Dec
17
2019
frustrated woman paying bills

Bank Fees You Should Never Pay

By | Budgeting & Goals, Financial Independence | No Comments

The list of fees that banks might charge you is pretty darn long and, on average, they can cost you more than $161 per year. Per year.

Some of the more typical bank fees include monthly maintenance fees, overdraft charges, returned item fees, ATM fees, and foreign transaction fees. Some of these charges, such as the overdraft and returned item fees, can hit people the hardest when they have the least amount of money available to pay them.

So, if you’ve ever been frustrated by having to pay bank fees, or have been surprised when a charge showed up on a bank statement, this post will share tips on how to avoid those fees in the first place.

And, when thinking about bank fees, here’s something else you could consider: Picture what you would do with an extra $161. Save it? Buy something special? Also, think about how long you’ve had a particular account. If it’s been 10 years, for example, imagine how you’d spend an extra $1,610! That’s money you could put back into your pocket.

At the end of this post, you’ll find a possible way to avoid paying bank fees altogether.

Monthly Maintenance Fees

If your bank or financial institution charges maintenance fees, you may be so used to watching that money disappear out of your account each month that you’ve simply stopped trying to figure out how to make it stop.

It isn’t unusual for banks to charge about $12 a month in maintenance fees, nearly $150 a year for this fee alone.

If you keep a large enough balance in this account, you can typically avoid paying a monthly maintenance fee at many banks. That’s great for those who have that kind of money, but this is the type of fee that often hits those who don’t have a lot of money in their accounts.

If keeping a larger balance in your account isn’t practical right now, then it can make sense to explore online-only financial institutions that are more likely to not charge this fee.

Online-only banking doesn’t mean banks that they offer mobile services, though—it’s banks that don’t have a physical location and are online only, who have less overhead and, therefore, the opportunity to pass on more savings to you, the customer.

Overdraft Fees

Banks often have an overdraft program, so if you withdraw more than what’s currently available in your account, the bank won’t “bounce” the check. Instead, it will be covered, but often with a fee attached.

So, let’s say that you deposited $200 in your checking account but $100 of it has a short-term hold on it. This means that even though you have $200, only $100 is currently available. This is a common practice among financial institutions. So, if you withdraw $150 during this time, you could be charged an overdraft fee, depending upon your bank’s policies.

These types of fees can average around $35 per instance. To avoid being charged, you could decline to sign up for overdraft service (which may lead to bounced checks or declined debit card transactions).

Or you could ask if your bank has a service where, if you overdraft on your checking account, then the amount would be covered from your savings account. Note, though, that this kind of transfer may also come with a fee.

What may be most important here is, you may want to be clear about what your bank or financial institution will do in a certain circumstance. Let’s say that you’ve signed up for automatic bill pay at your bank. What will your financial institution do if there aren’t enough funds?

Pay it anyway and charge you an overdraft fee? A little research with your own financial institution could reveal the answer, and if it’s not what you want to hear, you could see if another institution handles the situation in a way that works better for you.

Returned Item Fees

If you don’t opt in to have overdraft protection on an account, banks typically decline or bounce, the transaction if there aren’t enough funds to cover a transaction.

Besides the problems associated with a bounced check, there is typically a returned item fee, averaging around $35 for each occurrence. And, unfortunately, sometimes a returned item fee can take an account balance to the point where another check may bounce, causing the situation to become increasingly worse.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.20% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


ATM Fees

ATM fees come with unique pain points that can be especially frustrating. That’s because you sometimes have to pay a bank or a random ATM just to get your own money! And sometimes you’ll pay ATM fees twice on the same transaction: once in a surcharge by the ATM being used and, second, by the bank that issued your card.

To make matters more frustrating, out-of-network surcharges from ATM owners keep increasing, becoming the highest to date in 2018. In fact, it’s 36% higher than it was almost a decade ago, with an average out-of-network ATM charge costing users around costing users around $4.68 , on average!

This situation isn’t especially likely to change, because the very nature of an out-of-network surcharge means that people getting socked with extra fees are non-customers.

