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A wire transfer is a way of moving money electronically between from one individual to another person or a business. For example, if you’re buying a house and you need to make the down payment, you could do a wire transfer to deliver the funds quickly. Or maybe you need to send money to relatives overseas. Wire transfers can be done within the U.S. and internationally.

Read on to learn more about bank wire transfers, how to wire money, the cost involved, and the pros and cons of transferring money this way.

What Is a Wire Transfer?

A wire transfer is an electronic transfer of funds between bank accounts. Wire transfers can be done by banks or by money transfer services like Western Union and MoneyGram.

Wire transfers allow a certain amount of money to be sent electronically from your bank account at a traditional or online bank to a recipient’s bank account, or vice versa.

Domestic vs International Wire Transfers

Wire transfers are a way to manage money, and they can be domestic or international.

Domestic wire transfers involve transferring money to someone within the same country. You may be able to do the wire transfer through your online portal on your bank’s website, using your bank’s mobile app, or by calling the bank. You’ll need the recipient’s banking information, including their account and routing numbers, and their contact information. Domestic wire transfers are typically processed the same day.

The process is similar for an international wire transfer in which you send money to someone in another country, but banks may have stricter rules for these transfers. For example, you might need to visit a branch in person and/or provide more detailed information about the transaction. International wire transfers may take two or three days or more to clear.

How Wire Transfers Work

You can wire money through a bank or wire transfer service. Either way, here are some details to know:

•   You’ll typically need to provide banking information like the recipient’s routing and account numbers in order to process wire transfers.

•   The money could be sent within hours if it’s a domestic wire transfer or a few days if it’s an international transaction.

•   When someone is sending money, the funds must be in their account before the bank will initiate the transaction. The money will be removed immediately after the wire transfer.

•   When someone is receiving money through a wire transfer, the bank will treat the payment like cleared money. As soon as the recipient’s account is credited, they can withdraw or spend the money.

How Long Does it Take to Wire Money?

A wire transfer can be set up in minutes at a bank or wire transfer service. Then, once it’s sent, wire transfers are typically processed the same day when they are domestic.

International wire transfers can take at least two to three days, depending on the receiving country’s banking processes.

How to Wire Money in 5 Steps

Wiring funds typically involves the following steps:

1. Make Sure You Have the Funds

If you are the sender, make sure that the money is in your bank account. Wire transfers can’t be sent if the money isn’t there.

2. Pick a Wire Transfer Service

The sender can typically transfer the money online or go to providers in person and use cash or a bank account, depending on the service.

3. Fill Out the Forms/Create an Account

When sending money through a bank, senders will need to fill out forms and include their bank account information, their bank’s contact information, and the recipient’s bank account information, including the account number and contact information for the bank. They may also need to provide a government-issued ID if they do a wire transfer in person.

When sending through a wire transfer service, they may have to log in online or go to the service in person and draw funds from a linked bank account or take cash, choose the recipient’s country, delivery method, and account information, and fill out any other information that’s required. Again, they may need to provide a government-issued ID.

Senders have to be careful that the bank account numbers they provide are accurate so that the money gets to the recipient.

4. Include Fees

Banks and wire transfer services should be able to tell users what the fees are going to be upfront. Your bank will typically deduct the fee from your bank account.

5. Ask for a Receipt

The last step in how to wire money is to get your receipt. This ensures that senders have a record of the transaction.

Pros of Wiring Money

Reasons that people might want to wire money include the following.

They Need to Move a Big Amount

Wire transfers are common for moving large sums, such as money in a savings account that’s needed for real estate transactions and sending money to and from family members.

The Money Is There

With checks and debit cards, payment can bounce or an account can go into overdraft. With a wire transfer, that’s not possible, since the money must be there in order to be sent. A wire transfer request will be declined if someone has limited funds.

It’s Safer Than Checks

While checks are typically safe, mailing them is not necessarily. Individuals might open mail that isn’t theirs and take checks out and try to cash them. Wire transfers may offer a more secure alternative to writing checks.

Money Can Be Sent Internationally

Say a person goes to work in another country but wants to send money to family members back home every month. With a wire transfer, that’s easily done.

Cons of Wiring Money

Wire transfers do have some possible drawbacks, such as:

Cost

For a domestic wire transfer, the cost is typically about $25 to $30 for an outgoing bank transfer within the U.S, and $0 to $15 for a domestic incoming payment. International transfers typically cost around $50 for an international outgoing payment and $0 to $25 for an international incoming wire transfer.

No Do-Overs

Wire transfers are typically irreversible, so both sender and recipient should be sure that all of the required information is correct.

Potential Scams

Scammers might ask unsuspecting people to wire them money for goods or services and then never follow through with the items, among other possible scams involving wire transfers. So it’s best to avoid wire transfers unless the sender and receiver know each other.

Unlike with a credit card, where someone might be able to dispute the charge, the money sent by a wire transfer may be gone forever once it’s sent.

Here, for a quick comparison, are the pros and cons of wire transfers:

Pros of Wire Transfers	Cons of Wire Transfers
Can move large sums domestically and internationally	There are typically fees involved.
Reliable — the money can only be sent if the sender has it	No do-overs
May be safer than checks	Potential for scams

Alternatives to Wiring Money

If you need to move money but don’t want to use a wire transfer, here are some other options.

