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Having a roommate can be great; you have companionship and someone to split the bills with. But that sharing of expenses can sometimes get challenging and tense even. Roomies can wind up arguing over who is using up all the toilet paper or sending the electricity bill through the roof.

To help keep the peace and control costs, there are smart tactics you can use. Try some or all of these tips to keep your household as fun and argument-free as ever.

Creating Clear Guidelines on Which Bills to Split

One of the easiest ways to ensure everyone feels satisfied with how the household bills are handled is to be direct and upfront with financial expectations. And this means being straightforward about what those expectations are before anyone moves in.

When negotiating moving into a new home, consider asking how bills are handled now and how it will change when you or someone else moves in. Additional questions to wrangle can include:

•   Whose name is currently on the utilities?

•   Will I be expected to put my name on any utilities?

•   When is money collected to split the bills?

•   Are the bills divided equally, or by room size?

These can be helpful, because everyone can understand what’s expected. It also sets ground rules moving forward.

Deciding How Everyone Wants to Split Bills

As for the best way to split bills, that may depend on the household situation. For example, if the home has two evenly-sized rooms and a shared bathroom, kitchen, and living area, it may be easiest to simply split the bills down the middle as everyone has an equal space. But, if one room is exponentially larger than the other and has its own en suite bath, the bills could be split proportionally to reflect the extra space for one roommate versus the other.

It is a good idea to tackle the grocery issue head on. For instance, address such questions as:

•   Is the house going to split groceries?

•   Is everyone going to enjoy one shared meal together at night?

•   Are the roommates going to split common goods like cleaner and toilet paper?

•   Or is each person going to fend for themselves?

Any way you choose to go about it is fine, as long as it’s all out in the open — before someone accidentally finishes someone else’s ice cream without asking.

Picking Who Is Responsible for Which Bill

Once it’s decided how a bill will be divided, one other idea may be assigning each roommate ownership of bills for things like the electricity, heating, gas, water, trash, cable and internet, and more, depending on the rental agreement. Perhaps you’re able to get a better deal based on a roommate’s existing account with a certain biller. That may be one way to decide and to lower expenses.

Or, another common method is to have the roommates divide up the bills evenly in order to distribute the responsibility. Doing things this way may also ensure everyone pays bills on time. Being late with bills can lead to fellow roommates being surprised with a service being interrupted and their credit being dinged if they are listed on the account that’s unpaid.

You might also look into changing the due date on bills; this can sometimes be accomplished and can ease cash flow.

Creating a Roommate Bills Contract

Once the lease has been negotiated, the bills have all been cleared up, and everyone is in agreement, you may be considering some sort of “roommate contract” spelling out exactly what was decided upon, which everyone reads and signs.

That way, no one can ever claim they were confused about the household budget and how bills are split, when money is owed, and who is responsible for what. It is recommended to share the fully executed contract electronically and then a printed out copy for all to review and retain.

Recommended: How to Rent an Apartment With No Credit

Sharing a Spreadsheet of Expenses

Settling into a new home and arrangement might be a good time to finish up the admin work by creating and sharing a monthly spreadsheet of expenses.

This spreadsheet could be kept in a common gathering area for easy reference and shared online as well. In the spreadsheet, each roommate can keep track of the expenses they are responsible for, as well as who has paid and what is outstanding.

This spreadsheet may also come in handy for adding in shared groceries and necessities like milk, eggs, toilet paper, and paper towels. That way, everyone can keep track of who bought the last batch to avoid an argument later. You’ll also see how much your household is spending on groceries per month and other expenses.

Recommended: Different Types of Budgeting Techniques

Sitting Down Together at the End of Each Month

It is said that one of the quickest ways to ruin a roommate relationship is for one person to get passive-aggressive about the bills. That’s why it’s recommended to avoid leaving little notes around the house about who owes what (or who hasn’t done the dishes in far too long) and instead face those issues head on.

At a good time for everyone, perhaps toward the end of each month, schedule a 10-minute roommate check-in. In this meeting, everyone can share household happenings, announcements, and any updates on household bills.

By sitting down in person, no one can avoid possible uncomfortable questions about money. You all can figure out potential sticky situations together.

