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While the National Retail Federation is expecting record spending this Halloween of $104 per person, revelers might be planning to focus more on Halloween savings this year. Inflation is scarier than ghosts.

Luckily, creativity is one of the hallmarks of this spooky season, and savings are easy to achieve. Here are 31 ways to do it.

Get Creative with Costumes

Costumes may be the best part of Halloween. You can “be” anyone or anything for one night. But costumes don’t have to be expensive. In fact, with a little creativity you can have a great costume for almost nothing.

1. Rent, Don’t Buy

Sites like Costumer.com rent theater-level costume styles for less than the purchase price.

2. Make Your Own

Extend Halloween fun by making your own costume. The internet is full of innovative ideas — homemade costumes that turn the wearer into jellyfish or fairies, or that create illusions, like someone sitting on a flying carpet.

3. Hit the Surplus Store

Surplus stores don’t just provide the materials for a costume, they can also give you ideas: buy a wedding dress and become a ghostly bride or purchase a lab coat and become a mad scientist. You also might spot great savings on fall fashions while you’re at it.

4. Swap Costumes with Friends

Swapping costumes with friends is a great way to save money. And your outfit from last year may be someone’s dream costume for this Halloween.

5. Look For Sales

You can shop online at Halloween retailers and regular discount stores that sell costumes. Some may have sales to boost early purchases or to clear out inventory as Halloween gets closer.

Decorate on a Budget

You would think pumpkins would be a super cheap decoration, but that’s not always the case. There are, however, some easy ways to haunt your house magnificently and take advantage of Halloween savings at the same time.

6. Become a Prop Master

There are lots of videos online explaining how to make everything from real-looking spider webs to authentic tombstones and creepy candles. Want to be eco-friendly? You can substitute toxic chemicals and unsustainable materials like Styrofoam with more sustainable materials.

7. Repurpose Last Year’s Decorations

You don’t need a spending tracker app to tell you that the cheapest Halloween decor is stuff you already own. Rework the decorations you used last year to create a whole new look. Give that mummy a hat, or have the witch you made last year hide behind a bush this time. If you’re crafty, a bit of paint or touch of glue can give your decor a whole new look.

8. Hit Garage Sales

Check out local garage sales and estate sales for decorations other people are ready to discard. You can often find some cool vintage treasures!

9. Trade Decorations with Friends

Tired of your old skeleton? You can switch it for a pal’s ghoul or light-up graveyard. You can offer up your old decorations on social media or just have everyone gather and trade like a Halloween market.

10. Try the Discount Stores

Discount stores often have great decorations for almost nothing. Dollar stores, surplus stores, Spirit Halloween stores, and others can provide garlands, jack-o’-lanterns, skeletons — you name it.

11. Scan Thrift Stores

A thrift store is like a treasure hunt inside a shopping trip. You never know what you’ll find at one, but you’re sure to find inspiration for decorations!

12. Don’t Forget the Lighting

Lighting changes everything. Put a green or purple bulb in a lamp and a basic room is automatically made spooky, especially if you’re lighting something from below.

13. Make Creepy Shadows

With nothing more than some paper and scissors you can make scary silhouettes for the windows: a werewolf looking in or a dagger-wielding murderer, for example. When placed in front of a flashlight, they can even create some large, scary shadows for a spooky wall.

14. Scary Music Makes Ambiance

The most ordinary scene can feel terrifying when you add scary music. You can look online for options from classical pieces like Danse Macabre to soundtracks from horror movies complete with howling winds, distant church bells, and crows calling. There are even spooky tracks available on streaming services like Spotify.

15. Look for Pumpkin Deals

Most jack-o’-lantern pumpkins cost less than $10, but if you need more than just one, the pumpkin costs can mount quickly. One way to potentially spot good deals online is to follow retailers on social media.

16. Grow Your Own

It’s too late this year, but you can grow your own pumpkins to use next year. You may be able to grow other decorations to use for fall, like corn husks and twisted tree branches that can later be made into haunted forests and witches’ brooms.

17. Shop in November

Everything Halloween related goes on deep discount the day after Halloween to make room for the upcoming holidays. Many people take advantage of these closeout sales to save money while also stocking up on decor for the following year. Don’t forget about websites — there are often good deals to be found online.

Recommended: Savings Goals by Age: Smart Financial Targets by Age Group

Low-Cost Ways to Celebrate Halloween

Haunted houses and ghost tours can cost as much as $50 per person, but there are a lot of ways to celebrate Halloween without spending a scary amount of money. Try hosting your own party, where you can save on food by shopping the sales, using coupons, and having potlucks.

