Sep

2024

Building a Nest Egg in 5 Steps

By AJ Smith | Growing Wealth, invest, Investing, Preparing for Retirement | Comments Off

A nest egg can help you save for future goals, such as buying a home or for your retirement. Building a nest egg is an important part of a financial strategy, as it can help you cover important costs or allow you to become financially secure.

A financial nest egg requires some planning and commitment. In general, the sooner you start building a nest egg, the better.

What Is a Nest Egg?

So what is a nest egg exactly? A financial nest egg is a large amount of money that someone saves and/or invests to meet a certain financial goal. Usually, a nest egg focuses on longer-term goals such as saving for retirement, paying for a child’s college education, or buying a home.

A nest egg could also help you handle emergency costs — such as medical bills, pricey home fixes, or car repairs. There is no one answer for what a nest egg should be used for, as it depends on each person’s unique aims and circumstances.

💡 Quick Tip: Before opening any investment account, consider what level of risk you are comfortable with. If you’re not sure, start with more conservative investments, and then adjust your portfolio as you learn more.

Understanding How a Nest Egg Works

There are a few things to know about how to successfully build a nest egg.

• You have to have a plan. Unlike saving for short-term goals, building a nest egg takes time and you need a strategy. A common technique is to save a certain amount each month or each week.

• You need to save your savings. This may sound obvious, but in order to save money every week or month, you have to put it in a savings or investment account of some sort. If you “save” the money in your checking account, you may end up spending your savings.

• Don’t touch your nest egg. The flip side of that equation is about spending: In order for your nest egg to grow and for you to reach your savings goals by a certain age, you have to make it untouchable. When saving a nest egg, you have to keep your saved money out of reach and protect it.

How Much Money Should Be in Your Nest Egg?

There is no one correct and specific amount a nest egg should be. The amount is different for each person, depending on their needs. It also depends on what you’re using your nest egg for. If you’re using it to buy a house, for instance, you’ll likely need less than if you are using your nest egg for retirement.

As a general rule, some financial advisers suggest saving 80% of your annual income for retirement. However, the amount is different for each person, depending on the type of lifestyle they want to have in retirement. For instance, someone who wants to travel a lot may want to save 90% or more of their annual income.

A retirement calculator can help you determine if you’re on track to reach your retirement goals.

What Are Nest Eggs Used for?

As mentioned, nest eggs are often used for future financial goals, such as retirement, a child’s education, or buying a house.

A nest egg can also be used for emergency costs, such as expensive home repairs, medical bills, or car repairs.

5 Steps to Building a Nest Egg

1. Set a SMART Financial Goal

The SMART goal technique is a popular method for setting goals, including financial ones. The SMART technique calls for goals to be (S)pecific, (M)easurable, (A)chievable, (R)elevant, and (T)ime bound.

With this approach, it’s not enough just to say, “I want to learn how to build a nest egg for emergencies.” The SMART goal technique requires you to walk through each step:

• Be Specific: How much money is needed for an emergency? One rule of thumb is to save at least three months worth of living expenses, in case of a crisis like an illness or layoff. But you also approach it from another angle: Maybe you just want $1,800 in the bank for car and home repairs.

• Make it Measurable and Achievable: Once you decide on the amount that’s your target goal, you can figure out exactly how to build a nest egg that will support that goal. If you want to save money from your salary, such as $1,800, you’d set aside $200 per month for nine months — or $100 per month for 18 months. Be sure to create a roadmap that’s measurable and doable for you.

Last, keeping your goal Relevant and Time-bound is a part of the first three steps, but it also entails something further: You must keep your goal a priority. And you must stick to your timeframe in order to reach it.

For example, if you commit to saving $200 per month for nine months in order to have an emergency fund of $1,800, that means you can’t suddenly earmark that $200 for something else.

2. Create a Budget

It’s vital to have a plan in order to create a nest egg — for the simple reason that saving a larger amount of money takes time and focus. A budget is an excellent tool for helping you save the amount you need steadily over time. But a budget only works if you can live with it.

There are numerous methods to manage how you spend and save, so find one that suits you as you build up your nest egg. There’s the 50-30-20 plan, the envelope method, the zero-based budget, etc. There are also apps that can help you budget.

Fortunately, testing budgets is fairly easy. And you’ll quickly sense which methods are easiest for you.

3. Pay Off Debt

Debt can be a major roadblock in building a nest egg, especially if it’s high-interest debt. Those who are struggling to pay down debt may not be able to put as much money into savings as they would like. Prioritizing paying down debt quickly can help save money on interest and reduce financial stress. Adding debt payments into a monthly budget can be one smart way to make sure a debt repayment plan stays on track.

If you’re having trouble paying down a certain debt, like a credit card or medical bill, it might be worth calling the lender. In some cases, lenders may work with an individual to create a manageable debt repayment plan. Calling the lender before the debt is sent to a debt collector is key, as many debt collectors don’t accept payment plans.

Debt Repayment Strategies

Here are two popular debt repayment strategies that might be worth researching: the avalanche method and the snowball method.

The avalanche method focuses on paying off the debt with the highest interest rate as fast as possible, because the interest is costing you the most. This method can save the most money in the long run.

The other option is the snowball method, which can be more motivating as it focuses on paying off the smallest debt first while making minimum payments on all other debts. When one debt is paid off, you take the payment that went toward that debt and add it to the next-smallest one “snowballing” as you go.

This method can be more psychologically motivating, as it’s easier and faster to eliminate smaller debts first, but it can cost more in interest over time, especially if the larger debts have higher interest rates.

4. Make Saving Automatic

Behavioral research is pretty clear: The people who are the most successful savers don’t mess around. They put their savings on auto-pilot, by setting up automatic transfers based on their goal.

Behavior scientists have identified simple inertia as a big culprit in why we don’t save. Inertia is the human tendency to do nothing, despite having a plan to take specific actions. One of the most effective ways to get around inertia, especially when it comes to your finances, is to make savings automatic.

Set up automatic transfers to your savings account online every week, or every month. While you’re at it, set up automatic payments to the debts you owe. Don’t assume you can make progress with good intentions alone. Technology is your friend, so use it!

