Building Your Career Archives | Page 3 of 28

Oct

2024

How to Roll Over Your 401(k): Knowing Your Options

By MP Dunleavey | Budgeting & Goals, Building Your Career, Growing Wealth, invest, Investing, Life & Career | No Comments

It’s pretty easy to rollover your old 401(k) retirement savings to an individual retirement account (IRA), a new 401(k), or another option — yet millions of workers either forget to rollover their hard-won retirement savings, or they lose track of the accounts. Given that a 401(k) rollover typically takes minimal time and, these days, minimal paperwork, it makes sense to know the basics so you can rescue your 401(k), roll it over to a new account, and add to your future financial security.

Whether you’re starting a new job and need to roll over your 401(k), or are looking at what other options are available to you, here’s a rundown of what you need to know.

Key Points

• Rolling over a 401(k) to an IRA or new 401(k) is typically straightforward and your retirement funds will continue to have the opportunity to grow.

• Moving 401(k) funds to another 401(k) is often the simplest option and allows you to continue to have a higher contribution limit.

• Moving 401(k) funds to an IRA may provide more investment choices and control over those investments.

• Leaving a 401(k) with a former employer is an option but may involve additional fees and complications.

• Direct transfers are simpler and generally preferred over indirect transfers, which run the risk of incurring tax liabilities and penalties.

401(k) Rollover Options

For workers who have a 401(k) and are considering next steps for those retirement funds — such as rolling them to an IRA or another 401(k), here are some potential avenues.

1. Roll Over Money to a New 401(k) Plan

If your new job offers a 401(k) or similar plan, rolling your old 401(k) funds into your new 401(k) account may be both the simplest and best option — and the one least likely to lead to a tax headache.

That said, how you go about the rollover has a pretty major impact on how much effort and paperwork is involved, which is why it’s important to understand the difference between direct and indirect transfers.

Here are the two main options you’ll have if you’re moving your 401(k) funds from one company-sponsored retirement account to another.

Direct Rollover

A direct transfer, or direct rollover, is exactly what it sounds like: The money moves directly from your old account to the new one. In other words, you never have access to the money, which means you don’t have to worry about any tax withholdings or other liabilities.

Depending on your account custodian(s), this transfer may all be done digitally via ACH transfer, or you may receive a paper check made payable to the new account. Either way, this is considered the simplest option, and one that keeps your retirement fund intact and growing with the least possible interruption.

Indirect Rollover

Another viable, but more complex, option, is to do an indirect transfer or rollover, in which you cash out the account with the expressed intent of immediately reinvesting it into another retirement fund, whether that’s your new company’s 401(k) or an IRA (see above).

But here’s the tricky part: Since you’ll actually have the cash in hand, the government requires your account custodian to withhold a mandatory 20% tax. And although you’ll get that 20% back in the form of a tax exemption later, you do have to make up the 20% out of pocket and deposit the full amount into your new retirement account within 60 days.

For example, say you have $50,000 in your old 401(k). If you elected to do an indirect transfer, your custodian would cut you a check for only $40,000, thanks to the mandatory 20% tax withholding.

But in order to avoid fees and penalties, you’d still need to deposit the full $50,000 into your new retirement account, including $10,000 out of your own pocket. In addition, if you retain any funds from the rollover, they may be subject to an additional 10% penalty for early withdrawal.

Pros and Cons of Rolling Over to a New 401(k)

With all of that in mind, rolling over your money into a new 401(k) has some pros and cons:

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Pros:

• Often the simplest, easiest rollover option when available.

• Should not typically result in any tax liabilities or withholdings.

• Allows your investments to continue to grow (hopefully!), uninterrupted.

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Cons:

• New employer may change certain aspects of your 401(k) plan.

• There may be higher associated fees or costs with your new plan.

• Indirect transfers may tie up some of your funds for tax purposes.

¹Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits.

2. Roll Over Your 401(k) to an IRA

If your new job doesn’t offer a 401(k) or other company-sponsored account like a 403(b), you still have options that’ll keep you from bearing a heavy tax burden. Namely, you can roll your 401(k) into an IRA.

The entire procedure essentially boils down to three steps:

1. Open a new IRA that will accept rollover funds.

2. Contact the company that currently holds your 401(k) funds and fill out their transfer forms using the account information of your newly opened IRA. You should receive essential information about your benefits when you leave your current position. If you’ve lost track of that information, you can contact the plan sponsor or the company HR department.

3. Once your money is transferred, you can reinvest the money as you see fit. Or you can hire an advisor to help you set up your new portfolio. It also may be possible to resume making deposits/contributions to your rollover IRA.

Pros and Cons of Rolling Over to an IRA

This option also has its pros and cons, however.

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Pros:

• IRAs may have more investment options available.

• You’ll have more control over how you allocate your investments.

• You could potentially reduce related expenses, depending on your specifications.

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Cons:

• May require you to liquidate your holdings and reinvest them.

• Lower contribution limit compared to 401(k).

• May involve different or higher fees and additional costs.

• IRAs may provide less protection from creditor judgments.

• You’ll be subject to new distribution rules – namely, you’ll need to be 59 1/2 before withdrawing funds to avoid incurring penalties.

3. Leave Your 401(k) With Your Former Employer

Leaving your 401(k) be – or, with your former employer – is also an option.

If you’re happy with your portfolio mix and you have a substantial amount of cash stashed in there already, it might behoove you to leave your 401(k) where it is.

You’ll also want to dig into the details and determine how much control you’ll have over the account, and how much your former employer might.

You might also consider any additional fees you might end up paying if you leave your 401(k) where it is. Plus, racking up multiple 401(k)s as you change jobs could lead to a more complicated withdrawal schedule at retirement.

Pros and Cons of Leaving Your 401(k) Alone

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Pros:

• It’s convenient – you don’t do anything at all, and your investments will remain where they are.

• You’ll have the same protections and fees that you previously had, and won’t need to get up to speed on the ins and outs of a new 401(k) plan.

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Cons:

• If you have a new 401(k) at a new employer, you could end up with multiple accounts to juggle.

• You’ll no longer be able to contribute to the 401(k), and may not get regular updates about it.

4. Cash Out Your Old 401(k)

Cashing out, or liquidating your old 401(k) is another option. But there are some stipulations investors should be aware of.

Because a 401(k) is an investment account designed specifically for retirement, and comes with certain tax benefits — e.g. you don’t pay any tax on the money you contribute to your 401(k), depending on the specific type — the account is also subject to strict rules regarding when you can actually access the money, and the tax you’d owe when you did.

