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Poor financial health can linger like a stubborn cold that just won’t go away. Plenty of fluids and rest might get someone back in fighting shape, but there’s no single cure that’ll bring someone’s finances back to good standing. However, that doesn’t mean throwing in the towel.

Staying in good financial standing means a stronger credit score, peace of mind, and often better terms when applying for loans in the future.

Improving financial health takes time, effort, and often multiple strategies. Take a cue from these seven tips below to help kick that financial cold once and for all.

Making a Budget

For most, the idea of budgeting brings a sense of dread. Budgets conjure the image of fewer meals out, clipping coupons, and generally saying “no.” But in reality, a budget is a tool for efficiency.

It could help determine how much to spend and save in a month, and might actually create a sense of freedom. It might help eliminate that stomach ache that arrives each month when the credit card bill comes in the mail. One way to start budgeting is to collect the previous month’s spending in a single place. Think of it like the Marie Kondo method.

Pull everything out all at once into one big pile to get an idea of each month’s spending patterns and income—taking note of multiple bills for rarely used streaming services might “spark” a budgeter to unsubscribe and save a few bucks a month.

This spending information could be found in bank statements or credit card bills or might need to be logged manually depending on how much cash a person uses. Budgeting might include the following financial information, but this is in no way an exhaustive list:

•   Credit card statements and debt
•   Education loans
•   Car loans and additional expenses, including fuel, insurance, etc.
•   Health care insurance premiums
•   Rent/mortgage, including home or renter’s insurance
•   Utilities
•   Monthly food expenses
•   Child care, child support, or related family obligations
•   Additional transportation (excluding a car)
•   Savings/investments, such as a 401(k), an IRA, or automatic savings deductions
•   Average monthly income from pay stubs or bank account statements

With this information, a budgeter can get a general sense of net expenses month over month. Do months generally net out positive or negative? Is there money left over or is it a close call?

This might be the toughest part of the budgeting process, and once it’s in the rearview, creating a simple budget moving forward could make all the difference. Every budget will look different for every person, but one guideline to keep in mind is the popular 50/30/20 budget.

This budget dictates that:

•   50% of post-tax income goes to essential spending. This includes finances that are required, such as rent/mortgage, groceries, health insurance, and utilities.
•   30% of post-tax income goes to discretionary spending. This is spending that a person could cut if they were in a pinch. It includes things like dining out, Netflix memberships, and fitness classes.
•   20% of post-tax income is dedicated to savings. This money is put toward future spending, whether that be retirement contributions, emergency savings, or larger loan payments.

Sticking close to the 50/30/20 budget at the outset could help illuminate blind spots in spending. It might reveal that a budgeter is spending too much on dining out, going far beyond the 30% discretionary spending.

Or it may show that essential spending, like astronomical monthly rent, doesn’t leave much wiggle room for the 20% savings. Expenses and spending habits might wax and wane with the seasons, but that’s no excuse to keep a person from establishing a budget.

It’s a good idea to start with a budget that’s simple to maintain and easy to stick with but still helps manage money and improve financial health.

Paying Off Debt

The amount of debt a person carries can have a pretty big impact on their overall financial health. Thirty percent of a person’s credit score consists of how much they owe in relation to their credit limits.

To stay in good financial health, it’s a good rule of thumb to use no more than 30% of the credit available.
If a borrower is trending above that 30% limit, they might make paying down debt a top priority to improve financial standing.

There’s no one right way to pay down money owed, but these are some popular strategies that could help eliminate debt faster:

Snowball Method

The snowball method starts small and grows as it picks up momentum. Debtors pay the minimum on all loans, regardless of interest rate and amount. From there, they’ll put any surplus cash in their budget toward paying off their smallest debt.

Once the smallest debt it paid, they’ll roll the amount of that monthly payment into the next smallest balance. This method continues, growing monthly payments toward larger loans as the smallest are eliminated. This method makes for wins early on, knocking out the little guys first, and growing toward those large or intimidating balances.

Avalanche Method

The avalanche method is nearly the reverse of snowball, focusing on interest rates of loans instead of balances. Budgeters ignore the total amount of each loan and prioritize repayment of the highest interest rate loan first.
Like the snowball method, they’ll pay the minimum on each loan every month, but they’ll put the surplus of their budget towards the high-interest bill.

Once the highest interest rate loan is paid down, budgeters will focus on the next highest interest rate, and so on. This method tackles the intimidating high-interest rates, then downshifts to the smaller loans. Like an avalanche, the method starts big, then peters off as it becomes easier to pay off low-interest loans.

Fireball Method

When someone can’t choose between the snowball and avalanche method, the debt fireball method may be the answer.
It’s a hybrid between the two strategies above, asking budgeters to sort between good and bad debt and focus on repaying bad debt first. Bad debt, like credit card debt, is debt that generally has a high-interest rate (above 7%).

Good debt, on the other hand, are things like a mortgage or student loans, they generally have lower interest rates and are good investments to make.

The general idea: Rank the bad debts from small to large based on balance. Make the minimum monthly payments on each debt, but use extra cash to pay off the smallest “bad” debts first.