Peer-to-Peer Services

P2P payments (peer-to-peer payments) through an app such as PayPal or Venmo usually can be made from a linked bank account or directly from the P2P account for free.

Some P2P providers charge around 1.5% to 3.5% to process payments drawn from a credit or debit card.

Bank Account Money Transfer

You may also set up electronic transfers with your bank. Funds can often be sent to any other bank account, not just those held at the same financial institution. The following are two different types of bank account transfers.

Automated Clearing House (ACH) Transfers

The Automated Clearing House is a national electronic network that links financial institutions in the U.S. With an ACH payment or transfer, an individual or a business can move money from one bank account to another.

For example, ACH transfers are often used for bill payment. Individuals provide their bank account information to businesses like their mortgage lender or utility companies, and those companies can then withdraw funds through autopay or one-time payments.

The ACH network is also often used by employers to direct deposit paychecks into employees’ bank accounts. This may show up on your bank account as an ACH credit, meaning the money has been paid to you.

Blockchain-Based Bank Transfers

A blockchain bank transfer is a way to send digital assets like cryptocurrencies over a blockchain network. (A blockchain network uses a decentralized network of computers to perform the transaction. ) The sender converts the money they want to send into digital assets in order to do the transfer. The recipient usually receives it within minutes.

However, the blockchain transfer process can be complex and typically involves a learning curve for those who have never done it.

Here’s a quick overview of how three major methods of transferring funds — wire transfer, P2P transfer, and bank account transfer — compare:

Wire Transfer	P2P Services	Bank Account Transfer
Often involve a fee	May involve a fee, depending on the provider and funding source	Often free
May take at least two to three days internationally	May take up to 5 days internationally	May take up to 5 days internationally

The Takeaway

Wire transfers can be an efficient electronic way to move funds between people or businesses. Depending on the specific details, such as whether the transaction is domestic or international, the timing and fees may vary. A good first step may be to check with your banking partner to learn what they offer.

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

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

What information is required to wire money to someone?

To wire money, you will need to use your bank or a wire service and have the sum available in your bank account that you’re planning to transfer. Then, you’ll need to fill out the proper forms, provide the recipient’s bank account information, and pay any fees owed for the transfer.

How much do bank wire transfers cost?

The amount it costs to wire money depends on the financial institution, whether the money is moving into your account or into someone else’s account, and whether the funds are being sent domestically or internationally. Fees typically range from about $0 to $50 per transaction.

How do you do a wire transfer?

To wire money, you can go through your bank or use a wire transfer service. Make sure you have the funds available that you’re planning to transfer. Then, you’ll fill out paperwork with the recipient’s banking information, including their bank account and routing numbers, and pay a fee for the transfer, if required. Finally, it’s a good idea to get a receipt so that you have a record of the transfer.

Are wire transfers reversible if I make a mistake?

Wire transfers are generally irreversible once they’re sent. Carefully review the recipient’s information, including their bank account and routing numbers, to make sure they are correct before you sign off on a wire transfer.

Do wire transfers get reported to the IRS?

Wire transfers of sums over a certain amount are reported to the IRS. Any transfer over $10,000 must be reported to the IRS by banks and other financial institutions under the Bank Secrecy Act. The reason for this is to help prevent money laundering and other illegal activity.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
This article is not intended to be legal advice. Please consult an attorney for 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.

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Whether a $40,000 salary is considered good can depend on a variety of factors. For a recent grad in a small town where the cost of living is low, that might be an annual income that pays the bills. In addition, a $40,000 salary works out to about $19.23 an hour, more than double the federal minimum wage of $7.25.

But a $40,000 salary is not typically enough for a household to live comfortably in most parts of the United States. According to the U.S. Census, the median household income was $83,730 in 2024. What’s more, in 2026, a $40,000 salary would fall below the federal poverty guideline for households of six or more people. Here’s a closer look at the $40K salary figure.

How Does a $40,000 Salary Compare to the American Median Income?

Here’s a look at how earning a $40,000 annual income compares to that of your fellow Americans. The U.S. Census Bureau reported that the median household income in 2024 was $83,730, so a single $40,000 salary falls well below the midpoint. Combined with a second income, though, it could still contribute to a household reaching that level.

Could this salary be considered good? Consider the following:

•   As an individual, you may find that $40,000 is a good entry-level salary.

•   Couples living the DINK lifestyle (which stands for dual income, no kids) and who each make $40,000 would be well above the median household income. Plus, they would have the additional costs of raising children as part of their budget.

$40,000 Salary Breakdown

It can be helpful to know what a $40,000 salary translates to as a monthly budget, weekly paycheck, or even hourly rate. This may help you decide if $40K is a good salary.