Specifically, if you take out or borrow money from your 401(k) before age 59 ½, you’ll likely be subject to an additional 10% tax penalty on the full amount of your withdrawal — and that’s on top of the regular income taxes you’ll also be obligated to pay on the money.

Depending on your income tax bracket, that means an early withdrawal from your 401(k) could really cost you, not to mention possibly leaving you without a nest egg to help secure your future.

This is why most financial professionals generally recommend one of the next two options: rolling your account over into a new 401(k), or an IRA if your new job doesn’t offer a 401(k) plan.

Pros and Cons of Cashing Out Your 401(k)

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Pros:

• You’ll have immediate access to your funds to use as you like.

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Cons:

• Early withdrawal penalties may apply, and there will likely be income tax liabilities.

• Liquidating your retirement account may hurt your chances of reaching your financial goals.

When Is a Good Time to Roll Over a 401(k)?

If there’s a good time to roll over your 401(k), it’s when you change jobs and have the chance to enroll in your new employer’s plan. But you can generally do a rollover any time.

That said, if you have a low balance in your 401(k) account — for example, less than $5,000 — your employer might require you to do a rollover. And if you have a balance lower than $1,000, your employer may have the right to cash it out without your approval. Be sure to check the exact terms with your employer.

When you receive funds from a 401(k) or IRA account, such as with an indirect transfer, you’ll only have 60 days from the date you receive them to then roll them over into a new qualified plan. If you wait longer than 60 days to deposit the money, it will trigger tax consequences, and possibly a penalty. In addition, only one rollover to or from the same IRA plan is allowed per year.

The Takeaway

Rolling over your 401(k) — to a new employer’s plan, or to an IRA — gives you more control over your retirement funds, and could also give you more investment choices. It’s not difficult to rollover your 401(k), and doing so can offer you a number of advantages. First of all, when you leave a job you may lose certain benefits and terms that applied to your 401(k) while you were an employee. Once you move on, you may pay more in account fees for that account, and you will likely lose the ability to keep contributing to your account.

There are some instances where you may not want to do a rollover, for instance when you own a lot of your old company’s stock, so be sure to think through your options.

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FAQ

How can you roll over a 401(k)?

It’s fairly easy to roll over a 401(k). First decide where you want to open your rollover account, then contact your old plan’s administrator, or your former HR department. They typically send funds to the new institution directly via an ACH transfer or a check.

What options are available for rolling over a 401(k)?

There are several options for rolling over a 401(k), including transferring your savings to a traditional IRA, or to the 401(k) at your new job. You can also leave the account where it is, although this may incur additional fees. It’s generally not advisable to cash out a 401(k), as replacing that retirement money could be challenging.

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Sep

2024

How To Counter a Salary Offer (Sample Emails)

By Rebecca Lake | Building Your Career, Life & Career, relay | Comments Off

Salary negotiations can be one of the most stressful parts of the hiring process. You don’t want to offend your new employer but you don’t want to get shortchanged either. Making an appropriate counter offer requires a little skill and finesse to communicate your salary needs in a professional way.

That’s where knowing how to write a salary counter offer email comes in. A good counter offer email can help you build a stronger case for why you deserve a higher salary.

Table of Contents

What Is a Counter Offer
Keys To Asking for More Salary
Should You Negotiate Your Job Offer
Negotiate Your Salary Through Email or a Phone?
Steps To Making a Salary Counter Offer
Salary Counter Offer Email Template
The Takeaway

Key Points

• When countering a salary offer via email, be professional and polite.

• Express gratitude for the offer and highlight your qualifications and value.

• Provide a specific counter offer with a reasonable salary range based on research and market value.

• Justify your counter offer by emphasizing your skills, experience, and contributions.

• Close the email by expressing enthusiasm for the opportunity and willingness to negotiate.

What Is a Counter Offer?

A counter offer is your response to the hiring company’s original salary offer. When you make a counter offer, you’re asking the company to reconsider its initial offer and bump the number. For example, if a company offers you a starting salary of $80,000, you might counter that with $85,000 or $90,000.

Making a counter offer is not uncommon, and some companies expect new hires to do a little bargaining for higher pay. There’s no guarantee that a counter offer will be accepted, but it’s still worth making one if you believe that you can get a better deal.

Writing a counter offer email can be a great way to communicate what you’re hoping to get. If you’re getting hired at your first job, you might not know how to write a counter offer salary email. The good news is that it’s not as complicated as you might think.

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When To Counter a Salary Offer

There are different reasons that a job candidate might decide to make a salary counter offer. Here are some of the most common scenarios when a counter offer can be appropriate:

• The company is offering a salary that’s below average for the industry.

• You believe that your skills and/or experience are sufficient to command a higher salary.

• The salary isn’t enough to meet your financial needs.

• You’ve received a higher offer from a competing company.

If you’re negotiating salary for your first job, it’s important to find out what is competitive pay for this type of job and for someone with your experience?

Entry level salaries are naturally lower than salaries for people with more experience or education. That doesn’t mean, however, that you should automatically accept a lower salary for an entry level position if similar companies are paying more.

Researching pay ranges for the type of job you’re accepting can help you determine the high and low figures for a salary negotiation. It may also be helpful to know what trades make the most money and how much people earn at different levels within that trade or sector.

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Keys To Asking for More Salary

There’s some groundwork that goes into negotiating higher pay, either as a new hire or an employee seeking a raise. Here are some of the most important things to consider when asking for more pay:

• Research average salaries across your industry for employees with skills or experience equivalent to yours

• Know what you bring to the table, and be prepared to back that up with examples

• Be confident in your approach

• Be realistic and understand what the company can reasonably afford to offer you

Making your request for a salary increase in writing is also important, as it gives you an opportunity to outline in detail your reasoning for a pay boost. That’s where knowing how to write counter offer salary email messages comes in handy.

Should You Negotiate Your Job Offer (Even If It’s Already Pretty Good?)

Negotiating salary or other benefits isn’t something you necessarily have to do. And it’s possible that you might feel a little awkward asking your new employer for more money right off the bat. But it may still be worth negotiating certain aspects of your pay or benefits if you think there’s some wiggle room.

For example, you might be willing to accept a lower offer in exchange for stock if you think the company’s value is only going to rise in the future. One of the advantages of buying company stock through your employer is that you may be able to get it at a discounted price.

