man and woman couple bills laptop kitchen mobile

How to File for a Tax Extension

This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Depending on your financial circumstances, you might have a lot of paperwork to get in order before April 15. If you feel like you just need more time, it is possible to file for an extension on your federal tax return.

But there are considerations to keep in mind. Most important, filing for an extension on your return does not mean you have more time to pay the taxes you owe. That money is still due to the government on the regular due date, and you may incur penalties if the payment is late.

Here’s what you need to know to file a tax extension for tax year 2020.

What Is a Tax Extension?

A tax extension extends the deadline for filing your federal tax return by six months, making the new due date Oct. 15. All you have to do to get an extension is file IRS Form 4868 by April 15.

You can file the form electronically or on paper, and you won’t be asked to provide the reason you need the extension. Once the form is filed, your extension is automatically applied—the IRS will not contact you unless your request has, for some reason, been denied.

Again, it’s important to note that a tax extension does not grant a filer extra time to pay any taxes that might be owed to the IRS. If you can’t afford to pay your full tax bill, you should pay as much as you can and then contact the IRS at 800-829-1040 to discuss payment options.

The IRS notes that in some cases, the agency may be able to waive penalties, but not interest charges, which accrue on unpaid tax bills.

Why File a Tax Extension?

Given how much many of us dread Tax Day, you might be wondering, “Why not file a tax extension?” But even with an extra six months to get things together, eventually, the paperwork has to get sent in … and the money is still due on time. So procrastinating for procrastination’s sake may have diminishing returns.

But there are some reasons you might really benefit from a tax extension, such as:

•  Needing extra time to track down lost or unsent tax documents, especially if you’re dealing with an extenuating circumstance (for instance, the closure of a place of employment shortly before tax documents were due to be issued)
•  A major unplanned life event that interrupts your plans and makes it hard to get things together on time
•  General life busyness that led to the deadline sneaking up on you

How to File for a Tax Extension

If you’ve decided that filing for a tax extension is the right move for you, there are a variety of ways to go about it.

First, you can simply download and print Form 4868 from the IRS website, fill it out, and mail it in, along with a check for estimated income taxes owed. The document itself includes information about where to send the document, depending on where you live.

If you’re filing electronically with a tax preparation software product or using the services of a professional accountant, they can help you file for an extension using their system.

Finally, if you use the IRS’s electronic payment system, you don’t need to file Form 4868 to request an extension. According to the form itself, “The IRS will automatically process an extension of time to file when you pay part or all of your estimated income tax electronically.” This applies to both online and telephone payments.

Can I File for a Tax Extension If I Owe Money?

Yes, you can still file for a tax return extension if you owe the government money—but the money itself is still due on the original due date.

Unfortunately, there’s no way to file for an extension of taxes owed. Rather, you should pay as much as you can of your estimated taxes when you file for the extension on the return, and then contact the IRS directly to learn about your options for complete repayment.

How to Know If You Owe Taxes

You may be wondering whether or not you owe taxes to the government at all—and if so, how to find out how much. While self-employed individuals must estimate their taxes and pay on a quarterly basis, those who file using W-2 wage reports may not often do this kind of taxation math.

The good news is, there are several easy ways to find out if you owe Uncle Sam. For one thing, you may receive a notice in the mail directly from the IRS, but be sure to look closely to ensure it’s official correspondence and not a note from a scammer. The IRS will never email, text, or reach out to individuals via social media.

The IRS has also set up an online tax account system that allows you to see how much you owe in taxes simply by logging in. This user profile also allows you to pay any owed taxes directly and takes only a few minutes to set up.

Finally, you can always call the IRS at 800-829-1040 to confirm any amount of back taxes you might owe.

The Takeaway

Filing for a tax extension isn’t difficult, it turns out—and indeed, many tax time to-dos aren’t actually that hard. It’s all about getting the knowledge you need to get things done right the first time. (And, OK, maybe a bit of Virgo-esque organization.)

