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Most businesses report information to the credit bureaus every 30 to 45 days. Each on-time payment you make may barely affect your score, while a missed payment can have a significant effect.

But how often does your credit score update? Let’s find that answer, and learn how to keep an eye on your credit history and credit score.

Recommended: How to Build Credit Over Time

When Do Credit Reports Update?

Whenever consumers take some sort of action relating to their credit, their score, usually a number between 300 and 850, will fluctuate.

For instance, if they apply for a loan or miss a credit card payment, their score could change.

There is no set date for a credit score update because a lender or creditor may send information to the three main credit bureaus at different times: Experian one day, Equifax five days after that, and TransUnion a week later.

An update, though, will occur at least every 45 days.

Rather than constantly checking for updates, you might want to focus on long-term goals like paying off debt, always sending payments on time, and ensuring that your scores are going in an upward direction.

Recommended: Which Credit Bureau Is Used Most?

What Is a Good Credit Score?

Lenders most often use FICO® Score, but the credit bureaus introduced the VantageScore® in 2006 to provide a score that was more consistent among the three credit agencies.

This is how the FICO Score 8 and the latest VantageScore models break down:

People with high scores typically have access to higher lines of credit and lower interest rates. Those with low credit scores may not be approved for certain credit cards and loans. And if approved for, say, a mortgage, they will usually pay a much higher mortgage interest rate.

(That said, a conventional mortgage lender is free to set its own requirements when it comes to credit scores. Government-backed loans still have credit score requirements, even if they’re lower.)

How to Check a Credit Report

Under federal law, consumers are entitled to one free copy of their credit report every 12 months from each of the main credit reporting agencies, TransUnion, Experian, and Equifax.

AnnualCreditReport.com is the only authorized website for free credit reports, according to the Federal Trade Commission.

Consumers can also call 1-877-322-8228 and provide their name, address, Social Security number, and date of birth to verify their identity.

If you want to check your credit history more than once a year, you can ask one or all three credit reporting bureaus, for a small charge, for another copy.

Why check your credit report periodically? Mainly:

•   To make sure the information is accurate and up to date before you apply for a car or home loan, buy insurance, or apply for a job.
•   To help guard against identity theft.

Recommended: How To Read A Credit Report

How to Check a Credit Score

The free annual credit reports do not include your credit score — or more accurately, scores. Your credit score from each of the credit bureaus will vary based on the information each has. Lenders also use slightly different credit scores for different kinds of loans.

How to get your credit scores then? Here are a few ways:

•   Buy a score directly from the credit reporting companies or from myfico.com.
•   Look at a loan statement or a credit card statement. Some financial companies provide credit scores for customers as a perk.
•   Use a credit score checker. Some services give consumers access to their credit scores but charge for premium services like checking a score daily. Other sites may require that you sign up for a credit monitoring service with a monthly subscription fee in order to get your “free” score.
•   Sign up for an app like SoFi, which provides free weekly updates on your credit score and tracks all of your money in one place.

When signing up for credit score checking websites, it’s important for consumers to look at the terms of service and ensure they’re not being charged for premium services they do not want.

Also, it’s best to avoid an “educational” credit score vs. a score that a lender would use. For some, there will be a meaningful difference, the Consumer Financial Protection Bureau says.

What Makes Up a Credit Score?

Learning about what factors make up a credit score can help consumers raise their scores. Main factors that contribute to the score, in order:

•  Payment history (35-40%)
•  Credit utilization
•  Length of credit history
•  New credit
•  Credit mix

In terms of payment history, the most important factor when calculating a score, it’s critical to always repay debts on time.

The credit utilization ratio is the amount that is owed in relation to how much credit a person has overall. Keeping your credit utilization ratio below 30% is commonly recommended.

For the length of the credit history, consumers can increase their score by not closing cards. The longer someone’s credit history is, the better.

Applying for new credit cards and loans that require a hard inquiry into a credit report could bring down a score, even if the result is approval. However, if a score does go down, it shouldn’t take long for it to go back up. It’s multiple hard inquiries on a credit report in a short period that can cause damage. Then again, if someone is shopping for a mortgage or auto loan, both FICO and VantageScore account for multiple hard inquiries in a grace period of 14 to 45 days.

