SoFi

Living in America? Consider how your average monthly expenses stand in comparison to your country-peeps:

Every year , the average American spends:

•  $18,886 on housing (including property taxes, if applicable)

•  $9,049 on transportation (including gas)

•  $7,203 on food (groceries and eating out)

•  $2,913 on entertainment

All that expense seems to be pretty standard, even before you start chasing the classic American Dream. For that, it’s easy to look to your peers to see how it’s done (even if they’re doing it wrong).

An old-school term for this is “keeping up with the Joneses,” trying to acquire as many things your neighbors next door. Even for the most competitive, that race gets tiresome very fast. Once you realize that the best person to compete against is not others but yourself, you can get more focused on your own financial goals.

Otherwise, comparing yourself with others will leave you in a constant state of distraction. Until then, you may be burning many wasted calories that could be put to better use focused on your own average monthly expenses, spending, budget and goals.

Let’s face it, though: some of this is a result of social media. Part of the need for keeping up with your friends comes from Facebook and Insta envy. Seeing your friends post photos and videos of their latest acquisitions (cars, houses, tech equipment) can light that competitive fire in you (or maybe it’s just plain envy). Sometimes, a message like that from an online friend can be even more powerful and influential than an advertisement from the actual brand.

How Do You Compare?

Data regarding average monthly expenses among peer groups is shown on a website called Status Money . It matches individuals to a peer group based on income, geography and age to compare how other people are doing in relation to your financial situation.

It also lets you compare your spending habits with like-minded people among your peer group. Average monthly expenses include transportation costs, shopping, eating out and other obligations.

How it came about: Status Money cofounder Majid Maksad was formerly a data analyst for Citi; he found
that , even during the Great Recession, Americans were not becoming as frugal and financially careful as you might expect.

In fact, what he found was the complete opposite: continued spending, not by personal choice but mostly driven by writing off bad debts through foreclosures and personal bankruptcies.

What it boils down to: think differently. Train yourself to be more aware.

“It wasn’t a change in behavior that was occurring,” Maksad told Forbes about the stats he discovered. “And that raised the question: ‘How do you get people to change behavior?’”

Perhaps the answer lies in knowing — not assuming — exactly what your peers average monthly expenses are. The results seem to support this. A study on the early users of Status Money found that comparing yourself to those in your peer group (a minimum of 5,000 people) could strongly influence your spending habits (this can also be called FOMO spending). Between September 2017 and April 2018, spending among those surveyed by Status Money declined by about $600 a month.

“People need to know what others are doing with money,” Maksad told CNN Money, “but in a completely secure and anonymous way.”

Comparing Finances To Your Peers

When comparing finances online, completely secure and anonymous is how most people want to roll, particularly Millennials. If you are a part of this largest living generation, here are some broad strokes to give you a general idea of where you stand when compared to your peeps. It’s all according to a survey from the American Institute of Certified Public Accountants:

•  Over three-quarters of Millennials want to have the same clothes, cars and tech gadgets as their friends.

•  Around half of have used a credit card to pay for daily necessities.

•  Over 25 percent of them had late payments or are dealing with bill collectors.

•  Seven out of 10 of those surveyed define financial stability as being able to pay off of their bills each month.

•  Gender difference are also a thing. The study reveals that men are more inclined to keep up with their friends when it comes to material goods. Women, however, tend to be more frugal and consider saving money important.

According to the apartment rental site RentCafe, younger adults may have spent as much as $93,000 by age 30 on rent. During their first decade in the workforce, rent can take up about 45 percent of their income, which can leave next to nothing for savings, investments, and paying off debt. Compare that to GenX adults, who spent only 41 percent of their income on rent per year by age 30 (adjusted for inflation); Baby Boomers spent only 36 percent of their income on rent back in the day.

Are you paying more than 30 percent of your income on housing? The U.S. Department of Housing and Urban Development considers you “cost-burdened.” If you’re spending 50 percent or more on housing, you maybe put in to the category of “severely cost burdened.”