That’s why SoFi put together a comprehensive resource portal for all things Tax Season 2021, from understanding how your student loans might affect your taxes to figuring out which of your retirement contributions are tax-deductible.

Ready to turn tax time into a breeze? Check out the Tax Season 2021 Guide today.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SOCO20122

Read more
female student in library

The Ultimate GMAT™ Study Plan

Gearing up for a Master of Business Administration program involves a lot of prep, especially when it comes to taking the GMAT™—The Graduate Management Admission Test. It’s a standardized test that assesses potential business school students.

The GMAT was created by the Graduate Management Admission Council (GMAC) and is now the most widely used assessment for graduate management admissions.

It’s available in more than 100 countries and taken by more than 200,00 students annually.

The exam is important for prospective MBA students because it may carry a lot of weight in the application, with some experts estimating it accounts for up to 22% of admissions decisions.

Because of this, getting prepared for the GMAT is crucial to getting into an MBA program.

Important Facts About the GMAT

There are four sections in the GMAT: quantitative, verbal, integrated reasoning, and analytical writing. These sections are meant to test a student’s general knowledge—they’re not specific to business knowledge.

The total score a student can receive for this exam will fall somewhere between 200 and 800. This score is a combination of verbal and quantitative questions.

Students will also be given scores for each individual section. The section scores for the verbal and quantitative sections range from zero to 60.

The integrated reasoning score, which ranges from one to eight, requires students to analyze graphs and tables.

The analytical writing section is scored from zero to six and is based on how well students can analyze and write about an argument given in a provided text.

There is no set score that students must achieve to be accepted into a program, but students can figure out an estimate of how well they need to do by researching the average score accepted students got on their GMAT exam.

This can give prospective students a good idea of what score they should aim to receive to be considered for acceptance to a particular program.

Making a Study Plan

Making a GMAT study plan depends on when applications are due, which will differ by school.

It’s recommended that students take the exam at least three to four months before their application deadline.

This will give students enough time to retake the test if necessary. It can be taken up to five times within twelve months, with a lifetime limit of 8 times.

Once students know their application deadline, they can make a plan for when they want to take the exam.

Exams are available year-round, and students can register to take it in person or online at mba.com.

Each student will have to determine how much preparation is right for them, but usually, it’s recommended to spend three to six months preparing for the GMAT.

According to GMAC, the makers of the exam, students who studied 60 hours or more scored 500 or higher .

Studying more isn’t a guarantee of a high score, but it seems to help a majority of students find success. With this information, students can create a study plan that suits them and their timeline best.

Study Tips for the GMAT

With 60 or more hours of preparation recommended, how can students best spend those hours?

Here are some tips on how to study for the GMAT that may help students make the best of their prep time.

Taking Practice Exams

Familiarity with the format of the test means there are few surprises. Students will be familiar with each section of the test, the order of the sections, and how the instructions are worded.

Studying the content is important, but so is knowing what to expect when test day comes.

The most effective way to use practice tests is to take one first and use it as a baseline so it’s easy to see where improvements need to be made and how much progress is being made after each consecutive practice test.

When taking practice tests, students should try to reproduce the test experience as closely as possible, in a similar environment and with the same time constraints that the real test has.

The time allowable depends on whether the test is taken in person or online.

The online exam takes two hours and 45 minutes, whereas the in-person exam takes three hours and seven minutes because it includes the analytical writing assessment.

Taking practice exams is also a good way for students to learn how to pace themselves through each section of the test.

Strategies recommended are keeping a consistent pace throughout the entire exam, keeping in mind how many questions are in each section, and estimating how much time is allotted for each question.

•   The quantitative section includes 37 questions over 75 minutes.
•   The verbal section gives test takers 75 minutes for 41 questions.
•   The 12 integrated reasoning questions average two minutes and 30 seconds each for the section’s time allotment of 30 minutes.

Students may choose to use official GMAT exam prep packages, which vary in cost (one is free).

Hundreds of quantitative and verbal questions, as well as integrated reasoning questions can be accessed through these official packages.

Students can also purchase unofficial GMAT practice tests if they need more resources.