Here’s how it breaks down:

•   Monthly income: $3,333.33

•   Biweekly paycheck: $1,538.46

•   Weekly income: $769.23

•   Daily income: $153.85

•   Hourly income: $19.23

*Based on 260 working days a year

**Based on 2,080 working hours a year

And remember: That’s before taxes; that’s not likely to be the amount that’s deposited in your checking account when you are paid. If you are single and make $40,000 a year, your top federal tax bracket is at 12%. The applicable tax bracket rates apply only to income above the standard deduction, so your effective rate on the full $40,000 is lower. You may also owe state, city, and even school district taxes, as well, depending on where you live. It’s important to keep that in mind as you plan and assess how to pay bills and save with this salary.

Can You Live Individually on a $40,000 Income?

It is possible to live individually on a $40,000 income. In fact, you may be able to afford the average monthly expenses for a single person and work on your saving and investing goals.

Your location will have the largest impact on how far your dollars will stretch. Areas with a lower cost of living will likely be easier to afford for an individual on a $40,000 income.

As an individual, you can help your salary go further by looking for ways to save money, like:

•   Having a roommate or renting out a room in your house if you own one

•   Cooking at home instead of eating out

•   Buying a used car or, depending on where you live, relying on public transportation

•   Finding a high-yield savings account

💡 Quick Tip: When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.

Best Places to Live on a $40,000 Salary

If you can afford moving expenses and aren’t tied to a specific location for work, you can make your dollars go further more easily in certain locations in the United States. U.S. News & World Report analyzed 859 cities for its 2026-2027 Best Places to Live rankings, using median gross rent and annual housing costs for mortgage-paying homeowners. Among its list of the most affordable places to live in the U.S., these five cities had the highest ratings:

•   Eagle Pass, Texas

•   Enid, Oklahoma

•   Weirton, West Virginia

•   Midland, Michigan

•   Decatur, Illinois

However, there’s more to moving than just the expenses and the job. Before packing up a rental truck, consider whether you are comfortable leaving behind friends, family, and familiar places.

Worst Places to Live on a $40,000 Salary

A $40,000 salary might not go far enough in a city with a high cost of living. According to the 2026-2027 Best Places to Live rankings from U.S. News, these five cities are among the most expensive in the U.S., requiring significant wealth to live comfortably:

•   Westminster, California

•   Newport Beach, California

•   San Rafael, California

•   Spring Valley, New York

•   El Cajon, California

Tips for Living on a $40,000 Budget

How can you (and possibly your family) live on a $40,000 budget? It’s important to cut costs, look for deals, pay down your debt, and build up savings for an emergency.

But living on a small salary doesn’t mean you have to completely give up entertainment. Remember that it’s OK to treat yourself to the nice things in life from time to time, as long as they are within reason. Everyone needs some fun in their life.

Here are some important tips for living on a $40,000 budget:

Carefully Tracking Your Expenses

First things first, get an understanding of your current spending habits. Your bank may offer tools that make this easy to analyze or you can download apps or check websites that make this easier.

Consider what bills you have every month, whether they are set up as automated bill pay, and, if so, when do they get processed? (This will help you schedule your bills and avoid getting hit with late fees.) Make a list of all your recurring expenses (mortgage or rent, student loans, car payment, phone, insurance, and utilities), and then analyze how much on average you’re spending on more variable expenses like groceries, gas, clothing, and entertainment.

What can you cut? What bills can you negotiate down? Where can you reallocate money toward savings?

Recommended: 20 Commonly Forgotten Monthly Expenses

Getting on a Budget

Now that you have an idea of what you’re currently spending, it’s time to design a budget around what you should be spending.

Start by plugging in necessary monthly expenses; these are things you must pay for each month, like your home, insurance, and food. Only once you can see that these basic needs are met should you begin to budget for things like dining out or new clothes, also known as wants vs. needs.

Not sure where to start? Do some online research on how to make a budget. There are different techniques including a line item budget and the 50/30/20 budget rule.

Consider using the 50/30/20 budget calculator below to get an idea of how your budget could be broken down.

You might also check out what tracking and budgeting tools your financial institution offers. Many (especially online banks) offer a suite of tools.

Getting Out of Debt

As you consider how to manage daily life on a $40,000 salary, it’s wise to pay attention to the role that debt plays in your personal finances. Mortgage and student loan debt are structured to be paid off over decades, and can be considered by some to be good debt, as the interest rates are often relatively low and timely payments build your credit history. The rates on credit card debt, however, can be high and therefore more detrimental to your finances (and mental health). If you have serious credit card debt, consider cutting back expenses as much as you can so you can focus on paying off your debt.

You can tackle your debt using the snowball method or the avalanche method. You may also consider a debt consolidation program or potentially a balance-transfer credit card, depending on your situation. However, transferring debt to another credit card involves risk. In addition to possibly steep transfer fees, a low or 0% introductory APR offered by a new card may jump to a high rate once the introductory period ends or a payment is missed.

Talking to a debt counselor can be helpful, as well. Nonprofits, such as the National Foundation for Credit Counseling (NFCC), may offer free or low-cost services.

Saving Your Money

If you are debt-free (house, car, and student loan payments aside) and still have wiggle room in your budget after accounting for necessary expenses and a little bit of fun money, you can allocate some of your $40,000 salary toward your saving goals. These might include vacations, a house down payment, renovations, or a wedding. An emergency savings fund is often a good place to start.