Once the smallest is knocked out, pay attention to the next smallest, and so on until all bad debt is burned up. Then, budgeters need only to pay off “good” debts normally.

Without a plan to properly tackle it, debt can be crushing. However, once a person decides to torch, roll, or overwhelm their loans with a payment method, they’re in control.

Curbing Spending Habits

When spending money is as simple as swiping a card or tapping a phone, it’s no wonder impulse spending is out of control. While a couple of lattes or convenience store trips don’t feel expensive at the point of sale, they add up over time.

Prime orders make it easy to drop $20 here and $40 there, without leaving the comfort of home.
One way to curb these frivolous spending habits is instituting a “hold” period on all purchases.

Instead of hitting “buy now,” shoppers could consider waiting 24 hours, or even 72, before completing the purchase. Creating a waiting period eliminates that instant gratification dopamine rush and allows for logic and reasoning to take hold.

After the allotted waiting period, shoppers can return to the online cart or boutique to reconsider the purchase. They might just realize they don’t need it.

Automating Savings Transfers

Tackling financial health can be exhausting, and it wouldn’t be surprising if some habits fell through the cracks in the process. There’s a lot to keep track of, and that’s where financial automation can lend a hand.

Setting up an automatic transfer each month from checking to savings account means even the busiest budgeter won’t have to remember to do it manually.

Transferring an amount, even if it’s small, into saving each month might mean there’s less of a temptation to spend. Remember, saving a little is better than saving nothing at all. Making it automatic is one less thing for a busy person to remember.

Paying Bills on Time

Thirty-five percent of a credit score is based on payment history—it’s weighted more than any other factor. When it comes to improving financial health, paying bills on time can have a pretty significant impact.

One way budgeters can ensure timely payment is automating bill payment through a checking account or adding bill due dates to personal calendars. Even if a person can’t afford to pay a bill in full, they should pay the minimum amount due to avoid a penalty.

Starting an Emergency Fund

Only 40% of Americans say they’d be able to cover an unexpected expense totaling $1,000 or more. Without an emergency fund, people are forced to dip into their retirement savings or rack up credit card debt when unexpected finances arise.

A savings account could be set up using an automated savings transfer with a goal of saving $1,000 to start. This probably won’t happen overnight, and that’s okay. Even the smallest savings can build up over time.

Once a budgeter has $1,000 socked away in a savings account, they could start thinking big. With an eye on monthly expenses, they could aim to accrue three to six months’ worth of expenses in a savings account. It’s important these savings stay liquid for easy access in the event of an emergency.

Building up a robust emergency nest egg can create a sense of well-being when it comes to financial health. Budgeters can rest easy knowing they have savings set aside for whatever life throws their way.

Staying up to Date on Credit Reports

Checking a credit score is equivalent to an annual check-up at the doctor’s office. While negative factors such as late payments and collections can stick around on a credit report for up to seven years , they’ll impact a score less and less as time passes.

Pros recommended checking on credit scores at least once a year or more to stay on top of financial health. Federal law allows for one free credit report every 12 months, but budgeters looking to go above and beyond can also try major credit bureaus Experian , Equifax , and TransUnion for free annual credit reports, but not scores. You could also use a credit score monitoring tool like SoFi Relay.

Checking in on credit score regularly will give budgeters not only a sense of how their efforts to improve financial well-being are going, but they’ll also make it easier to find and dispute errors if they arise.
Think of regular check-ins on credit like progress reports on a person’s financial health.

Tracking Financial Wellness with SoFi Money®

Tackling all the steps to improve your financial well-being can be overwhelming, but with a SoFi Money® cash management account, you can track all your spending and saving with a single dashboard. You could set up automatic transfers to savings accounts for different goals, all while earning competitive interest.

With SoFi Money®, it’s easy to save, spend, and earn all in one place. Get started today.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
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.

SOMN20010

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When you buy vegetables from a grocery store, you know farmers grow the vegetables, then a distributor might buy from the farmer and sell the vegetables to grocery stores, and stores then sell those vegetables to you, the consumer. This is comparable to investors using a broker to buy shares of stock, because there is a middle person involved.

But you can sometimes purchase food directly from growers, perhaps at farmers markets. This direct form of purchasing can be comparable to participating in a direct stock purchase plan (DSPP).

Direct Stock Purchase Plan Explained

At a high level, DSPP is a term that pretty much means what it says. When a company offers a DSPP, individual investors can directly purchase shares of that company’s stock without the need for broker involvement. If someone has a 401(k) retirement account at work and has stock from the employer’s company included in a portfolio, then this process has some similarities.

Briefly returning to our vegetable analogy, buyers can sometimes get a better price from a farmers market, because the distributors and grocery stores may mark up their prices to cover their own costs.

With a DSPP, investors directly purchase shares of stock, sometimes at a small discount, which adds value to the purchase. Discounts can range from 1% to 10% to encourage investors to buy more of the company’s stock.

More specifically, if someone wants to buy stocks in this way, they typically open an account and make deposits into it. Usually, these deposits are automatically made monthly through an ACH funds transfer from the investor’s bank account.