Tutoring and Peer Study Groups

For students who want extra help preparing for the GMAT, getting a private tutor, taking a prep course, or finding a study group may be options to consider.

A benefit to these strategies is the addition of regular feedback and accountability, which can help students stick to their GMAT study plan.

For students with a tighter budget, finding a GMAT support group and free practice exams may be more affordable routes.

Staying Healthy

Performing well during a stressful examination can be made easier by maintaining good physical and mental health.

It’s recommended that students get plenty of rest in the days before the exam, as well as keep up a healthy diet.

Both rest and nutrition can impact physical wellbeing. Going into the GMAT in good physical condition can help students reduce stress and build confidence.

During practice tests, students can practice stress management techniques, which may make it easier to use them during the official test.

Test-taking anxiety is a common phenomenon, and each student may want to learn which coping techniques work best for them.

What About Finances?

Students who are considering an MBA program may be shocked when they see the high cost of tuition.

For a few of the most prestigious schools, the cost averages $137,500, a price that may be out of reach for students.

Options for decreasing the cost of earning an MBA may be getting a master’s degree online or getting financial aid to help cover the cost.

There are a few options when it comes to paying for graduate school. As with undergrad, students can start by applying for federal financial aid.

Filling out the Free Application for Federal Student Aid (FAFSA®) as a graduate student means the aid is given based on the student’s income, not their parents’. This could help students receive more federal aid than they did as undergraduates.

After submitting the FAFSA, students will receive their Student Aid Report (SAR), which provides information about their federal student aid eligibility.

The schools to which a student has applied and been accepted will send a financial aid package offer letter, and the student can decide whether to accept or decline the offer.

Federal student financial aid can come in the form of work-study, grants, or loans. Grants usually don’t need to be repaid, but loans do. Graduate students are not eligible for subsidized student loans, only unsubsidized, so interest will start accruing as soon as the loan is disbursed.

Another option may be working while getting an MBA, with some employers helping to pay for tuition. There are more part-time and online MBA options than there used to be, making it easier for students to work while finishing school.

Students can also apply for scholarships through the school they are attending, as well as from private or professional organizations. Scholarships usually vary in their eligibility requirements, and it’s recommended that students seek out and apply for all they may be eligible for.

Another option for funding an MBA program may be private student loans. Private student loans do not come with the same benefits and protections that federal loans do, like income-driven repayments and fixed low-interest rates. The interest rates and repayment options vary by lender, so students are encouraged to do their research carefully before considering this option.

The Takeaway

Students who already have student loans from their undergraduate education may want to consider refinancing their student loans, which could mean a lower interest rate or a repayment plan that works better for their particular financial situation. The choice to refinance student loans depends on a lot of factors, like whether those loans are federal or private and whether or not the new loan will be beneficial to the borrower. Figuring out how to prepare for and pay for graduate school can feel overwhelming, but help is available for both.

Learn more about private student loans and student loan refinance options from SoFi.



SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF DECEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE
FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOSL20043

Read more
woman on laptop

10 Top Career Training Programs

When it comes to getting a secure, well-paying job, it’s not always necessary to get a college degree first.

Some students may choose a career training program to learn the necessary skills for a specific job, often more quickly and for less money than a four-year college degree. These programs may also be referred to as career certificate programs, usually certifying the students to work in a particular role once the course is completed.

These programs can be completed after college, but many are designed to train people who haven’t attended college. Recent high school graduates or those who have attained their GED can often attend career training programs and get started on their careers after receiving their certificate.

Why Do People Choose Career Training Programs?

Two big factors in choosing to go through a career training program before or instead of going to college are time and money.

Career training programs typically can be completed in less time than it generally takes to complete an undergraduate degree. Some programs can be completed in as little as four months, a staggering difference from the four years it might take to earn a bachelor’s degree.

In addition to being shorter term, they’re also less expensive. On average, a career certificate program may cost around $100 per credit. The average cost of in-state tuition at a public two-year institution is $3,412, and at a public four-year institution the in-state tuition averages $9,308.