Credit mix refers to credit cards, student loans, auto loans, personal loans, and mortgages. By having a mix, consumers show that they can manage all kinds of debt.

Recommended: What Credit Score is Needed to Buy a Car

Why Credit Scores Matter

Having a high score can help consumers in a number of scenarios.

They will save money, and potentially a great deal of money if they gain access to lower interest rates.

The higher a score is, the more credit someone will be able to access as well.

Consumers can reach their financial goals quicker and utilize better products. For example, they may get approved for a credit card that offers perks like bonus travel rewards or a high cash-back rewards rate. They might also be able to use a card with a 0% introductory APR or 0% balance transfer rate for a certain period.

People with a high score may be able to rent a better apartment or home since landlords will check prospective tenants’ credit.

They may gain access to better car insurance rates and be able to avoid paying deposits to utility companies and cellphone providers.

Improving a credit score could take time, but it’s worth it because in the long run, consumers will save money and potentially reach their financial goals that much faster.

Recommended: Should I Sell My House Now or Wait

The Takeaway

How often does your credit score update? All the time, really, but once a month is a good barometer. You can order a free credit report every year, or you can see updates in your credit score for free or for a fee.

SoFi’s money-tracking tool offers a host of benefits at no charge:

•  Get weekly updates on your credit score.
•  See changes to key factors contributing to your credit score.
•  Link your checking, savings, investment, and retirement accounts as well as credit cards, student loans, and mortgages. Manually add an account or asset to see your entire net worth.

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

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

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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.

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.

SORL21003

Every consumer has multiple credit scores. Why on earth is that? Because the major credit bureaus — Experian, Equifax, and TransUnion — may have slightly different credit information on any one person, and credit scoring models vary.

Credit scores are an important financial metric to keep track of throughout the year. The three-digit number can help people qualify for everything from mortgages to student loans and apartment rentals.

Here’s why credit scores vary and how to keep track of each.

What Is a Credit Score?

A credit score is a three-digit number assigned to each consumer that businesses use to measure the risk of lending to that person. It’s not the only thing lenders consider, but it is one of the most important metrics, if not the most important.

Your credit score is based on a bunch of factors, including if you typically pay your bills on time, what your debt is relative to your income, how long you’ve carried credit, how many loans or lines of credit you have at once, and if you have ever had a negative financial event, including bankruptcy.

Recommended: What Is Considered a Bad Credit Score?

Credit Scoring Models Vary

Though there are a number of credit scoring models out there, the majority of lenders use either FICO® or VantageScore.® Both determine a person’s credit score using the factors above, including history of borrowing, repayment history, and how much of the consumer’s credit they are currently using (known as a utilization rate).

Though both use the same factors, each one uses its own formula to weigh the worth of each factor. For example, a person’s credit history may be more important in one model than the other.

Based on the information gathered, the scoring models assign each consumer a three-digit number, which denotes that person’s lending risk compared to others.

To complicate matters, there are often multiple versions of each scoring model available from its developer at any given time. And adoption rates for updated versions can be low, meaning some lenders may be using older models that calculate a person’s score differently than an updated version. But for now, the FICO scoring model (known as FICO 8) breaks down as follows:

•   Payment history: 35%

•   Amounts owed: 30%

•   Length of credit history: 15%

•   Credit mix: 10%

•   New credit: 10%

Scoring Ranges Vary, Too

Both FICO and VantageScore calculate credit scores in a range between 300 to 850.

VantageScore 3.0 and FICO 8 are the most used scoring models and frequently mirror each other, so if your FICO number is high then your VantageScore will likely be high as well.

However, it’s important to note that the two pull the same data but weigh that individual data differently, putting greater importance on some aspects of a person’s credit history and usage than others.

While all creditors and lenders have their own standards, here are the FICO and VantageScore credit score categories:

FICO:

•   Exceptional: 800 to 850

•   Very good: 740 to 799

•   Good: 670 to 739

•   Fair: 580 to 669

•   Very poor: 300 to 579

VantageScore:

•   Excellent: 781 to 850

•   Good: 661 to 780

•   Fair: 601 to 660

•   Poor: 500 to 600

•   Very poor: 300 to 499

To put it all into perspective, in 2022, the average FICO credit score hit 714. Minnesotans reigned supreme for the 11th straight year with an average of 742.

