The 7 Most Common Questions About IRAs

Saving for retirement is complicated, and if you’re like most, you were never taught how to handle your money in school. So, if you’re not totally sure what an IRA is, how it works, or if you should have one, there’s no need to hide it.

In fact, that’s where we come in. Read on for a run-down of IRA basics, so you can feel more secure about saving for your future.

1. How is an IRA different from a 401(k)?

Both IRAs and 401(k)s are tax-advantaged ways to grow money for retirement, but an IRA, which stands for individual retirement account, is “an independent account that you, as an individual, are initiating or creating,” says Katy Song, a SoFi Certified Financial Planner. “A 401(k) comes through your employer and has to be funded through payroll contributions.”

So, if you have extra money that’s sitting in a checking, savings, or investment account, you can’t just throw that into a 401(k). But you might be able to put some of that cash into an Individual Retirement Account. That’s one advantage of an IRA.

On the other hand, you can contribute more to a 401(k). As of 2018 , you can put up to $18,500 into a 401(k) each year, whereas you can toss in a maximum of only $5,500 into a Traditional or Roth IRA (or a combination of the two) each year. When you’re 50 or older, those maximums go up slightly.

(Though, note that there are income limits and may be other considerations, so you should talk to your tax advisor before making a contribution.) And sometimes employers will offer a 401(k) “match,” which means that they put additional money into your retirement account. This is typically done as a percentage of contributions with a cap, such as “100% match up to 3% of your salary”. Those are some advantages of a 401(k).

But here’s some good news: You can have both. If you have access to an employer-sponsored 401(k), most financial planners recommend contributing as much as possible there, then supplementing with an IRA if you can. And if you don’t have a 401(k)? An IRA is a must, says Song. If you just put money into a savings or investment account, you won’t get any tax deferral advantages.

Related: How to save for retirement if you don’t have an employer-sponsored 401(k)

2. Traditional vs. Roth—how do they work?

The three most common types are Traditional, Roth, and Rollover IRAs. (There are other kinds, like SEP and SIMPLE IRAs, but those are geared toward people who are self-employed or running small businesses. If that applies to you, read more about SEP IRAs.)

With a Traditional IRA, you get a tax deduction when you contribute. With a Roth, you don’t get a tax deduction when you contribute but your money grows tax-free. And a Rollover IRA is where you should put any money that’s sitting in an old employer plan—like a 401(k) from a past job.

Note: Many financial companies may not allow you to contribute annually to a Rollover IRA, says Song, but it’s still a worthwhile move.

Related: Rolling over your 401(k) is a pain—here’s why it’s still worth doing

3. Which kind of IRA is best for me?

If you have money sitting in a 401(k) from an old job, you’ll likely want to move that money to a Rollover IRA. Even if your employer paid the 401(k) fees, many stop doing that and pass them on to you when you leave. Companies can merge or go out of business. If that happens it can be very hard to roll over your money. If you’ve never changed jobs, then you probably don’t need a Rollover IRA.

“Many people have one Rollover IRA and then either a Traditional or Roth IRA,” says Song. To figure out whether a Traditional or a Roth IRA is best for you, think about your current tax bracket and what tax bracket you’re likely to be in when you retire. (A SoFi financial advisor can help you think through this.)

“If you think you’re not going to earn any income in retirement and you’re going to have really low taxes, you want to take the deduction today and open a Traditional IRA. But if you’re in a low tax bracket today and you’re not paying a whole lot of taxes and you don’t need more tax deductions, you would opt for the Roth IRA,” says Song.

You could, technically, open both and contribute, say, $2,500 to a Traditional and $3,000 to a Roth each year, but Song isn’t a big fan of that approach. “I think it gets confusing,” she says.

Related: Traditional IRA or Roth IRA: Which one works for you?

4. How much should I put into an IRA?

Your goal should be to try to hit that maximum of $5,500 per year, which is the equivalent of contributing about $459 per month. If you can’t afford that, don’t worry. Just get as close to that number as you can. “Try to make an annual contribution, no matter what the amount is, just to start early in life and get in the habit and let the power of compounding be on your side,” says Song.

5. When should I make IRA contributions?

Song recommends setting up an automatic contribution once a month that takes money from your checking or savings account and puts it directly into your IRA. Then, you never have to worry about forgetting to contribute, and you won’t miss (or spend) money that you never see. Use our IRA calculator to help determine which contributions you can make.

