with each.

You’ll need to file your dispute in writing and use the credit reporting bureau’s dispute form if they have one. Include documents that support your dispute, and be sure to keep a record of what you send.

Recommended: What Is The Difference Between Transunion and Equifax

The Takeaway

Disputing information on your credit report can be an important part of ensuring that your credit score is as accurate as possible. You won’t be penalized for filing a dispute, though in certain circumstances, it is possible that your credit score will drop if information in your dispute has a negative impact on your credit.

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

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

FAQ

Why did my credit score go down for no reason?

Your credit score likely didn’t go down for no reason at all. It’s possible that a creditor reported new information to the credit reporting bureaus that had a negative impact on your credit report. Or there could be a mistake on your credit report. Regularly monitoring your credit report can help you catch errors.

Why did my credit score drop after filing a dispute?

Your credit score may have dropped after you filed a dispute if information in that dispute had a negative impact on your score. You are not penalized for filing the dispute itself.

Does losing a dispute hurt your credit?

Losing a dispute does not necessarily hurt your credit, but it may leave it unchanged if the information you were hoping would boost your score is rejected.

Photo credit: iStock/pepifoto

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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

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

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

SORL-Q224-1921260-V1

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