SoFi

Most people hit financial challenges at some point. Perhaps it’s a bout of overspending, the feeling that you can’t get out from under your credit card debt, or the fact that you can’t balance your budget.

Facing these kinds of situations doesn’t mean that financial security can’t be yours, nor that your money goals are unattainable. Rather, it means that you may need to focus on your finances, reprioritize, and adopt some new habits to get on track.

Here, you’ll learn about five of the most common money challenges, as well as some smart solutions that can help you take control of your finances.

1. Monthly Spending Exceeds Income

Many people struggle with the fact that their monthly outflow (or spending) outpaces their monthly inflow (or take-home income). The imbalance can cause you to rely on credit cards, and make it nearly impossible to save for the future, or even for a rainy day.

To help get your cash flow into balance, you may want to set up a basic budget. While a budget may sound restrictive, it can actually simplify your finances and make it easier to make everyday spending decisions.

A good way to start is to go through the last few months of financial statements and receipts, then tally up your average monthly income (after taxes) and average monthly spending. You may also want to break down expenses by categories, and then group categories into necessary and unnecessary spending.

It can also be helpful to actually ​track your spending for a month, taking note of every latte and lunch out (or by using an app that tracks expenses). Although you may think you know where your money is going, when people tally up all their purchases for a month, they are often surprised to notice that their spending doesn’t always match up with what they thought their priorities were.

Once you see where your money is really going each month, you can then look at your budget critically and search for areas where you can cut back. For example, you might decide you’ll eat out less often, pack your lunch a few days a week, save on a streaming service you rarely watch (buh-bye), or find a cheaper cell phone provider.

You may also want to think about ways you may be able to grow your income, such as negotiating a higher salary, looking for a new (higher-paying) job, or taking on a low-cost side hustle.

2. Not Having a Financial Cushion

Life can be unpredictable, and unforeseen events, like a loss of income, car breakdown, or visit to the ER, can quickly put you into a hole if you don’t have any emergency savings at your disposal.

Ideally, an emergency fund will have enough cash to cover at least three- to six months’ worth of living expenses, but even a reserve of $1,000 can save you from having to rely on credit cards or take out a personal loan to handle an unexpected expense.

To start building a buffer, you may want to consider dedicating part of your monthly budget to emergency savings. It can be a good idea to keep this fund in an account that earns more interest than a standard savings account, but still allows you easy access to your money, such as a high-yield savings account (typically offered by online banks), money market account, online savings account, or a checking and savings account.

Even contributions of $50 a month can add up quickly, creating a cushion that can come in handy when a rainy day hits.

3. Carrying a Credit Card Balance Every Month

Credit cards can be both a useful financial tool and an incredibly slippery slope. High-interest rates make the price of the charged items significantly more expensive. And, depending on credit makes it more likely that you’ll spend more than you earn.

As you re-evaluate your budget and work to reduce expenses, you may also want to find a way to pay more than the minimum on your credit card balances. If you have multiple cards, you might try the avalanche method of paying off debt. This involves paying the minimum on all your balances, but putting extra towards the balance with the highest interest rate. Once that’s paid off, you put your extra money towards the debt with the next highest balance, and so on.

Another approach is the snowball method. Here, you pay the minimum on all your debts, but put extra money towards the smallest balance. Once, that’s paid off, you put your extra money towards the next-highest balance, and so on.

Alternatively, you may want to consider consolidating your credit card debt by paying off all your balances with a personal loan. You would then only have one balance to keep up with, ideally with a lower interest rate.

4. Being Weighed Down by Student Loan Debt

Having a large amount of student debt can demand payments that limit your ability to buy a home or increase your savings. While it can be tempting to put off payment and keep more money in your checking account, that only results in paying more interest over time.

Instead, you may want to consider paying more each month in order to get out from under student debt faster. Whether it’s paying $20 or $100 more each month, every bit over the minimum payment helps to make a dent in your debt.

You may also want to put any lump sum of cash you receive, such as a tax refund or bonus, towards your student loan debt. When you make extra payments, however, it’s a good idea to make sure that you select the option for the funds to be applied toward your loan principal (otherwise it may go towards interest).

Another option you may want to consider is refinancing your student loans. This means trading in your current loan(s) for one brand new loan through a private lender. The goal with refinancing is to get a lower interest rate while also having the ability to change your loan term (such as cutting the timeline in half). This can be a good option if you have good credit and are currently paying a high interest rate on your student loans. Just be aware that refinancing federal student loans can mean you are not eligible for forgiveness, so think carefully about your decision. In addition, extending your loan term can mean that while your monthly payments are lower, you pay more interest over the life of the loan.