5. Start Investing in Your Nest Egg

The same is true of investing. Investing can be intimidating at first. Combine that with inertia, and it can be hard to get yourself off the starting block. Also, you may wonder whether it makes sense to invest your savings, when investing always comes with a possible risk of loss (in addition to potential gains).

You may want to keep short-term savings in a regular savings or money market account — or in a CD (certificate of deposit), if you want a modest rate of interest and truly don’t plan to touch that money for a certain period of time. But for longer-term savings, especially retirement, you can consider investing your money in the market. SoFi’s automated investing can help you set up a portfolio to match your goals.

You can also set up a brokerage account and start investing yourself. Whichever route you choose, be sure to make the contributions automatic. Investing your money on a regular cadence helps your money to grow because regular contributions add up.

The Power of Compounding Interest

When saving money to build a nest egg in certain savings vehicles, such as a high-yield savings account or a money market account, compound interest can be a major growth factor. Put simply, compound interest is interest that you earn on interest.

Here’s how it works: Compound interest is earned on the initial principal in a savings vehicle and the interest that accrues on that principal. So, for instance, if you have $500 in a high-yield savings account and you earn $5 interest on that amount, the $5 is added to the principal and you then earn interest on the new, bigger amount. Compound interest can help your savings grow. Use the following compound interest calculator to see this in action.

With investments, compound returns work in a similar manner. Compounding returns are the earnings you regularly receive from contributions you’ve made to an investment.

Compound returns can be achieved by any type of asset class that produces returns on both the initial amount — or the principal — as well as any profits or returns that are generated after the initial investment. Some investment types that earn compound interest are stocks and mutual funds.

💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).

Why Having a Nest Egg Is Important

A financial nest egg can help you save for retirement and/or achieve certain financial goals, such as paying for your child’s education. By building a nest egg as early as you can, ideally starting in your 20s or 30s, and contributing to it regularly, the more time your money will have to grow and weather any market downturns. For instance, if you start investing in your nest egg at age 25, and you retire at age 65, your money will have 40 years to accumulate.

Investing in Your Nest Egg With SoFi

Like most financial decisions, building a nest egg starts with articulating goals and then creating a specific plan of action to reach them. Using a method like the SMART goal technique, it’s possible to build a nest egg for retirement, to buy a home, pay for a child’s education, or other life goals.

Because a nest egg is typically a larger amount of money than you’d save for a short-term goal, it’s wise to use some kind of budgeting system, tool, or app to help you make progress. Perhaps the most important ingredient in building a nest egg is using the power of automation. Use automatic deposits and transfers to help you save, pay off debt, and even to start investing.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Invest with as little as $5 with a SoFi Active Investing account.

FAQ

What is a financial nest egg?

A financial nest egg is a substantial amount of money you save or invest to meet a certain financial goal. A nest egg typically focuses on future milestones, such as retirement, paying for a child’s college education, or buying a home.

How much money is a nest egg?

There is no one specific amount of money a nest egg should be. The amount is different for each person, depending on their needs and what they’re using the nest egg for. For instance, if a nest egg is for retirement, some financial advisers suggest saving at least 80% percent of your annual income.

Why is it important to have a nest egg?

A nest egg allows you to save a substantial amount of money for retirement or to pay for your child’s education, for instance. By starting to build a nest egg as early as you can, the more time your money has to grow.

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.

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 Invest®

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

Sep

2024

How Does Non-Farm Payroll (NFP) Affect the Markets?

Nonfarm Payroll: What It Is and Its Effect On the Markets

By Brian O'Connell | Financial Independence, invest, Terminology | Comments Off

The nonfarm payroll report measures the number of jobs added or lost in the United States. The report is released by the Bureau of Labor Statistics (BLS), usually on the first Friday of every month, and is closely watched by economists, market analysts, and traders. The nonfarm payroll report can have a significant impact on financial markets. A strong or weak jobs report may lead to stock market volatility, as investors feel confident or pessimistic about the direction of the economy.

The nonfarm payroll report is just one of many economic indicators that investors can use to gauge the economy’s strength. However, market participants often pay attention because it provides a monthly snapshot of the U.S. economy’s health.

What Are Nonfarm Payrolls?

Nonfarm payrolls are a key economic indicator that measures the number of Americans employed in the United States, excluding farm workers and some other U.S. workers, including certain government employees, private household employees, and non-profit organization workers.

Also known as simply “the jobs report,” the nonfarm payrolls report looks at the jobs gained and lost during the previous month. This monthly data release provides investors with a snapshot of the health of the labor market, and the economy as a whole.

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

The U.S. Nonfarm Payroll Report, Explained

The nonfarm payroll report is one of two surveys conducted by the BLS that tracks U.S. employment in a data release known as the Employment Situation report. These two surveys are:

• The Establishment Survey. This survey provides details on nonfarm payroll employment, tracking the number of job additions by industry, the average number of hours worked, and average hourly earnings. This survey is the basis for the reported total nonfarm payrolls added each month.

• The Household Survey. This survey breaks down the employment numbers on a demographic basis, studying the jobs rate by race, gender, education, and age. This survey is the basis for the monthly unemployment rate reported each month.

When Is the NFP Released?

The Bureau of Labor Statistics usually releases the nonfarm payrolls report on the first Friday of every month at 8:30 am ET. The BLS releases the Establishment Survey and Household Survey together as the Employment Situation report, which covers the labor market of the previous month.

4 Figures From the NFP Report to Pay Attention To

Investors may look at several specific figures within the jobs report to help inform their investment decisions:

1. The Unemployment Rate

The unemployment rate is critical in assessing the economic health of the U.S., and it’s a factor in the Federal Reserve’s assessment of the nation’s labor market and the potential for a future recession. A rising unemployment rate could result in economic policy adjustments – like changes in interest rates that impact stocks, both domestically and globally.

Higher-than-expected unemployment could push investors away from stocks and toward assets that they consider more safe, such as Treasuries, potentially triggering a decline in the stock market.