You don’t have to contribute monthly—the frequency is totally up to you, and many people contribute once annually, after they receive a year-end bonus, for example, or before the annual deadline of when taxes are due in April of the following year. But consider this: The sooner you put money into the IRA, the more time it has in the market. No, investing isn’t without risk, but more time in the market means more time to (hopefully) grow.

Also, it’s often less risky to spread out your investments. “What if you contribute every April, but the market is super hot in April and you buy at the peak price?” asks Song. By spreading out your contributions, you’re doing something financial analysts call “dollar-cost averaging.” While you’re not totally eliminating the risk of loss, you are averaging out the cost of the purchases, which may save a little money in the process.

6. Is there anyone who won’t benefit as much?

Yes. If you’re a high earner, pay attention to this part.

• Traditional IRAs: Anyone can open a Traditional IRA and contribute to it, but in some cases, Traditional IRA contributions may not be considered tax-deductible. For instance, if you’re single and you’re covered by a workplace retirement plan like a 401(k), your Traditional IRA tax deduction starts to become reduced when your modified adjusted gross income (MAGI)—your gross income minus what you put into your 401(k) and medical premiums—is $63,000.

For married couples filing jointly, where the spouse who makes the Traditional IRA contribution is covered by a workplace retirement plan, the deduction starts to go away when that person’s MAGI is $101,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction starts to phase out if the couple’s MAGI is $189,000.

•Roth IRAs: You can open a Roth IRA and contribute the maximum to it only if your income is below a certain level. If you’re single, the phase-out begins if your MAGI is $120,000. If you’re married and filing jointly, the phase-out begins if your MAGI is $189,000.

If you fall into one of these categories, what should you do? If you or your spouse has a 401(k), you can start by trying to max out that contribution each year. Then talk to a financial advisor to see whether that’s enough to keep you on track toward your retirement goal or if opening an IRA on top of that would help. In most cases, Song still recommends both.

7. How do I open an IRA?

Like everything else these days, do it online! Though all the IRA rules are complicated, the process of opening one up with SoFi takes just a few minutes.

And if you have any questions about which account is right for you, SoFi financial advisors are available to help, absolutely complimentary.

“The great thing is we have financial advisors who are there to walk you through every step of it. So whether it’s the first time you’re opening an account, or you have accounts that you want to consolidate, we take the guesswork out and do most of the work for you,” says Song.

Best of all, a financial advisor can show you how to invest those funds wisely, in a way that will help you meet your personal goals. Set up a complimentary IRA consultation today.


SoFi Wealth, LLC does not render tax or legal advice. Individual circumstances are unique and we recommend that you consult with a qualified tax advisor for your specific needs.
The SoFi Wealth platform is operated and maintained by SoFi Wealth LLC, an SEC Registered Investment Advisor. Brokerage services are provided to clients of SoFi Wealth LLC by SoFi Securities LLC, an affiliated broker-dealer registered with the Securities and Exchange Commission and a member of FINRA / SIPC. Investments are not FDIC Insured, have No Guarantee and May Lose Value. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Clearing and custody of all securities are provided by APEX Clearing Corporation.
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Is a Backdoor Roth IRA Right for You?

You’ve probably heard that Roth IRAs are a great way to save for retirement. And there’s a reason that financial planners and tax accountants sometimes gush about these accounts: You can contribute up to $5,500 a year (or $6,500 if you’re 50 or older), then withdraw those contributions any time without paying taxes or penalties.

You can also withdraw your earnings tax-free in retirement. You don’t get an up-front tax deduction, as with a Traditional IRA. But Roth IRAs are a great choice if you expect to be in a higher tax bracket when you retire or if you don’t currently have a high tax bill to offset.

There’s a caveat: You can only contribute to a Roth IRA if your income falls below a certain limit. If your contribution is for 2017, that maximum is $118,000 for a single person or $186,000 for a married couple filing jointly (based on modified adjusted gross income ). Though, if you make slightly more than that, you may qualify to contribute a reduced amount.

Want to contribute to a Roth IRA, but have an income that exceeds the limits? Good news: There’s another option. It’s called a backdoor Roth IRA.