Tips on How To Combat Peer Pressure Spending

Here are a few ways to put blinders on when that peer pressure spending urge comes on:

Get Real

Make a deal with yourself to be honest about your overspending. Don’t try to fool yourself or rationalize away unnecessary purchases. Ask yourself — constantly — “Do I really need this, or am I just trying to keep up with my friends?”

Get Stubborn

Once you have a budget in place, be rigid about sticking to it. If you can’t afford something, don’t let the devil on your shoulder sweet talk the angel on your other shoulder. Step in and take charge. With time, the compulsion to give into your spending impulses will start to weaken and listen to you.

Treat Yourself

If you’re doing a good job of sticking to your budget and not overspending, allow yourself a periodic reward that you promise yourself in advance (once a month, every six weeks, etc.). Go have a meal with friends or buy that pair of shoes you really like. Be sure not to treat yourself so well that you overspend and wind up taking giant steps backward.

Get Help With SoFi Relay

Often, it helps when you can keep tabs on your spending and have access to someone to talk through your expenses without fear or embarrassment. With SoFi Relay you’ll have access to both of these, and more, at no cost!

SoFi Relay gives you insight into your cash flow and spending habits so you can see the full picture of your finances. Additionally, you can connect all of your accounts on one dashboard to get a bird’s-eye view of your balances on the go.

What’s more? You can talk with a financial planner about your spending habits & take a serious look at your expenses to create an action plan to help achieve your financial goals.

Keep track of your spending with SoFi Relay!

---

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.
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. Advisory services offered through `SoFi Wealth, LLC. SoFi Securities, LLC, member
FINRA / SIPC .
SOAD18100

Read more

After falling to rock bottom levels following the Great Recession of 2008, interest rates are on the rise again.The Federal Reserve raised benchmark rates in December for the fourth time in 2018, bringing them up to a target range of 2.25% to 2.5%. Observers expect those hikes to continue into the following year.

The Fed usually only raises rates by a small amount each time, so there’s little cause to worry about something overly dramatic happening. But a steady climb does affect the economy, including your debt and investments. When interest rates go up, borrowing gets more expensive.

So if you’re planning on taking out a new home mortgage loan or car loan, or refinancing an old one, you may want to keep in mind that rates are likely lower now than they will be in the near future.

And if you have a variable rate loan, you might see your interest rate start to climb. Similarly, credit card interest rates are also likely to go up, so it may make sense to to pay off any balances in full, if possible.

But what happens to your investments when interest rates rise? The answer, though complicated, is worth digging into. Knowing what to expect can help you figure out what you should be investing in and when. We break down how climbing interest rates can often affect investments such as money market accounts, stocks, bonds and commodities.

How Rising Interest Rates Impact Money Market Accounts and CDs

When benchmark interest rates climb, banks and other financial services providers tend to increase the rates they offer on high-interest savings accounts, money market accounts, and certificates of deposit (CDs). Although these rates are still unlikely to match what you’d get from investing in the stock market long term, they can make these financial products a more attractive place to park your money.

If you’re already in a high-interest non investment account, many banks will keep raising your rate without you having to do anything. If you’re not, this could be a good time to start looking around for an institution that’ll put more money in your pocket.

If you already have money in a CD, rising rates won’t do much for you until the term ends, since you’re probably locked into what you signed up for.

How Do Interest Rates Affect Bonds?

When you purchase a bond, you loan money to a company or the government for a set amount of time and receive a fixed return in exchange. When interest rates rise, bond yields—or the return you make on investing in a bond—rise as well.

With interest rates low in recent years, bond yields have been low as well, making them less appealing as an investment. As rates increase, a higher return can make bonds seem more attractive. On the other hand, when demand for bonds increases, the price of bonds can go up, too.

What to Know About the Interest Rate and Stock Market

Unlike some investments, interest rates don’t have a single, clear impact on stock performance. However, rising interest rates have often had a negative impact on the stock market historically. Since borrowing becomes more expensive, consumers may put off taking out mortgages, buying cars or purchasing major household appliances.