2. Employment Sector Activity

The nonfarm payroll report also examines employment activity in specific business sectors like construction, manufacturing, or healthcare. Any significant rise or fall in sector employment can impact financial market investment decisions on a sector-by-sector basis.

3. Average Hourly Wages

Investors may consider average hourly pay a barometer of overall U.S. economic health. Rising wages may indicate stronger consumer confidence and a more robust economy. That scenario could lead to a rising stock market. However, increased average hourly wages may also signify future inflation, which could cause investors to sell stocks as they anticipate interest rate hikes by the Federal Reserve.

4. Revisions in the Nonfarm Payroll Report

Nonfarm payroll figures, like most economic data, are dynamic in nature and change all the time. Thus, investors watch any revisions to previous nonfarm payroll reports to reevaluate their own portfolios based on changing employment numbers.

How Does NFP Affect the Markets?

Nonfarm payrolls can affect the markets in a few ways, depending on the state of the economy and financial markets.

NFP and Stock Prices

If nonfarm payrolls are unexpectedly high or low, it can give insight into the economy’s future direction. A strong jobs report may signal that the economy is improving and that companies will have increased profits, leading to higher stock prices. Conversely, a weak jobs report may signal that the economy is slowing down and that company profits may decline, resulting in lower stock prices as investors sell their positions.

NFP and Interest Rates

Moreover, nonfarm payrolls can also affect stock prices by influencing the interest rate environment. A strong jobs report may lead the Federal Reserve to raise interest rates to prevent an overheated labor market or curb inflation, leading to a decline in stock prices. Conversely, a weak jobs report may lead the Federal Reserve to keep interest rates unchanged or even lower them, creating a loose monetary policy environment that can boost stock prices.

Investors create a strategy based on how they think markets will behave in the future, so they attempt to factor their projections for jobs report numbers into the price of different types of investments. An unexpected jobs report, however, could prompt them to change their strategy. Surprise numbers can create potentially significant market movements in critical sectors like stocks, bonds, gold, and the U.S. dollar, depending on the monthly release numbers.

How to Trade the Nonfarm Payroll Report

While long-term investors typically do not need to pay attention to any single jobs report, those who take a more active investing approach may want to adjust their strategy based on new data about the economy. If you fall into the latter camp, you’ll typically want to make sure that the report is a factor you consider, though not the only factor.

You might want to look at other economic statistics and the technical and fundamental profiles of individual securities you’re planning to buy or sell. Then, you’ll want to devise a strategy that you’ll execute based on your research, your expectations about the jobs report, and whether you believe it indicates a bull or a bear market ahead.

For example, suppose you expect the nonfarm payroll report to be positive, with robust job growth. In that case, you might consider adding stocks to your portfolio, as share prices tend to rise more than other investment classes after good economic news. If you believe the nonfarm payroll report will be negative, you may consider more conservative investments like bonds or bond funds, which tend to perform better when the economy slows down.

Or, you might take a more long-term approach, taking the opportunity to buy stocks at a discount and invest while the market is down.

The Takeaway

The jobs report can be used as one of many economic indicators that investors take into account when weighing their next investment moves. The report offers a snapshot of the health of the labor market, and the economy at large. But it’s important to keep in mind that it’s only one indicator.

Markets move after nonfarm payroll reports, but long-term investors don’t have to change their portfolio after every new government data release. That said, active investors may use the jobs report as one factor in creating their investment strategy.

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

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Sep

2024

Can Personal Loan Be Used to Start a Business?

Personal Business Loans: Risks, Appeals, and Alternatives

By Austin Kilham | Building Your Career, Life & Career, personal_loan, SMB | Comments Off

Starting a new business requires a good idea, customers who want your product or service, and money to get you off the ground. A personal loan to start a business can be one option for funding your business, especially if you don’t yet qualify for a small business loan.

Let’s walk through the difference between personal loans and business loans, the advantages and disadvantages of using a personal loan for business, and some alternative options to explore.

Key Points

• Personal business loans offer flexibility in spending, but it’s crucial to confirm with lenders whether they will allow you to use the loan for business purposes.

• Your personal loan interest rate is influenced by your financial history, income, and credit score, with higher credit scores leading to better rates.

• Benefits of personal loans for business include ease of qualification, faster funding than business loans, and lower interest rates than credit cards.

• Personal loans can be versatile with few spending restrictions, but they may have lower borrowing limits and shorter repayment terms and can affect your personal credit score.

• Alternatives to personal business loans include small business loans, business lines of credit, business credit cards, and merchant cash advances.

What Is a Personal Business Loan?

Personal loans for business are offered by some banks, credit unions, and online lenders. While many loans will specify what you can spend the money on — a mortgage must be used to buy a house, for example — the sum you receive from a personal loan can be used in several ways. That said, it’s important to confirm with your lender whether its personal loans can be used for business expenses, as some lenders do not allow this.

Your personal loan interest rate is based on various financial factors, including your financial history, income, and credit score. Generally, the higher a person’s credit score, the more likely they are to receive a personal loan with favorable terms and interest rates. Applicants with lower credit scores may have more difficulty qualifying for low interest rates. Lenders tend to see them as at greater risk of defaulting on their payments. To offset that risk, they might charge a higher interest rate.

Personal Business Loans vs. Small Business Loans

Borrowing money to pay for business expenses is a decision that takes some consideration. There are different reasons you might want or need a business loan, many lenders to choose from, and different lending options to compare. Some things to think about if choosing between a personal loan for business or a small business loan include:

Factor to Consider	Personal Loan for Business	Small Business Loan
Use of funds	Some lenders may not allow personal loan funds to be used for business purposes	Specifically for business purposes — cannot be used for personal use
Qualification	Personal creditworthiness determines approval, interest rate, and loan terms	Lenders will require business financials, proof of time in business, and other details, in addition to possibly taking personal credit into account
Interest rate	Depending on your creditworthiness, interest rate may be lower than other forms of credit, such as credit cards	Depending on the type of loan, interest rates on SBA loans may be lower than some personal loans
Loan amount	Up to $100,000 depending on the lender.	SBA maximum loan amount is $5 million. Some lenders may approve working capital loans for up to several million dollars
Funding time	Depending on the lender, loan funds may be disbursed as soon as the day of approval or in up to seven days	The SBA loan timeline is between 60 and 90 days from application to disbursement. A working capital loan from a traditional lender may be approved quickly and funded shortly after approval
Tax deductibility	Interest is not generally tax deductible	Interest may be tax deductible in some cases

Benefits of a Personal Loan for Business

Taking out personal loans for business purposes can offer several advantages over other financing options.