At Minnesota State University, certificate programs consist of nine to 30 credits, which can be completed in one year or less of full-time study. If these programs cost the average $100 per credit, they would cost between $900 and $3,000. This is fairly affordable compared to the cost of tuition at either a two-year or a four-year institution.

Another reason some people choose a career training program is that they need to, or would like to, start earning money relatively soon after graduating high school.

A career training program could be a more direct route to employment than getting an associate or bachelor’s degree for people who are sure about their career path. This could also be a beneficial route for students who want to save money to attend college later in life.

Choosing a Program

The most important thing to look for when choosing a career training program, whether it’s in-person or an online career training program, is accreditation. Accreditation verifies that an institution is meeting a certain level of quality. Usually, a certificate will need to come from an accredited institution for it to be considered legitimate.

Accreditation is done by private agencies, and most programs or institutions will list accreditations on their website.

The most up-to-date accreditation information can be found in the database of postsecondary institutions and programs compiled by the US Department of Education or with the specific accrediting agency’s website.

Once it’s clear that the potential programs are accredited, students can begin to narrow down which one will be best for them. This will be a highly personal choice, but there are a few factors worthy of attention, including cost, course length, and type of instruction (online vs. in-person).

Job search assistance—which might include resume writing workshops, job fairs, or interview prep—is another element that may help set students up for success.

Top Paying Jobs For Certificate Holders

In addition to career training programs having the potential to save students time and money, people want to know that they’ll be able to make a good living with those jobs.

Right now, these are the highest paying jobs for those opting to go through a career training program:

1. Web Designer

According to the US Bureau of Labor Statistics, the average annual income for a web designer is $73,760, with the educational requirements ranging from a high school diploma to a bachelor’s degree. This job is growing faster than average, so it has a promising future.

2. Paralegals and Legal Assistants

Paralegals and legal assistants make, on average, $51,740 per year. The required education for an entry-level job as a paralegal is a certificate or an associate degree. This job is also growing at a rate much faster than average, showing great potential for a long-term career.

3. Solar Photovoltaic Installer

Solar panel installation is a growing field with decent pay and a lot of projected growth for the future. The median annual pay is $44,890, with only a high school degree or a certificate required to begin working.

4. Licensed practical and licensed vocational nurses

Training to become a licensed practical or licensed vocational nurse typically takes only one year of full-time study, and the median annual salary is $47,480. This job is growing faster than average and is in a field that will certainly always exist. This could be a good choice for someone who wants to be in the medical field without the time and financial commitment it takes to become a doctor.

5. Medical Records Technician

Working as a medical records technician usually only requires a certificate, and sometimes an associate degree. This job has a median annual pay of $42,630 and the potential to work from home.

6. Pharmacy Technician

The median pay for a pharmacy technician is $33,950 per year. This job is growing at an average rate and typically requires on-the-job training or a formal training program, most of which last one year. Some longer pharmacy tech training programs culminate in an associate degree.

7. Computer Support Specialist

The role of a computer support specialist can vary widely, which means the educational requirements may, also. Some jobs in this field may require a bachelor’s degree, but others may only require an associate degree or a certificate. The median annual pay for a computer support specialist is $54,760, and the field is growing faster than average.

8. Phlebotomists

Professional certification, which can be gained after completing a phlebotomy training program, is the credential generally preferred by employers. This job has a median annual pay of $35,510 and it’s growing much faster than average.

9. Medical Assistants

Medical assistants have a median annual pay of $34,800, and the job only requires a certificate or on-the-job training. This job is growing much faster than average.

10. Wind Turbine Technician

The median pay for this job is $52,910 per year and the only education required is a training certificate through a technical program. This job is growing at a rate much faster than average, which could make it a great choice for students who are ready to start their career shortly after graduating high school.

Paying for a Career Training Program

Just because career training programs are typically less expensive than college doesn’t mean they’ll be easy to pay for. Some programs last longer than others and will still end up costing a fair chunk of money.