While we at SoFi can’t offer up tax advice (you’ll have to contact a tax pro for that), we can walk you through this strategy and help you decide if it might be something you should consider. Here’s what you need to know.

What is a Backdoor Roth IRA?

If you aren’t eligible to contribute to a Roth IRA outright because you make too much, you can do so through what’s called a “backdoor Roth.” This involves converting funds in a Traditional IRA into a Roth IRA. (What’s the difference between the two? Here’s a breakdown.)

The government allows you to do this, as long as you pay income taxes on any contributions you deducted on your taxes (and any profits you made) when you convert. Unlike a normal Roth IRA, there is no income limit for doing the conversion, nor is there a ceiling to how much you can convert.

When is a Backdoor Roth right for you?

As with a typical Roth IRA, a backdoor Roth might make sense when your taxes are lower today than you expect them to be in retirement. This method is likely your only option to contribute to a Roth IRA if you exceed the income limits.

A backdoor Roth can be a particularly good choice if you have put money into a Traditional IRA but have not deducted those funds on your taxes. This can happen if you or your spouse have a 401(k) or other company-sponsored plan, which blocks you from deducting IRA contributions if you make a certain income. In this case, because you’ve already paid taxes on the contributions, you can convert the Traditional IRA to a Roth IRA without paying any extra taxes.

Keep in mind that if you have money you’ve deducted in any IRA account, including SEP or SIMPLE IRAs, the government will assume a Roth conversion represents a portion of all the balances. For example, say you contributed $5,000 to an IRA that you didn’t deduct and another $5,000 that you did deduct. If you then converted $5,000 to a Roth IRA, the government would consider $2,500 of the conversion taxable. A conversion can also put you into a higher tax bracket, so try to do one when your income is lower than normal.

And we know: This can get complicated. So be sure to check with a tax preparer to confirm if and when a backdoor IRA makes sense for you. You can also explore SoFi’s IRA Calculator to help you make an informed decision about your IRA contributions.

How to Open a Backdoor Roth IRA

If you have no other Traditional IRAs, here’s how you can make a backdoor Roth IRA happen with SoFi:

Open both a Traditional IRA and a Roth IRA with SoFi Invest®.

• Send an email to [email protected] before you contribute, explaining that this is a backdoor Roth so SoFi doesn’t invest your contribution. Otherwise, you might have to pay tax on any profits you convert into your Roth (but you can’t deduct any losses).

• Make a non-deductible contribution to the Traditional IRA by the tax deadline (April 17 in 2018). The maximum allowable yearly contribution is $5,500 (or $6,500 if you’re 50 or older). Make sure the funds are deposited by the tax deadline. Allow at least 5 days for the account to be opened and the money to move from your bank.

• Send an email to [email protected] once you have made your contribution to the Traditional IRA.

• SoFi will send you a form to transfer the money into your Roth IRA. Sign and return it.

• Once the funds are in your Roth IRA, SoFi will invest them in the portfolio you’ve chosen. The funds will grow tax-free!

If you have any questions or want some help as you go through the process, schedule a complimentary appointment with one of our licensed financial advisors. SoFi Invest is all about empowering you and your financial future, and we’re here to help.

Set up a complimentary IRA consultation


SoFi Wealth, LLC does not render tax or legal advice. Individual circumstances are unique and we recommend that you consult with a qualified tax advisor for your specific needs.
The SoFi Wealth platform is operated and maintained by SoFi Wealth LLC, an SEC Registered Investment Advisor. Brokerage services are provided to clients of SoFi Wealth LLC by SoFi
Securities LLC, an affiliated broker-dealer registered with the Securities and Exchange Commission and a member of FINRA / SIPC. Investments are not FDIC Insured, have No Guarantee and May Lose Value. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Clearing and custody of all securities are provided by APEX Clearing Corporation.
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Buying a Car with a Personal Loan

Buying a new car is a financial commitment. Sure, it’s not a house, but it’s still something that typically requires a loan you would be paying off for a while. According to an analysis from Kelley Blue Book , the average car price less than 6 months ago was $34,861. This price leveled off slightly from previous months, but has generally risen over the last few years.

When you factor in depreciation, insurance, maintenance, and gas, having a car isn’t cheap. AAA found the average cost of owning and operating a new car in 2017 was $8,469 annually. Small sedans were the cheapest to operate, while pick-up trucks were the most expensive.