Ease of Qualification

If your business is brand new, it can be tricky to get a business loan and may be easier to qualify for a personal loan. Banks offer personal business loans based on your personal income and credit score. On the other hand, you’ll be asked for a lot of information during the business loan application process, including your personal and business credit score, annual business revenue and monthly profits, and your length of time in business. The longer your business has existed, the more likely you are to have a record of revenue and profit — and the more likely you are to qualify.

Faster Funding

The length of time it takes to get approved for a personal loan and receive funding will vary by lender. Online lenders are typically faster than traditional banks and credit unions. You are likely to receive funding within seven business days.

By contrast, the process for a business loan can be much slower. For example, it can take 30 to 90 days to receive funding from a Small Business Administration (SBA) loan.

Potential for Low Interest Rates

If you have strong credit, personal loans can have lower annual percentage rates (APRs) than other financing products — such as credit cards. While it can be useful to have a business credit card, you’ll pay a relatively high rate If you carry a balance from month to month. Credit cards may also have penalties and fees that personal loans may not have, such as penalty APRs that go into effect if you make a late payment, over-limit fees if you spend more than your credit limit, annual fees, and more.

Flexibility and Versatility

Personal loans have few restrictions on how you’re allowed to use the money you borrow. You can use them for anything from debt consolidation to home repairs to a veterinary bill.

Disadvantages of a Personal Loan for Business

Despite the potential advantages of using a personal loan to help you start your business, there are drawbacks.

Some Lenders Don’t Allow Personal Loans for Business

Some lenders place restrictions on how personal loans can be used. It’s wise to be transparent about your intention to use the personal loan for business expenses and confirm if the lender permits it.

In some cases, it may not be. However, it’s far better to be honest about how you plan to use a loan than risk breaching the loan agreement. If you end up using a loan in a prohibited way, your lender could force you to immediately repay the full amount of the loan with interest.

Lower Loan Amount Limits

Personal loans generally offer borrowing limits as low as $1,000. They can go as high as $100,000 for larger personal loans. For small businesses, this might be plenty. But if you own a larger business that needs more money, you might benefit more from a loan specifically designed to meet business financial needs. Small business loans generally have lower interest than personal loans.

Shorter Repayment Terms

Lending periods for personal loans vary. Typically, you can find loans with term lengths of 12 months to five years. Compared to some small business loans, this is a relatively short period. Consider that for SBA loans, maximum terms can be as much as 25 years for real estate, 10 years for equipment, and 10 years for working capital or inventory.

Potential to Affect Personal Credit Score and Assets

If you take out a personal loan and can’t make monthly payments, you are putting your personal credit at risk. Missed payments may harm your credit score, which can make it more difficult for you to access funding in the future.

Recommended: What Is Considered a Bad Credit Score?

Fewer Tax Deduction Opportunities

Generally, the interest you pay on a personal loan is not tax deductible, unlike the interest paid on business loans. However, there’s an exception if you use the proceeds of a personal loan for business purposes.

However, this can get a bit tricky, as you may only deduct interest on the portion of the loan used for business expenses. So if you use any of that money to remodel the primary bathroom in your home, for example, interest on that portion can’t be deducted.

How to Get a Personal Loan for Business

Securing a personal loan for business purposes involves several key steps. The process looks like this:

1. Assess your finances: Begin by looking at your personal credit score, income, and overall financial health. This will give you insight into the likelihood of qualifying for a personal loan and the interest rates you might get.

2. Choose a lender: Look for banks, credit unions, and online lenders that offer personal loans suitable for business purposes. Make sure they allow you to use personal loan funds for business expenses. Compare interest rates, loan terms, and fees to find the best lender for your needs.

3. Prepare your documents: Gather documents like proof of income, tax returns, identification, and any business-related information required for your application.

4. Submit your application: Complete the loan application process with your chosen lender. Be honest about your intention to use the loan for business expenses. This transparency helps avoid potential issues in the future.

5. Review loan terms: Once your application is approved, carefully review the loan terms, including the interest rate, repayment schedule, and any associated fees. If everything looks good to you, accept the loan terms to move forward with the funding process.

Alternatives to Personal Business Loans

Personal loans might not be ideal for everyone and aren’t the only funding option for your small business. It may be worth considering small business loans or other types of business loans as alternatives.

Small Business Loans

Small business loans are offered through online lenders, banks, and credit unions. There are various options available, each designed for specific purposes. For example, a working capital loan is designed to help you finance the day-to-day operations of your business. An equipment loan can help you replace aging technology and buy new equipment.

SBA loans are guaranteed by the Small Business Administration, whose aim is to help small businesses start and grow. If you aren’t able to make your payments, the SBA will step in and cover up to 85% of the default loss. By reducing risk in this way, the organization helps businesses get easier access to capital.

Shopping around for the best small business loans rates is a good way to compare lenders and find the one that works best for your unique financial needs.

Business Lines of Credit

A business line of credit is revolving credit, similar to a credit card. You have a set credit limit and only pay interest on the amount you’re currently borrowing, making it a more economical option than a term loan for some business owners. As you repay the funds, they are available to borrow again.

Another advantage to a line of credit over a term loan is the ability to use a check to pay vendors who do not accept credit cards.

Business Credit Cards

Business credit cards can be useful for separating personal and business expenses. They also usually have higher credit limits than personal credit cards, which gives you more flexibility to make larger business purchases. Plus, they may offer rewards, perks, and bonuses. It’s important to keep in mind, however, that credit cards tend to have higher interest rates than other types of business financing.