If you’re trying to budget carefully, this can be painful. To reduce how much you could pay in ATM fees, pre-planning might help. You could research locations of in-network ATMs and only make withdrawals there.

If you know you’ll be shopping at a business or attending an event that operates as cash only, you could withdraw more than you might need, just in case, so you can avoid using an out-of-network ATM nearby.

When you go into a store, pharmacy, and so forth, you could also check to see if the ATMs located in them are part of your bank’s partnership network. Even if you don’t need cash right away, it might be a good idea to file away that information for when you do need it.

Here’s another idea: Many grocery stores and even some big box stores will let you get cash back when you make purchases there. This could be another way to circumvent ATM fees.

Foreign Transaction Fees

If you’ll be going abroad, then you will likely need to deal with foreign transaction fees. Credit card companies add these onto transactions processed by or passing through foreign banks.

A typical fee is 3% of the transaction amount. There is often a fee charged by the credit card network and another one by the card issuer. Some credit card companies charge fees in addition to network ones, while others don’t.

Credit card issuers typically don’t mention these fees up front (unless they’re advertising that they don’t charge them), so they can come as a surprise when the next statement arrives.

Just one foreign transaction fee might not seem like a big deal, but when you consider how many times you might use a credit card during a trip, it can really add up. And, often, you don’t earn any credit card rewards on these fees.

Returning to the painful subject of ATM fees, banks often charge an additional 1% to 3% for this type of fee on international transactions, meaning beyond what you’d normally pay on ATM withdrawals and debit card purchases.

To help mitigate these fees, you could check with your bank to see if they have affiliate banks in regions where you’re traveling and ask if you can withdraw from those ATMs without paying the additional international fees. You could also ask if your bank reimburses fees that you’ve paid.

As another way to reduce bank fees, you could exchange US dollars to foreign currency before you leave the country, perhaps eliminating the need for ATM withdrawals while traveling. Your bank might do this with no fees.

Online-Only Banking

With online-only banking, there are no physical branches, so overhead costs for the financial institution can be lower, giving them the ability to provide certain perks to customers, such as lower fees.

Sometimes, certain fees aren’t charged at all. Just like with traditional banks, policies differ from one online-only financial institution to another.

If this sounds appealing, you could consider investigating how online-only institutions might help you avoid fees. Many, for example, provide ATM services for free or refund ATM fees up to a certain amount each month.

Money and Millennials

A Kasasa study points out that an overwhelming percentage of millennials they surveyed—93% of them—say that fee-free banking is important to them. They note that no-fee banking matters to them when choosing a bank for everyday banking needs.

SoFi Checking and Savings®

SoFi Checking and Savings® is a checking and savings account where you can spend, save, and earn all in one place. You’ll earn 0.20% APY (annual percentage yield) on all your cash with no account fees (subject to change).

You can sign up for and open an account in just 60 seconds, and the account is FDIC insured for up to $1.5 million with additional fraud insurance.

Discover more about SoFi Checking and Savings today!

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member
FINRA / SIPC . SoFi Securities LLC is an affiliate of SoFi Bank, N.A. SoFi Money Debit Card issued by The Bancorp Bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
SoFi members with direct deposit activity can earn 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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Dec
16
2019
old bank front

9 Reasons to Switch Bank Accounts

By | Budgeting & Goals | No Comments

Is your bank ghosting you? Charging fees out of the blue? Do you feel like you’re settling instead of looking for “the one”?

It can be tough to tell when it’s time to call it quits with your bank, especially after all these years and bank statements you’ve shared. Knowing how to switch banks isn’t always easy, but neither is detecting those red flags.

If you’re generally happy with your bank, it might be best to stay put, especially if it’s a busy time. While it’s typically easy to open a new account, you’ll need to transfer your balance over, change autopay settings and more. If you’re not up for the task, you could end up with late fees, penalty payments, and more.

But, if you and your current bank account are on the rocks, it might be time to move on—for the right reasons, of course. A brokerage checking and savings account, which combines checking and savings accounts under one virtual roof, could be one option. The accounts tend to offer higher interest rates and also often don’t charge fees that a brick-and-mortar location might.