One way to pay for a career training program is to save the amount of money needed before starting it. If the program is short or has a lower cost per unit, it may be possible to simply save up the necessary amount before beginning the course of study.

The program cost may be available on the school’s website or by calling the school. Paying in full with cash means no debt to worry about.

Another potential way to pay for a career training program is to apply for federal student financial aid, which may be available to students enrolled in eligible degree or certificate programs and who meet other eligibility requirements. Completing the Free Application for Free Application for Federal Student Aid (FAFSA) ® is the first step to applying for federal student financial aid. After submitting the FAFSA®, students will find out if they’re eligible for federal student aid, which could include federal student loans and/or work-study.

Students who aren’t eligible for federal financial aid or students who can’t cover tuition costs without financial aid may want to look for scholarships. There may be fewer scholarships available for certificate programs than there are for degree programs, but they’re out there!

The best place to start looking for scholarships is with the school the student is attending. Some schools set up their own scholarships. Alternatively, students can search for scholarships offered by professional organizations in their related fields.

A private student loan may be another option to cover the cost of a career training program. Loan terms will vary from lender to lender, and applicants are encouraged to understand the terms of the loan before accepting one. Students should exhaust all federal student aid options before considering private student loans.

The Takeaway

Students can be under a lot of pressure to go right into a four-year college or university after graduating high school, but career training programs provide an alternative that can also set students up for success, typically in less time and for less money.

Learn more about private student loans at SoFi.



SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. SoFi Lending Corp. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOSL20040

Read more
woman sitting on the floor doing work on her computer

4 Tips for Handling Finances After a Pay Cut

Millions of Americans faced pay cuts as the coronavirus pandemic affected industries. While many workers were laid off, some were furloughed, and others kept their jobs but at lower salaries as businesses struggled to stay afloat.

Some workers are reexamining their budgets to cut some of their expenses until they get another job or their employer restores pay cuts. Taking a pay cut means facing the reality of no longer living the same financial life.

Americans often aren’t so good at saving for emergencies such as a car repair or sudden illness, or for their retirement. A recent survey found that 59% of U.S. residents say they live paycheck to paycheck.

Less than 40% of working adults think their retirement savings are on track, and 25% have no retirement savings or pension at all, according to the latest Federal Reserve Report on the Economic Well-Being of U.S. Households.

Another alarming fact is that 4 in 10 adults have said that if they had an emergency and had to pay a bill of $400, they would have to borrow the money or sell an item they own. And that is in so-called normal times. Here are four strategies to handle finances after a pay cut.

1. Update Your Budget

There are several ways to deal with the changes to your budget after a change to your salary. Create a budget if you do not already have one. List all your expenses for weekly purchases, from groceries to gasoline and parking fees. Add monthly bills, including rent or mortgage, car loan, cable, cellphone, utility bills, credit cards, student loans, and any other debt such as personal loans.

Update your budget and examine all your expenses to see which ones you can lower or eliminate, even temporarily, for the next six months. Add your income and include part-time jobs, tax refunds, bonuses, and any child support, alimony, or help from parents. This will help you determine how much money you can spend for necessities, expenses, entertainment, and other items such as doctor visits.

There are several free apps that can help you manage your debt easily and update it as your financial circumstances change. To track your spending, decide if you want to track it daily, weekly, or biweekly. You might try different time periods before you decide on one. Some people prefer to keep up with their spending on old-fashioned pen and paper.

Others like to have online access to their spending so they can check while they are out shopping for groceries or other basic items. Many banks and credit card companies will also track your spending. You can download it into Excel or another spreadsheet or use an app like SoFi Relay.

After you track your spending for two or three months, you will see a pattern emerge of where most of your money goes. You can also look at older bank and credit card statements to see what you were spending money on last year compared to this year. This will help determine if you had one-time expenses such as medical bills, airplane tickets, hotel stays, wedding gifts, or a vacation. You might be surprised at what you’re spending your money on. For instance, you might be spending a lot of money on entertainment or buying gifts.

In addition to a budget, create a financial plan for both short- and long-term goals. A plan will help you determine when you can pay off any loans and how much you want to save, say, for a down payment on a house.