18. Look for Coupons

Coupon sites offer discounts on haunted houses and other spooky activities. Just make sure you read the fine print. Some coupons may require you to visit during the week or might only be valid for specific events.

19. Show a Scary Movie

Hold a movie marathon where your friends and family create the lineup by bringing their favorite scary films. Or tune in the Halloween classics on television. Serve popcorn and inexpensive Halloween candy. And if someone has a projector, you can show it outside and make it that much spookier.

20. Host a Costume Contest

Consider inviting the kids to dress up and compete to create the scariest, funniest, and even most creative costumes using items they already have at home. The prizes don’t need to be expensive, just something from a dollar store.

21. Carve Jack-O’-Lanterns

Have friends bring their own pumpkins and have a jack-o’-lantern carving party. You can even roast the seeds and serve them as a snack.

22. Host a Scary Makeup Party

Have a get-together where you paint your faces with inexpensive makeup to look like werewolves, vampires, and banshees. Watch some online tutorials for inspiration as you get into the Halloween spirit.

23. Tell Ghost Stories

This is a great activity to do in the dark, maybe even around a fire with some s’mores. Have everyone come with a ghost story to share.

24. Have a Seance

Also great to do in the dark near a glowing fire: Use a Ouija board or other tools to speak to the departed. It’s extra fun if one or two people hide out and make ghost noises.

25. Have a Haunted House

You needn’t put on a big production. Simple things can bring a lot of spooky fun like hanging old pictures and telling ghost stories about them while leading participants around darkened rooms. Play scary recordings and have someone hiding behind a few corners to jump out.

26. Check Out Local Haunts

Do you have a house, an old church or another place in town that’s known to be haunted? How about a neighborhood that really goes to town on the decorations? If so, Halloween is the perfect night to go visit.

27. Check Out Local Free Events

Look for local churches, malls, or schools that are putting on free Halloween parties or fall festivals for the community. Consider it ready-made fun.

Save on Treats

Halloween just isn’t Halloween without the candy. But you don’t have to spend a fortune to keep you and your trick-or-treaters happy.

28. Buy in Bulk

Get giant bags of candy from club stores like Costco or Sam’s Club. They can provide you with enough candy for the whole neighborhood — and a party at home.

29. Visit Low-Cost Retailers

Low-cost retailers like Walmart and Target often have special large bags of candy that may be on display in the holiday aisle rather than the regular candy aisle. If you can’t find it, ask for help.

30. Use Coupons

You can look for retailer coupons that give you a few dollars off your candy purchase, or even offer a buy one get one free deal.

31. Focus on the Fun

On Halloween, people are ready to be tricked, to be scared, and to believe the illusions that give them a little thrill of mystery. Instead of worrying about impressing others, focus on having good experiences and creating lasting memories.

The Takeaway

Halloween is about the kind of fear that gives you goosebumps, not sleepless nights. With today’s inflation, and a need to stretch dollars further than before, it might be a lot less scary, in a good way, to focus on your savings goals this year.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

Photo credit: iStock/Talaj

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.

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

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

SORL-Q325-010

Loan modifications can change the terms of your loan in order to make the payment more manageable. Unlike refinancing a loan, having a loan modified means the loan remains with the same lender — just under revised terms.

Loan modifications can be challenging to obtain and typically decrease your credit score. But for some borrowers, they may be the only option, if the lender agrees to the terms.

So what is a loan modification and how does it work? Let’s explore the details below.

Loan Modification Defined

A loan modification is a revision to the terms and conditions of an existing loan. The lender and borrower agree to new terms that make the monthly payments more manageable for the borrower and prevent the lender from having to take more expensive, drastic actions, like foreclosing on a property.

While loan modifications are most common for secured loans, like home mortgages, it’s also possible to get student loan modifications and even personal loan modifications.

How Do Loan Modifications Work?

The goal of a loan modification is to make a borrower’s monthly payments more manageable. Typically, borrowers will consider this option if they’re at risk of defaulting on their loan (or if they already have). In the case of mortgages, loan modifications can help prevent foreclosure.

Borrowers may also look for loan modifications in times of hardship, like a serious illness or injury. In this case, borrowers might also request a loan deferment.

So how do loan modifications work? They’re a two-way street: The lender and the borrower must come together and agree to a change of the loan terms. The approach can vary, but strategies may include:

•  Adjusting the interest rate: If interest rates were high when you first took out your loan, your lender may agree to lowering the interest rate on your loan. Doing so typically reduces your monthly payment. An online personal loan calculator is one tool that might be helpful in determining how a new interest rate can affect your monthly payments.