Tuition repayment assistance is something else that may be worth negotiating if you’re starting your career with student loans in tow. Employers are increasingly offering help with student loan debt and tuition to attract and retain talented employees. That type of benefit may be well worth negotiating if your company is open to the idea.

A signing bonus can also help balance out a lower salary. If the bonus is particularly lucrative, that might be a tempting reason to skip salary negotiations. Of course, you’ll want to brush up on the basics of how to ask for a signing bonus before you start negotiating.

Should You Negotiate Your Salary Through Email or a Phone Call?

If you’re interested in attempting to wrangle a higher salary from your employer, choose your approach carefully. Asking for a salary increase over the phone has its pros and cons. Your employer might feel like they’ve been put on the spot. Or you might be so nervous that you stumble over your words and don’t communicate your request clearly.

Putting your request in writing can take the pressure off both sides. It may be easier for you to explain why you feel you deserve a higher salary in writing and you can take your time with writing your email. You can expand on how you believe you’ll be able to help the company and why making a bigger investment in your salary is justified. You can also use your email to compare the salary offer to industry averages in order to underscore your case.

An email also gives your employer a chance to review your arguments and make a decision without feeling rushed. And should they decide to counter your counter offer, they may prefer sending it back to you in email format so there’s a paper trail of all salary discussions.

Steps To Making a Salary Counter Offer

Countering an employer’s salary offer can be nerve-racking, so it’s wise to have a plan or strategy going in. We’ve put together a helpful checklist for what to do when entering salary negotiations.

Research Comparable Salaries

As mentioned, it’s important to know what the average pay is for the industry and type of job you’re accepting. You don’t want to make a counteroffer that’s too far outside the norm of what employees with your same skill set and level of experience are making, as that can cause the employer to balk.

Wage data from the Bureau of Labor Statistics is a good place to start your research. You can also check salaries on sites like Payscale.com or Salary.com to see what kind of entry-level pay competitive companies are offering.

Review the Benefits Package

Before negotiating salary, it’s helpful to look at everything an employer is offering. That might include things like subsidized health insurance, a solid retirement plan, paid time off, stock options, tuition assistance, or a remote work option. Weighing the value of those benefits against salary can help you decide if it’s worth negotiating your pay.

If you’re offered great benefits but a lower salary, getting a second job can help bridge the gap. You may already have experience with making money on the side if you’ve ever held any jobs that pay for college, like babysitting, dog-walking, or doing gig work.

Know Your Value

A little self-awareness goes a long way. When you’re applying for your first job, you may not have a lot of professional experience under your belt yet. Instead, you can focus more on your college accomplishments, skills, personality traits, and other qualities that make you an attractive candidate for the job.

Take Time To Craft Your Counter Offer

The next step is the most important, because you need to make sure you’re wording your counter offer salary email carefully to convey what you want in a respectful way. You’ll want to start your email with a polite introduction and state your request briefly at the beginning. Then go into more detail explaining why you believe your counter offer is appropriate, and close the letter politely. It’s also important to verify to whom you should send the email to ensure it gets to the right place.

Negotiate With Your Employer

Once your employer receives your salary counter offer email, they’ll review it and then respond. The immediate response may be no, at which point you’ll have to decide if you want to continue attempting to negotiate. If the employer is willing to negotiate, you can then begin salary discussions to see if you can reach an agreement that suits you both. Being willing to compromise here is important, as coming on too strongly could cause the employer to rescind your offer and hire someone else.

Make Your Final Decisions

Once you’ve completed salary negotiations, your employer may give you a little more time to make up your mind. At this point, you’ll have to decide whether to accept their final salary offer or move on to another job. (By the way, hold onto the offer email — it can serve as proof of income for student loans and apartment applications.)

You may want to review your finances before deciding if the salary is acceptable. Using a free budget app can help you get a better sense of what kind of income you need to cover your spending.

If you decide to decline, you’ll want to do so politely. Burning bridges is a bad idea, in case you later apply for a position with the same company.

Recommended: Does Net Worth Include Home Equity?

Salary Counter Offer Email (Sample Templates)

If you’ve never attempted to write a counter offer before, you may not know what your letter should include. To make things easier, here are guides for how to write a counter offer email for salary in different situations.

Requesting Additional Compensation (Sample Email)

Dear [Hiring Manager],

Thank you for extending an offer at [company name] for the position of [title]. This is a very exciting opportunity, and I’m confident that I’ll be able to make a positive contribution to the team.

I am hoping there is room to negotiate the base salary for the role. According to my research, the industry average for this position is [salary range] for someone with experience and skills comparable to mine. I believe that a salary closer to [$$$] would be more appropriate, given my background and the requirements the role entails.

Please advise as to whether you’re open to discussing this at your earliest convenience.

Thank you and I look forward to your response.

Sincerely,
[Your name]

Responding to a Lowball Offer (Sample Email)

Dear [Hiring Manager],

Thank you for extending an offer at [company name] for the position of [titel]. This is a very exciting opportunity, and I’m confident that I’ll be able to make a positive contribution to the team.

I am hoping there is room to negotiate the base salary for the role, as it seems to be lower than the average salary typically offered for this type of position. According to my research, the industry average for this position is [salary range] for someone with experience and skills comparable to mine. I believe that a salary closer to [$$$] would be more appropriate, given my background and the requirements the role entails.

Please advise as to whether you’re open to discussing this at your earliest convenience.

Thank you and I look forward to your response.

Sincerely,
[Your name]

Leveraging a Competitor Offer (Sample Email)

Dear [Hiring Manager],

I am hoping there is room to negotiate the base salary for the role, as I’m currently considering an offer from another company. They’re offering a base salary of [$$$] along with a competitive benefits package that includes [list any benefits your recipient’s company does not offer].

I’m very interested in accepting the offer to work at [company name] if you’d be able to [match or increase] the base salary. Please advise as to whether you’re open to discussing this at your earliest convenience.

Thank you and I look forward to your response.

Sincerely,
[Your name]

Accepting the Offer (Sample Email)

Dear [Hiring Manager],

I’m pleased to accept the offer for the position of [position name] with [company name] that was extended on [date]. I’m looking forward to working with the team, and I appreciate the opportunity to negotiate a compensation and benefits package that is agreeable to all parties involved.

Per our negotiations, I understand that my starting salary will be [$$$] and that my benefits package will include [list of benefits]. I look forward to beginning work on [date].

Many thanks,
[Your name]

Rejecting the Offer (Sample Email)

Dear [Hiring Manager],

Thank you for extending an offering of employment at [company name]. I’ve enjoyed getting to know you throughout the hiring process, and I appreciate your willingness to consider my request for salary negotiation.