Recommended: 6 Strategies to Pay Off Student Loans Quickly

5. Not Saving Enough for Retirement

Retirement saving can be critical if you want to have financial freedom in your future. And even if retirement seems like a long way off, it can be much easier to amass a comfortable nest egg when you start saving and investing early.

Thanks to the magic of compounding interest (when the interest you earn also earns interest), even putting a little bit of money into a retirement fund each month can help you build wealth over time.

If you aren’t maximizing contributions to a 401k, you may want to consider putting as much tax-deferred money as possible into these accounts. If your employer offers matching funds, it can be a good idea to take full advantage of this perk (which is essentially free money).

If you don’t have access to a 401k or you are able to put any additional money aside to secure your retirement, you may want to consider opening an IRA (keeping in mind that there are annual limits to retirement contributions).

Taking advantage of these savings vehicles can lower your tax burden this year and earn interest for your golden years.

The Takeaway

Many of us have to deal with financial challenges at one time or another during our lives, such as living paycheck to paycheck or accumulating too much debt. Resolving these issues can involve tracking your expenses for a month and setting up a monthly budget. Or you may need to set up a manageable debt repayment plan to regain control of your finances. One simple step that may help you optimize your finances is to find the right banking partner.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

What are the main financial challenges?

Common financial challenges include poor budgeting, not having an emergency fund, overspending, racking up credit card debt, living paycheck to paycheck, and not saving for long-term money goals.

What is financial stress?

Financial stress can be defined as difficulty meeting one’s financial commitments and the anxiety that triggers. Money worries are often based on feeling as if one doesn’t have enough money and/or having too much debt.

What are significant financial difficulties?

Significant financial difficulties can be defined as being unable to make necessary payments using one’s disposable income or possibly any other source.

Photo credit: iStock/iamnoonmai

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details 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.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOBNK-Q325-083

When you deposit money into your bank account, you can’t necessarily use the money right away. Your financial institution may put a hold on a portion of your funds as they process the transaction and make sure it clears.

Whether or not all your cash is available can depend on a variety of factors, such as the form of the deposit; the amount of money involved; and when and where the deposit was made. Your money might be ready to use almost immediately, or it could take a few days or even longer. The timing can depend on both federal regulations and a bank or credit union’s internal guidelines for processing deposits. Here’s what you need to know.

Why Do Banks Put a Hold on Deposits?

Banks hold deposits to protect themselves, as well as their customers, from losing money. If a check you deposit bounces or some other complication arises, the bank will have an opportunity to fix the problem before you have the opportunity to spend the funds.

While a delay in being able to access your own money may seem like a nuisance, holds can actually help protect you from fraud and fees.

If your bank allows you to spend funds from a check that later bounces, you would have to repay the bank the amount that they gave you, and likely also get hit with a hefty overdraft fee. This is the case regardless of who is at fault.

How Long Can a Bank Hold a Deposit?

The amount of time it takes for funds to become available can depend on a number of factors, including how long you’ve held your account, your financial history, the type of deposit (e.g., cash, check, direct deposit), and the amount of the deposit.

•   Generally, a bank or credit union has until at least the next business day (a business day is a weekday that is not a holiday) to make most deposits (or a portion thereof) available.

•   Electronic deposits are typically available on the same day. So, one way to make sure your paycheck is available to you quickly is to sign up for direct deposit into your checking account.

•   Cash deposits may clear immediately or the next business day.

•   The longest a bank can hold funds is usually five business days for money deposited at an ATM of a different bank.

•   While each bank or credit union has its own rules as to when it will let you access the money you deposit, federal law establishes the maximum length of time a bank or credit union can make you wait.

The amount of money deposited can also matter, with the current guideline specifying that the first $275 of a check must be made available according to schedule.

Here are the rules set by the Federal Reserve for making funds available the next day or longer.

• Cash deposited to your bank account in person or to an in-network ATM.

• The first $275 of a check deposited in person or at an in-network ATM.

• Electronic payments, like a domestic wire transfer

• U.S. Treasury checks deposited in person or at an in-network ATM.

• U.S. Postal Service money orders deposited in person to one of your employees and into an account held by a payee of the check.

• Federal Reserve Bank and Federal Home Loan Bank checks deposited in person.

• State or local government checks deposited in person.

• Cashier’s, certified, or teller’s checks deposited in person.

• Checks drawn on an account held by the same institution as your account, deposited in person or at an in-network ATM.

For cash, USPS money orders, Federal Reserve Bank and Federal Home Loan Bank checks, state or local government checks, and cashier’s, certified, and teller’s checks that are deposited to out-of-network ATMs, the funds must be made available by the second business day. Deposits made by cash, non-USPS money order, or check at out-of-network ATMs must be made available by the fifth business day.

You may want to keep in mind that the hold times listed above are the maximum allowed. It’s possible that your funds will be available sooner.