As a bonus, roommates can also use this time to go over any other to-dos around the house. You might also discuss ways to economize, such as saving money on water bills.

Keeping Some Personal Purchases Separate

Though some may be tempted to fully invest in a roommate relationship by sharing the financial burden on just about everything, there are some items that are better left in a budget’s personal spending category.

That includes the purchase of any big-ticket items you’d like to take with you if you ever move out. These might include such items as a TV, couch, tables, glasses, or an expensive Crockpot purchased on a whim.

It may also be helpful to distinguish an area in cabinets and the fridge for each individual roommate to place specialty or expensive food items they do not want to share.

If one roommate has a pet they adopted on their own, it is a good idea to keep those bills completely separate.

Recommended: How to Save Money on Pets

Another common recommendation is for everyone to invest in their own renters insurance. This will protect all their items in case of a fire, flood, burglary, or more. This type of insurance could save everyone a lot of money and heartache if disaster strikes.

Using Modern Technology to Split Bills with Roommates

Fortunately, splitting bills with roommates is easier than ever, thanks to the advent of P2P transfers. You might all pay bills via PayPal, Venmo, or Zelle, and then one person transfers the appropriate amount to the payee. Your bank may also have tools you can use to quickly send funds to others.

It can be fast and free to transfer money this way and can make the bill-paying routine quick and simple.

The Takeaway

If you need flexible banking (whether or not you have roommates), consider what SoFi offers. With an online checking and savings account, you can not only access your money at any time from anywhere but also transfer money to pay bills directly online. Plus, you can complete peer-to-peer transfers between SoFi Checking and Savings members and non-members.

More perks: No account fees and a competitive annual percentage yield (APY) to help your money grow faster.

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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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.

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When applying for a form of credit such as a personal loan or credit card, applicants likely have their credit score top of mind. As they review their different credit scores, they may wonder: What’s the difference between a FICO score and a credit score?

Put simply, a FICO score is simply a type of credit score that uses the FICO credit scoring model. A credit score is essentially a generic term, whereas a FICO score is a credit score created by a specific brand.

What Is a FICO Score?

A FICO Score is a type of credit score that’s created by the Fair Isaac Corporation (FICO). It’s a very popular form of credit score, and many companies rely on it when determining the creditworthiness of applicants.

Not all lenders use FICO score models though, as some use their own credit scoring models or rely on a score made by one of FICO’s competitors.

Is a FICO Score the Same as a Credit Score?

The main difference between FICO scores and credit scores is that FICO credit scores are only offered by the brand FICO, as this particular score relies on FICO’s specific credit scoring model. A credit score, on the other hand, is a generic term referring to scores created by any model, as all credit scores are backed by a credit scoring model.

Essentially, what many credit scores do is predict how likely someone is to make their debt payments on time. FICO scores specifically predict how likely it is that someone will fall 90 days behind on a payment within the next 24 months. This credit limit is determined based on a complex algorithm that uses information from credit reports made for each consumer by the three major credit bureaus (Equifax, Experian, and TransUnion). FICO occasionally updates how it determines its scores and releases new versions of the FICO Score.

The higher someone’s credit score is — no matter where the credit score comes from — the higher credit limit and the less likely they are to miss a debt payment. The more reliable a borrower appears to be based on their credit score, the better terms a lender is likely to offer them. A lower interest rate, for instance, can lead to savings, as demonstrated by this personal loan calculator.

FICO Score vs Credit Score: Which Is Better?

A FICO score is not inherently better or worse than a credit score. The term credit score applies to the general concept of the score that comes from a credit scoring model. The FICO Score is simply a brand-name version of a credit score.

All lenders get to decide if they want to use their own internal credit scoring models or one from a brand like VantageScore or a FICO credit score. However, none of the different types of credit scores is necessarily better than the other.

FICO vs VantageScore

As briefly noted before, there are other brands that offer other credit scores to lenders. VantageScore is one of FICO’s main competitors. Like a FICO credit score, VantageScore relies on information from the three major credit bureaus’ credit reports to determine scores.