•  Extending the length of the loan: Extending the loan could reduce your monthly payment, though adding more years to a loan may mean you’ll spend more on interest in the long run. Still the immediate relief it offers might be worth it.

•  Changing the structure of the loan: If your loan has an adjustable interest rate structure, you might benefit from modifying it to a fixed rate. This can make your monthly payments more predictable.

•   Reducing the principal balance: In some cases, a lender may agree to temporarily reduce the amount owed on your principal to make it easier to manage your monthly payments. Note, however, that you’ll have to make up for those reduced payments later. In the case of mortgages, this is a rare strategy that is typically only considered to avoid foreclosure. Student loan forbearance may also be possible with federal loans.

When Should You Use Loan Modification?

Loan modifications are often a last resort. Here are some scenarios when it might be time to consider loan modification:

•  Risk of foreclosure: If you’ve missed multiple payments on your mortgage or cannot afford to make future payments at the current amount, a lender may be open to modifying. This can prevent you from losing your home to foreclosure and may save the lender money in the long term.

•  Underwater on a mortgage: An underwater mortgage (also called an upside-down mortgage) occurs when you owe more on your home than it’s worth. This can happen if your home’s property value plummets or if you miss payments early on and are playing catchup on accumulated interest. Loan modification may be the right solution for you and your lender.

•  Defaulting on a personal loan: If you cannot afford your upcoming monthly personal loan payment or have already missed one or more payments, it may be worth seeing if you can have your loan modified, likely by extending the life of the loan to reduce your monthly payments. This may be more agreeable to a lender than having to take expensive legal action against you.

•  Financial hardship: If you are undergoing some kind of hardship, such as a debilitating medical condition or loss of job, you may want to work with your lender to see if you can modify your loan before you miss a payment.

Does Loan Modification Hurt Your Credit Score?

A loan modification will show up as a negative entry on your credit report and thus could negatively impact your credit score.

That said, if you’re missing payments on your loan because you can’t afford them — or worse, verging on home foreclosure in the case of a mortgage loan — that can have an even more dramatic negative impact on your credit.

Recommended: What Credit Score Is Needed For a Personal Loan?

How Often Do Loan Modifications Get Approved?

While getting a personal loan can be a simple process, approval for loan modifications vary by lender, loan type, and the borrower, but they’re typically more challenging to get than refinancing. Lenders are not obligated to approve your loan modification, but it may be in their best interest to avoid an expensive foreclosure process.

You might be able to improve your chances of approval by working with a debt relief company. These companies may be able to advise you on how to negotiate.

What Does It Mean to Refinance Your Personal Loan?

Personal loan modification is possible, but for many borrowers, it may make more sense to refinance a personal loan. You might consider refinancing a personal loan to achieve one of several goals.

Shortening Your Term

If you initially took out a personal loan with a particularly long term, you could try to refinance for a shorter term and pay it off sooner. While your monthly payment would go up, you might pay less in interest over the life of the loan.

Lowering Your Monthly Payment

On the flip side, you could extend the length of your loan when refinancing to lower your monthly payment. While you might pay more in the long term, this strategy could be helpful if you’re struggling to pay your bills each month.

Lower the Interest Rate

If you took out a personal loan when interest rates were higher — either because of your credit score or the state of the market — it could be worth refinancing to get a better personal loan rate. Depending on the difference in the interest rate and the size and length of the loan, refinancing could save you a considerable amount of money.

Recommended: Loan Modification vs. Refinancing

How to Get a Loan Modified

Lenders are under no obligation to modify your loan, but it’s worth a shot if you don’t see any other options.

Qualifying for modification usually requires missed payments and a demonstration of personal hardship. In some cases, borrowers may qualify for a government loan modification program.

Thinking about applying for loan modification from your lender? You’ll need to assemble a wide range of documents for your application, including:

Proof of Income

Or rather, proof of lack of income. Demonstrating to the lender that you do not currently earn enough income to afford your loan payment is crucial to making your case.

Self-employed individuals may need to supply a profit and loss balance, while salaried and hourly workers can supply an employment contract demonstrating their pay.

Your most recent tax return can also offer insight into your income and overall financial standing.

Bank Statements

Lenders typically want to see your bank statements as well. This will verify how much money you have but will also show them your spending habits.

Hardship Statement

A hardship statement is your chance to make your case. You can use this formal letter to explain your hardship — medical issues, divorce, unemployment, etc. — and how it has affected your finances.

You may be more successful if you include documentation to support your argument. This might include medical bills, divorce paperwork, or a termination letter.

