To Tip or Not to Tip — And How Much?

If you travel, you may wonder in which circumstances tips are customary and when they aren’t needed. As you plan a trip, you are likely sticking to a budget and don’t want to overlook this area. But money isn’t the only consideration. You also likely want to do the right thing: In some countries, tipping is a must. In others, it’s optional, and in a few, it’s considered downright rude. Learn the ropes here.

Key Points

•   When you travel, tipping may or may not be customary, depending on the country and the situation.

•   When tipping is customary, it’s wise to have a bit of cash on hand for this purpose.

•   In some countries, restaurant tipping is expected; in others, it’s already included in the bill. In Scandinavia, you might just round up the amount owed.

•   In parts of Asia, tipping can be considered rude, so proceed with caution.

•   It’s wise to research the country you are traveling to in advance, both to understand local customs and budget appropriately.

Who Should You Tip While on Vacation?

As you travel, there are many people you could tip: the ones who help you into the airport, out of the airport, into your hotel, out again, into a taxi…the list goes on and on. Most people want to be polite and tip appropriately but don’t want to burn through more money than they have to.

To help you manage this aspect of travel, here are some of the people you probably do want to tip, plus some insight into how much to tip.

Luggage attendants can help get your luggage from the curb at the airport to the check-in counter. You can definitely manage the process on your own, but if you’re wrangling young kids, traveling with pets, or simply packed extra-jumbo bags so you’d have loads of outfits to choose among, it’s nice to get help.

Traditionally, it’s polite to tip $2 for your first bag and $1 for any additional luggage. If your bags are legitimately humongous, consider tipping the full $2 for each one. This expense can’t go on your airline credit card or any other kind of plastic, so be sure to keep cash on you.

Note: Airline employees stationed outside the airport may not be able to accept tips, so be prepared for your bills to be rebuffed if one of these workers assists you.

Car valets park and return your car directly from the curb of hotels and restaurants. It’s a major convenience and generally deserves a monetary thank-you. How much to tip? In the $2 to $5 range when your car is returned to you. Tipping when your wheels are first whisked away is generous, though not necessary.

Housekeepers should be tipped each day during your stay, whether you splurged on luxe accommodations or figured out how to save on hotels and booked a rock-bottom rate. Housekeepers freshen your room, replace those damp towels, and otherwise make it a pleasure to return after a long day of visiting museums, lolling on the beach, or whatever else you’ve been up to.

The best method is to leave the cash in a marked envelope (some hotels provide them for just this purpose) or folded in some hotel stationery that is clearly marked “For Housekeeping.” Best practice suggests $1 to $5 each day of your stay.

Room service is a luxurious treat during vacation. Some hotels automatically include a gratuity on your bill. If you don’t see it on your receipt, however, the answer to the “to tip or not to tip” quandary is that it’s likely a good idea to add 15% to 20%, just as you would in a restaurant.

Drivers help in a few different travel scenarios. If you’re taking a taxi or rideshare, consider tipping either a few dollars for short rides and 10% to 20% for long rides. Add an extra tip if the driver helps with your luggage. It’s also customary to tip shuttle drivers, typically from $1 to $2 per person in your party.

Tour guides share their expertise and passion with you, as they lead you around the best snorkeling spots in Tulum or show you the hidden treasures of Paris. Their services can be a memorable highlight of your summer travel plans, so it’s nice to tip them, especially when you have a great experience. An easy rule of thumb is to tip 10% to 20% of the tour’s cost for your group or $5 to $10 per person.

Recommended: Breaking Down the Different Types of Credit Cards

Why Tipping Is Important

Tipping is by no means a requirement, but in many economies throughout the world (including the U.S.), it’s a way to help workers make ends meet. Many service industry employees are not guaranteed minimum wage.

In fact, in most states in America, there is a much lower minimum wage for tipped employees; hourly rates can dip below $3. While economic policies are a larger discussion, the fact of low wages can help put things in perspective and show the very real value of rewarding workers for a job done well.

For this reason, when budgeting for an upcoming trip, it’s wise to think about your plans, estimate a tip budget, and include that as part of where you keep your travel fund. It’s one of those incidentals that can add up and throw your financial planning out of whack if not accounted for.

Also, since tips are often given in cash rather than plastic (sorry, you can’t reap those credit card rewards this way), you may want to plan ahead to get some foreign currency for this purpose.

Recommended: How Families Can Afford to Travel

Tipping Guidelines by Destination

You likely do a good amount of research before traveling, scoping out cool hotels, amazing restaurants, and an affordable car rental. So why not, before your next trip, familiarize yourself with tipping customs in different parts of the world? It’ll help you prepare for the costs coming your way and make you feel more comfortable and in control while traveling. Here’s some useful intel:

US

Across the U.S., it’s customary to tip up to 20% for restaurant servers, bartenders, and drivers. In some cities, like New York, the answer to “How much to tip?” is nudging up to 22% or even 25%.

Europe

If you’re planning an epic family reunion trip to France, Spain, Italy, or other European countries, service tips may already be included in your restaurant bill in Europe. Look on the menu; it will probably say so. If it’s not, a maximum 10% tip is recommended. When it comes to your hotel stay, you might tip one euro per bag if a staffer helps you, and leave one euro per day for housekeeping.

Mexico and the Caribbean

Whether you’re heading to Cancun, Mexico City, or the Bahamas, be prepared to tip. Restaurant gratuities usually average between 10% and 20% in Mexico and the Caribbean.

If you’re staying at a resort, remember to keep cash on hand for bellhops, housekeeping, and other employees. Typically, a dollar or two per day/interaction is appropriate.

Central and South America

Heading to Argentina, Bolivia, Colombia, or beyond? Here’s the scoop: The standard tip rate for Latin America is 10% to 15% in restaurants. Some countries (like Brazil) may include the gratuity in your bill, so look carefully at the check before paying for your feijoada. Not sure? There’s no harm asking your server; you’re likely not the first person to do so.