Report Data Can Differ From Bureau to Bureau

Each of the credit bureaus collects its own data independently, and some lenders may only report data to one or two of the credit bureaus rather than all three.

To add to the complexity, the bureaus usually do not share information with one another, so none can really promise to show a consumer’s total financial picture.

Say Joanna goes into collection for her car loan, but the lender only reports this information to Experian. That means it will likely only appear on and affect her Experian credit report and may not affect her TransUnion or Equifax report. Thus her Experian report could be lower than her other two credit reports.

Scores Can Change Depending on the Lender

Lenders typically build their own relationships over time with at least one of the credit bureaus. This means they may only report information to the credit agencies they have relationships with.

Before applying for a line of credit, a car, home or student loan, or any other credit, it may be prudent to ask the lender which agencies they share information with and check in with those to see where you stand.

How Often Should You Check Your Credit?

Here’s the good news: Checking your credit won’t hurt your credit score, so go ahead and keep an eye on it. The bad news? The number a person sees when checking their score for free likely won’t match the one any lenders do.

The report a consumer has access to is a simple free report, lacking detail. But again, that’s OK, because it will show any errors or possible identity theft, which can be corrected if caught early enough.

Anyone can order a copy of their credit report from all three reporting agencies once a year for free at AnnualCreditReport.com . The report breaks down a person’s credit history but does not give a score.

However, again, this is the time to look for any mistakes and amend them ASAP. Consumers who do see an error can dispute it with the credit reporting agency and the company that holds the account.

It’s also a good idea for people to periodically check their credit to ensure it’s on the up and up.

Those interested in improving their credit scores to potentially get a better rate on loans should pay all their bills on time, limit their credit utilization ratio, and pay down existing debt.

The Takeaway

An individual’s credit scores differ for a variety of reasons. It might be a good idea to ask lenders which agencies they share information with. It’s always a good idea to periodically check your credit report to make sure everything’s kosher, to pay bills on time, and to keep credit utilization low.

Know what’s cooler than keeping track of your credit score? Keeping track of your credit score and finances at once. If you’re on the market for a money tracker tool that will let you do both, SoFi may be just the thing.

SoFi tracks all of your money in one app — at no cost. And SoFi members can work one-on-one with a financial advisor at no charge.

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

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

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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.
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.

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.

SORL0523012

Buying your first house is a major move, even if the home itself is tiny. Becoming a homeowner can be a great way to start putting down some roots and building equity. And just because it’s called a “starter home” doesn’t necessarily mean you’re twenty-something when you go shopping for one. For many people, the purchase of a first, maybe-not-forever house can come years or decades later.

But what exactly makes a good starter home? How do you know when to jump into the housing market? There are many variables to factor in, such as price, location, type of home, the sort of mortgage you’ll get, your personal finances, and more.

Read on to learn answers to such questions as:

•   Why should you buy a starter home?

•   Should you buy a starter home or wait?

•   How do you buy a starter home?

What Is a Starter Home?

The first step in deciding “Should I buy a starter home?” is understanding what exactly that “starter home” term means. A starter home is loosely defined as a smaller property that a first-time buyer expects to live in for just a few years.

The home could be a condo, townhouse, or single-family home. But generally, when you purchase a starter home, you anticipate outgrowing it — maybe when you get married or have a couple of kids, or because you want more space, a bigger yard, or additional amenities.

A starter house could be brand-new, a fixer-upper, or somewhere in between, but it’s usually priced right for a buyer with a relatively modest budget.

That modest budget, though, may need to be loftier than in years past. The 2022 price of a starter home was $325,000, according to Realtor.com, up 48% from $220,000 in 2019.

That might sound a little intimidating, but remember, that’s the median price. Depending on where you live, there may be entry-level homes selling at significantly lower price points.

Recommended: What Is Housing Discrimination?

How Long Should You Stay in a Starter Home?

Unless you’re a big fan of packing and moving — not to mention the often-stressful process of selling one home and then buying another, or buying and selling a house at the same time — you may want to stay in your starter home for at least two to five years.

There can be significant financial reasons to stick around for a while:

•   Home sellers are typically responsible for paying real estate agents’ commissions and many other costs. If you haven’t had some time to build equity in the home, you might only break even or even lose money on the sale.