Recommended: A Guide to Unsecured Personal Loans

The Takeaway

A loan modification can help make monthly payments more manageable for borrowers and can be a useful strategy for those who are at risk of defaulting on their personal loan or having their house foreclosed. The lender and the borrower must agree to a change of the loan terms. Strategies may include adjusting the interest rate, extending the length of the loan, changing the structure of the loan, and reducing the principal balance.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Does a loan modification hurt your credit?

A loan modification results in a negative mark on your credit report, which can lower your credit score.However, the alternative for many borrowers is missed payments and, in the case of a mortgage or car loan, eventual foreclosure or vehicle repossession. These can have an even worse impact on your credit score.

What qualifies as a loan modification?

Loan modification is a revision to the terms of an existing loan. The borrower and the lender must both agree to those terms. Modifications can take many forms, but often the lender will reduce the borrower’s interest rate, increase the length of the loan, or change the rate structure from adjustable to fixed.

What are the types of loan modifications?

Borrowers can seek out loan modifications for various types of loans, but mortgage modifications are the most common. Borrowers with unsecured loans, like personal loans and student loans, may also be able to get modifications. Modification types include changes to the interest rate, rate structure, and length of the loan. In some cases, lenders may temporarily adjust the principal balance as a type of loan modification.

Photo credit: iStock/Riska

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q325-031

When comparing different interest-bearing accounts, you may come across the terms APY (annual percentage yield) and interest rate. While similar, they are not the same thing.

The interest rate is the base rate the financial institution offers, while APY factors in how often that interest is compounded (or credited to the account). The more frequently interest is compounded, the faster your money grows, since interest is earned on previously earned interest more often. As a result, APY gives you a more accurate picture of potential earnings over time.

Ready to learn more about APY vs. interest rate and how each impacts your finances

APY and Interest Rate Defined

Both APY and interest rate indicate how much you’ll earn on your balance in a savings account, or other interest-bearing account, but there is a key distinction between the two.

What Is APY?

If you deposit money into any type of savings account, you will earn an annual percentage yield (APY) on that money. The APY is a useful number because it tells you how much you’ll earn on your deposits over the course of a year, expressed as a percentage. The APY calculation takes into account the interest rate being offered, then factors in whether or not the financial institution offers compounded interest.

Compound interest is the interest you earn on the interest you’ve already earned. Depending on the bank or credit union, interest may compound daily, monthly, quarterly, or annually. The more frequently interest compounds, the faster your money grows.

What Is an Interest Rate?

When it comes to a savings account, an interest rate is simply the percentage return you’ll earn on your original balance, without compounding. The higher the interest rate, the more you’ll earn on your deposits. But interest rate is only one component of the account’s APY, which also factors in compound frequency — or how often interest is paid.

When it comes to loans (e.g., a mortgage, car loan, or credit card), the interest rate refers to the price you pay for using that money. The higher the interest rate, the more you’ll pay back in addition to the principal amount. The interest rate on a loan doesn’t include any fees associated with the loan, such as origination fees, application fees, or other charges. To understand the total cost of a loan, you’ll want to look at its APR (annual percentage rate).

APY vs. Interest Rate Explained

Why does interest rate vs. APY matter? When you are opening a bank account, it can make a difference as one can give you a better picture of how your money will grow while on deposit.

The interest rate tells you the basic rate at which your money will accrue interest. The APY, however, gives you better insight to how much interest you will earn by the end of a year because it factors in the boost that compound interest can deliver.

Recommended: Different Ways to Earn Interest

The APY Formula

For those who want to delve in a bit deeper, the actual formula for APY calculation is as follows: (1 + r/n)ⁿ – 1.

•   The “r” stands for the interest rate being paid.

•   The “n” represents the number of compounding periods within a year.

If, for example, the interest rate is 3.50%, then that’s what you’d use for the “r.” If interest is compounded quarterly, then “n” would equal four.

The “n,” or compounding frequency, can cause two different savings accounts with the same interest rates to have different APYs. For example, if two different banks offer a savings account with the same interest rate but one compounds quarterly and the other compounds annually, that the account that compounds annually would have a lower APY than the account that compounds quarterly or daily.

Fortunately, if you want to compare savings rates from one bank or credit union to another, you don’t need to perform any in-depth calculations.

Financial institutions are required to provide information on APY as part of the Truth in Savings Act. And, here’s the heart of it all: The higher the APY, then the more quickly the money you deposit can grow.