Both FICO Score and VantageScore give higher credit scores to more creditworthy individuals and their credit rating scales range from 300 to 850. Where these two scoring models differ is in how they determine their scores.

With different FICO scores, there are five categories of information that make up the overall credit score, and each category is given a different weight:

•   Payment history: 35%

•   Credit utilization rate: 30%

•   Length of credit history: 15%

•   Mix of your credit accounts: 10%

•   New credit accounts: 10%

VantageScore, on the other hand, uses six different categories, but doesn’t assign specific weights using a percentage. Instead, VantageScore places a different level of influence on each category:

•   Payment history: Extremely influential

•   Credit utilization: Highly influential

•   Length of credit history and mix of credit accounts: Highly influential

•   Amounts owed: Moderately influential

•   Recent credit behavior: Less influential

•   Available credit: Less influential

Why Is a FICO Score Important and What Is It Used for?

FICO credit scores play an important role when it comes to borrowing money. This is because an applicant’s FICO score indicates how likely they are to make their debt payments on time. The more likely someone is to repay their loan, the less of a risk they pose to lenders.

Because of this, a high credit score is helpful if you want to get approved for a personal loan or a credit card, among other types of loans. Lenders use FICO scores and other types of credit scores to determine how much money to lend someone, how long they have to pay their loan back, and how high their interest rate should be.

What Affects Your FICO Score?

A handful of different factors affect a consumer’s FICO score. The most important among those is payment history. Someone who consistently makes on-time payments will have a higher score, which is why prompt payment is critical to accessing top credit cards and leveraging common uses for personal loans down the road.

The next most important factor affecting a FICO score is how much of available credit someone is using. Using up a lot of one’s available credit indicates to top lenders that a borrower is overextended and may not be able to afford new loan payments.

Someone’s length of credit history also plays a role, and having a longer credit history can help give someone’s FICO score a boost. Having a good credit mix made up of different types of credit — like installment loans, retail accounts, auto loans, and mortgage loans — is also taken into consideration, as is how recently someone opened new credit.

How Do I Get a FICO Score?

Getting a FICO score is easy. Consumers typically can access their FICO score through lenders, credit card issuers, credit bureaus, and select financial institutions.

Because the FICO Score is such a popular credit report, some consumers may want to know what their FICO Score is before they apply for a new form of credit, such as a type of personal loan. That way, they can get an idea of whether they may qualify and under what terms.

The Takeaway

The FICO score is simply a type of credit score that utilizes a credit scoring model from the brand FICO. Many lenders choose to use the FICO score when deciding which applicants to lend money to and what terms to offer them — including how much interest to charge them. That being said, some lenders choose to use use industry specific scores, competitor models, or their own internal models to determine who they want to lend money to.

Before applying for a personal loan, it’s important to make sure you know where your credit score stands. For those who aren’t sure what type of interest rates they may qualify for, SoFi is here to help. With SoFi, you can find what interest rates you qualify for within 60 seconds, and with no commitment required. From there, you can complete your application and receive funds as soon as the same day.

Photo credit: iStock/Lyndon Stratford

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.

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

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Playing the stock market is a common but misleading phrase: The stock market is not a game and it does come with investment risks.

To some degree, those risks can be mitigated by using certain strategies, including using a more long-term, buy-and-hold strategy and embracing diversification, among other things.

And while investing is a serious business, playing the stock market can have an element of fun to it in the sense that investors who do their research — and tune into the news and business cycles — can take advantage of trends that might enable them to earn better returns on investment.

Playing the Stock Market: What Does It Mean?

Despite the phrase “playing” the stock market, it’s important to make the distinction between investing and gambling up front.

While both gambling and investing involve risk, investing actively attempts to manage various forms of risk, rather than relying on blind luck. Second, smart investing involves a strategy, something that a gambler pulling the lever on a slot machine can’t employ.

But because all investing involves an element of risk — there is no 100% safe investment — in a way each investment can feel like a gamble. However, it’s important to keep in mind that the market is not a casino, and just because there’s risk involved doesn’t mean that “playing the market” is the same as playing roulette.