At this time, I must respectfully decline the position. I thank you again for the opportunity to discuss the job, and I regret that we were unable to reach a compromise suitable to all parties involved.

I do hope that you’ll find a suitable candidate for the position.

Kind regards,
[Your name]

The Takeaway

It’s natural to want to be paid what you’re worth, and negotiating your salary may be necessary to get what you want when accepting a job offer. You’ll want to research competitive salaries for your industry and type of job, and also consider the full benefits package. In email communications with your potential employer, it’s important to always be polite, professional, concise, and confident.

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FAQ

How do you politely negotiate salary via email?

Politely negotiating salary via email comes down to using respectful language and clearly explaining your needs and expectations. You want to state your case clearly and simply, then allow your employer time to form a response.

How do you politely counter a salary offer?

Countering a salary offer politely means making your case for better pay firmly but respectfully. You want to ensure that you’re directing your counter offer to the right person and explaining your reasoning behind for asking for higher pay.

How do you negotiate salary after receiving a job offer?

Once you receive a job offer, you can review the terms and draft a short email to ask if the employer is willing to consider salary negotiations. You then have to wait for their response to see if they’re open to negotiating. If they are, you can make your salary counter offer.

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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.

SORL-Q324-044

Sep

2024

Law School Scholarships Guide

By SoFi Editors | Budgeting & Goals, Building Your Career, Going to College, Student Loans, student_loan | Comments Off

Navigating the cost of law school can be daunting, but scholarships offer a valuable way to reduce financial burdens and make your legal education more affordable. Whether you’re a prospective law student or currently enrolled, understanding the variety of scholarships available is crucial to securing funding for your studies.

Keep reading to learn the types of law school scholarships available, tips for finding law school scholarships, and strategies for crafting compelling applications to increase your chances of success.

The Average Cost of Law School

The Law School Admission Council (LSAC) reports that the average annual cost of a public, out-of-state law school in 2023 was $43,590, or $30,554 for in-state students. For private law schools, the average in 2023 was $55,963. And according to Education Data Initiative, the average total cost of law school is over $230,000.

Because students aren’t yet racking up those billable attorney hours, it can be helpful to research law school scholarship opportunities before applying.

Types of Law School Scholarships

Per the numbers mentioned above, there might be a fair amount of sticker shock for those who haven’t yet applied for graduate school and are only thinking of someday going the lawyer route. Fortunately, there are a range of options for aspiring attorneys seeking to fund law school.

Full-Ride Tuition Law School Scholarships

In some cases, there are full-ride tuition scholarships and need-based grants out there. Full-rides, of course, are not available at all law schools. If a law school doesn’t explicitly advertise or highlight information regarding full-ride opportunities, interested students can contact the school to ask.

Students deciding whether to apply to law school may want to familiarize themselves with the language universities adopt to explain these scholarships. In some cases, specific scholarships are designated for particular students. Full-ride law school scholarships can be highly competitive — with some schools offering as few as two to four per enrollment year. One potential tip for the search for scholarships is to target law schools with more tuition help.

General Law School Scholarships

There are many options for law school hopefuls to find potential scholarships. The nonprofit organization Law School Admission Council (LSAC) has compiled a list of law school scholarships available to applicants. It could be well worth your time to go through the list and make note of the scholarships you’d qualify for.

Many law schools themselves offer competitive scholarships to attract stronger candidates, as well. It might also be helpful to check if a school also offers in-state residents specific tuition reductions or grants.

Law School Scholarships from Law Firms

Similarly, some law firms offer scholarships to law school students. Applying is typically a straightforward process, with many firms requiring a short essay, transcripts, and sometimes references to be considered. One such law firm scholarship is offered by The Dominguez Firm, which offers $5,000 and $2,500 annually to selected student applicants.

On top of this, there’s the rising trend of law firms helping new hires to repay a portion of their student debt once onboarded.

Diversity Law School Scholarships

Some scholarships are awarded to students with diverse backgrounds. One example of this is the Legal Opportunity Scholarship Fund offered by the American Bar Association. This scholarship is awarded to law students from a racial or ethnically diverse background.

The USLAW NETWORK Foundation also offers a $5,000 scholarship for up to 10 diverse students.

Law School Scholarships for Women

Some scholarships are offered to women attending law school. One resource is the American Association of University Women (AAUW) Fellowships and Grants, which offers scholarships to women in graduate studies, including law.

Finding Scholarships for Law School

There are dedicated resources like Fastweb and SoFi’s scholarship search tool to help prospective students find scholarships for which they may qualify. Fastweb is an online resource to help students find scholarships, financial aid, and even part-time jobs in support of college degrees.

The American Bar Association’s law student division also has a running list (along with deadlines) of law student awards and scholarships. Additionally, the Law School Admission Council offers a list of diversity scholarships available to students from diverse racial and ethnic backgrounds.

Negotiating Wiggle Room

Doing all this research and the math around law school scholarships could put applicants in a more informed position when evaluating which program to attend — and, potentially, help them to identify schools more likely to be interested in their application.

A reality of today’s admissions process for law school is negotiating scholarships. Some schools have a strict policy against negotiating, but others fully expect their initial offer to be countered. That’s why it can help to save acceptance letters and anything in writing from schools that offer admission.

Suggestions for Negotiating Law School Scholarship Offers

Offer letters could be shared with competing schools, asking if they’re able to match another university’s aid. It might be uncomfortable asking for more tuition assistance upfront, but a little discomfort now could help applicants shoulder less law school debt later on.

Doing research on law schools (and figuring out the likely cost of living expenses at each institution) could help applicants to determine which scores or grades to aim for in an effort to make law school more affordable for them. Tabulating expenses (and having records on hand) may also demonstrate to universities that the amounts being negotiated are based on well-documented expenses.

Federal vs Private Loans for Law School

Students wanting to apply to law school should consider the differences between federal and private student loans. Federal loans come with certain benefits not guaranteed by private ones (such as forbearance or income-driven repayment), and should be used first before seeking private student loans.

Private student loans can also help applicants cover the expense of graduate school. They typically offer competitive rates and terms, but you need to have a solid credit score to qualify.

It’s important to note that private student loans don’t offer the same benefits and protections afforded to federal student loan borrowers, like Public Service Loan Forgiveness (PSLF). If a law school applicant is interested eventually in becoming a public defender or pursuing non-profit legal work, forgiveness and forbearance perks may play a role in their decision.