Because depreciation is one of the biggest annual costs, the longer you own your car, the more that initial investment pays off. According to Edmunds, a new car depreciates 15% to 25% every year during the first five years (half of which happens immediately after you drive off the lot). However, maintenance costs can obviously go up as a car ages. These are all things to consider when you head to the dealership to purchase your new car.

When you do, odds are you won’t just have $35,000 in cash lying around. That means you’ll likely need to take out an auto or personal loan to buy your car. Deciding which car to buy, understanding how much it’s worth, and choosing a payment option can seem overwhelming, but it doesn’t have to be.

Figuring out the Value of a New Car

To start: What will you use your car for? How much do you drive? Do you need certain features or capacity? These are all questions you should answer for yourself first, and then do research on which cars meet your requirements and fit your lifestyle.

Fortunately, there are a number of well-respected pricing guides to consult for an appropriate price range once you narrow down your car choices: Edmunds’ offers a True Market Value guide ; Kelley Blue Book has suggested price ranges for various cars (particularly useful for used cars); the National Automobile Dealers Association’s guide is dealer-focused; and Consumer Reports provides detailed reviews and reports about specific makes and models.

These all simply offer a price range for the car you want. You’ll also want to investigate any incentives or financing deals that dealers are offering. You can even call around for price quotes, so you’ll be informed by the time you walk into the dealer.

As already mentioned, the value of your car goes down over time. The costs of depreciation are usually spread over a five-year period, with the car depreciating further each year. The other factor when considering the true cost of your car is the potential increasing maintenance costs over five or 10 years. The biggest ongoing cost of the car, though, is the car loan itself, which brings us to the next step in your car buying process.

How to Get a Car Loan

Once you know which car you want and what you can afford, how do you pay for it?

For most of us, the negotiation part of buying a new car is the most daunting. This is why you want to go in understanding the price range for your desired car—ideally, you’ll also be equipped with a few comparable quotes from other dealers.

It’s a good idea, when speaking with a car salesperson, to ask for the actual sales price instead of monthly payments, because it can be difficult to keep track of the overall price when talking about monthly payments and payment periods. And don’t rush: Test-driving, negotiating, and finishing all the paperwork will take some time, and that’s okay.

One of the final factors in the process is deciding on a payment option. Car loans are usually offered by car dealers on 36, 48, or 60-month payment plans, but you can also obtain one—sometimes at more favorable terms—from a bank or private lender. Car dealerships are typically set up to get you a car loan quickly you could even sign the auto loan and drive off the lot that day.

However, banks or private lenders may offer better interest rates and more favorable terms, though they have their own eligibility criteria. The average interest rate in 2017 was 4.2% on a 60-month auto loan and the average is a 12% down payment on your car loan. That interest rate varies based on a variety of factors.

Car Loans Versus Personal Loans

As the names imply, personal loans can be taken out for any number of personal expenses—home improvements or a vacation, for example—whereas a car loan can only be taken out to pay for a car.

In essence, a car loan works much like a mortgage. It is paid for in monthly installments and the asset isn’t fully yours until the final payment is made. The car is the asset that secures the loan, which means if you default on payments, then the lender could seize your car. Because it’s a secured loan, that also means interest rates tend to be different than unsecured loans. However, there’s no getting around the fact that the car loan is tied directly to the car.

Funds from a personal loan can be much more flexible, meaning it can be used not just for purchasing your car, but for the other costs of owning a car as well. Personal loans can also be secured or unsecured. If you choose an unsecured personal loan the repayment would not be tied directly to the car, as it would for a secured loan, so it means your car won’t necessarily be seized if you miss a payment. Personal loans also generally have fixed interest rates that don’t change over the life of the loan. While a car loan at the dealership can be obtained faster, if you have your personal loan approval in hand before you go to the dealership, it also can take a step out of the negotiation process.

Even if you have already purchased a vehicle, a personal loan could be a good low-interest (and less expensive) way to pay for your car and car expenses. Refinancing a car with a personal loan can save you some serious cash in the long run. Plus you get the advantages of an unsecured loan, meaning your car isn’t on the line.

If you’re interested in taking out a personal loan to buy a car, find out if SoFi’s personal loans are right for you, by checking out SoFi’s low fixed rates.