Similarly, because they are paying higher interest rates on existing bills, consumers have less money left over to spend on other goods and services. Reduced spending affects companies’ revenues and profits, which can have a ripple effect throughout the stock market.

Like individuals, companies too find it more expensive to borrow when interest rates rise. They may borrow less or have less money left over to invest in their business, potentially slowing growth and reducing profits, all of which can dampen stock performance. Even the psychological impact of anticipated interest rate hikes can be enough to make individuals and companies spend less, causing the market to take a hit in advance of actual increases.

When stock prices decline broadly, the primary market indexes will also go down, which can further reduce confidence in the market. The exception is banks and other companies in the financial sector, such as mortgage or insurance providers, who benefit from higher interest rates and often see a bump in stock value. That often makes those stocks more attractive during rising interest rates.

Despite these trends, there is no guarantee than any given change to interest rates will affect stocks negatively. That’s because the stock market is affected by myriad factors besides interest rates, including current events, trade policies and other economic conditions.

It’s worth remembering that selling stocks out of panic during a downturn isn’t usually a great idea. Instead, it makes sense to buy when stocks are low. Even more importantly, the best predictor of returns is the length of time that your money remains in the market, so resist the urge to pull money out.

How Do Rising Interest Rates Impact Commodities?

Interests rates usually have a more direct relationship to commodities prices than they do to the stock market. Commodities are raw materials or agricultural products, include things like steel, beef and lumber. When interest rates rise, commodities prices usually fall.

That’s because it becomes more expensive for the companies that buy commodities, such as food producers or construction firms, to stockpile them and store them for long periods. As a result, companies will buy more commodities as they need them and lower demand will fuel lower prices.

That said, don’t panic yet: There’s no guarantee if this will happen since factors like inflation also play a role.

How Investing with SoFi Invest® Can Help You Tackle Rising Interest Rates

When you open an automated account with SoFi Invest, you can invest in a bundle of Exchange-Traded Funds. Because your portfolio is diversified across thousands of assets, you have more protection against fluctuations across various types of investments due to rising interest rates then you might if you invested in just one or two stocks.

Plus, a credentialed financial advisor will rebalance your portfolio at least quarterly, so you can know your investments will stay on track with your goals and risk tolerance, even if things start to change due to climbing interest rates.

If you’re a member and have more questions about how to invest in this dynamic environment, you can access complementary financial advice as often as you like. And you can start investing with as little as $100.

Want the confidence that comes with knowing your portfolio can respond to a changing economic environment? Look into investing with SoFi today.

---

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.
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. Advisory services offered through SoFi Wealth LLC, a registered investment advisor. SoFi Securities, LLC, member FINRA / SIPC .
SOIN18122

Read more

Navigating your personal finances can be a tricky business. Sometimes, a financial mentor is just what you need to get your finances on track. A financial mentor is essentially someone who can help you plan smart strategies for how to spend, save, and invest your money.

Money can get complicated and having a trusted financial mentor can bring clarity and context to your financial decisions and make things like investing and saving a little easier to manage.

Today, anyone with a website and a little bit of knowledge can claim to be an expert, so follow these steps to be sure you find a mentor whose intention is to truly help you.

Decide What You Want in a Mentor

First, take an honest look at your situation. List out your financial strengths and weaknesses, and set some goals. If you have a pretty good grasp of your personal budget but need guidance to break into the housing market, you might want to sit down with someone in your family who owns property and knows what it’s like to be a first-time house hunter.

If, on the other hand, you’ve tried—and failed—on numerous occasions to get a savings or retirement account built up, you may be in search of a money mentor who understands the vagaries of life and everyday finances.

Professionals and budding investors may want to hire a financial advisor to help put their money to work, but may not have the money to spend on one. This is where a financial mentor comes in handy.

Solidify Your Perspective

Before you begin your search in earnest, there’s one thing you may want to do, and continue to do throughout the entire process. Write down your goals and two questions to be answered about every step of the process: Will this help me meet my goal? Will this work well for my life?