Recommended: APY calculator

Calculating APR

The APR vs. interest rate of a loan tells you how much the loan will cost you over one year, including both the loan’s interest rate and fees, and is expressed as a percentage. A loan’s APR gives you a better sense of the true cost of the loan than the loan’s interest rate, since it includes fees. The higher the APR, the more you’ll pay over the life of the loan.

Thanks to the federal Truth in Lending Act, lenders must provide the APR of a loan. This allows you to compare loans apples to apples. A loan with a low interest rate but high fees may not be a good deal. In fact, you may be better off with a loan that charges a higher interest rate but no or lower fees. APR allows you to be a savvy consumer.

APR can be calculated with this formula:

APR = (((Interest + Fees ÷ Loan amount) ÷ Number of days in loan term) x 365) x 100.

Lenders will tell you the APR of a loan and you won’t need to perform any complicated calculations.

How Simple and Compound Interest Differ

With simple interest, no compounding is involved. If you were to deposit $10,000 in an account earning 4.00% simple interest, at the end of three years, your money would earn $1,200 for a total of $11,200.

If, however, the interest were compounded daily, you would earn around $408 the first year. The second year, interest would accrue on the principal and the interest earned in the first year, and you would earn roughly $425 the next year and then $442 the year after that, for a total of around $11,275.

While the difference in dollar amount may not seem earth-shattering in this example of a few years, when you are talking about your decades-long financial life, it can really add up. Your money will grow faster with compound interest, helping you reach your financial goals.

Types of High-Interest Accounts for Savings

If you’re looking to earn a competitive rate on your savings, you’ll want to compare accounts by looking at APYs, as well as account fees and balance minimums. Generally, you can find competitive rates by looking at high-yield savings accounts, money market accounts, and CDs.

•   High-yield savings accounts, typically offered by credit unions and online banks, are accounts that typically pay a substantially higher APY than the national average of traditional savings accounts. They generally also have low or no fees.

•   Money market accounts are savings accounts that offer some of the features of a checking account, such as checks or a debit card. They often come with a higher APY than a traditional savings account, but typically require a higher balance, such as $2,500 or more.

•   Certificates of deposits (CDs) also tend to pay a higher APY than a regular savings account but require you to leave your money untouched for a certain period of time, called a term. If you take money out before then, you’ll likely pay an early withdrawal penalty. CD terms typically range from three months to five years. Generally, the longer the term, the higher the APY (however, this isn’t always the case).

Recommended: How Does a High-Yield Savings Account Work?

High-Interest Checking Accounts

Checking accounts work well for everyday spending but typically offer no interest or very little. A high-yield checking account is a special type of account offered by some financial institutions (such as traditional and online banks, and credit unions) that offers a higher-than-average APY. These are accounts designed to give you the flexibility of a traditional checking account (with checks and/or a debit card) but with higher-interest returns.

A few points to note:

•   Some high-interest checking accounts will offer different APY tiers, with higher account balances earning a higher APY than lower account balances.

•   Often, to qualify for the highest rate the checking account has to offer, you need to meet certain criteria. This might be making a certain number of debit card transactions in a month, having at least one direct deposit or automated clearing house (ACH) payment each month, or choosing to receive paperless statements.

The Takeaway

When it comes to choosing a savings account, it’s essential to understand the difference between APY (annual percentage yield) and interest rate. While both relate to how your money grows, they aren’t the same.

The interest rate is the basic rate the bank pays you for keeping your money in the account and doesn’t account for compounding, while APY includes the effects of compounding.

When comparing accounts, it’s a good idea to look at the APY, since it shows the real return on your money and can help you select an account that maximizes your earnings.

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.

SOBNK-Q325-055

Curious about your financial health? A good first step is to calculate your net worth and your liquid net worth. These two numbers can give you a snapshot of where you stand financially by comparing what you own (your assets) to what you owe (your liabilities). They can also offer insight into how your personal wealth is growing over time.

While your net worth gives a broad overview of your total assets minus your total liabilities, liquid net worth zooms in cash and other assets that you could convert to cash quickly in an emergency.

Liquid net worth is a valuable number to know, since it measures your financial safety net, which is your capacity to manage both anticipated and unexpected financial events effectively. Below, we’ll walk you through how to calculate your liquid net worth, along with ways to improve it over time.

What Is Liquid Net Worth?

Liquid net worth is a subset of net worth, which is your total assets minus your total liabilities. The meaning of liquid net worth is similar to net worth except that it only includes liquid assets, which are holdings that are in cash or can be converted into cash quickly.

When calculating liquid net worth, you would exclude the value of your home or car (since you likely can’t sell them quickly for cash), as well as your retirement accounts (as there is typically a penalty for withdrawing retirement funds before age 59½). However, you would include money you have in your bank accounts and any brokerage accounts.