The Takeaway

Students looking to offset law school costs with scholarships can look to their law school, scholarship databases, local law firms, and other organizations for resources. Consider contacting the financial aid office at your law school if you are looking for scholarship resources. If students interested in law school find themselves coming up short on funds for the JD after scholarships and federal aid, additional options may be available.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

What LSAT score will get me a scholarship?

One general rule of thumb is that students who have a LSAT score (and sometimes GPA) above the median for a certain school could qualify for a scholarship. Chances of qualifying are even greater if your score falls in the 75th percentile for the school.

What is a good scholarship for law school?

Any scholarship for law school is a good scholarship. Scholarships typically don’t need to be repaid and can help reduce a student’s debt burden. Students looking for law school scholarships can apply for institutional aid and aid through other sources like nonprofit organizations.

Do top law schools give scholarships?

While some top law schools do not offer scholarships, many law schools do offer law school scholarships to students. For example, in the 2023-2024 class at Yale, 71% of students qualified for some form of financial aid and 62% qualified for an institutional law school scholarship. Check directly with the schools you are interested in to see if they offer scholarships to students.

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Sep

2024

Is a $20,000 Salary Good?

By Timothy Moore | Building Your Career, Life & Career, money | Comments Off

While there’s no official guideline on what makes a salary “good,” a $20,000 salary is not typically enough for a household to live comfortably in most parts of the United States. Certainly, each person’s situation is unique in terms of their assets and expenses, but an individual making $20K a year may have a hard time making ends meet. They might need to rely on assistance from family, friends, and/or the government to afford basic necessities.

A $20,000 salary puts a single person above the poverty threshold for 2024. An individual supporting themselves plus one or more people on $20K a year, however, will live below the poverty threshold. With the record-high inflation we’ve seen in recent years, affording basic needs on a $20,000 salary has become even more challenging.

So is $20K a year good? While a $20,000 salary averages out to more than the federal minimum wage of $7.25/hour for full-time work, it is likely not an adequate income for anyone living independently and especially those with a family. In this piece, we’ll cover:

• The current American median income.

• Is $20K a year good?

• A breakdown of a $20,000 salary.

• The best and worst places to live on $20,000.

• Tips for living on $20K a year.

Factors to Determine if a $20,000 Salary Is Good

A $20,000 salary will be challenging for anyone to live on, but a few factors may determine if it can be done — or if it’s impossible:

• Taxes: If you are filing singly, a $20,000 salary will put you at the 12% federal income tax bracket. You may owe additional taxes for your state, city, and/or school district. For the sake of example, assume a flat 15%. That means, although you make $20,000, you only bring home $17,000 after taxes.

• Family size: Single individuals without children can make $20,000 stretch more easily. Two or more people living off a $20,000 salary will face more challenges.

• Location: Money goes further in some places more than others. If you live in an area with a low cost of living, a $20,000 salary may be more manageable. But if you live in a popular city, $20,000 a year may not even cover rent.

• Debt: If you have debt, it can be more challenging to allocate your limited money to basic necessities and important financial goals, like building an emergency savings fund. If you are dealing with high-interest debt, you probably know how quickly this debt can grow when you are only paying the minimum amount due.

How Does a $20,000 Salary Compare to the American Median Income?

According to the most recent U.S. Census Bureau report, median household income was $80,610 in 2023. Keep in mind, though, that this number represents all households, which may include more than one earner. According to the Bureau of Labor Statistics, median weekly earnings for American workers was $1,117 in 2023, which comes out to $58,084.

Either way, $20,000 is far below either estimate for a median income. If you earn $20,000 and have a domestic partner or spouse who earns additional income, your salaries together might get you closer to the median income level.

Recommended: Is a $100,000 Salary Good?

$20,000 Salary Breakdown

Again, no judgment here: It’s not a matter of if a $20,000 salary is good or bad. To someone just out of high school, $20K a year might look like a good entry-level salary. But anyone who has handled monthly bills like rent and utilities will likely recognize that a $20,000 salary may be insufficient.

Here’s how a $20,000 annual salary breaks down:

• Monthly income: $1,666.66

• Biweekly paycheck: $769.23

• Weekly income: $384.62

• Daily income: $76.92 based on working 260 days a year

• Hourly income: $9.62 based on working 2,080 hours a year

These estimates do not account for taxes. In the example above, a $20,000 salary may shrink to $17,000 after Uncle Sam has taken his cut.

Recommended: For other salary conversions, use our Salary to Hourly Calculator.

Can You Live Individually on a $20,000 Income?

It is possible to live individually on a $20,000 income, but you will likely only be able to afford the items on your basic living expenses list if you aren’t able to supplement your income. Living comfortably — with easy access to good health care (including mental health), balanced nutrition, safe housing, and efficient transportation — may be far more challenging on $20,000 a year.

If you make $20,000 a year, you might be able to minimize monthly expenses by looking for government assistance, getting a roommate or moving in with family, cooking at home, and using an online bank account with a high interest rate and automatic savings features.

How Much Rent Can You Afford Living on a $20,000 Income?

Wondering how much you can afford to spend on rent? Researchers have long argued that you should spend no more than 30% of your income on housing. With rising inflation and increasing rent prices, however, that’s not always possible.

If you were to stick to the 30% rule (and forget about income taxes for the sake of the example), that means you can spend $6,000 a year on rent, or $500 a month. But the median cost of rent in the U.S. was $2,100 as of September 2024, according to Zillow. That’s about four times what you could afford on $20K a year.

To afford rent on a $20,000 salary, it’s a good idea to live in a place with a very low cost of living and to have one or more roommates who can help share living expenses of rent and utilities with you. Moving in with family is also a solution if you cannot afford rent on your salary.

Best Places to Live on a $20,000 Salary

If you are making $20,000 a year (or $9.62 an hour), it might be a good idea to explore cities and states with a low cost of living.

These are the five least expensive cities to live in for 2024-2025, per U.S. News:

• Fort Wayne, Indiana

• Huntsville, Alabama

• Wichita, Kansas

• Springfield, Missouri

• Davenport, Iowa

Living outside a city altogether is usually more affordable. Consider a rural location in one of these five cheapest states to live in:

• Arkansas

• Mississippi

• Alabama

• West Virginia

• South Dakota

Worst Places to Live on a $20,000 Salary

On the flip side, there are some major cities that are exorbitantly expensive to live in. If possible, it’s a good idea to avoid living in the following locations when you are living on $20,000 a year:

• Hartford, Connecticut

• Los Angeles, California

• Miami, Florida

• New Haven, Connecticut

• New York City, New York

California cities clearly carry a high cost of living, but other states are also expensive. If you have a $20,000 annual salary, it’s a good idea to steer clear of any of the five most expensive states to live in:

• Hawaii

• New York

• California

• Massachusetts

• Oregon

Is a $20,000 Salary Considered Poverty?