Then, that dollar amount is applied toward the DSPP, meaning toward purchasing shares in that company’s stock, which can include fractions of those shares. For example, let’s say that one share of a company’s stock currently costs $20. If an investor sets up an ACH withdrawal of $50 monthly, then, each month they have purchased 2.5 shares of that company’s stock. (The price of a share of stock can fluctuate, but this is how the process works, overall.)

One of the benefits of investing through a direct stock purchase plan is the ability to incrementally invest in an inexpensive way. This might make it a good choice for some first-time investors with smaller amounts of money to invest, with initial deposits ranging from $100 to $500, usually with very low fees to purchase shares or, sometimes, no fees.

This investment strategy can also work for people who want to focus on a select number of quality stocks, long term. It might be a good strategy for people who simply want to have a direct method of ownership, without an intermediary—and some investors appreciate the DSPP programs that allow dividends to be automatically reinvested into additional shares of stock (something that not all companies that offer DSPP programs do).

Conversely, this may not be the preferred method of choice for investors who value diversification, because buying DSPPs tends to create a portfolio based on a small group of stocks. Plus, not all companies offer this investment option, so focusing solely on DSPPs can limit choices.

Note that there may be restrictions placed upon when shares can be purchased. Companies often put maximum limits on how much an individual investor can purchase, too. One well-known home improvement store, as just one example, puts an annual cap of $250,000 on their DSPP program. And, when selling DSPP stocks, multiple types of fees can be charged that can significantly impact gains made.

Finding DSPP Opportunities

Armed with information about how to buy directly from companies, at least in general, investors may want to explore what specific opportunities exist. Perhaps they follow the stock market and already have a publicly traded company in mind.

In that case, they can go to that company’s investor relations website to see if that company offers this type of investment opportunity. They can also search on Google to see if DSPP information is available.

If investors decide to buy through a direct stock purchase plan, they can use a service like ComputerShare.com . It provides a listing of companies that sell stocks through a DSPP—these searches can be filtered in several ways to find the opportunities that fit investor parameters.

What to Consider Before Buying DSPPs

When internet investing was new, people typically needed to pay significant fees to brokers to buy stock—so, in that era, DSPPs could be real money-savers for investors. Over time, though, fees for online investing have lessened, making this less distinctive of a benefit.

Plus, many DSPPs charge initial setup fees, and may have other fees, including ones for each purchase transaction or sale. Although they may be small, in and of themselves, these fees can build up over time. And it may be challenging to re-sell shares without the use of a broker, which makes this investment strategy more of a long-term one, rather than one where investors regularly buy and sell.

Not everybody has the same type of investment personality—what’s important is for each investor to be clear about what type they are and act in tandem with that.

What Kind of Investor?

When people are relatively new to investing, they may not know the answer to that question yet—and that’s okay. As part of the process, though, investors will want to determine, at a minimum, their risk tolerance—in other words, the amount of risk a person is willing to take with investment dollars.

People who are risk takers might be what’s called a growth investor. This type of person might be willing to invest in high-priced stocks that have plenty of potential, even if they’d never heard of them before. More conservative investors can be called “income investors,” people who like to invest in stable, “blue chip” companies that are well established.

It isn’t unusual for younger investors to be more willing to go for growth, with older people going the more conservative route. This isn’t universally true, though, and it’s okay to experiment with investment strategies.

Buying That First Share of Stock

People with a retirement plan are probably already investing in mutual funds. When thinking about buying stock outside of retirement account investing, then it can make sense to complete a couple other financial items first, including:

•   Getting rid of high-interest debt
•   Building an emergency savings of three to six months’ worth of salary to cover unexpected expenses

Now, here’s what it means when someone buys a share of stock. Investors are really buying a piece of a company, becoming a partial owner of that company.

Then, when that company does well, investors can be rewarded by having shares of stock increase in value and/or receiving dividends. If the company doesn’t do well, then that can be reflected in a lesser stock value.

There are two main types of shares: common stock and preferred stock. Generally, when people talk about buying and selling shares of stock, they’re referring to common stock that comes with voting rights. Ideally, investors would like for the stock owned to increase in value, which would give them the option to sell their shares at a profit.

And, if the company is doing well, they may issue dividends, perhaps on a quarterly basis. Investors could use that as an income stream or reinvest those dollars into more shares of that company’s stock.

If a company goes bankrupt, common stockholders are placed behind creditors and another type of stockholders in line—preferred stockholders—in getting payment (which means common stock investors very well might lose all of what they’d invested in that company).

Owners of preferred stock, meanwhile, would get preferential treatment if a company was liquidated, being next in line behind creditors. Owners of this type of stock may or may not have voting rights but could benefit more fully when the company is profitable.

Nowadays, nearly all stock trading is handled online, which has made the process less expensive and more hands-on for the typical investor—at least compared to the days when people needed to walk into a stockbroker’s office to place an order.

Today, they simply need to open up an account with an online brokerage firm and then they can typically handle transactions from their computers or mobile devices. This, of course, raises the question about where a brokerage account should be opened. New investors can compare fees, as one step, while noting that it might be worth it to pay a bit more if the service is good.