Playing the Market: Risks and Rewards

Learning how to play the stock market — in other words, become a good investor — takes time and patience. It’s good to know the basics of the risks and rewards.

Potential Risks

In a broad sense, the most obvious risk of playing the market is that an investor will lose their investment. But on a more granular level, investors face a number of different types of risks, especially when it comes to stocks. These include market risk, liquidity risk, and business risks, which can manifest in a variety of ways in the real world.

A disappointing earnings report can tank a stock’s value, for instance. Or a national emergency, like a viral pandemic, can affect the market at large, causing an investor’s portfolio to deflate. Investors are also at the mercy of inflation — and stagflation, too.

For some investors, there’s also the risk of playing a bit too safe — that is, they’re not taking enough risk with their investing decisions, and as such, miss out on potential gains.

Potential Rewards

Risks reap rewards, as the old trope goes. And generally speaking, the more risk one assumes, the bigger the potential for rewards — though there is no guarantee because risk always entails the possibility of losses as well. Investors may earn returns in a couple of different ways:

•   By seeing the value of their investment increase. The value of individual stocks rise and fall depending on a multitude of factors, but the market overall tends to rise over time, and has fully recovered from every single downturn it’s ever experienced.

•   By earning dividend income. Dividends from stocks can also be reinvested, in order to further grow your investments.

•   By leaving their money in the market. It’s worth mentioning that the longer an investor keeps their money in the market, the bigger the potential rewards of investing are.

How to Play the Stock Market Wisely

Nobody wants to start investing only to lose money or see their portfolio’s value fall right off the bat. Here are a few tips regarding how to play the stock market, that can help reduce risk:

Invest for the Long-term

The market tends to go up with time, and has recovered from every previous dip and drop. For investors, that means keeping their money in the market for the long haul can be one strategy to mitigate the risks of short-term market drops.

As another common saying has it: “Time in the market beats timing the market.”

Consider: If an investor buys stocks today, and the market falls tomorrow, they risk losing a portion of their investment by selling it at the decreased price. But if the investor commits to a buy-and-hold strategy — they don’t sell the investment in the short-term, and instead wait for its value to recover — they effectively mitigate the risks of short-term market dips.

That said, you can’t rule out the risk of a downturn from which the markets never recover. It’s never happened, but no one has a crystal ball.

Do Your Research

It’s always smart for an investor to do their homework and evaluate a stock before they buy. While a gambler can’t use any data or analysis to predict what a slot machine is going to do on the next pull of the lever, investors can look at a company’s performance and reports to try and get a sense of how strong (or weak) a potential investment could be.

Understanding stock performance can be an intensive process. Some investors can find themselves elbow-deep in technical analysis, poring over charts and graphs to predict a stock’s next moves. But many investors are looking to merely do their due diligence by trying to make sure that a company is profitable, has a plan to remain profitable, and that its shares could increase in value over time.

Diversify

Another risk-mitigation strategy that investors can employ is diversification. Diversification basically means that an investor isn’t putting all of their eggs into one basket.

For example, they might not want their portfolio to comprise only two airline stocks, because if something were to happen that stalls air travel around the world, their portfolio would likely be heavily affected. But if they instead invested in five different stocks across a number of different industries, their portfolio might still take a hit if air travel plummets, but not nearly as severely as if its holdings were concentrated in the travel sector.

Use Dollar-cost Averaging

Dollar-cost averaging can also be a useful strategy. Essentially, it means making a series of small investments over time, rather than one lump-sum investment. Since an investor is now buying at a number of different price points (some may be high, some low), the average purchase price smooths out potential risks from price swings.

Conversely, an investor that buys at a single price-point will have their performance tied to that single price.

The Takeaway

While playing the market may be thrilling — and potentially lucrative — it is risky. But investors who have done their homework and who are entering the market with a sound strategy may be able mitigate those risks to a degree.

By researching stocks ahead of time, and employing risk-reducing strategies like dollar-cost averaging and diversification when building a portfolio, an investor is more likely to be effective at mitigating risk.

Ready to invest in your goals? It’s easy to get started when you open an Active Invest account with SoFi invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here). Members can access complimentary financial advice from a professional.

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Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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.

Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

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