Merchant Cash Advance

A merchant cash advance (MCA) is an alternative form of financing for businesses that get revenue through credit card sales. With an MCA, a business can borrow a lump sum of money and repay the lender with a percentage of future credit card transactions. The repayment amount is larger than the advance, since the lender charges a fee. In some cases, MCA fees can significantly exceed interest rates on other types of business loans.

The Takeaway

Can you use a personal loan to start a business? Perhaps. Taking out a personal loan may be one way to fund your small business needs. However, some lenders do not allow a personal loan to be used for business purposes. It’s a good idea to explore alternatives, such as a small business loan or line of credit.

If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.

With SoFi’s marketplace, it’s fast and easy to search for your small business financing options.

FAQ

Can a personal loan be used for business?

Yes, you can use personal loans for business if the lender allows it. It’s important to check with the lender to ensure there are no restrictions on using the loan for business expenses.

Can I write off a personal loan if used for my business?

You can typically write off the interest on a personal loan used for business purposes, but only the portion directly related to business expenses. Personal loan principal repayments are not tax-deductible.

Does the SBA offer personal loans?

No, the Small Business Administration (SBA) does not offer personal loans. The SBA provides various loan programs designed specifically to support small businesses, such as SBA 7(a) loans and SBA 504 loans.

Photo credit: iStock/fizkes

SoFi's marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

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.

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.

SOSMB-Q324-027

Aug

2024

13 Tips for Aggressively Saving Money

By Rebecca Lake | Budgeting & Goals, Family Finances, money | Comments Off

Saving money can help you to feel more in control of your finances and your life. When you have cash stashed away, you know you are prepared for financial emergencies and can also be working toward your short-term goals (like planning a wedding) or long-term ones, like retirement.

Often, though, saving happens gradually, like a slow drip. But there are people who want to save more aggressively, or there could be a moment in your life that spurs you on to accrue as much money quickly as you can.

If you’re interested in how to aggressively save money, there are smart strategies to help you do just that. Implementing an aggressive savings budget takes a certain amount of commitment, since you may need to make some significant lifestyle changes. That can be worth it, however, if the payoff is watching your money grow faster.

What Is an Aggressive Savings Plan?

An aggressive savings plan is a blueprint for setting aside a sizable amount of your income, typically over a fairly short time period. A 30-year-old who’s hoping to retire by 40, for example, might utilize an aggressive savings plan to save and invest 50% or 60% of their take-home pay over a period of 10 years to reach their goal.

For perspective, the personal savings rate in the U.S. was 3.4%, as of June 2024. That is the percentage of disposable income that citizens are socking away, whether in a savings account or a retirement fund. So the vast majority of people aren’t saving aggressively on a regular basis. Taking an aggressive approach to savings is something you might consider only if you have a specific goal you’re interested in achieving with your money.

Why an Aggressive Savings Plan Can Be Beneficial

Following an aggressive savings budget takes financial discipline, and it may not be right for every person or every financial situation. If you can stick with an aggressive savings plan, however, there are some tangible benefits you might be able to reap.

Here’s why an aggressive savings plan can work in your favor:

• You can set aside money for large or small goals.

• Reaching your savings goals can take less time.

• Saving money becomes a habit.

• You can learn to manage money better.

• It becomes easier to learn to live on less.

• You can avoid debt when you’re focused on saving vs. spending.

• It teaches you how to prioritize needs vs. wants.

Saving aggressively can become a lifestyle if you’re able to accustom yourself to spending less. But even if you only apply an aggressive savings plan for a few months, you might be surprised at just how much money you can set aside.

Whether you follow a turbocharged savings plan for a short or long time, it can definitely improve your financial status and even be a form of financial self-care, since you’re likely avoiding debt and improving your money mindset.

Tips for Building an Aggressive Savings Plan

There’s no single strategy for how to save aggressively; instead, there are numerous steps you can take to shape your savings plan. If you’d like to stop overspending money and start saving instead, these tips can help you get your finances on the right track.

1. Paying Yourself First

“Pay yourself first” is an often-repeated piece of personal finance advice. It simply means that you should set some of your paychecks aside for saving before doing anything else. The good news is that paying yourself first is relatively easy to do.

Some of the ways you can pay yourself first include:

• Contributing part of your salary to your 401k at work

• Scheduling recurring transfers from checking to savings each payday

• Using direct deposit to route payments directly to savings and bypass checking.

Paying yourself first ensures that money makes it to savings, rather than being spent. If you’ve struggled with sticking to a savings habit, adopting this mentality can make it easier to stay the course.

2. Getting Out of Debt

Debt can be a significant obstacle to saving money. If you’re spending hundreds or even thousands of dollars paying off credit cards, student loans, or other debts each month, you might have very little left to save.

Getting rid of your debt can help to free up more money so you can follow through on an aggressive savings budget. Focusing on debt payoff also requires you to control spending habits, since the goal is to not create any new debts in the process.

If you have high-interest credit card debt, consider balance-transfer offers that charge zero percent for a period of time, giving you breathing room to pay down your balance. Or you might take out a lower interest rate personal loan to consolidate and pay off your debt.

Recommended: 15 Creative Ways to Save Money

3. Tracking All of Your Spending

An aggressive savings plan won’t really work if you don’t know exactly where your money is going. Keeping track of your spending is essential for making your plan work.

There are different ways to track spending, including:

• Writing purchases down by hand

• Using a spreadsheet

• Linking bank accounts to an expense tracking or budgeting app.

The method you choose isn’t as important as tracking all of your expenses regularly, including cash spending. Getting into the habit of tracking expenses can make the next step in your aggressive savings plan easier to tackle. You’ll be much more aware of where your money goes and how you might economize.

4. Utilizing a Budgeting Method

A budget is a plan for spending money each month. Making a budget each month is central to how to save aggressively, since you can decide how to allocate the money you’re earning.

In its most basic form, making a budget means adding up expenses and subtracting them from income. When you’re trying to save aggressively, the goal is to make the gap between income and expenses as wide as possible.