When it comes to hotel staff and drivers, you’ll need a dollar or two (or the equivalent), so it’s wise to have some cash stashed in advance. Also know that tour guides depend on tips, so $10 to $20 of the price is appreciated.

Recommended: Where to Find Book Now, Pay Later Travel

Places You Probably Don’t Have to Tip

Here’s a travel budget bonus: There are a number of countries you might visit that do not have a tipping custom. In fact, it may even be considered rude or insulting to leave a tip. So before you add a tip when paying with your travel credit card or plunking down cash, double-check local etiquette. Here, some pointers:

Australia

Tipping is not vital when Down Under. Compared to the U.S. and many other countries, Australia has a high minimum wage. That’s one of the reasons why tipping in the service industry is seen as optional.

China

If you are going to be exploring China, know that tipping is actually taboo there. And in some places like airports, it’s illegal because it can be seen as a bribe. Stay polite and safe by skipping the tip.

Japan

Heading to Tokyo, Kyoto, or other locations in Japan? Heads up: Tipping is not customary in Japan and is actually considered rude. Although it may feel odd, when wondering whether to tip or not to tip, just don’t do it. Save your money for more shopping or sushi. The one exception may be if you’ve hired a private guide or translator. In that situation, a small amount of cash, presented discretely, can be appropriate.

Scandinavia

Iceland and Scandinavia typically don’t expect you to tip. You might round up a restaurant tab if there isn’t already a service charge added, but these aren’t countries where a 20% gratuity is routine. Taxi drivers don’t expect tips either.

The Takeaway

Preparing for a trip often involves budgeting, and a key way to wind up on or under your budget is to anticipate what costs are coming your way. Tips are one of those incidentals it’s easy to forget about and can throw your financial planning for a loop. By understanding local tipping customs, you can have a smooth, on-budget trip wherever you may go. What’s more, you’ll know exactly what to expect so you can travel with confidence. You can know how much cash to have on hand or when to add a tip to a restaurant credit card bill

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Are tourists always expected to leave a tip?

It depends on where you’re staying. Countries in North and South America, Europe, and Africa typically have tipping customs, particularly at restaurants and resorts. But Asian and Pacific countries like Australia, Japan, and China often do not incorporate tipping into their cultures — and it can even seem impolite.

Who are you supposed to tip at the airport?

In many countries (with China being an exception), it’s polite to tip a baggage handler who carries your luggage to the check-in counter. Some, however, may be unable to accept tips, depending on their employer’s policies.

How much do you tip internationally?

How much to tip internationally varies tremendously. Research each country individually to understand tipping customs. While it’s traditional in many foreign countries, it’s also rude (and sometimes illegal) to tip in others.


Photo credit: iStock/DragonImages

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

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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When to Start Saving for Retirement

When Should You Start Saving for Retirement?

If you ask any financial advisor when you should start saving for retirement, their answer would likely be simple: Now, or in your 20s if possible.

It’s not always easy to prioritize investing for retirement. If you’re in your 20s or 30s, you might have student loans or other goals that seem more “immediate,” such as a down payment on a house or your child’s tuition. But starting early is important because it can allow you to save much more. In fact, setting aside a little every year starting in your 20s could mean an additional hundreds of thousands of dollars of accumulated investment earnings by retirement age.

No matter what age you are, putting away money for the future is a good idea. Read on to learn more about when to start saving for retirement and how to do it.

Key Points

•   Starting to save for retirement in your 20s is ideal, as it gives your money more time to potentially grow and benefit from compounding. Compounding occurs when any earnings received are added to your principal balance, so future earnings are calculated on this updated, larger amount.

•   Assessing personal financial situations and retirement goals is crucial when determining how much to save for retirement, regardless of age.

•   Individuals in their 30s, 40s, 50s, or 60s can still successfully start saving for retirement, with different strategies tailored to each age group.

•   Regular contributions and taking advantage of employer-sponsored plans are key steps in building a solid retirement savings strategy at any age.

This article is part of SoFi’s Retirement Planning Guide, our coverage of all the steps you need to create a successful retirement plan.


money management guide for beginners

What Is the Ideal Age to Start Saving for Retirement?

Ideally, you should start saving for retirement in your 20s, if possible. By getting started early, you could reap the benefits of compound interest. That’s when money in savings accounts earns interest, that interest is added to the principal amount in the account, and then interest is earned on the new higher amount.

Starting to save for retirement in your 20s can allow you to save much more. In fact, setting aside a little every year starting in your 20s could mean an additional hundreds of thousands of dollars of accumulated investment earnings by retirement age.

That said, if you are older than your 20s, it’s not too late to start saving for retirement. The important thing is to get started, no matter what your age.

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1Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits.

The #1 Reason to Start Early: Compound Interest

If you start saving early, you could reap the benefits of compound interest.

CFP®, Brian Walsh says, “Time can either be your best friend or your worst enemy. If you start saving early, you make it a habit, and you start building now, time becomes your best friend because of compounded growth. If you delay — say 5, 10, 15 years to save — then time becomes your worst enemy because you don’t have enough time to make up for the money that you didn’t save.”

Here’s how compound interest works and why it can be so valuable: The money in a savings account, money market account, or CD (certificate of deposit) earns interest. That interest is added to the balance or principle in the account, and then interest is earned on the new higher amount.

Depending on the type of account you have, interest might accrue daily, weekly, monthly, quarterly, twice a year, or annually. The more frequently interest compounds on your savings, the greater the benefit for you.

Investments — including investments in retirement plans, such as an employee-sponsored 401(k) plan or a traditional or Roth IRA — likewise benefit from compounding returns. Over time, you can see returns on both the principal as well as the returns on your contributions. Essentially, your money can work for you and potentially grow through the years, just through the power of compound returns.