SoFi Lending Corp. is licensed by the Department of Business Oversight under the California Financing Law, license number 6054612.
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.
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How to Talk About Money with Your Partner

You talk about your job, your dysfunctional family, the dream home you want to live in someday—but your finances? Ugh. If you’re like most couples, money is right up there with exes on the list of topics you avoid like the plague.

In fact, a whopping 43% of people don’t even know how much money their partner makes, according to a Fidelity study. “I think there’s still a taboo surrounding finances today. It’s not a topic that you typically share with your family members or loved ones,” says Alison Norris, a Certified Financial Planner at SoFi.

That’s probably because talking about finances can be, well, tough. After all, when you talk about money—and I mean really talk about it—you end up discussing much more than just dollars and cents. Having a meaningful discussion means chatting about your biggest dreams and deepest fears, and that can be straight-up terrifying.

But as you start to get more serious with someone, talking about money isn’t only a logistical reality, it’s a crucial step in making sure you plan and live the life you’ve both dreamed of.

The good news? If you approach the conversation the right way, it can actually bring you closer. Here’s how to take the plunge.

1. Take a Moment to Reflect by Yourselves

Before you even begin to talk to your partner about finances, you need to do something a little touchy-feely on your own. Bear with me, though—it’s worth it.

Ready? Put your phone down for a few minutes, channel your inner Freud, and take a deep look at both your past and your future. Ask yourself questions like:

• What did my parents teach me about money?

• When I think about money, which feelings come to mind?

• What are some good money habits and some bad money habits that I’ve developed over time?

• What goals do I want to reach in the next 5, 10, or 20 years—get married, buy a house, explore Australia, become a CEO, have two kids, get a puppy, purchase a sports car, give a certain amount to charity?

• What will retirement look like for me—where will I live and how will I spend my time? Are you on track for retirement? Consult SoFi’s retirement calculator to see where you stand.

Those answers will help you steer when you’re making financial decisions. “Money is a tool and it’s about looking at how you can really use that tool for things that bring you happiness,” says Norris.

For instance, maybe this exercise will shed light on the fact that you’re an impulsive spender, and it’s putting you deeper into debt. Or perhaps it’ll teach you that you’ve been buying a lot of clothes, even though travel is what truly excites you. Or maybe you’ll realize that since your parents barely made ends meet when you were a kid, you carry around a lot of anxiety, and that’s why it’s so difficult for you to have conversations about finances without wanting to curl up into the fetal position.

Spoiler alert: You may not like your answers, and that’s OK. The only thing that matters is being honest. Remember: You can’t figure out how to make changes and move forward until you know where you’ve been and how you got there.

The next step, says Norris, is to define your personal values. Take a look at the list below, and circle the three that are most important to you. Or, feel free to add your own!

Values: Adventure, Balance, Change, Community, Education, Experience, Faith, Family, Fun, Generosity, Harmony, Inner Peace, Lifelong Learning, Mobility, Opportunity, Personal Growth, Pleasure, Presence, Prestige, Prosperity/Wealth, Reliability, Respect, Security, Simplicity, Travel, Variety, Well-being

This second exercise is similar in that it forces you each to think about your priorities, which should inform how you spend your money going forward.

Now, ask your partner to do the same (alone), and then…

2. Come Together to Talk about What You Learned

Once you’ve had your separate me-time, go over what you discovered about yourselves. (Here’s a fun bonus exercise: Try guessing each other’s values before they’re revealed to see how well you know each other.)

You may find that you’re very much in sync in terms of what you want out of life, or you could learn that you’re total opposites. Whatever the case may be, you can still be compatible, according to Norris. “Most of the time, couples can agree on at least one value or aspect of their life that’s important,” she says. “Talk about why those values matter to you and share stories with your partner.”

One of the benefits of doing this is that it gives you a frame of reference and helps you understand where the other person is coming from. For example, you might be more likely to agree to an expensive home alarm system if you find out that your partner’s family home was burglarized.

Or maybe your partner will stop asking why you splurge on a pricey gym membership when you tell him about how you’ve struggled with your weight for years. Admitting these things involves making yourself vulnerable, which isn’t easy, but it’s bound to lower the friction in your relationship—both financial and otherwise.