What Counts for Liquid Net Worth Calculations?

Here are some assets that can count when calculating liquid net worth:

•   Cash

•   Money in a checking account

•   Money in a savings or money market account

•   Mutual funds, stocks, and bonds

•   Possibly jewelry and watches that could be quickly sold (and without much or any loss in value), if need be.

Mutual funds, stocks, and bonds are typically considered liquid, since you can usually sell these investments and have the transaction settled within two business days. That said, if the quick sale of an investment would significantly decrease its value, it is not considered a liquid asset. Also any asset you need to hold for a period of time before it can be issued as cash is not considered liquid.

Net Worth vs Liquid Net Worth

As mentioned, your total net worth is all of your assets (what you own) minus your liabilities (what you owe). When you determine your net worth, you add up all your assets, including non-liquid assets (such as your house, car, and retirement accounts), and then subtract all of your liabilities. The resulting number is your total net worth.

Your liquid net worth is the amount of money you have in cash or cash equivalents (assets that can be easily converted into cash) after you’ve deducted all of your liabilities. It’s similar to net worth, except that it doesn’t account for nonliquid assets such as real estate or retirement accounts.

Your total net worth gives you a picture of your overall financial strength and balance sheet, while liquid net worth shows how much money you have available that is quickly accessible in case of emergency or other financial hardship.

Both measures of net worth can give you a useful snapshot of your financial wellness, since they consider both assets and debts. Looking at your assets without considering your debts can give you a false picture of your financial situation.

Knowing and tracking these numbers can also tell you if you are moving in the right or wrong financial direction. If your net worth or liquid net worth is in negative territory or the numbers are declining over time, it can be a sign you need to make some changes and/or may want to put off making a major purchase such as a home or a car.

Why Liquid Net Worth Matters

Your liquid net worth is a measure of your ability to weather a financial storm. Imagine you need money for something important — a major home or car repair, a trip to the ER, or starting your own business after getting laid off.

You need it now… or, at least, within the next few weeks or months. Where are you going to get the money?

You might not want to look at cashing in things like your home, your car, your retirement savings, your baseball card collection, or Grandma’s wedding ring unless it’s absolutely necessary.

Those kinds of assets can be difficult to convert to cash in a hurry — and there could be consequences if you did decide to go that route.

Instead, it may be easier to tap your more liquid assets, such as cash from a checking, savings, or money market account, or cash equivalents, like stocks and bonds, mutual funds, or money market funds.

Liquid net worth is often considered a true measure of how financially stable you are because it tells you what you can rely on to cover expenses. In addition, your liquid net worth acts as an overall emergency fund.

Recommended: Emergency Fund Calculator

Calculating Your Liquid Net Worth

The difference in calculating net worth and liquid net worth is understanding which of your financial assets are liquid assets.

As mentioned, liquid assets are cash and assets that could be converted to cash quickly. The following are considered liquid assets.

•   Cash: This includes the money that is in your wallet, as well as the cash you have in any savings, checking, and money market accounts.

•   Stocks: Any equities in a brokerage account, such as stocks, index funds, mutual funds, and exchange-traded funds (ETFs), are typically considered liquid assets. While you might have to pay taxes and other fees if you sell equities to convert to cash, you could liquidate these assets fairly quickly.

•   Bonds: Like equities, any bonds or bond funds are also liquid assets. Again, you may have to pay taxes on your profits when you sell, but the translation is relatively quick.

Nonliquid assets include anything that cannot be converted to cash quickly or for their full value, such as:

•   Retirement accounts, such as 401(k)s and IRAs.

•   A house or other real estate holding (which could take a while to sell and the actual sales price is not known).

•   Cars (while you may be able to liquidate a car relatively quickly, cars generally don’t hold their original value; they depreciate).

Liquid Net Worth Formula

For a liquid net worth calculation, here are the steps to follow:

•   List all of your liquid assets: The cash and cash equivalents you could easily and quickly get your hands on if you need money.

•   Next, list your current liabilities, including credit card debt, student loan balance, unsecured loans, medical debt, a car loan, and any other debt.

•   Subtract your liabilities from your liquid assets. The result is your liquid net worth.

4 Tips for Improving Liquid Net Worth

If your liquid net worth is too low to cover at least three to six months’ worth of living expenses or is in negative territory, you may want to take some steps to bolster this number. Here are some strategies that can help boost liquid net worth.