•   You could owe capital gains taxes if you’ve owned the home for less than two years and you sell it for more than you paid.

Of course, if there’s a major change in your personal or professional life — you’re asked to relocate for work, you grow your family, or you win the lottery (woo-hoo!) — you may need or want to sell sooner.

What Is a Forever Home?

A forever home is one that you expect to tick all the boxes for many years — maybe even the rest of your life. It’s a place where you plan to put down roots.

A forever home can come in any size or style and at any cost you can manage. It might be new, with all the bells and whistles, or it could be a 100-year-old wreck that you plan to renovate to fit your home decorating style and vision.

Your forever home might be in your preferred school district. It might be close to friends and family — or the golf club you want to join. It’s all about getting the items on your home-buying wish list that you’ve daydreamed about and worked hard for.

At What Age Should You Buy Your Forever Home?

There’s no predetermined age for finding and moving into a forever home. Some buyers plan to settle in for life when they’re 25 or 30, and some never really put down roots.

But according to data from the 2022 Home Buyers and Sellers Generational Trends Report from the National Association of Realtors® Research Group, buyers in the 57 to 66 age range said they expected to live in their newly purchased home longer than buyers from other age groups, with an expectation of 20 years of residence.

Younger buyers (ages 23 to 31) and older buyers (75 to 90) said they expected to stay put for 10 years.

The median expectation for buyers of all ages was 12 years.

Recommended: First-Time Homebuyer’s Guide

Benefits of Buying a Starter Home

Are you contemplating “Should I buy a starter home?” Here are some of the main advantages of buying a starter home:

•   Becoming a homeowner can bring stability to life. A starter home comes with a feeling of “good enough for now” that, for some buyers, is just the right amount of commitment without feeling stuck in the long term.

•   Buying a starter home is also a great way to try on aspects of homeownership that renters take for granted, like making your own repairs and mowing your own yard. The larger the house, the more work it usually brings. With a starter home, you can start small.

•   Buying a starter home is also an investment that could see good returns down the road. While you live in the home, you’ll be putting monthly payments toward your own investment instead of your landlord’s. Depending on market conditions, you could make some money when you decide to trade up, either through the equity you’ve gained when you sell or recurring income if you choose to turn it into a rental property.

•   Homeowners who itemize deductions on their taxes may take the mortgage interest deduction. Most people take the standard deduction, which for tax year 2022 (filing by Tax Day 2023) is:

◦   $25,900 for married couples filing jointly

◦   $12,950 for single taxpayers and married individuals filing separately

◦   $19,400 for heads of households

•   Some homeowners who itemize may be able to do better than the standard deduction. For instance, in some states, a homestead exemption gives homeowners a fixed discount on property taxes. In Florida, for example, the exemption lowers the assessed value of a property by $50,000 for tax purposes.

Downsides of Starter Homes

Next, consider the potential disadvantages of snagging a starter home:

•   While the idea of buying a home just big enough for one or two is a romantic one, the reality of finding a starter home that’s affordable has gotten tougher.

   The outlook has been so bleak, especially in some larger cities, that some Millennials are opting out of the starter-home market altogether, choosing instead to rent longer or live with their parents and save money.

   Who can blame Millennials for taking a different approach to homeownership than their parents? The older members of this generation came of age during the financial crisis of 2008-09, which included a bursting housing bubble that put many of their parents — and even some of them — underwater on a mortgage they may not have been able to afford in the first place.

•   When thinking about whether you should buy a starter home, know that it may require a lot of sweat equity and cash. If you buy a bargain-priced first home, you may be on the hook for spending much of your free time and cash to restore it.

•   Another con of buying a starter home is the prospect of having to go through the entire home-buying process again, possibly while trying to sell your starter home, too. Keeping your house show-ready, paying closing costs, going through the underwriting process, packing, moving, and trying to time it all so you avoid living in temporary lodging is a big endeavor that, when compared with the relative ease of moving between apartments, can be seen as not worth the effort.

•   In some circumstances, you may have to pay capital gains taxes on the sale of your starter home when you move up.

If you aren’t ready to jump into a starter home, an alternative could be a rent-to-own home.