3. Look at Your Net worth and Cash Flow

After you’ve done the hard work of opening yourselves up to each other, get down to the nitty-gritty numbers. Schedule a financial date one evening (feel free to include wine), sit down at a table with your laptops, log into all your investment and cash management accounts, and get cracking.

If you don’t have a joint account yet, consider SoFi Money®. Once you open up a SoFi Money account, it’s easy for you and your +1 to merge your finances with a joint account.

First, Norris advises calculating your net worth and showing it to your partner. Your net worth is everything you own (your assets) minus everything you owe (your debts). Then ask your partner to do the same, and write these figures down in a shared Google document with the date.

This process forces you to talk about things that might be a little embarrassing. For instance, if your partner has $30,000 of student loan or credit card debt, you don’t necessarily have to help pay it off, but you do need to know about it, because that may affect how soon you’ll be able to reach certain financial goals.

Next, analyze your cash flow from the last month by focusing on how much money you earned (your income), how much money you spent, what you spent it on, how much you saved, and what you’re saving it for. A website like Mint.com can put all of your financial information in one place and do the math for you for free.

Yes, this means revealing your salary, as well as any habits that you may have been trying to hide, which can be tough. But the more honest you can be, the better. “People have a tendency to overstate what they make and understate their debt. I’m not sure that there’s malice involved—it’s more tied to insecurity and worrying that you won’t measure up in your partner’s eyes,” says Norris.

That’s why it’s so important to be intentional and look at the actual figures together. Making yourself have “the talk” will keep you one step ahead and give you a more realistic sense of what you’re doing well and what you can do better.

4. Figure out How Your Resources Will Be Spent

The final step involves making joint decisions based on the knowledge and insights that you’ve just gained.

Discuss how you have been paying for “couples” stuff in the past and how you’d like to pay for it going forward. These types of expenses might include dinners at restaurants, concerts, or weekend getaways. If you’re already living together, it could include bigger-ticket items like rent and utility bills. And if you’re engaged, it may include wedding and honeymoon costs.

Do you split everything exactly down the middle? Or does the person with the higher net worth pay a larger percentage? Or is it less precise: One person handles rent and the other handles everything else? It doesn’t matter what you decide—only that you come to an agreement that feels fair to both sides so there’s clarity and no resentment, says Norris.

Keep in mind that the solution that you choose doesn’t have to be permanent. You can experiment from month to month to see which strategy works best, and your financial circumstances may change over time. One of you might lose a job, get a promotion, or receive a large sum of money through a bonus or inheritance, which could prompt an adjustment.

If you’re feeling overwhelmed or confused, or if you find you’re butting heads and could use some gentle conflict resolution from a neutral third party, arranging a joint meeting with a financial advisor can help you come up with a monetary game plan that’ll help you work toward your goals and feel less stressed.

SoFi Invest® is all about empowering you and your financial future, and we’re here to help. Schedule a complimentary personal consultation with one of our licensed financial advisors who can help you plot your path forward.


SoFi Wealth, LLC does not render tax or legal advice. Individual circumstances are unique and we recommend that you consult with a qualified tax advisor for your specific needs.
The SoFi Wealth platform is operated and maintained by SoFi Wealth LLC, an SEC Registered Investment Advisor. Brokerage services are provided to clients of SoFi Wealth LLC by SoFi Securities LLC, an affiliated broker-dealer registered with the Securities and Exchange Commission and a member of FINRA / SIPC .
Investments are not FDIC Insured, have No Guarantee and May Lose Value. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Clearing and custody of all securities are provided by APEX Clearing Corporation.
SoFi can’t guarantee future financial performance.
This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.
Advisory services offered through SoFi Wealth, LLC, a registered investment advisor.
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 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.
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How to Make Talking About Finances Fun, Not a Fight

Do you find yourself bickering with your babe about budgets or credit card points? Rest assured: You’re not the only ones mad over money.

Almost one-third of couples—31%—fight about finances at least once a month, according to an Ameriprise Financial study . Some of the most common clashes are over major purchases, decisions about finances and children, a partner’s spending habits, and investment choices.

Sound familiar? While dealing with money isn’t always easy, it doesn’t have to drive a wedge in your relationship. These strategies will ensure your financial discussions are productive and (gasp!) maybe even something to look forward to.