When it’s time to actually buy that first share of stock, the decision may be made to invest in a company that is already familiar to the investor—and then invest a small amount as a trial.

Any time a share of stock is purchased, at any company, some degree of risk comes along with it—how much depends upon what is happening with that specific company and the overall levels of turbulence in the market.
Here’s something else to consider: When owning stock in just one company, or only a couple of them, portfolios aren’t diversified.

Portfolio diversification is desirable because it helps to spread out the degree of risk—that’s because, if one stock’s value decreases, others may rise to balance out that portfolio. Some investors, for example, have a portfolio with 40 to 50 different stocks to provide diversification.

Researching Investment Opportunities

Before investing in a company, it makes sense to research how well they’ve been performing. How profitable have they been? How do they compare against their competitors?

Most companies must provide information about their financial performance and major corporate changes; this information can be found on a company’s website in the Investor Relations section or at the Securities and Exchange Commission site.

Before investing, it can make sense to look at a company’s quarterly and annual balance sheets, as well as their income statements and cash flow statements. Another strategy is to review their retained earnings statement and shareholders’ equity information.

When reviewing a company’s financial information, check its after-take income—or what’s often called their “bottom line.” This is the number that’s most watched by a typical investor because it’s often directly related to the price of that company’s stock.

This information can be found in quarterly and annual financial statements and, besides looking at how good current earnings are, it can make sense to check the statements to see how consistent earnings have been.

Another idea is to review return on sales, also called operating margins. This will show investors how much a company makes in profit after paying associated costs, not including interest or taxes. To calculate this metric, find the company’s operating profit and then divide it by its net sales. A good (higher) number is a positive sign while a lower number may indicate more risk for investors.

As another strategy, check the cash flow statements—cash flow has been described as the life’s blood of a company’s financial position. Then there’s a calculation known as asset utilization, and it helps people to know how well a particular company is doing when compared to other ones.

If someone is considering investing in Company A, for example, and that company has revenues of $200,000 and assets of $100,000, its asset utilization rate is 2:1. In other words, for every dollar they have in assets, they have $2 being generated in revenue. How does that compare to Company B? Company C?

Investors sometimes also review a company’s debt-to-equity ratio (also called debt-to-capital ratio) to determine how a particular company funds its business operations and pays for its assets. Ideally, a company will have enough short-term liquidity to pay for business operations as well as its growth. This figure does not take into account any long-term debt held by the company.

Are its earnings going up, overall? Are there noticeable patterns—perhaps lower earnings in the winter for outdoor entertainment corporations? When lower earnings exist, does it fit the seasonal pattern observed—or is something else potentially going on?

Besides doing investigative work, investors might want to read financial news, with reputable sources including The Wall Street Journal, Bloomberg, MarketWatch, and CNBC, among others.

Investors can browse through them to see how the market is doing, overall, as well as how individual sectors are performing. If interested in specific companies, they can read about their performances.

Considering Exchange-Traded Funds and Mutual Funds

If someone is new to investing, choosing exchange-traded funds (ETFs) and mutual funds may be a good introduction to the investing world. These types of investment vehicles can offer more diversity, which can help to mitigate risk. One way to think of ETFs is as a basket of securities that gives investors access to a broad variety of markets.

Mutual funds, meanwhile, also provide opportunities for people who want to get started investing with small amounts of money. Because mutual funds are like suitcases filled with different security types, they provide instant diversification.

SoFi Invest

When it’s time to start investing online, that’s also the time when people need to choose their broker.
With SoFi Invest®️, people can invest with ease, no matter what level of investment experience exists.

One option is the active investing route, choosing stocks, ETFs, and cryptocurrency, getting started with as little as $1 and avoiding the high costs associated with some other methods of investing. And, at SoFi, stocks and ETFs can be traded for free.

Because diversity is so important, SoFi makes it easy for investors to spread their money out over different investment vehicles, including Stock Bits, which allows people to invest in their favorite companies without needing to commit to a whole share.

Or, if investing sounds like a good idea but the heavy lifting involved doesn’t, there is the automated investing option.

Recommendations are made through sophisticated computer algorithms and help with goal-setting, rebalancing of portfolios, and diversification. Best of all, when choosing automated investing at SoFi, investors can still have access to human financial advisors.

SoFi Invest allows you to invest your way, all in one place.

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Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
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.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
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.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.

SOIN20017

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There are endless reasons why a person may want to save money. Be it for a trip they’ve been dreaming of, a home repair project that’s long overdue, a new car, college, or just for the general “future,” it’s a good idea to start putting away a few more nickels and dimes, if possible.

Those already doing so can give themselves a pat on the back as it’s a harder task than one may think. According to a 2019 survey by Bankrate , just 40% of the more than 1,000 survey respondents said they would be able to cover an unexpected $1,000 expense, such as a car breaking down or a flooded home, with the money currently sitting in their savings.

Instead of being able to pay for the emergency with cash on hand, over one-third of the respondents said they would have to put the expense on a credit card or take out a loan. (Hey, it’s not called emergency savings for anything.)