How to Find Starter Homes for Sale

Are you ready to start the hunt? Here are some tips for finding a starter home:

•   Work with an experienced real estate agent who knows your market and spends their days finding homes in your price range.

•   Rethink your house criteria. If you are buying a starter home and figured you’d shop for a three-bedroom, you may find more options and less heated competition if you go for a two-bedroom house.

•   Take a big-picture view. If you’re a young couple with no kids yet, maybe you don’t need to purchase in the tip-top school district. After all, you are at least several years away from sending a little one to their first day of school Or, if prices are super-high for single-family houses, could buying a condo or a townhome work well for a number of years?

   You might also look into purchasing a duplex or other type of property.

Average U.S. Cost of a Starter Home

As noted above, the typical cost of a starter home in the U.S. was $325,000. Keep in mind, however, that there is a huge variation in costs. A rural home may be much less expensive than shopping for a starter home that’s within short commuting distance of a major city, like New York or San Francisco.

Is Buying a Starter Home Worth It?

Deciding whether a starter home is worth it is a very personal decision. One person might be eager to stop living with their parents and be ready to plunk down their savings for a home. Another person might have a comfortable rental in a great town and be reluctant to take on a home mortgage loan as they continue to pay down their student loan debt.

When you consider the pros and cons of starter homes listed above, you can likely decide whether buying a starter home is worth it at this moment of your life.

Tips on Buying a Starter Home

If you’re tired of renting or living with your parents but don’t have the cash flow necessary for anything more than a humble abode, a starter home could be a great way to get into real estate without breaking the bank. Some pointers on how to buy a starter home:

•   Before you buy any home — starter or otherwise — it’s important to sit down and crunch the numbers to see how much home you can realistically afford. Lenders look at your debt when considering your debt-to-income ratio (DTI), but they aren’t privy to other regular monthly expenses, such as child care or kids’ activity fees. Be sure to factor those in.

•   You also may want to look at how much you can afford for a down payment. While a 20% down payment isn’t required to purchase a home, most non-government home loan programs do require some down payment.

   It’s possible to buy a home with a small down payment: The average first-time homebuyer puts down about 6% of a home’s price as a down payment, according to the latest data from the National Association of Realtors (NAR).

   In addition, putting down less than 20% means you may have to pay private mortgage insurance (PMI).

•   You’ll want to explore different mortgage loan products as well, possibly with a mortgage broker. You’ll have to decide between adjustable and fixed rate offerings, 20-year vs. 30-year mortgages, and different rates. You may also be in a position to buy down your rate with points. Getting a few offers can help you see how much house you can afford, as can using an online mortgage calculator.

•   The decision to purchase a starter home is about more than just money, though. You may also want to consider your future plans and how quickly you might grow out of the house, whether you’re willing to live where the affordable houses are, and if you’ll be happy living without the amenities you’ll find in a larger house.

•   Other factors to consider are your current state of financial health and your mental readiness for a DIY lifestyle (which includes your willingness to fix your own leaky toilet or pay a plumber.)

•   If you’re ready to make the leap, there are plenty of home ownership resources available to help you get started on the path to buying your starter home. Your first step might be to check out a few open houses and to research mortgage loans online.

The Takeaway

Buying a starter home can be a good way to get your foot in the door of homeownership, but it’s important to consider your financial situation and your plans for the next two to five years or more before buying a starter house.

Are you house hunting and mortgage shopping? SoFi offers fixed-rate mortgage loans with as little as 3% down for first-time homebuyers, plus competitive rates and variable terms.

SoFi Mortgage Loans: The smart, simple source for financing.

FAQ

How much money should you have saved to buy a starter home?

The average down payment is about 6% of the home purchase price. That number can help you see how much you want to have in the bank, though mortgage loans may be available with as little as 3% down or even zero down if you are shopping for a government-backed mortgage. Worth noting: If your down payment is under 20%, you may have to pay private mortgage insurance.

What is considered a good starter home?

A good starter home will likely check off some of the items on your wish list (square footage, location, amenities, etc.) and will not stretch your budget too much. You want to be able to keep current with other forms of debt you may have as well as pay your monthly bills (which will likely include mortgage, property tax, home maintenance, and more). That financial equation may help you decide whether to buy a starter home or wait.

How much do people spend on a starter home?