Learn why you might consider trading up and switching accounts.

Reasons to Switch to a New Bank

Fees

What’s worse than the dreaded 2am “U up?” text? Possibly an unexpected fee or charge from your banking institution to your account. Some banks charge up to $30/month in checking fees, then there are fees for using out-of-network ATMs and more.

If minimum balance fees, maintenance fees, paper statement fees, and weighty overdraft fees plague your monthly account balance, it might be time to consider switching accounts.

You could research alternative financial institutions and see if they charge similar rates or if they waive fees in certain circumstances. If you’re noticing unnecessary fees popping up in your account, it could be time to look for a new institution to better manage your money with.

Bad Customer Service

Does it feel like your bank is never there for you when you actually need them? When you detect fraud on your debit card, does it take half a day to straighten the charges out? Maybe the call center hours aren’t great, or you haven’t been happy with the in-person service at your bank’s retail location.

Whatever has given you pause, bad customer service is a common reason for leaving a bank. You might want better branch hours or online chat service instead of a customer service line. Your reasons might vary, but if you don’t feel you’re being treated as a valued customer, then it’s worth considering a move.

Joint Accounts

If you’re getting married or joining a partnership and want to open a joint account, it might be time to switch accounts. Your partner’s financial institution might offer better features, or have better customer service. In that case, it might be time to say farewell to your current account.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.20% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Lack of Branches

Maybe you’ve been with the same bank for years but moved to a different city. It could be a struggle to find your bank’s location, leading you to incur hefty ATM charges from using other ATMs when you’re in need of cash.

If your bank isn’t convenient location-wise to you, and you often find yourself in need of a brick-and-mortar location, then you might think about making the switch to a bank more common in your area. If brick and mortar doesn’t matter much to you, it might be time to consider an online-only checking and savings account, which often offer ATM reimbursement across the country.

Safety and Security

If you’re concerned about the safety of your funds at your current bank, then it might be time to switch. Check to see if your current bank is FDIC-insured. This insurance would mean your cash is still covered, even if the bank goes under.

You Want “In” on Incentives

If you’ve been with your bank for a while, you probably haven’t thought about incentives or sign-on bonus offers. While a one-time offer shouldn’t be the primary reason your switch bank accounts, taking advantage of an additional benefit might just be the cherry on top of your sundae.

Pay attention to rewards programs, or a bonus for a first-time deposit of a certain amount—it might end up being the tipping point to open something new.

Multiple Accounts

When it comes to bank accounts, you might be considering playing the field and opening multiple accounts at once. For business owners, freelancers, or foreign travelers, this can be a common practice.

If you’re looking to keep these accounts separate, you could consider opening a new account at a different bank or financial institution.

Lack of Features

You might’ve been floored by the rates and specials you had when first signing up with your current bank, but if you notice peers getting better features with other institutions, then maybe it’s time to move.

This could be ATM-fee reimbursement, a better online portal, and mobile check deposit, or overdraft fee forgiveness. If you feel like you’re missing out on special features with your current bank, then take a look around to see what other institutions offer. You might be surprised by what you’ll find.

Better APY

Wouldn’t we all like to make money just for putting our cash in a financial institution? Most offer some kind of APY (annual percentage yield), for using their services. The thing is, APYs can vary dramatically depending on where you’re banking or managing your money.

It might be only the difference of a few dollars a year, but hey, if you’re considering a new financial institution, take note of their APY as compared to your current institution.

Another Reason to Switch

If the signs are pointing you in a new direction, you might consider trying SoFi Checking and Savings®. With a 4.20% APY, no fees, and ATM fee reimbursement, it could be the perfect match you’re looking for.

SoFi works hard to give you high interest and charge zero account fees. With that in mind, our interest rate and fee structure is subject to change at any time. See our terms and conditions to learn more. Remember, you deserve more, and if something’s not meeting your needs, there are plenty of other fish in the sea.

Check out SoFi Checking and Savings — a high yield bank account that offers 4.20% APY and no fees!