2. Cut Expenses

One place many consumers can cut costs is from entertainment, such as their cable bill or streaming services. These can really add up. Canceling all or some of these services can improve your cash flow, which is how much money you have left over at the end of the month. Another place where you can slash expenses is from your food budget. Consider using digital coupons, shopping at warehouse clubs, or going out to eat for lunch instead of dinner.

Your expenses include debt such as credit cards, student loans, and personal loans. Paying more than the minimum balance, refinancing to a lower interest rate. and making extra payments can help you pay down the principal amount, or the original amount that you borrowed, sooner.

Consider refinancing your student loans by checking out both fixed and variable rates. Interest rates are at historic lows. You might be able to pay down your credit card bills faster by taking out a personal loan; those interest rates are often lower. And if that’s the case, the debt could be paid sooner.

Automating the payment of bills can make your life easier. This will also help you avoid paying late fees. You can either have your bills paid automatically through your checking account or set yourself a reminder on your calendar if you have some bills such as utilities that are a different amount each month.

You can also automate your savings. You can have money taken out of your checking or savings account each month and have it automatically invested into your workplace 401(k) plan or an individual retirement account.

Snip, Snip, Snip

When your salary has been slashed, there are several ways you can save money immediately and long term.

Call your mortgage, auto loan, utilities, credit card, and student loan companies to see if you can defer payments for several months. Skipping a few payments can help you get back on your feet sooner. If the company cannot provide this option, see if the interest rate can be lowered on, say, credit cards.

Check with your local nonprofit organizations. Many provide food or partial payments for utility bills. Your local food bank is a good place to start; this can help you lower your monthly grocery bill.

Look online to see if stores are offering deals. Stock up on staples such as beans, rice, and pasta if they are on sale.

If you are still short of money, you might consider talking to family members and friends about obtaining a short-term loan or working on a small project to earn some extra money.

People who have been socking away credit card rewards for a vacation might want to go ahead and use them. Some credit card companies will let you transfer the rewards for cash to your statement or use them for food delivery.

Other companies let you use your rewards to receive gift cards. Using these gift cards at retailers that sell staples and necessities such as food, detergent, and other personal items can help you spend less money. Many credit cards will give cash back on purchases such as food and gasoline. See which credit cards are the most beneficial for your financial needs before signing up for a brand-new credit card.

Shop around and see if competitors can provide lower rates for your homeowner’s or renter’s, car, and health insurance. If you live in a deregulated area, see if there are cheaper rates for electricity so you can switch providers. Some utility companies will offer special deals or programs.

Another way to save money is to use cash for gasoline. Some gas stations offer a cheaper price for consumers who use cash. The savings can add up quickly, especially if you have a longer commute.

Check your budget every month and see if there are other ways you can save money. If your credit card company denied your request last month to lower your interest rate, try calling again. Rules at lenders can change often.

3. Save for Retirement

While it is easy to skip saving for retirement, it’s ideal, of course, to continue socking away some money each month from your paycheck into a 401(k) plan or IRA. The money you stash away for retirement can lower your taxable income, meaning you will owe the IRS less.

Continuing to save money for retirement is a good habit, especially if your salary reduction is temporary. You can also sock away your tax refund, bonus, or any additional income into a retirement account.

Once you stop contributing to a retirement account, it can be difficult to catch up on your retirement savings. If you have your retirement contribution automatically deducted from your checking or savings account, saving for your future is easier.

4. Track Your Spending

Anyone who doesn’t track what goes out would probably be shocked by the reality. SoFi Money® is a cash management account that keeps track of weekly spending—which then allows creation of a budget based on habits.

There are no account fees for SoFi Money® and you can earn cash-back rewards on spending. And SoFi members can gain financial advice—at no cost.

Learn more about SoFi Money® today.



SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
SoFi Relay is offered through SoFi Wealth LLC, an SEC-registered investment advisor. For more information, please see our Form ADV Part 2A, a copy of which is available upon request and at www.adviserinfo.sec.gov . For additional information on SoFi Wealth LLC, SoFi Relay, and products and services of affiliates, see SoFi.com/legal.
Advisory services are offered through SoFi Wealth, LLC an SEC-registered Investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at adviserinfo.sec.gov .
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer to sell, solicitation to buy or a pre-qualification of any loan product offered by SoFi Lending Corp and/or its affiliates.
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.

SOMN20098

Read more
business man on tablet mobile

Vesting Schedule: Important Things to Know

Retirement matching funds or stock options that employees may get as part of their compensation from an employer may not be theirs right away. Rather, the company may hand over full ownership according to a vesting schedule. Here’s a look at how these schedules work.

What Is a Vesting Schedule?

Employers may contribute matching retirement funds, shares of company profit, or stock options as part of an employee’s compensation package. But that doesn’t necessarily mean the employee owns these assets right away.

An employee is vested when they receive ownership of a portion of or all of the assets their employer offers. If they were to leave the company before the assets were fully vested, they would lose out on some or all of those contributions/profits/stock options.

Once an employee is fully vested, 100% of their benefit belongs to them—there is no way for an employer to take any of the assets back, even if they leave the company.

Employees who are partially vested may not be entitled to the full amount of the assets. These employees may not meet certain requirements, such as years spent with the company or hours worked during the year, for example. Those who are not vested are typically not entitled to any assets at all.

So how does an individual know when they are partially or fully vested? They can ask their employer for a vesting schedule, which tells them the conditions they must meet or the dates that must be reached before vesting begins.

Three Types of Vesting Schedules

Vesting schedules may come in a few different varieties: immediate, graded, and cliff vesting.

Immediate Vesting

Immediate vesting schedules give employees full ownership of assets as soon as the assets hit their accounts. That means employees are 100% vested when their employer makes a contribution.

For example, under an immediate vesting schedule, if an employer makes a matching contribution to a retirement account, that contribution belongs to the employee regardless of any other conditions. The employee is now free to do what they will with the contribution.

Graded Vesting

A graded vesting schedule increases the portion of vested assets over time. Typically as an employee’s tenure at a company increases, the amount of vested assets gradually increases—until the employee eventually owns 100% of the assets. If the employee should leave the company before the vesting period is over, they will only be entitled to the portion of the assets in which they are already vested.

Graded vesting schedules are no longer than six years for retirement plans, according to federal guidelines, though employers may choose to use a shorter vesting schedule. With a hypothetical six-year vesting schedule, an employee might be 0% vested for their first two years of employment and 20% vested every year after that.

Cliff Vesting

This type of vesting schedule transfers 100% of assets to employees after a certain amount of time has passed. For example, an employee may need to work at their job for two years before they are vested. If they separate from employment for any reason before that period is up, they aren’t entitled to any of the assets.

Cliff vesting schedules for retirement accounts are three years at most, according to federal guidelines, but may be shorter.

Vesting and IRAs

Most people might be familiar with traditional and Roth IRAs, which individuals can set up and contribute to themselves. But there are a couple of IRA options that employers can contribute to as well, including SEP and SIMPLE IRAs.

Employers may offer SIMPLE IRAs in place of a 401(k). They can then offer funds that match employee contributions or they can make non-elective contributions, money they put in an employee’s account regardless of how much that employee has contributed themselves.

A SEP IRA is a retirement plan available to self-employed workers and small business owners. Unlike with other IRA plans, with a SEP IRA employees do not make contributions. Employers, including the self-employed, make contributions for them. Self-employed individuals act as their own employer and employee.

By law, required employer contributions to SEP and SIMPLE IRAs are immediately vested. This goes for any other IRA-based plan as well.

Vesting and 401(k)s

When you contribute to your 401(k), your employer may offer matching contributions to incentivize you to save at least enough to make the match. While your own contributions to your 401(k) are 100% yours immediately, your employer may decide to give you ownership of their contributions according to a vesting schedule.