The sooner you start saving and investing, the more time compounding has to do its work.

💡 Quick Tip: If you’re opening a brokerage account for the first time, consider starting with an amount of money you’re prepared to lose. Investing always includes the risk of loss, and until you’ve gained some experience, it’s probably wise to start small.

Saving Early vs Saving Later

To understand the power of compound returns, consider this:

If you start investing $7,000 a year at age 25, by the time you reach age 67, you’d have a total of $2,129,704.66. However, if you waited until age 35 to start investing the same amount, and got the same annual return, you’d have $939,494.76.

Age

Annual Return

Savings

25 8% $2,129,704.66
35 8% $939,494.76

As you can see, starting in your 20s means you may save double the amount you would have if you waited until your 30s.

Starting Retirement Savings During Different Life Stages

Retirement is often considered the single biggest expense in many peoples’ lives. Think about it: You may be living for 20 or more years with no active income.

Plus, while your parents or grandparents likely had a pension plan that kicked off right at the age of 65, that may not be the case for many workers in younger generations. Instead, the 401(k) model of retirement that’s more common these days requires employees to do their own saving.

As you get started on your savings journey, do a quick assessment of your current financial situation and goals. Be sure to factor in such considerations as:

•   Age you are now

•   Age you’d like to retire

•   Your income

•   Your expenses

•   Where you’d like to live after retirement (location and type of home)

•   The kind of lifestyle you envision in retirement (hobbies, travel, etc.)

To see where you’re heading with your savings you could use a retirement savings calculator. But here are more basics on how to get started on your retirement savings strategy, at any age.

Starting in Your 20s

Starting to save for retirement in your 20s is something you’ll later be thanking yourself for.

As discussed, the earlier you start investing, the better off you’re likely to be. No matter how much or little you start with, having a longer time horizon till retirement means you’ll be able to handle the typical ups and downs of the markets.

Plus, the sooner you start saving, the more time you’ll be able to benefit from compound returns, as noted.

Start by setting a goal: At what age would you like to retire? Based on current life expectancy, how many years do you expect to be retired? What do you imagine your retirement lifestyle will look like, and what might that cost?

Then, create a budget, if you haven’t already. Document your income, expenses, and debt. Once you do that, determine how much you can save for retirement, and start saving that amount right now.

💡 Learn more: Savings for Retirement in Your 20s

Starting in Your 30s

If your 20s have come and gone and you haven’t started investing in your retirement, your 30s is the next-best time to start. While there may be other expenses competing for your budget right now — saving for a house, planning for kids or their college educations — the truth remains that the sooner you start retirement savings, the more time they’ll have to grow.

If you’re employed full-time, one easy way to start is to open an employer-sponsored retirement savings plan, like a 401(k). We’ll get into details on that below, but one benefit to note is that your savings will come out of your paycheck each month before you get taxed on that money. Not only does this automate retirement savings, but it means after a while you won’t even miss that part of your paycheck that you never really “had” to begin with. (And yes, Future You will thank you.)

💡 Learn more: Savings for Retirement in Your 30s

Starting in Your 40s

When it comes to how much you should have saved for retirement by 40, one general guideline is to have the equivalent of your two to three times your annual salary saved in retirement money.

Once you have high-interest debt (like debt from credit cards) paid off, and have a good chunk of emergency savings set aside, take a good look at your monthly budget and figure out how to reallocate some money to start building a retirement savings fund.

Not only will regular contributions get you on a good path to savings, but one-off sources of money (from a bonus, an inheritance, or the sale of a car or other big-ticket item) are another way to help catch up on retirement savings faster.

Starting in Your 50s

In your 50s, a good ballpark goal is to have six times your annual salary in your retirement savings by the end of the decade. But don’t panic if you’re not there yet — there are a few ways you can catch up.

Specifically, the government allows individuals aged 50 and older to make “catch-up contributions” to 401(k), traditional IRA, and Roth IRA plans. That’s an additional $7,500 in 401(k) savings, and an additional $1,000 in IRA savings for 2024 and 2025. (Note that in 2025, those aged 60 to 63 may contribute an additional $11,250, instead of $7,500.)

The opportunity is there, but only you can manage your budget to make it happen. Once you’ve earmarked regular contributions to a retirement savings account, make sure to review your asset allocation on your own or with a professional. A general rule of thumb is, the closer you get to retirement age, the larger the ratio of less risky investments (like bonds or bond funds) to more volatile ones (like stocks, mutual funds, and ETFs) you should have.

Starting in Your 60s

It’s never too late to start investing, especially if you’re still working and can contribute to an employer-sponsored retirement plan that may have matching contributions. If you’re contributing to a 401(k), or a Roth or traditional IRA, don’t forget about catch-up contributions (see the information above).

In general, when you’re this close to retirement it makes sense for your investments to be largely made up of bonds, cash, or cash equivalents. Having more fixed-income securities in your portfolio helps lower the odds of suffering losses as you get closer to your target retirement date.

💡 Learn more: Savings for Retirement in Your 60s

The Takeaway

Investing in retirement and wealth accounts is a great way to jump-start saving and investing for your golden years, whether you invest $10,000 or just $100 to get started.

The first step is to open an account or use the one that’s already open. You could also increase your contribution. If you’re opening an account, you may want to consider one without fees, to help maximize your bottom line.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Easily manage your retirement savings with a SoFi IRA.

FAQ

Is 20 years enough to save for retirement?

It’s never too late to start investing for retirement. If you’re just starting in your 40s, consider contributing to an employer-sponsored plan if you can, so that you can take advantage of any employer matching contributions. In addition to regular bi-weekly or monthly contributions, make every effort to deposit any “windfall” lump sums (like a bonus, inheritance, or proceeds from the sale of a car or house) into a retirement savings vehicle in an effort to catch up faster.

Is 25 too late to start saving for retirement?