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member
FINRA / SIPC . SoFi Securities LLC is an affiliate of SoFi Bank, N.A. SoFi Money Debit Card issued by The Bancorp Bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SoFi members with direct deposit activity can earn 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SOMN19053

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Dec
13
2019
Two people sitting together at a table with laptop mobile

Who Should Pay The Bills in a Marriage?

By | Budgeting & Goals | No Comments

Money touches almost everything we do, from our basic living expenses to vacations and outings with friends to planning for the future—whether that includes a house, kids, or some other long-term goal. And yet, it can sometimes be hard to make space for important financial conversations with a spouse or partner.

Discussions about money can sometimes be awkward and unpleasant. Whether it’s figuring out how to breach the topic of who should pay the bills in a relationship or which partner is responsible for which expenses—whether based on earnings or some other criteria—these conversations aren’t always easy to start. But prioritizing them can be the key to a strong and sustainable partnership.

Take a look at some of the ways that couples might start having these discussions regularly. This article will also explore some possible strategies for divvying up financial responsibilities in a way that feels manageable and fair so the next time the topic of splitting bills in a relationship comes up in your life, you may feel more prepared.

No matter your financial situation, it can be important to find ways to have open money discussions in your relationship so that you can focus on making memories and building a strong foundation with the person you love.

Talking About Money in Your Relationship

When you’re in a long-term relationship, whether you’re married or cohabitating, talking about finances can be a worthwhile investment into your life together.

Living together often means splitting costs for day-to-day things, such as rent, utilities, groceries, and other costs.

So, it can be wise to start these conversations early, although it’s up to you to decide when makes the most sense in your relationship.

For many married couples, combining finances is the logical approach, so the question of who should pay the bills in a marriage isn’t as pressing as it can be for others.

But, there are couples—married or otherwise—that still like to have a sense of financial independence and who prefer to split shared expenses in a way that makes sense for them.

Every couple is different, so there is no one-size-fits-all approach to talking about money and splitting costs. Though, for some, marriage means enmeshing accounts and finances, other couples choose to keep their accounts separate.

Additionally, some partners earn similar salaries and prefer to split things evenly, while others earn drastically different incomes and adjust their financial responsibilities accordingly. What’s more, sometimes one person is carrying a substantial debt while the other is debt-free.

There are many factors that can impact the way that a couple chooses to split bills and other financial responsibilities in a relationship, and it may be helpful to keep in mind that there isn’t a single right way to do it.

A strategy that can potentially help to avoid financial elephants in the room is to find a time to establish a budget as a couple or other financial guidelines with your partner.

You may also want to a set time check in with your partner about finances, whether that’s once a week or once a quarter. It can also be helpful to come together to identify your shared goals and financial weaknesses so that you can support one another.

Some couples may opt to work with a financial advisor or another professional, while others prefer to manage things on their own. Regardless of your approach to splitting finances, consistent communication can be crucial.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.20% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Splitting Bills Evenly

For some couples, splitting bills evenly makes the most sense. This could mean keeping track of all of the monthly receipts for groceries and other shared living expenses along with rent, utilities, gas, or other common expenses you and your partner share.

At the end of each month, both partners can calculate the total expenses and settle them evenly. Of course, this strategy isn’t for everyone, and sometimes splitting bills and living expenses equally doesn’t make sense, especially, for instance, if both partners are making drastically different incomes.

If splitting things evenly doesn’t make sense for your relationship, there are other strategies that could be a better fit.

Splitting Bills Individually

In some cases, it may be preferable for each partner to be responsible for specific bills. This could look like one partner taking responsibility for the gas and electric bill, while the other covers water and internet.

Though this type of set-up can be great in terms of distributing responsibility, it’s highly unlikely that each partner will end up paying the same amount each month. For some couples, this may make sense and be an ideal set up. For others, partners may want to decide on a way to reconcile the bills at the end of the month.

Paying Bills Proportionally

Many couples, both married and unmarried, prefer keeping separate bank accounts for their own personal expenditures and having a joint bank account from which to pay for big household expenses.