As of 2022, the average price for a starter home in the U.S. was $325,000. However, prices will vary greatly depending on location, size, style, and condition.

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 Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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.

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.

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.

SOHL0323020

If you’re like most people, you’ve probably wondered how you can cut back on spending. Maybe you tend to drop a lot of dollars on impulse purchases as you go through a typical week, or perhaps you are just feeling the pain of living during times of high inflation. Or maybe it’s a combination of both.

If you are looking for some relatively painless ways to spend less, read on. There are all kinds of ways to slash expenses that don’t require much, or any, sacrifice. These can include trimming back some of your recurring bills to tweaking your typical shopping habits. You’ll even learn smart ways to avoid the temptations that can lead to overspending.

Ready to improve your cash flow? Here are 23 simple ideas for how to cut back on spending.

23 Ways to Cut Down Your Spending

Ready to start saving money? Pick and choose among these ideas to find the tips that suit you best.

1. Canceling Subscriptions

There’s a decent chance that you are leaking money on a subscription service that you are not getting much value from.

Scan your checking account and credit card statements for things you’re paying for on a recurring basis and consider canceling anything you don’t really need.

That might mean magazines or newspapers you rarely read, online software you aren’t using, and/or shopping services and other memberships that aren’t worth it anymore.

If you’re looking to save money faster, you might cut down on multiples. For instance, do you really need membership at two different yoga studios? Just one might be fine.

2. Cutting the Cord

If you’re paying a high price for cable each month, you may want to think about switching to a streaming TV service. This budget-cutting move could save $40 to nearly $100 per month.

Just don’t let that get out of hand. You likely won’t save on streaming services if you sign up for Netflix, HBOMax, Hulu, and a couple of others.

If you are not quite ready to cut the cord, you may still be able to shrink this monthly line item just by calling your cable service provider and asking for a better deal. Research better deals available elsewhere and cite those when talking to a customer service representative.

3. Revisiting Your Cell Phone Plan

Another way to significantly cut monthly spending is to take a closer look at what you’re paying for your cell phone service and exactly what you are getting.

You can then compare this with the competition and, if you see a better deal, call your provider and see if they will match it.

If you don’t see much wiggle room, you might consider going with one of the smaller MVNOs (mobile virtual network operators) that lease coverage from the major carriers, such as Cricket Wireless, Metro, and Visible.

Or, if you just need a basic plan, you can look into Consumer Cellular or H2O Wireless, which often offer affordable cell phone plans for individuals.

Before switching carriers, however, it’s a good idea to make sure that the carrier has strong coverage in your area. Saving money is great, but may not be worth it if you don’t get quality service.

4. Getting Into the Meal-Planning Habit

An easy way to cut back on food spending is to make a meal plan and a firm shopping list before you go to the grocery store. To cut spending even more, you can check your store’s weekly ads and plan meals around what’s on sale that week.

This can be as simple as picking a few basic recipes that you want to make throughout the week. You may want to try a meal planning app, such as Mealime and Yummly, among others.

Not only will this help you avoid impulse buys at the supermarket and ordering takeout, but you will likely be able to buy in bulk, cook once and enjoy the leftovers, and otherwise streamline your budget and your life.

5. Actively Paying Down Credit Cards

If you’re currently only paying the minimum on your credit cards, a big chunk of your payment is likely going toward interest and you may be doing little to chip away at the principal.

Doing this every month can increase the amount of time you’re in debt, and increase the total amount of interest you’ll end up paying.

If you can swing it, consider putting more than the minimum payment towards your bill each month. This can help you pay off credit cards faster, so you’re not spending so much money on interest.

6. Renewing Your Library Card

How else to cut back on spending? If you’re a reader and love books, a fun and easy way to cut your spending is to fish out that old library card, or if you don’t have one, stop into your local branch and apply for a card.

The library can be a great resource for more than books. For example, you can often access magazines, newspapers, DVDs, music, as well as free passes to local museums. There are also services on your computer and phone that let you stream digital media; check out Kanopy and Hoopla, for instance.

7. Carrying Cash

There’s something about using plastic that can make it feel like you are not really spending money.

That’s why an effective way to cut back on spending is to take out enough cash at the beginning of the week to cover your daily expenses for that week and then leaving your credit and debit cards at home.