It’s not too late to start saving for retirement at 25. Take a look at your budget and determine the max you can contribute on a regular basis — whether through an employer-sponsored plan, an IRA, or a combination of them. Then start making contributions, and consider them as non-negotiable as rent, mortgage, or a utility bill.

Is 30 too old to start investing?

No age is too old to start investing for retirement, because the best time to start is today. The sooner you start investing, the more advantage you can take of compound returns, and potentially employer matching contributions if you open an employer-sponsored retirement plan.

Should I prioritize paying off debt over saving for retirement?

Whether you should prioritize paying off debt over saving for retirement depends on your personal situation and the type of debt you have. If your debt is the high-interest kind, such as credit card debt, for instance, it could make sense to pay off that debt first because the high interest is costing you extra money. The less you owe, the more you’ll be able to put into retirement savings.

And consider this: You may be able to pay off your debt and save simultaneously. For instance, if your employer offers a 401(k) with a match, enroll in the plan and contribute enough so that the employer match kicks in. Otherwise, you are essentially forfeiting free money. At the same time, put a dedicated amount each week or month to repaying your debt so that you continue to chip away at it. That way you will be reducing your debt and working toward saving for your retirement.


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11 Financial Tips for College Students

Managing money in college isn’t easy, but building strong financial habits now can make a huge difference in the long run. With the cost of tuition, textbooks, and daily expenses, it’s important to make smart financial decisions to avoid unnecessary debt and stress. Whether you’re living on campus or commuting, these 11 tips will help you stay in control of your finances, save money, and build a secure financial future.

Key Points

•   Create a budget to track income and expenses.

•   Open both a savings account and a checking account for better money management.

•   Automate bill payments and savings transfers.

•   Build an emergency fund for unexpected costs.

•   To save money, buy used text books and take advantage of student discounts.

1. Create a College Budget

One of the most important financial habits you can develop in college is budgeting. A basic budget helps you track your income and expenses so you don’t overspend. To get started, simply list out how much you have to spend for the semester, including all sources of income, such as financial aid, income from a part-time job, and any parental support. Then subtract all your essential expenses, such as tuition, books, food, and housing. What’s leſt over can be used for nonessential (aka “fun”) spending and savings.

To make sure you don’t overspend on discretionary purchases, consider putting a budgeting app on your phone. These tools track your spending in real time and can help ensure you don’t run out of funds before you get to finals.

2. Open a Checking and a Savings Account

Even if you don’t have a lot of extra cash, it’s worth having a savings account along with a checking account. This allows you to separate everyday spending from money you want to save for a future expense, say a trip to Cabo for spring break.

When shopping for a bank or credit union, you’ll want to look for one that offers no-fee student accounts and a high-interest savings option to maximize your earnings. In addition to local institutions, you might also expand your search to online banks. While these banks don’t operate branches, they typically partner with large ATM networks, making it easy to access your funds at school as well as when you travel home without getting hit with a fee. Some offer student accounts and potentially better deals than traditional banks.

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3. Automate Bill Payments and Transfers

If you’re new to paying bills, it’s easy to forget about due dates, especially if you are focused on doing class assignments or studying for an upcoming exam. But missing a billing deadline means you could rack up late fees (and potentially damage your credit). A simple solution is to set up automatic payments for recurring expenses like rent, utilities, and student loans. To avoid overdrafts, be sure you have enough in your checking account to cover the bills when they come due.

Now that you have a savings account (see tip #2), also consider setting up an automatic transfer from checking to savings for a set amount on the same day each month. It’s fine to start small — even siphoning $25 into savings each month can add up over time. Many banks also offer features that round up your purchases and deposit the spare change into your savings account, which is another way to save without even thinking about it.

4. Build an Emergency Fund

Unexpected expenses, such as a trip to urgent care or a car repair, can quickly derail your college finances. Having an emergency fund can help you cover these costs without relying on credit cards. You might aim to save at least $500 initially, then gradually increase it over time. Even setting aside a small amount each month can make a big difference. Consider keeping your emergency fund in a high-yield savings account so it grows over time while remaining easily accessible.

5. Take Advantage of Student Discounts

Being a college student comes with some financial perks, including discounts on a wide range of goods and services. Many major companies offer student deals on transportation, entertainment, digital music subscriptions, laptops, car insurance, and more. Websites like UNiDAYS and Student Beans also provide access to exclusive deals. All you typically need to qualify for the student rate is a .edu email account.

Shops and eateries located on and around campus also tend to offer student discounts. It’s a good idea to keep your student ID handy and always about any potential discounts before you make a purchase. Using student deals can significantly reduce your expenses and help stretch your college budget further.

6. Start Building Your Credit

Having good credit can help open doors after you graduate. Your scores can come into play when applying for loans, renting an apartment, or even getting a job. Fortunately, there are a number of ways to start building your credit while you’re still a student. Here are some to consider:

•   Apply for a student credit card and use it responsibly. That means keeping your credit balance low and paying it off in full (and on time) each month

•   If you’re new to credit, consider becoming an authorized user on a parent’s credit card or getting a secured credit card.

•   If you have student loans, you might start making small payments of $25 to $50 per month while you’re still in school to pay down interest and have some positive repayment history on record.

7. Get a Part-Time Job

Getting a part-time job while you’re in school can help cover your expenses and/or build your savings. It can also give you valuable work experience that could give you a leg up when searching for employment after graduation. Many universities offer work-study programs or on-campus jobs that fit around your class schedule. If you prefer more flexibility, you might look into freelancing, tutoring, or gig economy jobs like rideshare driving or food delivery. You might also check online platforms for remote job opportunities, such as being a virtual assistant or helping a business manage their social media accounts.