There’s no single way to make a budget. For example, you might try zero-based budgeting, the 50/30/20 budget method, or cash envelope budgeting. Experimenting with different types of budgets can help you to decide which method works best for you.

Also consider different tools to help you along. Your financial institution may offer budgeting tools, you can download apps, you might use a journal, or even manage your budget in an Excel spreadsheet.

5. Cutting Down Expenses

How to stop spending money is a common challenge; succeeding at it can help you save aggressively. The key is knowing how to prioritize needs over wants and looking for areas in your spending that you can reduce or eliminate.

For example, you can start by making the obvious cuts and jettison streaming services you don’t use or canceling your gym membership. But you can go a step further and look for more drastic ways to reduce expenses, such as:

• Renting out a room or taking on a roommate

• Getting rid of your car and using public transportation

• Embarking on a no-spend year

• Moving to a cheaper area.

Whether these types of saving tactics will work for you or not can depend on your situation. But allowing yourself to be creative when finding ways to cut expenses can help to bolster your aggressive savings plan.

6. Opening a High-Yield Savings Account

If you’re saving aggressively, it’s important to keep your money in a secure place where it can earn a great interest rate. The higher the rate and annual percentage yield (APY), the more your money can grow.

That’s where high-yield savings accounts come in. High-yield savings accounts can pay an interest rate and APY that’s well above the national average. For example, the typical savings account at a traditional bank pays 0.46%, as of the summer of 2024. But you might find a high-yield account at an online bank that’s paying 4.50% or more instead.

When looking for a high-yield savings account, consider the APY you can earn. But also pay attention to things like fees, online and mobile banking access, and monthly withdrawal limits. These are important factors when sizing up the best option.

7. Starting a Side Hustle

Starting a side hustle can help you to generate additional income that you can add into your aggressive savings budget. According to a recent report, 36% of Americans have at least one side hustle.

There are different types of side hustles you can try, including ones you can do online and ones you can do offline. For example, you might try your hand at freelancing if you want to make money from home or get paid to deliver groceries in your spare time. You could drive an Uber or sell crafts you make on Etsy.

The great thing about side hustles is that you can try different ways to make money to see what works best. Just remember that any earnings from side hustles or temporary work over $400 are taxable.

Recommended: 11 Benefits of Having a Side Hustle

8. Avoiding Eating Out at Restaurants

Grabbing dinner out can be convenient, but it can also derail your plans to save aggressively. If you’re spending $50 a week on takeout food or meals with friends, for instance, that’s $2,600 a year that you’re not saving.

Learning to plan meals and make food at home can cut that expense out of your budget. If you want to share meals with friends, consider inviting them to a potluck dinner at your house instead. That can be a great way to try new foods without having to blow your budget.

9. Saving Money Windfalls

Windfalls are any money that comes your way that you might not have been expecting. So that can include:

• Tax refunds

• Rebates

• Bonuses

• Cash-back rewards

• Financial gifts (i.e., birthday money or wedding money)

• Inheritances.

Some money windfalls may be small and add up to just a few bucks, while others might be hundreds or even thousands of dollars. It may be tempting to spend those amounts (because it feels like free money), but you can make better use of them by adding them to savings instead.

10. Investing Your Money

Investing your money is the best way to grow it through the power of compounding interest. Compounding means your interest earns interest. When you invest money in stocks, exchange-traded funds (ETFs), and other vehicles, you have a chance to earn interest at much higher rates than what you could get with a savings account, which means the compounding factor is enhanced too. (However, do remember there is risk involved; these investments aren’t FDIC-insured.)

The longer you have to invest, the more your money can grow. So if you’re not investing yet, it’s important to get started sooner rather than later. Some of the best ways to start investing include adding money to your 401k, contributing to an Individual Retirement Account (IRA), and opening a taxable brokerage account.

11. Automating Your Finances

Deciding to automate your personal finances can make saving aggressively less time-consuming, since it’s something you don’t have to actively think about. As mentioned above, you can set up automatic transfers from checking to savings each payday. What’s more, you can also automate deposits to your investment accounts and your bill payments.

Automating ensures that bills get paid on time and that the money you’ve earmarked for savings in your budget gets where it needs to go. You can set up automatic deposits and payments through your bank account; it typically takes just a few minutes.

12. Utilizing the 30-Day Rule

The 30-day rule is fairly straightforward: If you’re tempted to spend money on an unplanned purchase, impose a 30-day waiting period. Thirty days is enough time to decide if you really need to buy whatever it is you’re considering and, if you do, to find the money in your budget to pay for it without having to rely on a credit card.

Using the 30-day rule can help you to curb impulse spending, which can be a hurdle to making an aggressive savings plan work. If you decide the item is still something you want to buy, then you can make the purchase guilt-free. But you might find that what seemed like a smart buy at the time is no longer something you need.

13. Living Below Your Means

Living below your means simply means spending less than you earn each month. When you spend less than your income, you have money left over that you can add to your savings goals.

All of these aggressive savings tips outlined here can help you to get into a mindset of living below your means. When you’re focused on cutting down expenses and sticking to a budget, living on less money than you make doesn’t seem like a struggle.

The Takeaway

Saving aggressively can take some getting used to if you’ve never tried it before, but the end result can be well worth the effort. As you find your savings groove, it’s important to have the right banking tools so you can make the most of your money.

Opening the right bank account can make it easier to follow an aggressive savings plan.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.50% APY on SoFi Checking and Savings.

FAQ

Are there downsides to aggressive savings plans?

Saving money aggressively can mean having to make certain sacrifices in the short-term. For example, you may have to say no to dinner out with friends, vacations, or new clothes. But those temporary sacrifices can pay off if you’re able to reach your savings goal relatively quickly.

How can I save aggressively if I do not make a lot of money?

Starting a side hustle can help you to create more income so that it’s easier to save aggressively. But if that’s not an option, you can still save at an above-average rate by cutting down your expenses as much as possible and using windfalls to grow your savings whenever they come your way.

Can you aggressively save long-term?