Opening a joint account may make bill pay a bit easier every month and can make sense for recurring expenses, like utility bills, rent, and other shared costs. Joint accounts can also make it easier for each partner to transfer the money they are responsible for into the account before the bills are due.

Of course, the question of how to split up the money for these expenses will depend on the discussions you have had with your partner. If you both decide to split the costs evenly, then both of you can transfer the same amount into the shared account once a month or before the bills are due, otherwise you can decide to reconcile things in a way that makes sense for you.

Regardless, having one central location from which to pay for all shared bills can take a lot of the guesswork out of your financial big picture and could also make it simpler to look back at what you’ve spent and analyze your shared spending habits over time.

Keep in mind that when you open a joint account each person has equal rights to the account. This means that one of the account owners could make withdrawals or close the account without the consent of the other. Opening a joint account requires a certain level of trust and commitment.

Splitting Bills in a Way That Works for You

Though many married couples have traditionally merged their finances, this is not the automatic course of action for all couples.

As such, it’s important to consider what strategies make the most sense based on your unique situation.

Ultimately, prioritizing open, honest, and regular conversations about money may help you to avoid money arguments, ensure you and your partner are on the same page, and help you both feel more in control of how you’re approaching your financial life together.

Whether you decide to open a shared bank account, split bills up based on your income, or simply combine your bank accounts and pay everything together, know that there is no right or wrong decision.

Consider giving yourself the freedom to try a few different approaches to find the one that best suits you and your partner, and remember that communication is often the key to success.

Thinking of getting a joint account with your partner? Open a SoFi Checking and Savings® account today.


External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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SoFi members with direct deposit activity can earn 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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13
2019
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Asset Allocation for Beginners

By | Growing Wealth, Investing | No Comments

When it comes to investing, there’s an old adage, “Don’t put all your eggs in one basket.” (Who carries their eggs in a basket anymore?) This is generally referred to as portfolio diversification.

The idea does make sense. Buying only one or two similar stocks might feel risky (and may be risky), no matter how profitable the companies currently are.

But did you know that diversification goes beyond the stock portfolio? For many investors, diversification might mean investing in other asset classes that don’t perform like stocks.

In fact, instead of considering which stock to buy, it may be more important to decide if it’s appropriate to own stocks in the first place. And, if it is appropriate, an investor may also want to ask: what proportion of a portfolio should be stocks?

Another way to describe the mix of stocks, bonds, cash, and other asset types in a portfolio? Asset allocation, or quite literally, the amount of money that is allocated to each of the different asset classes.

So what is asset allocation? Although it sounds like investing jargon, asset allocation is one of the more important investing concepts to understand. And although there is not a universal consensus about the right allocation mix for each investor, this big-picture decision could drive a majority of returns over time.

What Does Asset Allocation Mean?

Asset allocation is the investment strategy of balancing risk and reward by divvying up a portfolio into different asset types.

Generally, asset allocation is determined by looking at goals, risk tolerance, the investing timeline for the investor’s money, and comparing that to what the different asset classes have done over history. That way, an investor can determine what mix of assets is a good fit for what an investor is trying to accomplish.

Each asset class will have its own path of performance over time. The goal of diversification is to invest in such a way that not all investments perform the same or even similarly during different periods over the course of an investment journey.

For example, some investors may find it helpful to make investments beyond stocks during a stock market crash, which could have a sweeping and dramatic impact on all stock prices. Historically, bonds have performed well during stock market crashes, and aren’t considered to be correlated to stock market prices.

Therefore, bonds can act as a portfolio hedge during those stock market downturns. Another way to think about diversification? Stocks zig while bonds zag—or at least they have historically.

Using Modern Portfolio Theory

For all the statistics buffs out there, it may help to think of asset allocation in terms of Modern Portfolio Theory (MPT) . MPT assumes that investors are risk averse, and builds portfolios with the lowest level of risk given the desired level of return.

It does this by analyzing the historical return of each asset class, the variability of that return (called the variance), and the degree to which the price level of different asset classes experiences volatility at the same time (the correlation).

Within portfolios, volatility and risk are often measured by their standard deviation (which happens to be the square root of the variance).