Recommended: How to Make Money Fast

8. Seek Out Scholarships

Scholarships are not a one-time thing you can only apply for when you’re in high school, before you start college. Hundreds of companies and organizations offer scholarships for both new and returning students that may be awarded based on merit or financial need. In fact, dedicating some time to finding and applying for scholarships each year could net some significant cash. Some helpful resources:

•   Your school’s financial aid office

•   Online scholarships databases like Fastweb, Scholarships.com, and CareerOneStop

•   Religious and community organizations

•   Organizations related to your field of study

•   Your employer (or parents’ employers)

•   Ethnicity-based organizations

If you find scholarships you are eligible for, be sure you apply for them by the deadline.

9. Save on Textbooks

Textbooks can take a major bite out of your college budget, but buying used or renting can save you hundreds of dollars each semester. There are numerous websites with low prices on used textbooks (such as Chegg, AbeBooks, and Amazon); many also offer 30- to 180-day rentals. Also look into purchasing the e-book version of a textbook, which typically costs a lot less than the hard copy. If you have friends who are taking the same class the next semester (or vice versa), consider splitting the cost of the required textbooks with them.

Recommended: 33 Ways to Save Money

10. Start Investing if You Can

A lot of employers provide 401(k) plans or other savings options, even while you’re still in college. If your employer offers a matching contribution, it’s wise to take advantage of this opportunity — it’s essentially free money. Enrolling in the plan can also help you learn about different types of investments, such as stocks, bonds, and mutual funds. If your employer doesn’t offer a plan, you might consider investing independently through a brokerage account, Traditional IRA, or Roth IRA. Each of these options has its own benefits and drawbacks, and understanding them early on can set you up for long-term financial success.

11. Take a Personal Finance Course

Your degree program may not be in finance or even math, but that doesn’t mean you can’t take a personal finance course as an elective. Ask your college advisor if there are any courses in personal finance available through the school to help you learn the basics of budgeting, borrowing, and investing.

If your school doesn’t offer classes in personal finance basics, you can teach yourself online. Some websites (like this one!) are designed to help improve your financial literacy with helpful articles and videos. You can also find personal finance courses that you can take online; consider taking one in between semesters or over the summer.

The Takeaway

College is a time of learning and growth, and developing smart money habits now can set you up for a secure future. By budgeting, saving, building credit, and seeking out cost-saving opportunities, you can manage your finances responsibly and minimize debt while you’re a student. This can help you save money and establish a strong financial foundation for life after college.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.


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SoFi members with direct deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

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

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

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
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.

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.

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 .

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What Is Values-Based Budgeting?

Values-based budgeting involves managing your money mindfully and allocating it toward the things that matter most to you. For some people, that might mean keeping sustainability in mind when designing their budget. For another, it might translate into earning and spending with the goal of securing their loved ones’ future.

Values-based budgeting can have you thinking at a deeper level than just what you need or want in the moment. It can help you manage your money effectively while reflecting your core beliefs and higher-order goals. Here’s a closer look at how this practice can bring balance and deeper meaning to your money management.

Key Points

•   Values-based budgeting involves aligning one’s spending with core values to ensure financial decisions reflect personal beliefs and priorities.

•   A key step is to identify core values before setting budget categories to guide spending decisions.

•   Core values can include priorities such as sustainability, educational achievement, and sharing time with extended family, among others.

•   Connecting financial management with long-term goals and values can enhance satisfaction.

•   Reducing impulse spending can allow an individual to focus more on meaningful financial commitments.

Understanding Values-Based Budgeting

While there are many budgeting methods out there, they are all similar in the fact that they help you manage your income and expenses and reach your goals. Living within your means (or living within your budget) is one of the most important things you can do to help improve your financial future. With values-based budgeting, however, you are typically taking additional steps to align your money with your core beliefs.

Definition and Core Concepts

A values-based budget is one where your budget categories tie back to your core values. To create a values-based budget, you must first determine your core values — the things that are most important to you. For some, that might mean charitable giving plays a key role in their money management, or for another, it might involve prioritizing family “together time” across the generations.

Only then do you set up your budget categories and determine how much to spend where and how much of your paycheck to save.

Comparison to Traditional Budgeting Methods

There are many strategies for saving money, and values-based budgeting shares a lot of similarities with other traditional budgeting methods. The big difference is determining your unique and individual core values before starting the budgeting process. This can help guide your budgeting decisions and inform how much money you spend in various areas.

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Benefits of Values-Based Budgeting

Here are a few of the top benefits of values-based budgeting:

•  Increased satisfaction — When your budget is tied to your core values, it can often lead to increased personal satisfaction.

•  Better long-term planning — Values-based budgeting ties into the things that are most important to you. That helps make it not only a weekly or monthly thing, but something that ties into your long-term planning.

•  Reduced impulse spending — You may be less likely to, say, go on a holiday spending spree and break your budget when you know that the categories tie back to the things that are most important to you.

Identifying Your Personal Values

The first step in values-based financial planning is identifying your personal values. While this process is likely to be different for everyone, here are a few questions that might help you clarify your personal values:

•  What is your perfect life?

•  Finish the sentence — “More than anything, before I die, I want to ___ ”

•  If you could spend today doing whatever you desire, what would it be?

•  What causes are important to you?

•  If you could be paid in something other than money, what would it be?

•  What are the things in your life that you would like to get rid of?

Try to not just answer these questions superficially — instead, try to drill down to find the “whys” behind each question. For instance, if the way you would like to spend every day revolves around hanging with your high-school BFFs, you might learn that spending time with old friends is a core value. If the way you’d like to be paid involves college tuition credits for your kids, that could reveal that higher education is a priority for your family.

This process can put you on the path to finding your personal values and goals.

Steps to Implement Values-Based Budgeting

When you’ve identified your core values, you can then move ahead and start practicing money management in a way that embraces those beliefs.

Assessing Current Spending Patterns

The first step to implementing values-based budgeting is to figure out what your current spending patterns are. One way to do this is to look through your checking account and credit card statements.