1. Building an Emergency Fund

If you don’t already have a solid contingency fund set aside in a liquid account, you may want to start building one. Having enough cash on hand to cover three to six months’ worth of expenses can be a great place to start building your liquid net worth.

An emergency fund can help keep you from getting behind on your bills and running up high interest credit card debt in the event of an unexpected expense, job loss, or reduction in work hours.

It’s fine to build towards this slowly. Automating your savings to deposit, say, $25 per paycheck into an emergency fund can be a good starting point if money is tight.

2. Reducing Expenses

For every dollar you save each month, you are potentially increasing your liquid net worth by that amount. One way to cut spending is to take a close look at your monthly expenses and to then try to find places where you may be able to cut back, such as saving on streaming services, lowering your food bills, or shopping around for a better deal on home and car insurance.

3. Lowering High-Interest Debt

Debts add to your liabilities and therefore lowers your liquid net worth. Expensive debt also increases your monthly expenses in the form of interest. This gives you less money to put in the bank each month, making it harder to build your liquid net worth.

If you’re carrying credit card debt, you may want to start a debt reduction plan (such as the “debt snowball” or “debt avalanche” method) to get it paid down faster.

4. Increasing Investments

Investing money in the market for longer-term savings goals can increase your liquid net worth. While there is risk involved, you’ll have more time to ride out the ups and downs of the securities markets when saving for the longer term.

Recommended: Average Net Worth by Age

The Takeaway

Liquid net worth is the portion of your net worth that is readily accessible as cash or can be quickly converted to cash without significant loss of value. You calculate it by subtracting your total liabilities from your total liquid assets.

Your liquid net worth can be a valuable measure of your financial health and stability because it shows how prepared you are to handle a change in plans, an unexpected expense, or a true emergency.

One easy way to boost your liquid net worth is to start building an emergency fund. If you’re looking for a good place to start saving, you may want to consider opening a high-interest bank account.

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.

FAQ

Does a 401(k) count as liquid net worth?

A 401(k) typically does not count as part of your liquid net worth because it generally isn’t easily accessible without penalties before age 59 ½. Liquid net worth refers to assets that can be quickly converted to cash without significant loss of value. However, your 401(k) does hold value and contributes to your overall net worth.

How do you calculate liquid net worth?

To calculate your liquid net worth, add up your liquid assets (cash, money in the bank, stocks, bonds, and the like) and subtract your liabilities (credit card debt, student loans, car loan, etc.). When adding up your assets, do not include real estate or retirement accounts.

What is the average liquid net worth by age?

The government tracks total net worth (not liquid net worth). According to the most recent Federal Reserve’s “Survey of Consumer Finances” (2022), the average net worth is $183,500 for those younger than 35; $549,600 for those 35 to 44; $975,800 for those 45 to 54; $1,566,900 for those 55 to 64; and $1,794,600 for those 65 to 74.

It’s important to keep in mind that outliers can skew average numbers. Median (the middle value in a set of numbers when those numbers are arranged in order from least to greatest) can be more accurate at representing the typical net worth by age.

About the author

Kelly Boyer Sagert

Kelly Boyer Sagert is a full-time freelance writer who specializes in SEO-optimized blog and website copy: both B2B and B2C for companies ranging from one-person shops to Fortune 500 companies. Read full bio.

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Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

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“No credit check” loans or quick loans for bad credit can look mighty attractive. However, products like payday loans and auto title loans can have major drawbacks, including short repayment periods and sky-high interest rates.

In fact, short-term loans can be so expensive that borrowers often end up paying exponentially more than they would if they’d financed the purchase some other way. And many loan holders end up re-borrowing, starting a vicious cycle that can quickly spin out of control.

What Are No Credit Check Loans?

No credit check loans, as their name implies, are loans that offer quick cash to borrowers without requiring a credit check. This means the lender doesn’t review your credit history or credit score when deciding whether to give you a loan. However, not requiring a credit check makes these loans risky for the lender, which is part of how they can justify high interest rates and fee schedules.

And when we say high, we mean high. It’s not hard to find payday loans with effective interest rates of about 400%, and sometimes they go much higher.

Recommended: What Is Considered a Bad Credit Score?

No Credit Check Loans: Borrower Beware

Rather than a set interest rate, payday loans will often charge $10 to $30 for every $100 borrowed. If a payday lender charges $15 for a $100 two-week loan, that’s the equivalent of a 391% APR.

Here’s how those numbers can work out when it comes to real money. If a payday lender charges $10 for every $100 borrowed, you would owe $50 in interest for a $500 loan, and the $550 would be due on your next payday. If you are unable to repay the loan in full when it’s due, you will typically get hit with a fee, and then the cycle repeats itself. After a few months of rollovers, you can end up owing more in interest than the actual loan amount.