Recommended: Emergency Fund Calculator

💡 Quick Tip: An emergency fund or rainy day fund is an important financial safety net. Aim to have at least three to six months’ worth of basic living expenses saved in case you get a major unexpected bill or lose income.

Investing Your Money

After you have gotten a handle on your expenses, designed a budget, and opened a savings account, you might consider if there is enough leftover from your $40,000 salary for investing.

It can be challenging to set aside money for investing on a tight budget, but regularly putting even small amounts into an investing account gives individuals the opportunity to build wealth over time, with the help of compound returns. Returns are never guaranteed with investing, and losses are always possible. However, a longer time horizon gives a portfolio time to potentially recover from temporary market downturns.

How can you start investing? If your employer offers a 401(k) match, contributing enough to receive the full match means you’re not leaving part of your compensation unclaimed. You can also look for automated investing opportunities so you don’t have to worry about building a portfolio from scratch.

The Takeaway

Whether $40,000 a year is a good salary depends on a variety of factors. For a single person just out of school, living in a relatively inexpensive town, it might be adequate. For a family of four in a major city, it is likely a challenging sum to subsist on.

With a $40,000 salary, it’s important to follow smart financial strategies, like budgeting and cutting expenses, as well as finding a banking partner that’s right for your needs.

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

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

Can you live comfortably on $40,000 a year?

Individuals may be able to enjoy a reasonably comfortable lifestyle in more affordable regions on $40,000 a year, provided their budget accounts for their necessities, savings goals, and discretionary spending. Families, however, may struggle with this salary, especially in areas with a higher cost of living.

What can I afford making $40K a year?

If you are an individual living on $40,000 a year in an area with a low to moderate cost of living, you can typically afford monthly expenses like food, housing, and utilities and still have enough for a few fun expenditures, like entertainment. If you are frugal and build a budget, you may also be able to pay down debt, build your savings, and even invest a little.

Is $40,000 a year considered middle class?

Pew Research Center defines a middle-income household as one earning between two-thirds and double the national median, adjusted for household size. Against the 2024 median household income of $83,730, that puts the national range at roughly $55,800 to $167,500. A single person earning $40,000 falls below that range on their own, though the threshold varies by metro area and household size, and a second earner can move a household into it.

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Photo credit: iStock/Prostock-Studio

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. 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 Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Contactless payment allows you to make a transaction simply by tapping a contactless card or payment-enabled mobile device over a payment terminal. It’s simple, convenient, and growing in popularity: In one 2025 survey, more than half (51%) of U.S. respondents said they use contactless payment.

While there are a number of benefits of contactless payments, there are also a few key things to know about this payment method, including how safe it is.

Read on to learn how tap-and-go technology works, and how secure contactless payment is.

How Do Contactless Payments Work?

Contactless payment, sometimes called “tap to pay,” uses near-field communication (NFC) to let consumers pay by tapping or waving a card, phone, or smartwatch near a payment terminal. A digital wallet stores payment information, like your credit card information, on your mobile phone or smartwatch. Both the payment device and the payment terminal have NFC chips that communicate wirelessly when they’re close together.

Instead of sending your actual card number, however, the system uses tokenization — replacing your number with a secure, random token. The token is transmitted to the payment processor, which contacts your bank to approve the transaction. If authorized, the payment is typically completed in seconds.

Recommended: Guide to Mobile Wallets: What They Are and How They Work

What Transactions Are Eligible for Contactless Payment?

For contactless credit card payment to work, both the terminal and card need to have the technology.

Many credit cards and debit cards have built-in chips, but the chip that permits you to insert instead of swipe is not the same as a contactless card. To determine if your card is able to make contactless payments, look for the universal contactless symbol — a circle with a wave inside (or WiFi symbol turned on its side) — somewhere on the card. Contactless payments are also supported by devices using Apple Pay, Google Pay, or Samsung Wallet.

To determine if a payment terminal is contactless payment enabled, check for the universal contactless payments symbol with a hand next to it on the merchant’s electronic payment terminal, device, or card reader.

Recommended: What is an ACH Payment?

Benefits of Contactless Payment

Tap to pay comes with a number of advantages — here are some of the possible benefits of contactless payment:

•   Ease of use. With contactless payment, users just have to tap their chosen payment method on the terminal. There’s no swiping or inserting for the transaction to go through.

•   Speed. Since there’s no swiping or inserting, contactless payments tend to be faster.

•   Less stuff to carry around. If you’ve uploaded your credit and debit card information to one of the types of digital wallets, you can pay for things without carrying your physical wallet around.

•   Security. Contactless payment is typically more secure than traditional magnetic-strip credit cards. Contactless payments are encrypted. This system generally makes it much harder for credit card scammers to steal people’s credit card information.

Cons of Contactless Payment

However, just like online banking and traditional banking have some pros and cons, contactless payments do have some potential drawbacks, including:

•   Glitches in technology. A card and point-of-sale system might not line up from time to time, resulting in glitches.

•   It’s not available everywhere. While contactless payment is being widely adapted, not every store has it. If there’s no symbol, customers will typically have to insert or swipe to pay. Or they might even choose to use money withdrawn from their checking account to pay in cash.