It’s important to understand where you are spending money before starting a new budget. You might find a few simple ways to save money, while other money-saving strategies may require deeper cuts and more dedication.

Aligning Expenses With Values

Once you’ve identified your current spending habits, you can start aligning your expenses with the values you identified previously. For each spending category, ask yourself whether spending in this category is consistent with your values.

For instance, if you’re budgeting for a kitchen remodel and sustainability is a core goal of yours, you might begin to see how you can uphold your values and save money by seeing what’s available on Facebook Marketplace or from a freecycle site.

Creating Your Values-Based Budget

As you make your budget and go through each of your spending categories, it’s now time to adjust your spending based on your values.

•  In some cases, you might find that you are spending a high amount of money for something that is not that important to you. Perhaps it’s a case of FOMO (fear of missing out) spending, which amounts to “keeping up with the Joneses.” In those cases, you might reduce or eliminate spending in that category.

•  You might also find that you have things that are very important to you where you aren’t spending much (or any) money. If that’s the case, you should increase your spending in that category to align with your long-term goals and values.

Challenges and Solutions

Here are a few of the common obstacles in values-based budgeting plus ideas for resolving them:

•  Running out of money: If you have too many spending categories that align with your core values, you may run out of money. One of the risks of not saving money is that you may not have enough money in retirement to fulfill all your aspirations.

•  Conflicting values: If you are budgeting with a spouse or partner, you may not always agree on values. In that case, you’ll need to compromise and work together to form a shared budget.

•  Staying motivated: Finally, staying motivated to stick to your values-based budget may be just as hard as with traditional budgeting. Budgeting well does involve paying attention to how your income and expenses are tracking, which requires a time investment. However, you may find it easier to engage with this process if your budget is tied to your long-term goals.

Tools and Resources for Values-Based Budgeting

The tools for values-based budgeting are similar to those used for traditional budgeting. The exact tools that you use will depend on your own style and personality, and there is no one “right” tool that is best for everyone.

•  You might start by seeing what tools your financial institution offers with your accounts, whether that’s a traditional or online bank. They often have a variety of helpful trackers and alerts available.

•  You might use a budgeting and spending app, an online spreadsheet, or simple pencil and paper spreadsheet method to follow your income and expenditures.

•  You may want to open savings accounts that allow you to save money toward different meaningful goals, whether that’s a new electric car or an intergenerational vacation.

Again, there isn’t a set tool that is best for everyone — instead, experiment with different tools to find one that you feel comfortable with.

Recommended: How to Write a Check

The Takeaway

Making and sticking to a budget is one of the most important things that you can do to improve your financial outlook. Values-based budgeting takes traditional budgeting to the next level by making sure that your budgeting decisions tie into your long-term goals and values. This can help you stick to your budget since you know that it’s leading you on a path that aligns with your beliefs.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

How does values-based budgeting differ from traditional budgeting?

Values-based budgeting shares a lot of similarities with traditional budgeting. Where it differs is in determining how to allocate your money across various spending categories. In values-based budgeting, you try to make sure that your spending categories are in line with your core personal and financial values. It asks you to see your financial management through the lens of whether or not you are supporting your big-picture beliefs.

Can values-based budgeting help in achieving long-term financial goals?

Yes, values-based budgeting can help you to achieve your long-term financial goals. In fact, you might argue that it is a superior way to achieve your long-term goals. Making sure that your everyday spending is in line with your core values is the definition of values-based budgeting.

How do you identify your core values for this budgeting method?

Identifying your core values is one of the most important parts of values-based budgeting. After all, if you aren’t crystal clear on the things that are most important to you, you won’t be able to make sure that your spending lines up with those values. While the process will vary depending on each individual, you’ll want to ask yourself long-term questions like where you see yourself in 30 years or what things are most important to you. Try to not only answer these questions superficially and drill down to get the answers behind the answers.


Photo credit: iStock/zamrznutitonovi

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


SoFi members with direct deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

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

SoFi 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.

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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Financial Planning Tips for LGBTQ+ Couples

While enjoying more protections in recent years, LGBTQ+ couples may face unique legal situations and other scenarios that can leave them financially vulnerable. Taking a proactive approach can help ensure that you and your partner are prepared for the future.

Here are essential financial tips to help LGBTQ+ couples make informed decisions and develop a plan that supports their personal and financial goals.

Key Points

•   LGBTQ+ couples can have unique financial planning challenges that can be addressed with thoughtful planning.

•   Legal protections, including wills, trusts, and health care directives, are important for asset distribution and medical decision-making.

•   Adequate health and life insurance coverage is vital for financial security, especially for LGBTQ+-specific health care needs.

•   Family planning for LGBTQ+ couples may involve significant costs for adoption, surrogacy, or fertility treatments.

•   Estate planning is crucial for LGBTQ+ couples to ensure their wishes are honored and to avoid situations that lack clarity or could lead to disputes.

Unique Financial Challenges

Due to discrimination, legal limitations, and varying access to financial benefits, LGBTQ+ couples (which encompasses those who are lesbian, gay, bisexual, transgender, and queer or questioning) can encounter a number of financial hurdles. These issues may impact savings, career advancement, and even financial security, making proactive financial planning particularly crucial.

Legal Considerations

Legally speaking, LGBTQ+ couples have reasons to celebrate as well as causes for concern. Amid the legal landscape for LGBTQ+ rights, the Supreme Court’s legalization of same-sex marriage in 2015 is often noted as a highlight. This ruling gave LGBTQ+ couples access to legal protections and financial benefits that are only available for legally married couples.

Other key milestones include:

•   In 2020, the high court barred discrimination in employment decisions in relation to a person’s sexual orientation or gender identity. A 2021 executive order from President Biden further expanded these protections.

•   In 2021, the Consumer Financial Protection Bureau (CFPB) clarified that the Equal Credit Opportunity Act (ECOA) includes protections for LGBTQ+ people, making it illegal for lenders to discriminate on the basis of gender identity or sexual orientation.