But emergencies can happen to anyone at any time. And so can good things, like a new baby, a wedding, a new home, or job opportunity that means moving across town, the country, or the world (which can get really expensive, fast).

So yes, there are lots of reasons to save, and lots of ways to save too, (which we’ve outlined below). However, for those looking for a benchmark of just how much they should’ve saved by a specific age, things get tricky.

Average savings by age is a tough metric because there are so many variables that go into a number like that. We get it, though, everyone wants a guidepost.

So to help set some loose goals, we’ve outlined a few groups and the average American savings by age, to assist everyone in figuring out just how far their saving needs to go.

(Note: Like with all financial issues, your situation—and mileage—may vary.)

Why Everyone Should Be Saving for the Future

As we mentioned above, life can happen fast. For example, the average cost of just having a new baby can run anywhere from $5,000 to $14,500, let alone the cost of raising your kid for the rest of their life.

And, if that baby wants to get a college degree, you’re looking at a whole new ballpark of savings, as the cost of a college education can run from about $40,000 to well past $100,000.

There’s one other big reason to save for the future: People are living longer. However, people’s nest eggs appear to be losing feathers faster than they thought.

According to a 2019 survey by Aegon Center for Longevity, Transamerica Center for Retirement Studies and Instituto de Longevidade Mongeral Aegon in Brazil, just 36% of American workers are “very confident they will be able to retire comfortably.” Globally, that number is just 29%.

Almost Half the Population Has No Savings

Again, like Bankrate’s 2019 survey shows, a mere 40% of the more than 1,000 survey respondents said they would be able to cover an unexpected $1,000 expense.

The Federal Reserve also notes that 39% of all Americans don’t have enough cash in savings to cover even a $400 emergency.

To make matters worse, according to a 2019 study by ING Group International Surveys , 27% of Americans have no money saved. Even a few dollars saved is something to be proud of—but you shouldn’t stop there.

A Snapshot of the Typical American Household’s Savings

According to another 2018 survey by Bankrate , the typical American household has $8,863 in a savings account at a bank or credit union. But, this number varies greatly by age and number of people in a household. Let’s break it down.

Average Savings for Those 35 and Younger

The 2016 Federal Reserve Survey of Consumer Finances found that those Americans under the age of 35 had an average savings account balance of $8,362 .

Because this is such a large age bracket that can skew from teenagers just graduating high school to recent college grads to young professionals well into a decade’s worth of work, it’s tough to nail down age-by-age where the average may be.

It is typically suggested to have three to six months of expenses in an emergency account. At the very least aim for having $1,000 handy in a savings account just in case.

After hitting a savings stride at a new job, people may want to consider looking into any employer-sponsored retirement funds such as an IRA or a 401(k).

Minimally, add in whatever amount the company will match to ensure potential future savings thanks to compound interest. For reference, the average 401k savings for someone between the ages of 20-29 in 2019 was $11,800.

Average Savings by Age 35-44

The 2016 Federal Reserve Survey of Consumer Finances also found that those Americans between the ages of 35-44 had an average savings account balance of $20,839. Since this age bracket is now well into adulthood, it’s prudent to save up that three- to six-month savings account, to cover the cost of everything from an accident to a lost job.

Now may also be the time to think about diversifying a financial portfolio and potentially investing in the stock market or in real estate.

Again, for reference on where a person may want to be at for retirement savings goals, the average 401k savings for someone between the ages of 30-39 in 2019 was $42,400.

Average Savings by Age 45-54

The 2016 Federal Reserve Survey of Consumer Finances found that those Americans between the ages of 45-54 had an average savings account balance of $30,441.

At this point, common financial advice dictates that a 50 year old should have at least six times their annual salary if their intention is to retire at 67.

And, by the age of 40-49, a person may want to hit the average retirement savings, which sits at $102,700.

Average Savings by Age 55-64

The 2016 Federal Reserve Survey of Consumer Finances found that those Americans between the ages of 55-64 had an average savings account balance of $45,133.

As this is the time when most Americans are staring down retirement in a few years it’s a good idea to kick up savings, specifically retirement savings into high gear.

That’s because while younger people are capped at contributing $18,500 a year to a 401(k) account, those over the age of 50 are allowed to contribute an additional $6,000.

This is known as a catch-up contribution. The average retirement savings account for a person between the ages of 50-59 in 2019 was $174,100. It’s important to note that taking out cash before the age of 59 ½ could mean tax penalties.

Average Savings by Age 65+

This is when savings really peaks for the average American. The 2016 Federal Reserve Survey of Consumer Finances found that those Americans between the ages of 65-74 had an average savings account balance of $54,089.

However, that savings number does drop over time. According to the survey, Americans above the age of 75 had an average savings account balance of $42,391.

This drop means it’s all the more important to create a retirement budget and stick to to ensure enough savings for as long as a person needs it.

But, before retirement, try to hit the average retirement savings number of 2019 for those aged 60-69, which was $195,500.