A $20,000 salary is above the poverty line for an individual, but if you are a couple or a family of three or more people living on a $20,000 salary, the government considers you to be below the poverty line.

These numbers do not consider factors like variable cost of living. A localized poverty line could be more telling, especially if you live in a place with a high cost of living. If you are, say, living in a pricey city and earning $20,000 a year, you might be feeling the financial pinch more.

Tips for Living on a $20,000 Budget

While advocating for a higher salary can infuse your line item budget with more funds, you can’t necessarily count on a raise. Taking other steps now may make it easier to live on your $20,000 salary.

Finding Out What Assistance You Qualify For

If you are making $20,000 or less, you may qualify for government assistance. Here are a few actions to consider taking:

• Work with the U.S. Department of Housing and Urban Development for assistance with rent, including the Section 8 program.

• Determine if you are eligible for assistance with grocery bills through the Supplemental Nutrition Assistance Program (SNAP).

• Research the Low Income Home Energy Assistance Program (LIHEAP) to help with utilities.

• See if you can lower your phone bill through the Lifeline Modernization Order .

• Find out if you are eligible for free or low-cost health coverage through Medicaid and the Children’s Health Insurance Program (CHIP).

Coming Up With a Housing Plan

If you do not qualify for rental assistance from the government, you may need to come up with another plan to avoid high rent costs. Roommates can be a good way to keep rent low.

Alternatively, family and friends may be willing to offer free lodging while you save money. While it can be hard to lean on others in this way, it can be a form of financial self-care to do so until you are able to be out on your own. If you do move in with a loved one, just remember to be helpful around the house and chip in with utilities and groceries if you’re able.

Cutting Costs

After reducing your largest cost (rent), it may be possible to reduce other costs in your budget. For example, a car payment, gas, and car insurance can be costly monthly expenses. If you live in an area with great public transportation or are comfortable walking and riding a bike, you may be able to get around without owning your own vehicle.

Other costs you might be able to cut include streaming services, gym memberships, and bills from dining out.

Getting on a Budget

After finding low-cost housing and trimming unnecessary expenses, it’s a good idea to make a monthly budget that accounts for your post-tax income and your monthly expenses.

Not sure how to budget on a $20K salary? Taking care of all necessary bills (housing, utilities, groceries) is the perfect first step. Once you’ve accounted for those monthly expenses, see how much you can allocate to paying down debt or building your savings.

Recommended: How to Save Money From Your Salary

Avoiding the Wrong Kinds of Debt

Taking on debt is often necessary — when buying a house, purchasing a car, or even going to college. But when you make a low salary and struggle to pay the bills, it can be tempting to take out a payday loan or overuse a high-interest credit card.

When possible, it’s a good idea to avoid high-interest loans. In fact, instead of taking on more credit card debt, you may be able to take control of your bad debt by applying for a debt consolidation loan. These are typically personal loans that charge an interest rate that may be significantly lower than your credit cards’ rates. You use the loan to pay off the cards and then you work to eliminate the personal loan.

You might also meet with a counselor from a nonprofit debt counseling organization like the National Foundation for Credit Counseling, or NFCC .

Recommended: Debt Repayment Strategies

Supplementing Your Basic Income

You might also consider ways to bring in more income to pump up your spending power. This could include seeing if additional hours are available at your primary workplace, as well as taking on a seasonal part-time job or starting a side hustle. These are all ways to use some of your leisure time to bump up your income.

The Takeaway

A $20,000 is usually not enough for a family to live on, and it may be difficult for individuals to get by on this salary too. It may be wise to research government assistance, look for roommates to lower housing costs, and build (and stick to) a monthly budget that prioritizes paying down debt and building emergency savings. These steps can help you live on a $20,000 annual income.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

Can you live comfortably on $20,000 a year?

It can be difficult for an individual to live comfortably on $20,000 a year. With the right assistance from friends, family, and the government, however, it may be possible to meet basic needs. Families will face more challenges living off $20,000 a year.

What can I afford making $20K a year?

A $20,000 salary may leave room in your budget for the most basic expenses: rent, utilities, transportation, and groceries. Even then, getting government assistance and a roommate might be necessary for managing monthly expenses on $20K a year.

Is $20,000 a year middle class?

According to the most recent data from the Pew Research Center, middle class, middle-income households have incomes ranging from about $56,600 to $169,800. Thus, a family living on $20,000 is not middle class; it’s actually below the poverty level. While an individual earning $20,000 a year is not below the poverty line, they are still not considered middle class.

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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 3.80% 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.

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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 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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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.

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Sep

2024

Managing Your Money as a Freelancer

By Rebecca Lake | Building Your Career, Life & Career, money | Comments Off

In this era of the Gig Economy, side hustles, and entrepreneurship, many people are freelancers. Working this way can offer flexibility and unlimited earning potential, but it can also bring a learning curve when it comes to managing your money. Financial planning for freelancers means knowing how to handle things like tracking income and expenses, planning for taxes, and investing for retirement.

Mastering freelance money management can take some time and focus, but it’s a worthwhile pursuit if it helps you to achieve your financial goals. The better you understand how to manage finances as a freelancer, the easier it can be to get ahead.

To help get on the right path, read on to learn, among other topics:

• Why financial planning is important for freelancers

• How to create a budget as a freelancer

• How to track cash flow

• How to separate business and personal expenses

What Is a Freelancer?

A freelancer is someone who gets paid to complete work on a per-job basis. Freelancers are independent contractors, not employees. A freelancer can work with multiple clients on a contract basis, performing a variety of tasks.

Why does understanding this definition matter for freelance money management? It’s important because freelancers are not entitled to the same financial perks as hourly or salaried employees.

As a freelancer, you’re responsible for handling things like retirement planning, health insurance, and taxes yourself. You also won’t have paid vacations and holidays the way employees do, which may factor into your cash flow and money management planning.

Why Financial Planning Is Important

What is financial planning? Financial planning is the process of creating a plan for managing your money. A financial plan can include both short-term and long-term goals and the steps you’ll need to take to achieve them. For example, your financial plan might include a strategy for paying off student loans or saving money toward a down payment on a home.