Whether you’re able to save aggressively for the long-term can depend on how committed you are to your plan. If you have a clear reason for saving, then you may not need any added motivation to keep going. On the other hand, you may need to take a temporary break from saving as aggressively if you find yourself chafing under a strict spending regime.

Photo credit: iStock/Farknot_Architect

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

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

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

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.

SOBNK-Q324-050

Aug

2024

23 Easy Ideas to Pay It Forward

By Alice Garbarini Hurley | Family Finances, Life & Career, money | Comments Off

You’re likely familiar with the term “pay it forward.” It describes an act of kindness and giving, from passing along soccer cleats to the younger player next-door to volunteering in a soup kitchen, as a way of giving back. It’s all about putting generosity into action and participating in a cycle of giving that empowers both you and others.

By paying your good fortune (financial, healthwise, or otherwise) forward, you both help others and may inspire people to also give what they can to assist others and lift spirits.

As part of their ActNow campaign, the United Nations lists 17 Sustainable Development Goals, along with small things individuals can do in their daily lives that can improve life for all of us. They note that “a lot” can happen “when millions of people act together for our common future.”

Interested in joining this movement towards positive change? Read on to learn 23 ways to pay it forward, including:

• Gestures that lift spirits, from running errands to letting people take your place in line

• Giving back to your community

• Passing on meaningful possessions instead of tossing them.

Is Paying It Forward the Same as Karma?

The concepts of paying it forward and karma are similar yet different.

Paying it forward involves helping others without expecting anything in return, except the hope, perhaps, that the recipient might keep the cycle going, thus making the world a better place. You may also have heard of this concept called “random acts of kindness.”

The word karma, on the other hand, comes from the Hindu and Buddhist religious concept that a person’s actions in this and previous states of existence decide their future fate when reincarnated.

In everyday usage, the idea is that if we send the universe positive energy, also known as good karma, it will come back to us. On the flip side, bad karma is often believed to bring more bad events or bad luck.

💡 Quick Tip: Tired of paying pointless bank fees? When you open a bank account online you often avoid excess charges.

Simple Ways to Pay It Forward

If you’d like to test-drive some pay-it-forward ideas, there are plenty of options. Here, you’ll find 23; notice how doing one can make you want to try another.

1. Letting Someone Go in Front of You in Line

This is a present to a harried parent with a sick child at the pharmacy or a driver merging into a crowded highway toll lane. Kindness is connection in a busy world and is applicable anywhere, from an airport restroom to Home Depot aisles.

2. Paying for a Stranger’s Coffee or Meal

At Starbucks, numerous customers have kept drive-through pay-it-forward chains going, each covering the tab of the customer in the car behind them. But you could also buy someone a java at any coffee shop or drive-through, or be kind and give the cashier money to pay for a full meal of another patron, just to make their day.

3. Sharing Your Green Thumb

Tend the flowers in a public patch to give beauty to your town. Donate homegrown veggies to a food pantry, or leave extra zucchini, beans, rhubarb, and more by your mailbox for others to take for free. It could really help someone who is struggling to pay for groceries in a given month.

4. Donating Blankets, Pajamas, Socks, and Toiletries to Shelters

Unhoused families might move from shelter to shelter for available beds. Consider donating new blankets, PJs, socks, and unopened mini shampoos, lotions, and soaps from hotel stays for the gift of personal care.

Recommended: How to Make End-of-Year Donations

5. Leaving a Big Tip for a Server or Waiter

Servers and waitstaff are on their feet, catering to our whims (dressing on the side, hold the onions), and their base salary is generally low. Tips help even the score. Yes, there are guidelines of how much you should tip, but occasionally, it can be nice to go a bit overboard. For a server that goes above and beyond, consider slipping them a generous cash bonus before you leave.

6. Returning Another Person’s Shopping Cart

Here’s an easy way to pay it forward with a random act of kindness: Grab another customer’s card after they are done with it. This saves them the extra steps and, if you’re on your way on, you won’t have to hunt for a cart.

7. Sending an Email of Gratitude

Amid spam, advertising, and billing statements, a note of gratitude is a grace. Maybe it’s time to thank unheralded people like the school reading teacher or your family doctor for all they do every day.

💡 Quick Tip: Your money deserves a higher rate. You earned it! Consider opening a high-yield checking account online and earn 0.50% APY.

8. Sharing Your Food With Someone

If you enjoy getting bargain prices but Costco multipacks are just too big to store, consider sharing a few with a friend or neighbor free of charge.

Recommended: 31 Tips for Cutting Your Grocery Bill

9. Learning the Names of People You See Every Day

Get to know the crossing guard, train conductor, and neighbor who walks her poodle by your house every morning. (Learn the poodle’s name, too.) This is a sign of respect and appreciation that says “I see you and notice you. You are not anonymous.”

10. Leaving Extra Quarters at the Laundromat

These shiny silver timesavers can be a real boon for the next person lugging in dirty wash and detergent.

11. Asking for Charitable Donations Instead of Gifts for Your Birthday

More and more kids and adults share this kind of gift request on Facebook and in party invitations. Money goes to good causes, from the Breast Cancer Research Foundation to the World Wildlife Fund, rather than material gifts. Need inspiration? Spend a bit of time researching the best charities to support.

12. Helping Someone With a Task

Give a neighbor a hand raking leaves, shoveling snow, or with a work-related task, such as proofreading a resume or printing a document. Offering to help without any payment expected can deepen your bonds.

13. Writing a Recommendation for a Coworker

Leave a golden review on LinkedIn or write a glowing letter someone can take along when leaving a job. This can help them move ahead in their professional pursuits.

Recommended: 22 Money Moves To Make This Month

14. Writing a Message to Someone Who Made a Difference in Your Life

Did your fifth-grade teacher see in you skills other people missed? Did your first boss train you in a way that’s made your work life so much easier? A handwritten note or card sent by snail mail is one of the best pay-it-forward examples. You’ll probably make their day and then some.

Giving Away Items Online

Your daughter’s riding boots from all those lessons at the horse barn deserve a good home. So does the dollhouse your brother built her. Instead of tossing them in haste, consider posting them on sites like Freecycle, Nextdoor, or a local Facebook group, so someone else can nab them. Reduce/reuse/recycle helps the planet, too.