Saving a Little Bit More

Reaching specific savings goals doesn’t have to be complicated. It just means doing a bit of homework, strategizing, and staying diligent about personal finances.

The first step in saving more is to analyze current expenses to see what can be cut back on or cut out altogether to make more room for saving. This means creating a monthly personal budget and tracking current personal spending.

To track spending, a person could create an excel spreadsheet and list out all expenditures by categories like groceries, phone bill, car expenses, housing, medical, entertainment, etc, over the course of a month. Then, make sure to fill it in with every single dollar spent to see where every cent of money is going.

To make this process a little easier, SoFi offers SoFi Relay, which allows users to connect all their accounts to one mobile dashboard and track spending habits in real time.

After the month is up, the next step is to look back on the expenditures list. Was there anything that surprised you? Going to coffee shops more often than needed? How about that gym membership, did it actually get used? This is the time to get a little ruthless.

After figuring out what’s left, try implementing a general financial outline like the 50/30/20 rule. This means typically 50% of after-tax income goes toward essential expenses like food and rent, while 30% goes toward discretionary expenses like nights out at the movies or concerts. The last 20% belongs to savings and retirement account goals.

Now, it’s time to get creative about saving even more for the future. This can be done by simply direct depositing more cash into a savings or retirement account right from a paycheck. That way, it’s like the cash never existed in the first place.

Those looking to save a few more bucks every month could also do so by getting rid of a bunch of unnecessary expenses like recurring payments on apps they may not even use anymore. But, instead of pocketing that cash for fun, they can go ahead and reroute all that cash right to their savings.

Still feeling the pinch and don’t really have room to save more from a budget? Living paycheck to paycheck (which upward of 74% of Americans are) isn’t anything to be ashamed of, however it may be time to consider taking in a little more work via the gig economy.

Working part-time via an app like Uber, Lyft, or Taskrabbit allows people to set their own hours and make as much cash as they need depending on how much time they can dedicate.

However, those aren’t the only gig economy jobs available. Those with a talent for photography, writing, or creative arts could try freelancing with publications or individual businesses.

And hey, if you’ve got a spare bedroom, try listing it on room rental websites. Users of the most popular rental service earned an average of $924 per month renting out rooms in their home or other properties, according to 2019 data.

Making Your Savings Work Even Harder

There’s one more way to start making more money for your savings account and future, and it takes barely any work at all: Signing up for online investing with SoFi Invest®.

With the account, users can trade stocks and ETFs, buy crypto, or even start an automated investing program to make things quicker and easier than going it alone.

And, for those feeling a bit squeamish about diving headfirst into investing that’s okay too as SoFi Invest gives users the option to invest in smaller amounts like buying fractional shares with SoFi Stock Bits.

The new offering from SoFi gives users the ability to buy and sell fractional shares in mega-brands like Apple, Amazon, and Tesla. And investing a little now can go a long way in saving for tomorrow, next year, and your happy retirement to come.

Put your money to work toward all your long-term financial plans with SoFi Invest.

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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.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
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Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
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The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
Automated Investing
The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA / SIPC , (“SoFi Securities”).
Stock Bits
Stock Bits is a brand name of the fractional trading program offered by SoFi Securities LLC. When making a fractional trade, you are granting SoFi Securities discretion to determine the time and price of the trade. Fractional trades will be executed in our next trading window, which may be several hours or days after placing an order. The execution price may be higher or lower than it was at the time the order was placed.

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It’s time to talk about the big picture for a minute, so close your eyes and imagine your future. What does it look like? Are you sitting poolside, sipping margaritas while someone else takes care of your property?

Maybe you’re in an apartment at the heart of New York City, within walking distance to all the greatest shows and restaurants. Or maybe you simply want to have enough money to fully retire—no part-time gig needed.

How to Create a Financial Plan

A financial plan is not just another word for budget or debt-reduction plan. It’s the long-term roadmap that could help make your vision a reality. The smaller pieces, like budgets and debt-payoff strategies, are tools to help you get there.

And whether you sit down with a financial planner or do it yourself, putting pen to paper and writing down not only what you want, but how you plan to get it, could help take it out of your head and make it real. (If you’re the creative type, you might even consider a vision board.)

Setting Your Goals

While everyone’s financial goals will be different based on their individual situation, these three tend to rise to the top of the list:

•   Having an emergency fund. Many recommend a goal of three to six months worth of living expenses. It might help cover those unexpected expenses that show up, or float you through a loss of income, without wrecking your plan.
•   Growing your 401(k) or other retirement accounts. Contributing at least as much to your 401(k) that your employer is willing to match at 100% is akin to doubling your money. Combine that with the magic of compound interest, and you could see your balance grow at a nice pace.
•   Getting rid of high-interest debt. It’s no secret that eliminating your credit card debt could not only save you thousands of dollars in the long run, it could also help improve your credit score.