Despite progress, there is still a lot of work to be done to safeguard LGBTQ+ couples’ economic security. Many states have not put antidiscrimination laws in place that affect health care, housing, and access to credit, according to the Movement Advance Project (MAP), an independent, nonprofit think tank. And some fear that existing protections might be rolled back in the future.

Discrimination and Financial Impact

Because certain LGBTQ+ rights, like marriage and workplace protections, have only been granted in recent years, many members of the community have likely been disadvantaged from decades of living without them. LGBTQ+ individuals may also face barriers to career advancement, which can limit their earning potential.

Indeed, LGBTQ+ workers earn, on average, 90 cents for every dollar a non-queer worker earns, according to a recent analysis by the Human Rights Campaign. The gap widens further for LGBTQ+ people of color, transgender women and men, and non-binary individuals, who earn even less when compared to the typical worker.

Data also indicates that LGBTQ+ people generally carry more student loan debt and have saved less for retirement compared to their cisgender/heterosexual peers.

At the same time, LGBTQ+ couples often face higher living expenses, due to a desire to live in welcoming communities (often cities with a high cost of living). They also tend to face higher health care costs, particularly if they or someone in their family seeks gender-affirming medical care.

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Creating a Solid Financial Foundation

Establishing a strong, shared financial base can be the first step toward long-term security. This process involves open communication, assessing your bank accounts, setting goals, and establishing a budget that can help you achieve your shared objectives.

Setting Joint Financial Goals

As with any partnership, it’s important to sit down as a couple and consider goals that reflect your values and aspirations. These could include saving for a home, planning for retirement, starting a family (and a college fund), or preparing for potential health care costs.

Once you have a list of goals, you’ll want to discuss how much money you will need, a timeline, and steps you’ll take to achieve your goals. Strategies might include cutting back on nonessential expenses and/or transferring a set amount into a joint savings account each month.

Since your goals, as well as your income and expenses, will likely change over time, it’s a smart move to have regular check-ins. This allows you to assess your savings, budget, and cash flow and make any necessary adjustments in how you manage your money to help stay on track. Find a cadence that suits you: Monthly or quarterly might work well, but no less than annually. It’s a good idea to reassess your situation when there are any big life changes, such as a new job, a new baby, or buying a home, as all of these can impact your budgeting.

Legal Protections and Documentation

Securing proper legal protections and documentation can be essential for LGBTQ+ couples, as laws around partnership rights can vary. The documents listed below can protect both partners.

•   Wills: A will ensures that your assets are distributed according to your wishes. If you die without one, your assets will likely be distributed according to the state’s default plan, which usually directs the assets to a legal spouse or, if none exists, to your blood heirs.

•   Financial power of attorney: This document enables your partner to make financial decisions on your behalf if you’re incapacitated. Without it, they would need to obtain a court order in order to take over your financial accounts in an emergency. This is the case even if you are married — without a power of attorney, spouses can only control joint bank accounts and joint brokerage accounts.

•   Health care directives: A health care directive (also known as a medical power of attorney) specifies your wishes regarding medical treatment if you cannot communicate them. It ensures your partner can make decisions aligned with your preferences. This document is particularly important for unmarried LGBTQ+ couples. Should one of you experience a medical emergency, your partner could be bypassed at the hospital and a relative would be contacted instead about what could potentially be life-or-death decisions.

Marriage and Domestic Partnership Considerations

While LGBTQ+ couples are now legally able to get married, some may choose not to. This is a personal decision that also has implications on financial planning. Here’s a look at how marriage vs. domestic partnership impact your finances.

Marriage: Getting married can provide access to numerous financial, tax, and legal benefits, including spousal benefits through Social Security, pensions, and work. Marriage also allows partners to pass money and assets back and forth without worrying about gifting limits, and it gives each partner inheritance rights. One downside, however, is the so-called “marriage penalty.” This is the tax increase that many couples face once they combine their incomes and file as married filing jointly. (However, as noted above, there are tax benefits to marriage, such as additional deductions, which may offset this.)

Domestic partnership: A domestic partnership is an alternative to marriage and may provide you with some of the benefits that married couples receive. For example, your employer may allow your partner to receive benefits like health insurance. However, domestic partners are not considered “family” by law and are not recognized by most states. Also, while married couples automatically inherit each other’s assets upon death (and without incurring taxes), this is not the case for domestic partners. You can inherit your partner’s assets through a will, but you’ll be subject to taxes.

Retirement Planning for LGBTQ+ Couples

Members of LGBTQ+ community often have unique needs in retirement. Many look to retire in more accepting parts of the country, which tend to be cities with high housing and other costs, making retirement generally more expensive. Here are some factors to keep in mind as you plan for retirement.

•   Social Security benefits: Married couples in which one spouse earned significantly more than the other may be able to use spousal benefits to maximize their combined Social Security income. Married or not, it’s important for LGBTQ+ couples to understand how Social Security benefits work and consider the timing of their claims. You can get an estimate of your monthly payout and how it’s impacted by the age you start to claim your benefits at SSA.gov.

•   Pension plans: A pension plan is a retirement account provided by an employer that pays out a fixed amount of money to the employee after they retire, providing a steady stream of passive income for life. Certain pensions provide spousal benefits upon death, but these may only be accessible to married couples. Check with your employer to understand the details and consider how this might impact your retirement savings strategy.

•   IRAs and 401(k)s: Individual retirement accounts and employer-sponsored retirement plans are critical components of retirement planning. Both partners will want to contribute as much as possible to their retirement accounts, and at least enough to get the full employer match (if offered). Once you’ve maxed out your 401(k), you might each consider contributing to a Roth IRA, if you’re eligible.