Or, you might try the envelope system, where you designate an envelope for each expense category, then put enough cash inside to get you through the week. When you run out, you can’t spend anymore.

Using cash can also help you become more aware of and intentional with your purchases. You see exactly what you are spending as you go through your day.

8. Eliminating Bank Fees

How to cut back on expenses can involve taking a look at just what fees your bank may be charging for your checking and savings accounts.

They might include service fees, maintenance fees, ATM fees (if you don’t use their in-network machines), minimum balance fees, overdraft or insufficient funds fees, and/or transaction fees. And all those charges can eat away at your funds.

You may be able to cut your monthly spending by switching to a less expensive bank, or going with an online-only financial institution. When it comes to online vs. traditional banks, the former tend to offer low or no fees.

9. Clicking Unsubscribe

Do your favorite retailers fill your inbox with tempting sales alerts, whether that’s 75% off, buy-one-get-one offers, or free shipping? One effective way to cut back on spending is to get off their e-mailing lists.

Sales and great deals are happening all the time, but generally the best time to purchase something is when you really need it.

If the enticement to spend doesn’t constantly land in your inbox, you’ll be less likely to click through and buy.

10. Consider a 30-Day Spending Freeze

One quick way to change your spending habits is to put yourself on a 30-day nonessential spending freeze.

Or, if that seems too tall an order, you might pick a category (such as clothing or wine) to stop spending on for a month.

A spending freeze can immediately pay off, by leaving more money in the bank (or fewer bills) at the end of the month. And, once you start seeing the payoff of not giving in to impulse buying, you may find yourself spending less even after the freeze is over.

Recommended: Impulsive or Compulsive Shopping: How to Combat It

11. Keeping Your Tires Properly Inflated

A simple way to cut weekly spending on gas is to stop into a local station that offers free air once a month, and do a quick air pressure check on your car tires. If they aren’t inflated to the optimal PSI, you’ll want to fill each one to the maximum recommended amount (as stated on the tire or in your manual).

Here’s why: You can improve your vehicle’s gas mileage by an average of 0.6% and up to 3% with proper tire pressure.

Recommended: How to Save Money on Gas

12. Working Out at Home

Instead of paying for a monthly gym membership, consider free exercise options, such as going for a walk, run, or bike ride around your neighborhood.

You can also find at-home cardio routines, resistance workouts, yoga classes and more for free online (YouTube is a great source). If you’re missing the social aspect of the gym, you always invite friends or neighbors over to work out with you.

There are also a number of free workout apps that can help keep you motivated, such as 7 Minute Workout, Freeletics, and Nike Training Club, among others.

13. Saving Before You Spend

One of the best ways to cut monthly spending is to siphon off some savings before you even have a chance to spend it. Many experts suggest 20% of your take-home pay, as is outlined in the 50/30/20 budget rule.

You can do this by automating your savings. This can mean you set up an automatic transfer from checking to put money in a high-yield savings account on the same day each month, possibly right after your paycheck gets deposited.

And it’s fine to start small. Whatever the amount, since it’s happening every month, it will build up before you know it.

14. Turning Clutter Into Cash

If you’re thinking of hiring a company to haul away stuff you no longer want or need, think twice. It can be easy to sell your unwanted items. There are dozens of places to sell your stuff, thanks to sites such as ThredUp, Poshmark, eBay, and Facebook Marketplace. Or you could host a yard or stoop sale (just make sure to check if you need a permit).

15. Reviewing Home and Auto Insurance

Here’s another way to cut back on spending: Review your insurance payments. You may be able to considerably cut your costs by taking some time to shop around and compare prices.

Many insurance companies also offer a discount if you bundle your homeowners and auto policies together. If you currently use two separate insurers, it can be worth asking what kind of discount each would offer if you bundled the policies together.

And you don’t have to wait until your current policy is up for renewal to change insurance providers. With most companies, you can leave at any time without having to pay for the remainder of the policy. If you find a better deal, you can also give your current insurer a chance to match their quote.

16. Drinking More Water

Getting plenty of water can not only help you stay healthy, but it can also help you cut back on spending.

When you’re food shopping, for instance, you can skip over sodas and even bottled water in exchange for free tap water at home. (If you don’t like the taste of your tap water, consider getting a pitcher with a water filter.) Dining out? You can save by ordering water instead of pricey beverages.