While those are certainly important, they’re not the entire list. Some other financial goals that might make sense to you could include:

•   Getting (and keeping) good credit. If your dreams include large purchases, or even starting a small business, a bad credit score can be a deal-breaker. The minimum number needed to buy a home, for example, currently sits at around 620 for a conventional loan. (If you’re struggling with bad credit, there are ways to help increase your score.)
•   Paying off your student loans. If this is one of your financial goals, you likely share it with more than 44 million of your closest friends. And while a student loan is generally considered “good” debt, it still accrues interest. It’s also a potentially large chunk of money that could go toward other areas of your plan.
•   Living within your means. Conventional wisdom suggests you shouldn’t borrow more than you can afford. If you think you may need to borrow money, you could begin with a reality check to decide if you can afford to pay off the debt. If not, you may want to consider saving money until you can.
•   Saving for your kids’ education. No one can predict what the higher-ed landscape will look like when your kids are ready to start filling out applications. But we do know that the average costs for tuition and fees for a public college are hovering at just over $10,000 and are currently increasing at a rate of 3.1% over inflation .
•   Growing your investment portfolio. This might include items like your 401(k) and IRA, but it can also mean a foray into the world of stocks and mutual funds. Becoming a smart investor can not only be a goal by itself, but a way to achieve many of your other goals.

The goals that you choose as part of your financial plan may be on vastly different timelines, and you may need to accomplish one before you can move on to another.

One way to stay focused is to remember that you’re in it for the long haul, and huge changes probably aren’t to happen overnight (unless you win the Powerball, of course.)

Understand Your Resources

Knowing exactly what you have to work with might be one of the most important keys to building a plan that works. To put the entire puzzle together, though, you’ll need to find all the pieces.

One way to get started is to gather up all your paper and electronic bank statements, billing accounts, and portfolio documents. (You might also consider storing all your passwords in one place while you’re at it.

Because, let’s be real, remembering all your logins might be the hardest part of this whole process.) So, what are you looking for? The details on where your money is, how it’s moving, and whether it’s working for or against you. This might include:

•   Income: Salary, investment income, alimony, monetary gifts
•   Expenses: Bank debits, monthly billing statements, and other sources of everyday spending
•   Assets: Savings accounts, home equity, or physical items you own (your house, car, collectibles, etc.)
•   Liabilities: Credit card debt, student loans, mortgage(s), and any other sources of debt

The next step—categorizing spending—might be one of the most challenging due to the ever-changing nature of monthly expenses. (But you’ll likely thank yourself for putting in the work later.) An app like SoFi Relay® can give you a birds-eye view of your finances and let you track expenses all from one place.

However you choose to organize your finances, you might want to consider a method that feels natural rather than trying to force yourself into a pre-set structure. You might be more prone to let all your hard work go idle if you just don’t like the system.

Analyzing Outcomes & Exploring Alternatives

If the organization is the outline of your financial puzzle, then creating and analyzing your working plan is like filling in the center. If a piece doesn’t work one way, you can turn it around and try something different.

For example, if your 401(k) continues to grow at its current rate, and you continue to contribute the same amount each month, how much will you have at age 65? What if you push your retirement until age 67, or increase your risk-tolerance on your retirement accounts?

Or, if your debt will take too long to pay off using the snowball method, might another strategy work better? You could keep an eye out for areas in your plan that fall especially short and consider giving them some extra TLC.

With a lot of diligence and “if this, then that” tinkering, you may soon find yourself looking at a realistic, workable financial plan.

Looking for Help If You Need It

But if the picture just isn’t coming together, don’t forget that DIY doesn’t mean do it alone. If you look around, you’re likely to find quality, no- or low-cost expert advice that could help ensure you’re on the right track.

Your employer may offer access to planning tools, for example, as part of their employee benefits package. A number of low- or no-cost services may also be available to you, such as the Association for Financial Counseling and Planning Association .

And, if you become a SoFi member, you’ll have complimentary access to financial planners.

Implementing the Plan

Did you think you’d get through an entire article on how to make a financial plan without one mention of the “b” word? Here it is—the part where you create a budget that helps you implement your plan.

If saving is your ultimate goal, one helpful way to create a solid budget is to track every cent to the penny. Understanding your spending habits could be an effective way to control them.

You might also want to stick to some of the basic tenets of personal finance, like paying your bills on time, keeping one eye on your credit report, and choosing your financial institutions wisely.

You could get your money growing quickly, for example, by setting up a SoFi Money® cash management account.

Monitoring and Reviewing

It’s been a few months since you implemented your financial plan, and so far, so good. But things may have changed a bit.

You paid off one credit card, so you need to reallocate that payment to the next debt. Or, a goal that used to be at the top of your list isn’t so important any more.

Reviewing your plan can mean not only making adjustments, but simplifying. This can include automating any new payments, consolidating new debts, or opting out of paper statements to reduce clutter.

Plus, having the right accounts can go a long way toward helping a person achieve their financial goals. Learn more about how SoFi Money can help.

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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.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
SoFi Relay is offered through SoFi Wealth LLC, an SEC-registered investment advisor. For more information, please see our Form ADV Part 2A, a copy of which is available upon request and at www.adviserinfo.sec.gov . For additional information on SoFi Wealth LLC, SoFi Relay, and products and services of affiliates, see SoFi.com/legal.
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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For investors living in the era of “fake news,” it probably isn’t hard to imagine the chaos which might ensue if there weren’t any rules regarding the marketing of IPOs.