Another word to the wise: The fine print on short-term predatory loans can include a variety of fees, including change fees, mandatory subscription charges, and early repayment fees. These fees can quickly add up. On average, borrowers end up paying $520 in fees on a two-week payday loan for $375.

It’s clear to see how these loans, though small in size, can lead to big financial problems. Even under the best of circumstances, it can be difficult to get ahead of short repayment terms and steep interest rates and fees.

Recommended: What Is Consumer Debt?

Who Offers No Credit Check Loans?

Two of the most common types of these no-credit check loans are payday loans and auto title loans.

•   Payday loans As you might have guessed, payday loans are designed to be repaid on the borrower’s next payday — generally within two to four weeks. Because payday loans do so often carry predatory interest rates and terms, some states have limited the size and interest rate of payday loans, but even small loans with lower interest rates can lead to financial trouble.

•   Auto title loans Also referred to as “title loans,” these are another common type of short-term personal loan that doesn’t require a credit check. In the case of a title loan, the borrower gives the lender the title of their car as collateral for a cash loan of up to about 50% of the value of the car. The borrower is still allowed to drive the car, but the loan principal plus interest is generally due within 30 days — again at astronomical rates. If the borrower is unable to pay the loan, they risk having their car repossessed.

Other lenders offer similar types of short-term, high-interest rate personal loans, sometimes advertising online loans with “no credit check required” or “guaranteed loan approval.”

Even if they aren’t called payday loans or title loans, borrowers would be wise to pay attention to the loan’s terms and conditions, particularly interest rates, fees, and expected repayment schedules.

Generally speaking, too-good-to-be-true financial products are often just that. Staying informed about the full implication of the loan’s terms and doing the math to work out how much you will end up paying over time can help borrowers avoid a potentially disastrous financial situation.

Recommended: Can You Get a First-Time Personal Loan With No Credit History?

Alternatives to No Credit Check Loans

As financially harmful as no check credit loans can be, there still might be instances in which borrowers need quick access to money. Fortunately, there are some alternatives worth consideration.

•   For starters, borrowers might turn their attention to why they need the money in the first place. Short-term loans are often taken out to repay existing debt, an approach that might result in the borrower going even further into debt to try to scramble out of the hole.

   In this scenario, attempting to negotiate the existing debt with current lenders might be a better tactic. Sometimes, credit card issuers and other lenders might offer repayment options to ease the immediate financial burden. It’s a tactic that’s worth asking a creditor about.

•   Another option: borrowing from friends and family. While this can come with its own set of pitfalls, family loans are unlikely to create the same kind of debt spiral short-term cash loans might.

   In order to keep things friendly, you’ll want to set out a formalized loan agreement with interest rates and terms, similar to what you’d expect to sign for a traditional loan from a financial institution. This avoids any confusion and helps keep the transaction as objective as possible.

•   Credit unions are another source of small-dollar, payday loan alternatives — and importantly, credit unions are subject to a federal interest rate cap and other limits that keep these loans from becoming exorbitantly expensive.

•   Although they’re generally not an ideal solution, credit cards may carry lower interest rates than short-term cash loans. Some borrowers might also be able to utilize a promotional 0% interest rate period in order to aggressively pay off debt during the promotional period without paying interest.

•   Another alternative is a traditional personal loan from an online lender. While these loans usually do require a credit check and specific approval requirements, some online lenders will extend loans to applicants with imperfect credit histories. Rates are typically higher. However, they likely won’t be nearly as high as payday loans.

   You may be able to get a better rate by applying for a secured personal loan (which requires using an asset as collateral) or including a co-borrower on the loan agreement.

Recommended: How to Apply for a Personal Loan

The Takeaway

While no credit check loans can certainly be attractive, their high interest rates and associated fees can make them costly over time. Borrowers may not be able to repay the loans plus interest in the short repayment term required, which could lead to a debt treadmill scenario and, possibly, negative credit history consequences.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Can I take out a loan without a credit check?

Some lenders will let you take out a loan without a credit check, but you will likely pay very high interest rates and fees, which could trap you in a cycle of debt.

What types of loans don’t require a credit check?

Typically, payday loans, auto title loans, and other peer-to-peer lending don’t require credit checks. However, make sure you understand the interest rate and terms to avoid your debt increasing.

What is the easiest type of loan to get quickly?

Typically, the easiest type of loan to get quickly is a payday loan or no credit check loan, but these tend to have extremely high interest rates and/or fees, so proceed with caution.

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