This is important to not only help you remain focused but to remember that personal finance is just that—personal—and a legit mentor should always work toward your agenda, not theirs. Make it your screensaver, set a repeating reminder, or whatever method works best so the end goal stays in sight, and in mind.

Find Potential Candidates

Money mentors can come from anywhere—even your own family. Start with your circle of people, and create a list of those who have a good grasp on their finances. Look for relatives, friends or even acquaintances who successfully run small businesses or manage their debt well.

Partnering with a mentor whom you already know can not only save you money, but it also begins with a deeper level of trust. In many cases, people may also be more comfortable opening up to someone who isn’t a stranger.

If you need to reach outside your social circle, ask around for referrals. Word of mouth and personal references are typically much more reliable than a Google search, especially if you’re a beginner.

In fact, some wealth “gurus” prey on those who are inexperienced with money by selling overpriced programs that don’t offer much value, so the more you can rely on personal reputation, the better.

That said, the internet isn’t awash with predators waiting to take advantage of you. But if you head to the web, start with professional sites like LinkedIn, proceed with caution, and make ratings and reviews your friend.

When it comes to holding businesses and individuals accountable, they’re one of the greatest benefits of social media. Look for mentors who have both a high rating and a high number of reviews that sound relatable to you and your goals. (Even a comment as simple as “He was only available during work hours,” could be a negative for someone who has a day job.)

Find ‘The One’

Once you narrow your search to a few potential mentors, make a list of questions to ask them, and to ask yourself. Here are a few to get you started:

For potential mentors:

•  How long have you been a coach?

•  What’s your business specialty?

•  What’s your greatest financial success/failure?

•  Have you ever been in my situation? What did you do about it?

•  What is your availability?

•  What’s your plan to help me reach my goals?

For yourself:

•  Can I relate to this person?

•  Do they present themselves as a financial success story?

•  Do they know how to teach?

•  Are they truly listening to me?

•  Are they trying to sell me anything?

•  What’s my gut reaction?

As you evaluate your answers, remember to keep your original goal in mind and be strict, because you aren’t looking for three or four mentors that might work out. You’re looking for the start of a beneficial relationship. Once you’ve found “the one,” make the leap and ask for guidance.

Be a Good Student

During your first few meetings, work together with your mentor to set expectations and lay the groundwork. Determine a plan, how you’ll get there, and how often you’ll communicate.

And remember that as much as you expect them to be a good coach, you should be a good student. Listen closely, take good notes, and implement your mentor’s suggestions. And, if at any point you feel like your mentor has ulterior motives or doesn’t have your best interests at heart, it’s your prerogative to back out.

Turn to Tech

If your social circle is lacking in financial gurus or you don’t have the budget to hire a pro, consider tech as your teacher. There is a wealth of resources on the internet where you can learn about money. Of course, you’ll want to proceed with caution on the internet—you can’t believe everything you read, and you might want to seek out multiple sources to verify claims.

Find a reputable source that you find interesting—there’s no shortage of financial content. From blogs to podcasts, websites, and magazines, there’s something for everyone. Building a solid educational foundation can go a long way when it comes to managing your finances.

If you’re ready to take the next step, consider opening an account that offers advising or automated investing. At SoFi, we’ve launched SoFi Invest® which offers just that. With an invest account with SoFi, you gain access to human financial advisors who will work with you to set your goals and risk tolerance.

You’ll also benefit from automated investing technology, that will automatically rebalance your portfolio to stay in line with your goals and risk tolerance. And you can begin investing with as little as $1.

Another fantastic option to kickstart your savings is with SoFi Checking and Savings®, a checking and savings account where you can save and spend all in one place. With SoFi Checking and Savings you can take advantage of the ease of online access with perks like photo deposits, online transfers, and excellent customer service just a touch away.

In addition to the convenience, one of the biggest benefits of SoFi Checking and Savings is that there are no account fees (subject to change). With SoFi, you will know that your money is going toward your financial goals instead of going to fees.

Start saving with SoFi Checking and Savings. Join today.

---

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® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 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 http://www.sofi.com/legal/banking-rate-sheet..

SOMN18120

Read more