The SEC regulates the sale of securities to ensure that it is done fairly and investors receive accurate information. One of the ways it does this is by restricting the type of communication a company is allowed to do during the time leading up to and following an IPO.

When a company decides to issue an Initial Public Offering (IPO) there are numerous legal and financial steps they go through in preparation.

These include preparing a prospectus and filing an IPO registration statement with the Securities and Exchange Commission. The prospectus is a publicly available document which includes:

•   A description of the company’s business and assets
•   Information about the company’s management team
•   A description of the security being offered in the IPO
•   Independently certified financial statements

The quiet period is a time when company executives, board members, management, and employees cannot publicly promote the company or its stock. Investment bankers and underwriters also cannot put out buy or sell recommendations.

It starts when the company files the registration statement, including a recommended offering price for the security, and lasts for 30 days.

During this time, the SEC looks over all the documentation and approves the registration. The quiet period allows the SEC to complete the review process without bias or interruption and ensures that the company doesn’t attempt to hype, manipulate, or pre-sell their stock.

Companies are allowed to discuss information already in the prospectus during the quiet period, and oftentimes they will go on a “road show” to present this information and get a sense for the potential market. Activities generally avoided during the quiet period are advertising campaigns, conferences, and press interviews.

Some companies are now choosing to confidentially file for IPOs and only release information a few weeks before the sale. The confidential filing had only been allowed for companies with revenue under $1 billion since the 2012 JOBS Act and was extended to all companies in 2017.

This option allows businesses to avoid negative media attention, and if there are any changes in the stock market between the time they file and their planned IPO date, they can adjust their plans accordingly—and without scrutiny.

A study conducted at The Wharton School of The University of Pennsylvania showed that media coverage during a quiet period can result in negative outcomes for investors, so the confidential filing process could potentially help improve those outcomes.

Another quiet period takes place each quarter, during the month before a company files its quarterly earnings report. Similar to the pre-IPO quiet period, executives and management must be careful not to publicly say anything which could be perceived as insider information.

History of the Quiet Period

The quiet period was enacted in 1933 as part of the Securities Act. Prior to the 1929 stock market crash, the Federal Government didn’t regulate the sales or marketing of securities.

This was handled by each individual state. The goal of the Securities Act was to prevent fraudulent activity and marketing hype, as well as to ensure that potential investors across the nation were all presented with the same materials prior to an IPO.

The Securities and Exchange Commission (SEC) became the central regulating party. Companies were now required to register with the SEC and put together a prospectus document outlining the company’s team, assets, finances, and the security being offered in the IPO.

Since the SEC must act as a neutral party when vetting a company’s registration materials, the quiet period allows them to perform this task unbiased. It also gives investors the chance to assess the prospectus and IPO pricing in order to make informed purchasing decisions.

A few amendments have been made to the Securities Act regarding the quiet period since the 1930s. These include the recognition that companies may have made public statements prior to filing their registration, and clarifications about the type of marketing and communications a company is still allowed to do.

In the early 2000s the SEC modernized the rules of the quiet period to include clarifications about digital and online communications.

Other recent changes have made the rules more lax, such as permitting the solicitation of accredited investors. Perhaps one day the quiet period may no longer be enforced, but for now it is still an important part of the IPO process.

Violation of the Quiet Period

Violation of the quiet period is called “gun-jumping.” If the SEC deems a statement made by a company is in violation of the quiet period, consequences can include:

•   A delayed IPO
•   Liability for violating the Securities Act
•   Requirement to disclose the violation in the company’s prospectus

What to do During a Quiet Period

Quiet periods can be a good time to assess whether you’re interested in investing in a company’s IPO. Seasoned investors look to profit at the end of the quiet period, called the quiet period expiration.

At this time the stock price and trading volume can see drastic movement up or down, since a flood of information gets released from analysts.

Unbiased prospectus information about recent filings can be viewed on the SEC website. It’s a good idea to read the prospectus so you can judge for yourself whether a company’s mission, team, and financials look like a sound investment.

One of the keys to building a successful long term portfolio is diversification. By mixing investments from higher and low risk, new and established companies, you can likely reduce the risk of a single investment having an outsized effect on your performance.

IPOs have the potential to be lucrative investments, but can also turn out to be extremely volatile and could lose value. A good way for new investors to add recent IPO stocks to their portfolios is through an IPO ETF.

ETFs include multiple stocks and are generally rebalanced over time, so investors can hope to gain access to growing companies while diversifying their risk.

Don’t Keep a Lid on Your Investments

If you have questions or want to discuss your investment strategies and portfolio, the SoFi Invest team is here to help. Investing in IPOs can be risky and takes time.

If you’re looking for an efficient way to add some of the newest IPO stocks to your portfolio, let SoFi do the heavy lifting using the Automated Investing platform.

Or, if you love doing your own IPO homework, the SoFi Active Investing platform can give you access to stocks of newly public companies.

Learn more about SoFi Invest®.

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External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

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