Financial planning for freelancers is important because you’re in charge of deciding what happens with your money. Learning how to manage finances as a freelancer can help you to:

• Create a workable budget, even if you have irregular income

• Formulate a plan for saving for retirement

• Stay on top of your tax obligations

• Streamline expenses so you can avoid debt

• Plan for emergencies or unexpected costs

Planning can be a pathway to good financial health. And it’s an opportunity to develop positive habits and improve your money mindset, both of which can benefit you throughout your freelance career.

11 Tips for Financially Planning as a Freelancer

If you’re new to freelance money management, you may not know where to start or what you even need to be doing. Having a blueprint to follow can make it easier to develop a workable plan for managing money. Here are some essential steps to include in your financial plan if you have a freelance mindset.

1. Having and Maintaining a Budget

A budget is a plan for spending the money you make each month. If you want to be better with money as a freelancer, then creating and sticking to a budget is non-negotiable. It will help you both understand and optimize your finances.

When making a freelancer budget, start with income first. If your income is irregular, it can help to create an average as your baseline. So you’d add up all the money you made from freelancing over the past 12 months, for instance, then divide by 12 to arrive at a monthly average income.

You can then plan out your expenses (more on that in a minute), using that average as your baseline. You’ll tally how much money flows out for necessities every month, and see how much profit you are making.

When you have higher-income months, you can stash extra money in a savings account to help cover expenses in months when income is lower. You’ll also want to put money towards an emergency fund and retirement (more details below).

2. Giving Yourself a Consistent Paycheck

When you freelance, there’s no such thing as a weekly or biweekly paycheck. Instead, you might get paid on different dates each month, depending on how your clients handle payments.

That can lead to uncertainty about when to pay bills. You can avoid that issue by giving yourself a consistent paycheck on a regular schedule. So you might pay yourself a set amount on the 1st and 15th of each month, for example.

To do that, you might need to set aside enough money to cover one month’s worth of bills in your checking account first. That way, you can pay yourself according to the schedule you set without having to worry about overdrawing your bank account.

3. Keeping Track of Your Expenses

Tracking expenses is central to managing money better as a freelancer, especially if you’re worried about going over budget. It’s important to keep tabs on both your personal expenses and your business expenses so you know how much you’re spending each month. When adding up your business expenses, be thorough: Do you rent an office? If so, don’t forget about the electrical bill and any cleaning services as expenses.

Also track the costs of legal fees, insurance, website hosting and any online advertising you may do. Some of these charges can be billed annually, and you may lose sight of them since they don’t recur.

Keeping up with business spending also matters from a tax perspective. There are a number of tax deductible expenses for freelancers that can help to reduce your tax bill.

For example, you might be able to write off marketing expenses if you maintain a website for your business or claim an office at home tax deduction. Having a paper trail to back up those deductions is important in case the IRS targets you for an audit.

4. Timing Your Freelance Projects

Staying booked and busy is every freelancer’s dream since no work means no income. Timing your freelance projects can help to keep your income and cash flow consistent, so that you’re not struggling to stay on top of the bills. For example, if you’re a freelance writer, you might set deadlines to allow yourself enough time to invoice for your work (and get paid) before certain bills come due.

There’s another dimension to timing to consider as well. It’s important to think about how much time it will take to complete a project when setting rates. Underestimating the amount of time involved could cause you to shortchange yourself when quoting rates to clients. A good rule of thumb is to assume that any project will take 20% to 50% longer than you think it will. Then base your rates on that higher number.

5. Paying Down Your Debt

Debt can be a stumbling block to getting ahead financially as a freelancer. If you have student loans, a credit card balance, or other debt, it’s to your advantage to create a plan for paying off your debt as quickly as possible.

If your income is irregular, your budget should be designed to ensure that your most important living expenses are paid first. You can then decide how much room you have left in your budget to commit to debt repayment.

Also, consider ways to make your debt less expensive. Refinancing student loans, for example, may help you to get a lower rate and monthly payment, if you qualify for them, which can ease budget strain. You might also consolidate credit card debt with a better APR (annual percentage rate) credit card or even a rate of 0% with a balance-transfer offer. This can help you save on interest, which could make it easier to pay off your debt.

6. Separating Business and Personal Expenses

Keeping business and personal spending separate is a good idea for a few reasons. It makes it easier to create budgets for personal expenses and business expenses, so you know what you’re spending on each one. And you may encounter fewer headaches at tax time when trying to claim freelance tax deductions if business expenses are separate.

Opening a business bank account is a simple way to separate your spending each month. You can link it to your personal checking account in order to pay yourself your regular paycheck. You may also consider opening a separate business credit card to cover freelancing expenses if you can afford to pay the bill in full each month and avoid interest charges.

7. Investing in Insurance

As a freelancer, you don’t have access to employer-sponsored health insurance. So if you want to get covered, you’ll need to purchase a policy yourself. Self-employed individuals, including freelancers, can buy health insurance through the Health Insurance Marketplace.

When comparing health insurance plans, pay attention to:

• Premiums

• Deductibles

• Copays and coinsurance

• Coverage limits

You may also consider applying for health insurance through Medicaid if you have little to no income or financial resources. Eligibility for Medicaid is based on your income, household size, and assets. You can apply through your local department of social services.

In addition to health insurance, you may also want to look into insurance for your business. Liability insurance, for example, can protect you against claims arising from copyright infringement, libel, or defamation. That type of insurance can come in handy if you’re sued.

8. Having an Emergency Fund

An emergency fund is money that you set aside for unexpected expenses; say, a major car repair or medical bill. As a freelancer, an emergency fund can be invaluable if your work assignments dry up or you get sick and are unable to work temporarily.

In terms of how much to save for emergencies, three to six months’ worth of expenses is a commonly-used rule of thumb. But you might want to double or even triple that amount if your freelance income is irregular or you’re worried about a sustained client drought.

Recommended: Ready to build your emergency fund? Use our emergency fund calculator to determine the right amount.

Keeping your emergency fund in an online savings account is an option to consider. The annual percentage yield (APY) tends to be higher than what bricks-and-mortar banks offer. Online savings accounts may also charge fewer fees than traditional savings accounts.

9. Accounting for Taxes

Freelancing means you don’t have an employer taking out taxes from your paychecks. So you’ll have to handle taxes yourself.