•   Potential security concerns. Contactless payments do not require a personal identification number (PIN) or signature to authorize. As a result, lost or stolen contactless cards may be used to make fraudulent transactions. You can check with your bank to see what online banking security features they have.

•   Limited transactions. It largely depends on bank policies, but because tap to pay doesn’t require authentication, there may be limits on withdrawals and purchase amounts. For more details on transaction limits, contact your bank or credit card company.

Is Contactless Payment Secure?

Contactless payments are typically safer than payments made with magnetic strip cards. However, as with many payment methods, there are still some risks involved.

How Secure Is Contactless Payment Technology?

Contactless payment technology is generally considered secure, especially when compared to the technology used for magnetic-strip cards. That’s because contactless cards use advanced security features like tokenization to protect financial data.

Tokenization replaces your card number with a unique digital token, making it difficult for hackers to use stolen information. Contactless payment may also eliminate some of the opportunities for thieves to steal – or “skim” — your credit card information, since your card never comes into contact with the payment terminal.

Are Contactless Cards Secure?

Generally speaking, contactless cards are secure, especially when compared to magnetic-strip cards. However there is the risk of theft or loss of the card. Because contactless payment doesn’t require a PIN or signature to authorize payment, if a contactless card is lost or stolen, it might be used to make fraudulent transactions. If your card is lost or stolen, you can put a freeze or lock on the card and report it to the bank immediately.

The Takeaway

While contactless payment isn’t foolproof, it can generally make purchasing transactions faster, easier, and more convenient. It’s also becoming more commonplace as a payment method, and it’s typically more secure than cards with magnetic stripes. You can weigh the pros and cons of contactless payment to determine if it’s right for you.

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

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

Can digital pickpockets scan my contactless card?

There is a possibility that a digital pickpocket could scan your contactless card. Radio Frequency Identification (RFID) skimming is a form of digital pickpocketing in which a fraudster uses an RFID scanner, which they might hide in a bag, and stands close to you to try to obtain the data on your card. Contactless cards use encryption, which can make it difficult for your data to be stolen, but a fraudster might be able to pick up enough information in order to make purchases that are considered “card not present,” such as online shopping. You could help protect yourself against this by using wallets or sleeves with RFID-blocking technology for your cards.

Do contactless payments require a PIN?

No, contactless payments do not require a PIN for authorization. You simply need to tap or hold your card or mobile device near the reader to pay, and the transaction can go through quickly, even within seconds.

Can I accidentally pay for someone else’s items?

It’s unlikely. The retailer needs to initiate a transaction — typing in the amount and activating the reader — before payment can be made, and your contactless card needs to be within an inch or two of the reader for a payment to go through. So accidental payments are unlikely under normal circumstances.

What should I do if my contactless card is lost or stolen?

If your contactless card is lost or stolen, you can use your bank’s mobile app to put a lock or freeze on your card immediately. Then call the bank and ask them to cancel the card and issue a replacement. Monitor your account for any fraudulent activity.

Are contactless payments widely accepted internationally?

Contactless payments are generally widely accepted globally, including in Europe, Canada, Asia, and Australia. However, small businesses, small towns, and rural areas may not be set up for contactless payment.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

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

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Buying a house is a major rite of passage. While it’s fun to imagine what kind of home you’ll buy (a farmhouse? mid-century modern?), how you’ll renovate it, and what it will be like to have your own space, buying a home also requires considerable planning and financial discipline.

After all, buying a home is often the largest financial transaction you will ever make, and it can be the biggest investment of your lifetime. It can also be a key source of growing your personal wealth. Here is the advice you need on:

•   How to prepare for buying a home.

•   How to save money for a house, including the down payment.

•   How to budget for owning a house.

What You Need to Know Before Saving for a House

Here are some important first steps toward homeownership.

Understand Your Finances

Many people have debt these days, whether student loans, a personal loan, credit card debt, a car loan, or a combination of some (or all) of these. A lot of debt could hinder your ability to save for a home and qualify for a home loan.

A number of factors come into play when you’re applying for a mortgage, including your debt-to-income ratio (DTI). Your DTI looks at how your debt relates to the money you have coming in and what percentage of your income must go to paying what you owe. Lenders use this number to assess your risk as a customer — whether you have too much debt to be able to afford your monthly mortgage payments.

Qualifying DTIs can vary depending on elements such as credit, type of property, and others. Typically, lenders look for a DTI of 45% or ideally lower. They generally prefer that your DTI be closer to 36% or perhaps even lower. For this reason, as you focus on becoming a homeowner, you may want to try lowering or even eliminating your debt:

•   The snowball method involves listing all your debts, and then putting extra money toward your lowest balance first while paying the minimum on the others. Once that debt is paid off, you can apply that entire payment to your next debt on top of the minimum, and then rinse and repeat.

•   The avalanche method is similar. However, it focuses on the highest-interest balance first. By eliminating that high-interest debt at the start, the theory goes, you’ll pay less debt over time as the money starts to roll downhill into your other payments.