Recommended: Savings Goal Calculator

Family Planning and Financial Preparation

For LGBTQ+ couples, family planning may involve additional costs, especially if it includes adoption, surrogacy, or fertility treatments. For example, adoption can run anywhere from $20,000 to $70,000, depending on whether it’s done domestically or internationally. IVF can cost $13,500 to $21,000 or more, while surrogacy can range between $60,000 to $250,000-plus.

Since insurance often does not cover most of these costs, creating a financial plan that accounts for these expenses can be crucial. This plan should include saving for baby costs, as well as the ongoing expenses related to raising children.

Insurance Needs for LGBTQ+ Couples

Insurance provides an essential financial safety net for couples. Below are three kinds of insurance that can help protect your family.

•   Health insurance: Health insurance is vital for all couples, so you’ll want to make sure you are both covered either through employer plans, the Affordable Care Act marketplace, Medicare, Medicaid, or private options. When choosing a health care plan, carefully review coverage details, including any potential limits for LGBTQ+-specific health care needs. Though most health insurers cover medically necessary gender-affirming care, some states allow private health plans to deny coverage to transgender people for certain health care services.

•   Life insurance: Life insurance protects your partner in case of your untimely death by replacing lost income. This can be particularly important if you have children. Life insurance offers a safety net by ensuring the loss of income doesn’t disrupt your children’s daily life, education, and future opportunities. Keep in mind that you don’t have to be married to get life insurance — you can each purchase an individual policy and name the other as the beneficiary.

•   Long-term care insurance: This type of insurance helps cover expenses for long-term care that aren’t typically covered by health insurance or Medicare. LGBTQ+ seniors may face added costs if they lack family support (as can be the case for any couple that doesn’t have children). Long-term care insurance can be a worthwhile investment in this scenario. An alternative option is to self-fund your future needs.

Estate Planning Strategies

Estate planning is essential for LGBTQ+ couples to ensure assets are transferred to the right individuals and that financial protections are in place for the surviving partner. This is particularly important if you are not married, as your assets would not likely go to your partner without a well-defined estate plan. The following protections can help.

•   Trusts: Unlike wills (which can be successfully challenged), trusts cannot be contested by others. Putting some assets into a trust can be especially helpful for LGBTQ+ couples, as it can help you to avoid potential legal disputes with non-supportive family members. Assets in a trust may also be able to pass outside of probate, which can save time, court fees, and (potentially) estate taxes.

•   Beneficiary designations: Certain assets, like savings accounts and life insurance policies, can pass to the beneficiary on file without the need for a will and without going through probate. Whoever is listed as beneficiary will get those assets regardless of what a will might state. For this reason, it’s important to regularly review and update beneficiary designations on your accounts, especially if you set these accounts up years ago.

•   Titling: Another way to protect your estate is to make sure the title to your assets, particularly property, is coordinated with your will. For example, if your shared home is titled “joint tenants with rights of survivorship,” it will pass directly to the surviving owner when an owner dies, rather than through your will. Assets titled in an individual’s name (absent a beneficiary designation) or as “tenants in common,” on the other hand, will pass according to your will. You may want to discuss asset protection options with an estate planning attorney who understands the specific needs of LGBTQ+ couples to ensure you are both protected.

Recommended: Financial Planning for Young Adults

Building a Support Network

A strong support network can be invaluable for LGBTQ+ couples navigating unique financial and personal challenges. Community support can provide resources and guidance, along with a sense of belonging.

Community Resources and Support Groups

Many LGBTQ+ organizations and support groups offer financial assistance programs, legal resources, and planning guidance. Consider seeking out organizations or LGBTQ+-friendly financial advisors who understand the needs and challenges faced by LGBTQ+ couples.

A sampling of resources you might tap:

•   The Center for LGBTQ Economic Advancement & Research provides access to financial workshops, counseling, and self-help resources targeted to LGBTQ+ individuals and couples.

•   CenterLink focuses on strengthening, supporting, and connecting LGBTQ+ community centers nationwide.

•   Rainbow Families offers education, resources, and peer support groups for LGBTQ+ parents, families, and parents-to-be.

•   SAGE offers supportive services and consumer resources to older LGBTQ+ people and their caregivers.

The Takeaway

Financial planning is essential for everyone, but LGBTQ+ couples often face unique challenges and considerations. From navigating legal protections to managing potentially higher family-planning costs, these complexities can make proactive financial planning even more critical. By delving into these issues, LGBTQ+ couples can create a plan that protects their rights, and helps them build wealth over time.

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FAQ

How does marriage equality affect financial planning for LGBTQ+ couples?

Marriage equality gives LGBTQ+ couples access to financial benefits that are limited to legally married couples, which can simplify and enhance financial planning. This access can include spousal Social Security benefits, joint tax filing, inheritance rights, and health insurance coverage through a partner’s employer. These benefits can help reduce taxes, provide more retirement benefits, and offer financial security if one partner passes away. However, marriage can also come with new tax considerations, so couples might want to consult a financial advisor to optimize financial planning.

Are there specific estate planning considerations for LGBTQ+ couples?

Yes, estate planning is particularly important for LGBTQ+ couples to ensure their wishes are honored and to avoid potential family disputes. This may involve creating or updating wills, establishing durable powers of attorney, and designating health care directives to protect each partner’s wishes. In addition, they may want to establish trusts (for added control over asset distribution and to protect their estate from taxes) and update beneficiary designations on financial accounts.

What financial resources are available specifically for LGBTQ+ individuals and couples?

LGBTQ+ individuals and couples can access a number of specialized financial resources, including LGBTQ+-friendly financial advisors, legal services, and community-based support organizations. Organizations like the Center for LGBTQ Economic Advancement & Research provide access to financial workshops, counseling, and self-help resources targeted to LGBTQ+ individuals and couples, while SAGE offers resources for LGBTQ+ seniors. There are also a number of nonprofit groups and community centers that offer financial assistance to LGBTQ+ individuals and families facing financial challenges.


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SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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