For example, if there were two portfolios and both have the same expected rate of return, but one has a lower standard deviation, the investor may want to choose that one.

Managing Risk by Asset Class

Whether the goal is to try to minimize risk, maximize potential returns, or some combination of the two, a good place for an investor to start is to study the risk and return characteristics of the various asset classes, such as stocks, bonds, cash or money market funds, real estate, private equity, investment partnerships, and natural resources, like gold. Much of the time, the discussion about risk and reward of the different asset classes is focused only on the tradeoff between stocks and bonds.

Common stocks, also known as equities, historically fall on the higher risk and higher reward end of the spectrum. Bonds are often considered to be lower in risk but also lower in reward.

Cash and cash equivalents (like money market funds) are typically considered to be the safest options, in the sense that cash experiences little price volatility. But be aware: The value of cash is eroded by inflation over time, which means potentially losing purchasing power.

Not all stocks or bonds are the same. Categories within each of the asset classes may carry different risk and reward characteristics. For example, small cap stocks are typically considered to be riskier but may come with higher returns than large cap stocks (also known as big cap stocks), which are generally more established. This is because small cap stops have the ability to grow into large cap stocks, whereas large cap stocks may not experience as much volatility—in either direction.

That said, the difference between the two is somewhat subjective, and small cap stocks can be established (in other words, they’re not just start-ups), while large cap stocks can crash as well (think Enron). Within the category of bonds, for example, junk bonds may be riskier while U.S. Treasury bonds are considered a safer option.

Determining Asset Allocation

After learning what to expect from the different asset classes, a good next step is to think about goals, risk tolerance, and investing time horizon—for each pool of money to be invested. For example, an investor may want to invest retirement money differently than emergency money.

A couple questions an investor might begin by asking: What is their goal with this money? When will they need to use this money? The latter is the idea behind investing time horizon.

To determine an appropriate asset allocation, an investor may want to conceptualize how long this money needs to last or what amount is needed for a set goal. Last, they might consider asking: How much risk (volatility) are they comfortable with?

Recommended: age-based rule of thumb is to start with 100, subtract age, and the resulting number is the percentage to invest in stocks. (Or, simply invest current age in bonds, and the rest is allocated to the stock market.) So, for example, if someone is 30 years old, then this rule would have them invest in a portfolio of 70% stocks and 30% bonds.

Because people are living longer and healthier lives that require a longer-term focus on growth, this asset allocation model may be too conservative for some. Instead of 100, it might be more appropriate to use 110 or 120 .

Pro: This method for determining asset allocation is straightforward and may work for people in a straightforward financial situation that is typical for a person of their age group.

Con: These rules will not work for everyone. Investors can use this strategy as a guide, but may want to consider amending it based on some personal reflection regarding their current financial situation, financial goals, investing time horizon, and tolerance for risk.

Non Age-Based Asset Allocation Models

There are four general investment allocation models that may be used as guides for determining one’s asset allocation.

Capital Preservation

This model is for the investor who wants to preserve their capital. Said another way, it is an investment strategy for those who do not want to risk losing any money. Capital preservation is generally utilized by those with short-term goals.

Capital preservation may work for someone saving to buy a car in a year, or about to start a business, or building an emergency fund. (Emergency funds might not need to be used within a year, but the whole point is that they are available for use immediately in the event of an emergency.)

To deploy a capital preservation strategy, an investor would likely keep their entire portfolio in cash or cash equivalents, like a money market fund. Both stocks and bonds can lose money in the short term, and therefore may not be appropriate for an investor whose primary concern is not losing anything at all. If they are going to invest, they might consider investing in Treasury bills or certificates of deposit.

Income-Producing

This investment model aims to do exactly what it sounds like: produce income for the investor. An investor targeting this allocation is likely to be living off of their investments in some capacity. This investor is choosing income over growth.

This strategy might be utilized by a person in retirement who needs their investment income to replace or serve as a supplement to their pension or retirement funds.