•   The snowflake method is a bit different in that the objective is to put any and all extra money (not already budgeted) toward debt as often as possible. Called micropayments, these can be anything from credit-card cash back to the money you pocket by eating at home instead of a restaurant. That holiday money from Grandma? Goes toward debt. Same with any work bonuses.

Debt consolidation loans or refinancing are two other ways that could potentially allow you to get out from under high-interest payments. While they won’t eliminate your debt, with better terms, they could help reduce the number of monthly payments you’re responsible for.

Determine Your Budget

Understanding how much house you can afford is a vital step when you are contemplating buying a house. There are several factors to consider, including the home’s price, meaning how much of a down payment you can make and how much the home mortgage loan for the remaining amount will cost you. There are other costs to consider, too. You can read more on those below.

You will likely find this information by doing some research online, trying out home mortgage calculators, and talking to friends and family who are homeowners.

Research Potential Mortgages

As mentioned above, understanding your potential down payment and monthly mortgage payments is an important step.

It’s also wise to acquaint yourself with the different kinds of mortgages. You may think it’s just a matter of snagging the lowest interest rate out there, but there’s more to the equation:

•   Options for low- and no-money-down loans. These are available via various programs, such as VA loans for those who are active members of the military or veterans.

•   Fixed- vs. variable-rate mortgages. One may be a better option than the other, depending on your financial needs and how long you plan to live in the home.

•   The different terms possible for mortgages are another factor. While many people may think of a mortgage as a 30-year commitment, there are also loans ranging from 10-40 years in length. Depending on your financial resources and cash flow, you may want something other than a 30-year mortgage.

Establish a Solid Budget

As you look for the best way to save for a house, it’s wise to have a solid budget to help you track your money and make sure it goes where you want. That might mean funneling money toward your down payment fund as well as toward paying off debt. There are different budgeting methods you might use.

One popular one is the 50/30/20 rule. In this budget, you allocate 50% of your after-tax dollars to needs, 30% to wants, and 20% to savings.

There are many tools that can help you with budgeting, including apps. You may find that your financial institution’s app includes ways to track your spending and automate your savings.

Automating your savings can be an excellent way to help save a down payment (you’ll learn more about this in a moment). This means that money is seamlessly transferred from your checking to your designated savings account. You don’t have to expend any effort nor do you see that money bound for savings sitting in checking where you might spend it.

Save for a Down Payment

While there are (as mentioned above) a variety of ways to save for a down payment, consider the fact that it’s a myth that you must put 20% down on a house. The reality, though, is that the median down payment on a conventional loan was around 19% last year and 10% for first-time homebuyers, according to data from the National Association of Realtors®.

To come to your real-life goal for a down payment, you can start by calculating how much house you can afford.

One option you can look into for your mortgage loan is government programs that offer low- or no-down-payment mortgage options:

•   Federal Housing Administration (FHA) loans are government-backed loans. For those who qualify, they may require only a 3.5% down payment with a credit score of 580 or higher. Loan limits apply by property location.

•   United States Department of Agriculture (USDA) loans offer up to 100% financing in rural areas for eligible properties and borrowers. (SoFi does not offer USDA loans, but does offer FHA and VA loans.)

•   Veterans Administration (VA) loans, as noted above, are available for military service members and eligible family members with no down payment required.

Even though 20% down isn’t a given these days, it might still be a good idea for a number of reasons if you can swing it. First, you avoid paying private mortgage insurance (PMI), which is used to insure the lender against loss on a loan with less than 20% down. Putting 20% down could potentially mean lower monthly payments, less interest overall, and a quicker path to home equity.

Then, you can find ways to save up for a house, which can range from setting up recurring transfers into a high-yield savings account to investing in the market (more on that below). You might also consider selling stuff you no longer need or want or starting a side hustle to bring in more cash.

Consider Additional Costs

Saving money for a house involves more than you might think. It might start with a down payment, but it can also include several other important (and not insignificant) expenses. Consider the following.

Closing Costs

In addition to your down payment, you’ll likely need to come to the table with your portion of the closing costs.

These include fees that go along with the home buying and loan approval process, such as lender fees, payments to the home inspector, appraiser, and surveyor, escrow payments, and attorney and title fees. It’s a long list, and these closing costs are typically 2%-5% of the loan amount.

Moving Costs

Moving costs aren’t insignificant: A basic local move may cost you $501-$2,988, and a long-distance move can ring in at $1,123-$14,107. It can be wise to get a couple of quotes from well-reviewed moving companies as you go into house-hunting mode so you can budget appropriately.

One easy way to cut down on moving costs is to DIY the entire process, from finding free moving boxes from friends, family, and grocery stores to loading and driving your stuff across town in a friend’s truck. It’s safe to say that even the most frugal moving strategy, however, will likely incur some costs.

Repairs and Decor

It may be difficult to estimate these costs before you have an accepted offer on a home, but it is good to keep in mind how much renovations, repairs, and decorating could cost.

If you’re moving to a larger space, will you need an extra bedroom set? Are you thinking the backyard is perfect for a fire pit or even a pool? If you are considering a fixer-upper, repairs or upgrades could be tens of thousands of dollars or more.