Generally speaking, the IRS requires you to file an annual tax return and pay estimated quarterly taxes if you expect to owe $1,000 or more for the year. Quarterly taxes are essentially an advance payment against the amount of tax you’ll likely owe for the year.

Estimated taxes are due four times a year, typically:

• April 15 (1st payment)

• June 15 (2nd payment)

• September 15 (3rd payment)

• January 15 of the following year (4th payment)

Failing to make those payments on time can trigger penalties. If your state collects income tax, you’ll also need to make estimated payments to your state revenue agency.

You can use an online tax calculator to gauge how much you’ll need to pay for estimated taxes each quarter. It may be helpful to set up a separate business checking account or savings account to hold the money for those payments. As your clients pay invoices, you can allocate part of each payment to your tax account.

If filing taxes as a freelancer seems overwhelming, consider talking to an accountant or another tax professional who can help you figure out how much to set aside for taxes and how to maximize deductions in order to lower your tax bill. You may be surprised to learn about some business tax credits you didn’t know about.

10. Investing Your Money

Investing is key to building wealth since it allows you to take advantage of the power of compounding returns. If you already have an emergency fund in place, the next step in freelance money managing is creating an investment portfolio.

You can start with a retirement account if you don’t already have one. Freelancers can use traditional IRAs, Roth IRAs, SEP IRAs, and solo 401(k) plans to save for retirement. Each of these plans can offer a tax-advantaged way to save for the future. You can supplement your retirement savings with investments in a taxable brokerage account if you choose.

When investing as a freelancer, consider your risk tolerance and how much you have to invest, based on your budget. You may need to start with a small monthly amount, but you could build on that over time. The most important thing is to start saving and investing for the future.

11. Taking Advantage of Resources

Financial planning as a freelancer can be easier when you have the right tools and resources. For instance, some of the things you might consider incorporating into your plan include:

• Budgeting apps

• Tax management apps

• Online bank accounts for freelancers

• Investment apps

You can also search online for resources to help with things like insurance and tax planning.

Managing Finances With SoFi

Between managing deadlines, tracking invoices, and keeping up with client needs, freelancing can be demanding. Finding ways to simplify money management as a freelancer, including opening the right bank account, can save you valuable time and money.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

How is freelancing paid?

Freelancers can get paid in a number of ways, depending on their clients’ preferences. For example, clients can send payments through PayPal, Stripe, direct deposit, or paper checks. When negotiating a freelance contract with a new client, it’s important to understand how and when you’ll be paid for the work you perform. In some professions, it can be typical for clients to take 30 days or longer to pay invoices.

Do you need insurance if you are a part-time freelancer?

If you freelance part-time while working a full-time job, you may be covered by a policy from your main employer. But if you have no insurance coverage at all, it could make sense to buy a policy for yourself through the healthcare marketplace. You may also want to look into buying separate liability insurance for your business.

What are some good freelancer jobs?

There are lots of ways to make money as a freelancer. Some of the highest-paying freelance gigs can include copywriting, graphic design, and editing. There are also a variety of freelance jobs that may be desirable because you can set your own hours, such as driving an Uber.

Photo credit: iStock/StefaNikolic

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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3.80% APY
SoFi members with direct deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit 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, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

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 3.80% 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 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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.

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.

SOBNK-Q324-042

How to Roll Over Your 401(k): Knowing Your Options

401(k) Rollover Options

1. Roll Over Money to a New 401(k) Plan

Direct Rollover

Indirect Rollover

Pros and Cons of Rolling Over to a New 401(k)

Get a 1% IRA match on rollovers and contributions.

Double down on your retirement goals with a 1% match on every dollar you roll over and contribute to a SoFi IRA.1

2. Roll Over Your 401(k) to an IRA

Pros and Cons of Rolling Over to an IRA

3. Leave Your 401(k) With Your Former Employer

Pros and Cons of Leaving Your 401(k) Alone

4. Cash Out Your Old 401(k)

Pros and Cons of Cashing Out Your 401(k)

When Is a Good Time to Roll Over a 401(k)?

The Takeaway

FAQ

How can you roll over a 401(k)?

What options are available for rolling over a 401(k)?

How To Counter a Salary Offer (Sample Emails)

What Is a Counter Offer?

Check your score with SoFi

Track your credit score for free. Sign up and get $10.*

When To Counter a Salary Offer

Keys To Asking for More Salary

Should You Negotiate Your Job Offer (Even If It’s Already Pretty Good?)

Should You Negotiate Your Salary Through Email or a Phone Call?

Steps To Making a Salary Counter Offer

Research Comparable Salaries

Review the Benefits Package

Know Your Value

Take Time To Craft Your Counter Offer

Negotiate With Your Employer

Make Your Final Decisions

Salary Counter Offer Email (Sample Templates)

Requesting Additional Compensation (Sample Email)

Responding to a Lowball Offer (Sample Email)

Leveraging a Competitor Offer (Sample Email)

Accepting the Offer (Sample Email)

Rejecting the Offer (Sample Email)

The Takeaway

FAQ

How do you politely negotiate salary via email?

How do you politely counter a salary offer?

How do you negotiate salary after receiving a job offer?

Law School Scholarships Guide

The Average Cost of Law School

Types of Law School Scholarships

Full-Ride Tuition Law School Scholarships

General Law School Scholarships

Law School Scholarships from Law Firms

Diversity Law School Scholarships

Law School Scholarships for Women

Finding Scholarships for Law School

Negotiating Wiggle Room

Suggestions for Negotiating Law School Scholarship Offers

Federal vs Private Loans for Law School

The Takeaway

FAQ

What LSAT score will get me a scholarship?

What is a good scholarship for law school?

Do top law schools give scholarships?

Is a $20,000 Salary Good?

Factors to Determine if a $20,000 Salary Is Good

Get up to $300 when you bank with SoFi.

How Does a $20,000 Salary Compare to the American Median Income?

$20,000 Salary Breakdown

Can You Live Individually on a $20,000 Income?

How Much Rent Can You Afford Living on a $20,000 Income?

Best Places to Live on a $20,000 Salary

Worst Places to Live on a $20,000 Salary

Is a $20,000 Salary Considered Poverty?

Tips for Living on a $20,000 Budget

Finding Out What Assistance You Qualify For

Coming Up With a Housing Plan

Cutting Costs

Getting on a Budget

Avoiding the Wrong Kinds of Debt

Supplementing Your Basic Income

The Takeaway

Double down on your retirement goals with a 1% match on every dollar you roll over and contribute to a SoFi IRA.¹

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