It’s important to know the difference between your vested balance and you overall balance. You 401(k) may offer a variety of different vesting schedules, the terms of which are laid out in the plan document. Some plans offer immediate vesting, while others may offer cliff vesting after up to three years of service, or a graded vesting system in which an employee’s vested percentage grows over time.

When Must Employees Be 100% Vested

A retirement plan’s “normal retirement age” is the age set by the plan at which an employee is eligible to receive their full accrued benefits. In the case of annuity payments or other installment payments, this is the date employees can begin receiving payments. According to government rules, employees must be 100% vested by the time they reach normal retirement age.

Additionally, employees must be immediately 100% vested in their accrued benefits if an employer decides to terminate a plan, including for the following reasons: voluntarily; as part of bankruptcy proceedings; when the company is sold; or because of a switch to another retirement plan. At such a point, employer matching contributions and any profit sharing is fully vested regardless of any previous vesting schedule.

Sometimes employers will terminate only part of a retirement plan—for example, if a factory closure forces 25% of the company workforce to be laid off. In this case, workers affected by the partial termination have the same vesting rights as those affected by a full plan termination.

Vesting Stock Options

Employee stock options offer employees the chance to buy company stock at a predetermined price, and are often offered on a vesting schedule as well. Employees are often not allowed to buy the stock—also known as exercising their option—until they are vested. As with other types of compensation, vesting can follow a number of schedules, including graded scheduling, which allows employees to exercise their stock option gradually, and cliff scheduling. In some cases employees may be granted stock options that are immediately vested.

Once a stock option vests and an employee exercises it, they can sell the stock or hang on to it and hope the value appreciates.

Restricted stock units (RSUs) are another form of compensation in which employees are promised a specific amount of stock at a later date. While there are some differences between ESOs and RSUs, one similarity is that both may follow a vesting schedule and don’t belong to the employee until they are vested.

Employees who receive RSUs from a private company—a company whose shares don’t trade on the open market—may not be able to sell them until the company goes public in an initial public offering.

Why Companies Choose to Use Vesting

The different vesting schedules and the rules around them can get complicated. So why would an employer go through all that trouble? By using vesting schedules, employers are trying to align employees’ incentives with their own. It can be time consuming and costly to find new employees, so when an employer finds someone they like, they want them to stick around. Vesting schedules are one way employers can tempt employees to stay with the company for a certain period of time.

Some types of compensation, such as stock options, add another layer of incentive to the mix. That’s because as a company flourishes, that company’s stock should theoretically become more valuable, incentivizing workers to work hard to keep the company successful.

Additionally, having some time before an employee is fully vested in their benefits allows companies a bit of a trial period. If a new hire doesn’t work out, the company can let them go without owing them additional benefits.

How to Find out About Your Vesting Schedule

It’s critical to know how and when employer contributions to retirement accounts vest. That way, individuals can make informed decisions about when to leave their jobs while minimizing the amount of money they’re leaving on the table. For example, to make the most of their benefits, an employee with 12 months to go before they are fully vested may want to hang on to their job for another year before they start looking for a new one.

To fully understand an employer’s vesting policies, employees can speak with a representative in their human resources department. They may also get details of their retirement plan by reading the summary plan description, which lays out how it operates and what it provides. Individuals may also check their annual benefits statement. This statement should reflect an employee’s accrued and vested assets, and it may lay out what assets an employee will forfeit upon termination.

The Takeaway

Vesting schedules are a tool used by employers to entice employees to stay with the company by offering full monetary or stock contributions after a certain length of employment. There are three different types of vesting: immediate, cliff, and graded.

For employees, it’s important to understand the vesting schedule of one’s retirement plan, stock options, or RSUs. This information can help guide career decisions as well as investment decisions.

Investors may find it helpful to keep track of how their investments are doing, whether keeping track of an employer’s stock or their own individual stock picks. With SoFi Invest® members can track their investments and stay up-to-date on investing news via the app.

Find out how SoFi Invest can help you stay on top of your financial goals.



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.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

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.

SOIN20085

Read more
TLS 1.2 Encrypted
Equal Housing Lender