One bit of good news here is that you may not have to fork over the cash in order to pay for renovations. The FHA offers 203(k) rehab loans to homebuyers. Eligible improvements include structural repairs, elimination of health or safety hazards, modernization, and adding or replacing roofing. You can also add loan fees and mortgage payments during renovation up to the maximum loan amount.

In addition, considering a fixer-upper could be a more affordable way into the housing market. The property might be available for less than market value due to needed work, and any sweat equity you put into the house could equal larger returns down the road.

That said, keep in mind that not all properties are eligible for financing due to structural or other issues, and the costs of home repairs can add up quickly, so it’s essential to do your research in advance.

Additional Costs

In addition, you need to account for such other costs as:

•   Property taxes

•   Private mortgage insurance (PMI)

•   Any HOA fees

•   Home maintenance costs (lawn care, HVAC checkups, pest control, and the like)

•   Utilities (heating a house can be pricier than a small apartment).

Invest in Your Future

As you take steps forward to afford a home, you can choose to invest your money in ways that can help you either get to closing day sooner or save even more than you need.

One way to think of investing for a down payment is to compare it to a retirement plan, where a common approach is to save aggressively when you’re younger, then start to transfer your investments into more stable options as you get close to retirement.

Here are some ways you could apply this philosophy to saving for a down payment:

•   If your timeline is under three years, consider a conservative portfolio or maybe a high-yield savings account.

•   If you are looking at 3-5 years, consider a conservative or moderately conservative portfolio that could grow your money faster than a cash-based account.

•   If your closing day is 5-10 years or more in the future, consider a moderate or moderately aggressive investment portfolio that could yield higher returns in the long run.

While creating a plan can be a smart first step, that doesn’t mean it will go off without a hitch, especially if it’s long-term. You or your partner might change jobs, unexpected medical expenses might pop up, or the heating bill could go way up due to a cold winter. Life happens.

That’s why it’s important to check in on your budget periodically, see how you’re doing, rebalance your portfolio if needed, and make adjustments to your plan if you’ve gotten off track from your goal.

The Takeaway

Saving for a house is a big commitment and involves some focus. You’ll need to budget, consider your down payment and other upcoming costs, and also find ways to help your money grow quickly but safely.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How much money should you save before buying a house?

When buying a house, most people focus on the down payment. Currently, most buyers put down about 19%, but mortgages are available with as little as 3% or 0% down, depending on qualifications. In addition, it’s wise to budget for closing costs, home renovation, and furnishing costs, as well as having an emergency fund in place.

What is the fastest way to save money for a house?

There are a variety of ways to quickly save money for a house, including tracking and reducing your spending, minimizing debt, automating your savings, considering opening a high-yield savings account or investing in the market (depending on your timeline), and bringing in more income via a side hustle.

How do you realistically save for a house?

To afford a home, it can be wise to pay off or lower your debt, minimize your spending, increase your savings, sell stuff you no longer want or need, and bring in extra income through additional work.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Building an emergency fund savings program for employees can be one way employers can help workers prepare for unexpected expenses and financial disruptions. Many Americans continue to struggle to build adequate emergency savings.

According to Bankrate’s 2026 Annual Emergency Savings Report, just 27% of U.S. adults have enough emergency savings to cover at least six months of expenses, while 24% have no emergency savings at all. That shortfall can contribute to financial stress. Bankrate found that 60% of Americans are uncomfortable with the amount of emergency savings they have, including 31% who are very uncomfortable and 29% who are somewhat uncomfortable.

HR leaders have taken note of the need to help employees build greater financial resilience. Some employers are incorporating emergency savings into their broader financial wellness benefits, giving workers tools to set aside money for unexpected expenses.

If your organization is considering an emergency saving benefit, there are several ways to approach it. Here are six moves that can help you build an emergency auto savings program that supports your employees while fitting your company’s needs.

1. Evaluate Employee Needs

Adding an emergency savings plan can help employees alleviate a significant amount of financial stress and provide a solution to the lack of short-term savings. This might be especially appealing for younger members of your workforce who may have fewer resources to rely on than older employees.

To determine how effective an auto savings program will be for each segment of your staff, you might think about creating a preliminary survey of employees to see what they feel they need most from a short-term savings plan.

Consider the following questions:

•   Will you participate or do you feel there are already too many demands on your paycheck?

•   Are you more likely to join if the company offers a match or initial contribution?

•   Will you gravitate to emergency savings in lieu of long-term retirement savings?

•   Do more accessible after-tax savings in a 401(k) account that can be used for emergencies appeal to you?

•   Do you think automatic enrollment in an emergency saving plan could help you feel more financially secure?

2. Check Out the Competition

A good next step is to determine what competitors are offering their existing talent and new recruits in the short-term financial wellness arena. For example, is an emergency savings program common among companies competing for your talent? Do most competitors offer a match or contribution to get employees, especially new hires, started?

Use the results of this data and the survey of employees to devise the most effective program for your employees (see below) and, importantly, to help convince team members and management why an automated emergency savings program is right for your company’s comprehensive compensation and benefits package.