Such a portfolio will likely consist of investments that are known to produce income, but may be less likely to grow in value over time: bonds for large, profitable corporations and the U.S. government (often called treasury notes); Real Estate Investment Trusts (REITs); and shares of dividend-paying stocks, such as those of blue-chip (large) companies.

Growth

This is an investment model for those looking to target long-term growth in their portfolio—i.e. investors who are willing to take on additional risk, hopefully in exchange for higher returns. This portfolio is not necessarily geared toward income-producing assets, potentially because the investor is working and earning a livable salary and not looking to use their investment portfolio to produce income, or at least not yet.

This strategy could be used by a person who is early in their career, targeting growth for retirement, and who has a high risk tolerance.

A growth-oriented portfolio is typically invested, primarily or completely, in common stocks, whether via individual stocks, mutual funds, or exchange-traded funds.

Balanced

A balanced asset allocation model is typically a blend of the income-producing and growth models. Such an allocation may make sense for a person nearing retirement or in the early stages of retirement.

A balanced strategy is also used by folks at all stages of their investment journeys because it can make sense from an emotional standpoint. The volatility of the stock market can be unnerving, and investors should take this risk seriously.

While the blend of investments will be different for each investor, a balanced portfolio is often invested in some combination of common stocks, medium-term, investment-grade bonds, and potentially REITs.

The idea behind a balanced portfolio is to strike a compromise between assets that grow over time and those that will experience smaller fluctuations while providing some income or growth in portfolios.

Pro: This method of determining asset allocation is closely tied to the actual goals and risk tolerance of a portfolio, which may be a more useful method than a generalized approach, such as an age-based method.

Con: This method does not directly address the fact that different pools of money may require a different allocation model and that these goals may change over time.

No matter which method of determining asset allocation chosen, it’s important to know that allocations can change over time. For many people, asset allocation may change when the goal for the money changes.

And it’s worth being careful when making changes based off of market behavior; an investor might put themselves at risk of making a detrimental change at the wrong time, like selling stocks at a low because they’re spooked.

Additionally, most asset allocations will require some amount of upkeep over time—this is called rebalancing. While research says it doesn’t matter if a person rebalances monthly, quarterly, or annually, checking too often can lead to loss.

That said, it’s probably a good idea to periodically check in and make sure that none of your asset classes has significantly outgrown its initial allocation size.

Getting Started

Once an investor’s determined asset allocation, the next step is to invest to fulfill those allocations. There are several options for this.

Some investors may find using funds to be the easiest and most efficient way to invest. A fund, whether a mutual fund or an exchange-traded fund (ETF), is a basket of some other investment types.

With funds, it is possible to be instantly diversified not only across different asset categories, but within the categories themselves. For example, one broad U.S.-stock ETF could be invested across multiple industries, or at various companies within one industry, or both.

Some investors may prefer to buy individual securities, such as stocks themselves. This method requires more work as the responsibility to research companies and diversify rests fully on the investor. But this may give the investor more control over the implementation of the strategy, which some people may prefer.

No matter which investing technique you choose, SoFi Invest® can help put your money to work. And investors don’t have to invest a lot of money. With SoFi’s fractional share investing, investors can buy just a portion of a stock—starting at $5. And because there are no trading fees, 100% of your money is invested.

Perhaps most importantly, because you don’t have to invest much money in individual stocks, that leaves more room for asset allocation—helping you to find and follow through on the investment strategy that’s right for you.

Interested in fractional sharing? SoFi can help put your money to work—at a fraction of the cost of a share.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.


Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, LLC and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

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Nov
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2019
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Is it Better to Pay off Student Loans or Save?

By | Debt Payoff, Student Loans, student_loan | No Comments

Student loan repayment often begins after a six-month grace period. In that time, you’ve (ideally) settled into a job and a new, post-school routine. That means you’re ready to take on all your financial responsibilities—including building up a savings account—right?

If that sounds daunting, you’re not alone. One in five Americans report that they save less than 5% of their yearly earnings, and another 20% save no part of their annual income.

Building up an emergency fund is an important step toward financial stability, but paying your student loans is required, too.

Is it better to pay off student loans than to save? When both feel important, what do you choose?