Schedule Timed, Regular Meetings

Set aside time in your calendar to have a once-a-month conversation about all things money, advises SoFi Certified Financial Planner Alison Norris. That’s a good amount of time to judge progress because you’ll have paid monthly bills and have gotten a couple of paychecks since your last sit-down.

At the meetings, plan to review your net worth (everything you own minus everything you owe) and cash flow (what money is coming in, being spent, and being saved), and track headway toward any joint financial goals, like buying a house, saving for daycare or a nanny, or creating a will.

If you’re already dreading these sessions, keep in mind that, done right, they can actually streamline your financial conversations and prevent them from creeping into the rest of your life. “If financial debates edge into your one-on-one time, set a timer and spend no more than 30 minutes having an honest discussion about your finances.

When the timer goes off, agree to not talk about finances until the next meeting and go back to being a regular couple, knowing that there’s a special time and place for this type of a conversation,” says Norris. “The trick is boxing it in and treating it almost like a business meeting.”

If you can’t swing monthly meetings, then shoot for quarterly, biannual, or at least annual sit-downs—anything is better than nothing.

Make It a No-judgment Zone

These types of conversations can get very personal, and it’s important to make sure that you don’t judge your partner’s choices. After all, you wouldn’t want the same done to you. “We’re human and we all have our vices,” says Norris.

When you make the other person feel guilty, they’re less likely to share anything that makes them feel even remotely uncomfortable with you again, and being open with each other is key to having financial success.

If your partner is shy or tends to get defensive, it’s a great idea to lead the way and start things off by revealing a spending habit that you’re not proud of. This might encourage your partner to reciprocate. You can even keep things light by making a joke about it. “Ready for my biggest financial faux pas? I blow $150 on a massage every month that I don’t technically need but am totally addicted to. What about you?”

Let Go of Resentment

Norris says that two of the most common sources of tension in a relationship are when one person has a lot of debt or when there’s a large disparity between incomes. If you’re madly in love and want to be with this person in the long term, these are the types of issues that you’ll need to accept and work past together.

If you feel like one person’s debt is holding you both back, remember that it doesn’t have to last forever. Schedule a meeting with a financial advisor who can help you come up with a plan to knock it out. Especially when you’re dealing with multiple types of debt that have different interest rates (like credit card debt and student loan debt), a planner can help you prioritize, budget, and sometimes even refinance to break even faster.

When it comes to an income disparity, that may or may not disappear, you can learn to change the way you think about it. “The person with the higher income or the sole breadwinner may feel that they’re more valuable or that they should have more control over the finances because they’re the only one bringing in the money, but they’re forgetting about the intangibles that the other person is contributing,” says Norris.

“With one couple I worked with, the wife was a homemaker and she wrote down the market rates for all of her services—cooking, cleaning, watching the kids—and how many hours she spent doing each task each week and then presented the exact numbers to her husband.

She said, ‘You can consider this my income, because this is what you’re saving by having me around.’ And he was surprised to see everything she did listed out like that and what it was worth, numerically speaking. It was a reminder of how much they’re both bringing into the relationship.”

Reward Yourselves

Do whatever you can that will entice you to go through with each financial meeting. Maybe that means making homemade mimosas or bringing home a box of doughnuts before you begin talking, taking your laptops to your favorite coffee shop, or going to a movie after. (You could even create a competition to see who can come up with the silliest, funniest name to call the meeting on your shared Google calendar.)

Another idea is to reward yourselves as a couple after you hit a predetermined financial goal or milestone. “I worked with a couple that would never go out to eat until they increased their emergency fund by $500 each month. Every time they did, they’d treat themselves to whatever type of cuisine they were in the mood for,” says Norris.

Of course, you don’t want to break the bank with a lavish reward, especially if you’re trying to save more, but even a free indulgence—like a walk around your favorite lake after the discussion—can be effective. Just make it something that you both enjoy (bonus points if it’s something that you don’t do all the time so it feels extra special). That way, you’ll look forward to it.

Need some extra help talking finances—or just want an unbiased third party to weigh in? SoFi can help. Set up a complimentary appointment with one of our licensed financial advisors, who can help you and your partner plot your path forward.


SoFi Wealth, LLC does not render tax or legal advice. Individual circumstances are unique and we recommend that you consult with a qualified tax advisor for your specific needs.
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