3. Determine the Impact of an Emergency Savings Program on Your Total Rewards Strategy

Your total rewards strategy may have evolved in recent years as you’ve adjusted compensation, benefits, flexibility, performance recognition, and career development programs. As you consider adding an emergency auto savings benefit, think about how it fits into your broader strategy. Does it support your financial wellness goals and align with your organization’s business priorities? Does it address a financial need that your employees are facing today?

Emergency savings can complement a broader total rewards strategy by helping employees prepare for unexpected expenses and feel more financially secure. But it’s important to structure the benefit so it supports your overall goals for attracting, retaining, and engaging talent.

Adding an emergency savings benefit may also shift employees’ attention toward immediate financial needs rather than longer-term needs. As you implement the program, consider how you can support both. Alongside emergency savings, continue educating and encouraging employees to work toward longer-term financial goals, such as saving for retirement and preparing for future health care costs.

The goal is to make emergency savings part of a broader financial wellness strategy — not a replacement for other benefits and resources that help employees build financial security over time.

4. Select the Solution and Roll Out Best for Your Goals

At SoFi at Work, we’ve found that selecting the right solution is critical to the utilization and effectiveness of every benefit in your total rewards strategy. Following the McKinsey framework can work well for all types of benefit rollouts, including emergency auto savings programs. These four principles can also help ensure benefit rollouts are integrated into your business strategy.

Choose Partners Wisely

There are generally two ways to set up ESAs for employees: One is to link these accounts to an existing 401(k), where the ESA shares the same platform as the 401(k) plan. Another option is to set up an ESA with an outside bank or financial institution.

For many employers, an out-of-plan solution is appealing because these accounts are often hosted through banking platforms that can offer easier access to the funds for employees, while reducing employer responsibility and involvement. If you go this route, you’ll want to look for a credible partner that can provide expert support and advice to a wide variety of employees with varying financial needs. Consider partnering with a bank, credit union, or other financial institution that offers a low-cost, easy-to-use platform, like SoFi At Work’s Emergency Vault.

Focus on What’s Feasible

Make the program feasible to launch, which will help you make meaningful progress for employees in the short term as you lay down the foundation for long-term initiatives. This is key with emergency savings rollouts because by helping to relieve some short-term financial stress, you allow employees to focus on long-term goals sooner rather than later.

Make It Sustainable

Sustainable programs are able to flex with your business over time and during uncertain business conditions. Can your emergency auto-save program survive current or future political and economic changes? To answer this, your company may need to weigh questions such as: Do the engagement benefits of a match outweigh the cost of sustaining the program? Is the plan flexible enough to undergo changes in the economy, your workforce, and your business strategy over time?

Get Personal

Enable personalization where you can. This way, employees are likely to feel emergency auto savings can help meet their unique needs. Offering a range of amounts that employees can automatically withdraw is the first step toward personalization. Providing calculators and other educational tools that help employees determine how much they need to save and how much they can afford to save is another personalization tactic.

Recommended: How Much Should Your Employees Have in Emergency Savings?

5. Use Communication Effectively

Top-notch communication techniques can help you drive participation and, importantly, change savings behavior in your workforce. Coordinating communications about the importance of emergency savings with other financial well-being education programs can also help get the word out in an immediate and holistic way.

Clarity is Key

Accompany your rollout with clear communications telling employees exactly what they can expect, including:

•   How payroll deduction works

•   How much — or how little — employees can save in the account

•   Calculators, tools, and education efforts designed to help employees determine what they should/can save

•   Thorough explanation of any company match offered — how much, how often, and portability

•   Which bank, credit union, or other financial institution will run the account

•   How much, if any, interest will be earned

•   How withdrawals can be made

•   The fact that withdrawals can be made for any reason, no questions asked, with no penalties

•   A reminder that if employees leave the company, they may easily transfer their contributions to the account to their own savings account

Meet Employees Where They Are

Make sure effective and thorough communications are available across platforms so you can keep up with your far-flung workforce. Simply posting on the company website and hoping people sign up likely won’t work, especially for remote workers who may be feeling disconnected from corporate communications.

In all communications, make sure you take a multi-platform, consumer-grade, mobile-native technology approach.

6. Take Ongoing Pulse Checks

To determine engagement and any ongoing tweaks that need to be made, you’ll want to establish metrics to measure success at least quarterly. Then you’ll want to benchmark those results against your competitors and national averages to add an “outside-in” perspective.

There are several ways you can solicit employee input on the success of the program: employee surveys, focus groups with critical talent segments, and analysis of recent departing employees and job candidates who declined an offer.

Metrics can also help you track how well the benefit is supporting business goals. For instance, a customer-service-oriented company may find a higher focus among phone reps and fewer errors when staff is less burdened with financial worries.

The Takeaway

These six concepts are designed to help you build a successful, engaging, and effective employer-sponsored emergency savings plan. By reducing employee stress and increasing productivity and loyalty, you can help promote financial well-being in your workforce as well as enhance your company’s total rewards strategy and overall business objectives.

If you’re interested in setting up an emergency savings program, SoFi at Work can help. We provide an array of benefit platforms and education resources that can enhance financial wellness throughout your workforce.

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Photo credit: iStock/alvarez

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

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