17. Using Apps to Earn Cash Back

You can cut your spending even after you’ve made your purchases by keeping track of your receipts and using a cash back app, such as Ibotta, Fetch Rewards, or Shopkick.

While each app works a little differently, you can generally use cash back apps to download digital coupons, purchase specific items, and then scan receipts to claim your cash back.

You may also be able to add your store loyalty card number and avoid the need to submit a receipt.

18. Shutting off the Lights

A super easy way to cut monthly spending is to simply turn off the lights whenever you leave a room or leave your home. You may not notice the impact immediately, but the savings on energy costs can add up over time.

It can also be helpful to unplug any unused electronics and chargers that aren’t in use.

19. Cutting Back on Bigger Expenses

If you’re looking to have more money after paying bills, you may want to address the biggest expenses in your overall budget. For instance, in terms of housing, you might consider downsizing, moving to a more affordable area, or getting a roommate. This could significantly reduce your monthly expenses.

Also take a look at car payments, if you have them. If they account for more than 10% of your take-home pay, consider trading in your car for one with a lower monthly payment. Or, you might want to think about buying a less expensive vehicle with cash.

20. Unfollowing Social Media Influencers Pushing Products

If you, like many people, shop from social media because you see new products being promoted, you may want to unfollow those accounts. That FOMO (fear of missing out) feeling can be powerful when you see an influencer pushing new kitchen gadgets, comfy socks, or other products. By eliminating that temptation, you can cut back on spending.

21. Uninstalling Shopping Apps on Your Phone

Shopping apps can be hugely convenient; maybe too convenient. If you find that apps encourage you to one-click your way to too many products and credit card charges, delete them. You can always reinstall them later if you have more wiggle room in your budget.

22. Buying Used and Second-Hand

A fun and frugal way to shop can be buying used and second-hand. You might hit a local thrift store for clothes, cookware, and other items. Check out a local library’s book sale for new reading material, and if you need a new kitchen appliance, see what major retailers have in their “open box” section (items that were returned with minimal or no use or perhaps floor models).

23. Do Some Bulk Buying

Check out the deals to be had by buying in bulk. That can mean joining a wholesale club, like Costco, or shopping at a local grocery store that has grains, nuts, and pasta sold from large containers to help you save at the cash register.

If you don’t have room to store, say, a pack of 12 cereal boxes or 24 rolls of paper towel, split purchases with a friend or two. You can all cut back on expenses that way.

The Takeaway

Cutting back on spending doesn’t have to involve a complete overhaul of your lifestyle. You can focus on lowering your recurring expenses (housing, insurance, utilities) and also cut back on unnecessary spending, especially impulse buys. If you pay with cash, delete shopping apps, and unsubscribe to marketing emails, you may find there’s a lot more breathing room in your budget.

To make it easier to stay on top of your spending, consider opening an online bank account with SoFi. With SoFi Checking and Savings, you can easily see your weekly spending in our app, plus you’ll earn a competitive annual percentage yield (APY) and pay no account fees, both of which can help your money grow faster!

FAQ

How do I cut back on unnecessary spending?

Often, a mix of two tactics can help you cut back on unnecessary spending. First, look at how to reduce recurring basic bills, such as dropping a streaming channel or two, lowering your car insurance, and avoiding excessive banking fees. Next, tackle daily spending. You might reduce your daily latte habit, and look for free concerts and museum nights in your area vs. pricey entertainment. Also: Don’t let yourself give in to marketing ploys, like “buy one, get one” and free shipping, which can encourage you to overspend.

How can I drastically cut my spending?

To drastically cut your spending, try creating and sticking to a budget and using cash instead of credit so you are less likely to ring up debt. Also consider deleting shopping apps, emails, and influencer accounts that encourage you to shop, and putting yourself on a one-month shopping freeze, meaning no purchases except true necessities.

How do I mentally stop spending money?

If you are overspending, think about your triggers. Do you shop when bored or as a weekend activity? Find other ways to fill your time, whether that means reading or taking up a sport. You might also try the 30-day rule, which means that if there’s something you feel you must have, you might make a note of it in your calendar for 30 days in the future. Don’t buy it unless 30 days later you still feel it’s vital. Such feelings often dissipate over time.

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

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