16. Encouraging Someone Who Needs It With a Few Words

We all need some positive encouragement now and then. You can offer it by saying “You got this” to a parent who is job-hunting or “Good for you, walking” when you pass someone on a steep hill.

Recommended: 5 Ways to Achieve Financial Security

17. Leaving Coupons Next to Corresponding Products in the Grocery Store

That diaper coupon you can’t use because your baby is too big now? Leave the coupon on a package for another shopper. Same with any other coupons that could brighten someone else’s day.

18. Purchasing Extra Food to Leave at Shelters

When you go grocery shopping, you might add some shelf-stable products, like pasta, sauce, rice, nuts, boxed milk, nut butters, wholesome cereals, and canned fruit, to your cart for others in need. You can then drop them off at a local shelter or other nonprofit.

Recommended reading: Things to Do with Your Tax Refund

19. Cleaning Up Your Local Beach or Public Area

Bring trash bags, gloves, and perhaps family members to help collect garbage that clogs our natural areas. You can also help keep plastic out of our bodies of water this way.

20. Running an Errand for a Busy Loved One

Is your sister a full-time nurse raising two kids? Once a week, drop off a heat-and-eat dinner or shuttle kids home from activities.

21. Volunteering Your Time

Whether you make it a regular or a once-in-a-while activity, an easy and rewarding way to pay it forward is to give a couple of hours of your time. Help at a religious institution, the school library, or the local soup kitchen, or pitch in at a town park or garden cleanup. Volunteering can prove to be a fun, free way to spend your leisure time.

22. Donating Blood

Sign up to donate blood or give platelets (the latter takes longer but meets critical needs.) You leave on a high, knowing hospitals, patients, and their families are waiting for your vital gift.

23. Giving up Your Seat to Someone

Do it on the subway, bus, or train. If you’re hailing a taxi and other people are waiting, too, why not let them get the first one? It’s an easy way to be charitable.

Banking With SoFi

Paying it forward can help improve our world, little by little. You might give money, time, skills, or all of the above. A random act of kindness in your apartment or office building, or even with courteous driving, can turn someone’s bad day around. Looking out for another person, not just for yourself, makes everyone feel better.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.50% APY on SoFi Checking and Savings.

FAQ

How do I pay it forward at work?

In the office, you might treat co-workers to coffee and fruit as an act of friendship and gratitude. If everyone on your team is now remote, consider making a donation in their names to a nonprofit near company headquarters.

Where did the concept of “pay it forward” begin?

The phrase can be traced back to the 1916 book In the Garden of Delight by Lily Hardy Hammond. In it, she wrote: “You don’t pay love back; you pay it forward.” There was a movie with the title “Pay It Forward” in 2000. Then in 2007, a Pay It Forward Day was launched in Australia. The idea has since been adopted by many counties as an opportunity to do acts of kindness.

How often should you pay for kindness?

The term “pay for kindness” is a misnomer. We do not pay for kindness. Rather, we can pay forward to others the thoughtful gestures and generosity we received by keeping the cycle going. And if we receive an act of kindness, we can repay it by doing one too.

Photo credit: iStock/Vladimir Vladimirov

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

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.

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.

SOBNK-Q324-041

Building a Nest Egg in 5 Steps

What Is a Nest Egg?

Understanding How a Nest Egg Works

How Much Money Should Be in Your Nest Egg?

What Are Nest Eggs Used for?

5 Steps to Building a Nest Egg

1. Set a SMART Financial Goal

2. Create a Budget

3. Pay Off Debt

Debt Repayment Strategies

4. Make Saving Automatic

5. Start Investing in Your Nest Egg

The Power of Compounding Interest

Why Having a Nest Egg Is Important

Investing in Your Nest Egg With SoFi

FAQ

What is a financial nest egg?

How much money is a nest egg?

Why is it important to have a nest egg?

Nonfarm Payroll: What It Is and Its Effect On the Markets

What Are Nonfarm Payrolls?

The U.S. Nonfarm Payroll Report, Explained

When Is the NFP Released?

4 Figures From the NFP Report to Pay Attention To

1. The Unemployment Rate

2. Employment Sector Activity

3. Average Hourly Wages

4. Revisions in the Nonfarm Payroll Report

How Does NFP Affect the Markets?

NFP and Stock Prices

NFP and Interest Rates

How to Trade the Nonfarm Payroll Report

The Takeaway

Personal Business Loans: Risks, Appeals, and Alternatives

What Is a Personal Business Loan?

Personal Business Loans vs. Small Business Loans

Benefits of a Personal Loan for Business

Ease of Qualification

Faster Funding

Potential for Low Interest Rates

Flexibility and Versatility

Disadvantages of a Personal Loan for Business

Some Lenders Don’t Allow Personal Loans for Business

Lower Loan Amount Limits

Shorter Repayment Terms

Potential to Affect Personal Credit Score and Assets

Fewer Tax Deduction Opportunities

How to Get a Personal Loan for Business

Alternatives to Personal Business Loans

Small Business Loans

Business Lines of Credit

Business Credit Cards

Merchant Cash Advance

The Takeaway

FAQ

Can a personal loan be used for business?

Can I write off a personal loan if used for my business?

Does the SBA offer personal loans?

13 Tips for Aggressively Saving Money

What Is an Aggressive Savings Plan?

Why an Aggressive Savings Plan Can Be Beneficial

Tips for Building an Aggressive Savings Plan

1. Paying Yourself First

2. Getting Out of Debt

3. Tracking All of Your Spending

4. Utilizing a Budgeting Method

5. Cutting Down Expenses

6. Opening a High-Yield Savings Account

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.50% APY on your cash!

7. Starting a Side Hustle

8. Avoiding Eating Out at Restaurants

9. Saving Money Windfalls

10. Investing Your Money

11. Automating Your Finances

12. Utilizing the 30-Day Rule

13. Living Below Your Means

The Takeaway

FAQ

Are there downsides to aggressive savings plans?

Student Loan
Refinancing

Personal
Loans

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