Unfortunately, there may not be one right answer—but it is possible to do both. Here are some moves to help make both student loan repayment and saving more manageable.

Considering Refinancing Your Student Loans

In the last decade, interest rates on federal student loans have ranged between 3.4% and 8.5% . Rates on private loans—those provided by private institutions such as banks, credit unions, or schools themselves—can be even higher.

Refinancing your student loans is an opportunity to lower your interest rate. If you can refinance at a rate lower than your existing one, you may pay less on interest throughout the life of your loan.

Alternately, you could elect to lengthen your loan term in refinancing, which could lower your monthly payment and may allow more wiggle room in your budget to pay down other debts or save more. That said, lengthening your loan term can mean you’ll pay more interest over the life of the loan.

Considering Consolidating Your Student Loan Debt

Another reason to consider refinancing student loans is that doing so can simplify the repayment process. If your initial loans are with multiple institutions, you are keeping track of several due dates and recipients. Refinancing gathers all of those loans into one place—with one lender—leaving you with a single bill to pay each month.

Refinancing can consolidate both private and federal loans. However, if you only have federal loans, you can also consolidate them with the government through a Direct Consolidation Loan.

This may not reduce your interest rate, but it would combine all of your loans into one. And with a Direct Consolidation Loan, you’re able to keep your federal student loan benefits. On the other hand, refinancing means you’ll no longer be able to take advantage of federal loan benefits.

Explore SoFi student loan refinancing
options to help you pay off
your loans.

Paying Student Loans On Time Can Help Build Your Credit Score

A silver lining to student loan debt is diligently paying your student loans on time may help build your credit score, which is a number that reflects your credit risk at a
given time. On-time student loan payments in the long term are an opportunity to show a long history of consistent payment, which may positively affect your credit score.

Consider setting up automatic payments or an electronic calendar reminder to avoid missing student loan payments. If you do miss a payment, you may want to call your lender immediately to ask how you can rectify the situation.

In some cases, a lender may be willing to waive the fee on a missed payment if it’s your first one, and if you pay it before 30 days have passed, you may be able to avoid getting the missed payment reported to the credit bureaus.

Trying Increasing Your Student Loan Payment Each Month

Paying more than the minimum on your monthly student loan bill can lessen the amount of interest paid over the life of your loan, and may help you pay off loans earlier than your original loan term.

If you get a windfall of extra cash—from a holiday gift or professional bonus, for example—consider using a portion of it to send in one extra payment on your student loan. There are no prepayment penalties for federal or private student loans. Manage to do this every year and you can help reduce the interest you pay and therefore the total cost of your loan.

Finding a Way to Save In Addition To Your Payment Plan

Even if it feels like a negligible amount in the moment, you can try to prioritize putting some money in a savings account each month.

None of us is exempt from the unpredictability of the future, so growing an emergency fund can help you weather an unexpected financial strain, such as a medical bill or car repair.

Saving between three to six months’ worth of expenses is a common goal suggestion. But if that sounds overwhelming on an entry-level salary, remember that even a small start is just that—a start.

Trying to Paying Your Savings Account Like a Bill

There is urgency in the word “bill,” so trick yourself a little by thinking of your monthly savings as a bill to be paid. Or you can consider setting up automated monthly payments, so that you don’t need to lift a finger to save.

Considering a Side Hustle

If you’re already working a full-time job, chances are you’d want a side hustle that requires minimal effort or that brings you a good deal of joy. If you’re social and happy to meet new people regularly, renting out a room in your home via Airbnb is one way to earn extra cash.

If you have a car, you can rent that, too, via companies like Turo and Getaround . Or use your wheels and join the ride-sharing economy, offering transport via Lyft .

It isn’t necessary to try all of the above strategies at once. But the more ideas you have, the more likely you are to find the ones that work for your life and financial situation.

And striking a balance between saving, spending, and paying down debt is a win in itself.

Learn more about how SoFi student loan refinancing can potentially help you get out of student loan debt faster than you’d planned.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.


External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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

SoFi Loan Products
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.

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