You can typically find specifics about your bank’s funds availability policy in the account agreement you received when you opened your account, or you can ask the bank for a copy of their holding policies.

Understanding Cut-Off Times

When you deposit a check to your checking account, you may think you did it “today.” However, you may have missed the cut-off for starting the deposit process on that calendar day.

If you make a deposit after the cut-off time, your financial institution can treat your deposit as if it was made on the next business day. If the deposit was made late in the day on a Friday, it could actually take three or more days for the money to show up in your account.

By law, a bank or credit union’s cut-off time for receiving deposits is generally no earlier than 2 pm at physical locations and no earlier than noon at an ATM or elsewhere. Sometimes banks have later deposit times for mobile deposits (made via the bank’s phone app), such as 5 pm.

Deposits That May Take Longer to Become Available

There are certain circumstances under which banks are allowed to hold deposited funds for longer than the times listed above.

When these exceptions apply, there isn’t always a clearly defined limit to the amount of time the bank can hold funds. The bank can generally hold funds for a “reasonable” amount of time.

Exceptions to standard holding times include:

Large Deposits

If a customer deposits more than $6,725, the bank will typically need to make the first $275 of the funds available on the next business day, then a total of $6,725 the business day after that, but they are allowed to put a longer hold on the remaining amount.

Redeposited Checks

If a check bounces and then is redeposited, banks may hold the funds for longer than one business day. (You may want to be cautious about accepting future checks from a person or business that has already bounced a check.)

Recommended: How to Deposit a Check

Accounts That Have Been Repeatedly Overdrawn

If a customer has a history of overdrawing their account, the bank may go beyond charging overdraft fees and also hold funds for more time before making them available for use.

Repeatedly overdrawn means that the account has had a negative balance on at least six business days within the past six months, or the account was $6,725 overdrawn more than twice within the past six months. (One note: If you are in this situation, you may want to consider the pros and cons of overdraft protection.)

Reasonable Doubt

If a customer deposits a check that seems suspicious, the bank may hold funds for a longer period of time. A check may seem suspicious if it’s postdated or it’s more than 60 days old. (Typically, how long a check is good for is about six months, but it may cause concern after two months has passed.)

New Bank Accounts

If you recently opened a bank account and your account is less than 30 days old, you may experience hold times of up to nine days. Official checks and electronic payments, however, may be partially available the next day.

Emergency Conditions

If there is a communications outage, a natural disaster, or another circumstance that impedes normal bank functions, banks can hold funds until they are able to provide the funds.

The Takeaway

When you deposit a check, you naturally expect the money to show up in your bank account. Banks generally make funds available on the business day after you make a deposit, but there are exceptions that keep funds on hold for several days. Knowing the federal and your financial institution’s policies about holding times can help ensure that you’re able to pay your bills on time, have access to cash when you need it, and don’t get hit with overdraft fees.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

What is the $275 availability rule?

This rule states that the first $275 of a given day’s deposit must be made available on the next business day.

How long can a bank hold onto a large check?

When you deposit a large check, the first $275 is typically available the next business day. The rest of it, up to a total value of $6,725, is usually accessible within two business days, and the remainder potentially held for several more days as the bank verifies the check’s validity.

How long does it take for a $30,000 check to clear?

It will typically take about two to five days for a $30,000 check to clear.

Photo credit: iStock/solidcolours

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details 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.

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-Q325-084

Many people sign up for app free trials, perhaps for an exercise program or a streaming platform, and think they’ll remember to cancel in a week, before they get billed…but don’t. Then, a charge appears on a statement, and they realize it’s time to take action and cancel that unwanted subscription.

Or perhaps you’re the type who signed up for a meditation app but haven’t used it in a while and think it’s time to exit.

In these situations, you may need a little help figuring out the most direct way to cancel a subscription on your iPhone, iPad, or Mac. Here’s help: a guide to canceling those money-draining sign-ups.

How to Cancel App Subscriptions on an iPhone or iPad

Here are the steps for canceling a subscription on your mobile iOS device.

Step 1. Open the Settings app.

Step 2. Tap your name at the top of the page.

Step 3. Tap Subscriptions.

Step 4: Tap the subscription that you want to cancel.

Step 5. Tap Cancel Subscription. If you don’t see Cancel as an option, the subscription has already been cancelled and won’t renew. You should be free of this charge and on track to be saving money daily.

There’s another option you might use:

Step 1. Go to the App Store.

Step 2. Tap your profile image.

Step 3. Scroll down to Subscriptions and tap. You will then see any active subscriptions.

Step 4. Tap the subscription you want to cancel.

Step 5. Confirm by tapping Cancel Subscription. That can help keep more money in your checking account, to be used as you see fit.

How to Cancel Subscriptions on a Mac

Follow these instructions to cancel app subscriptions on a Mac laptop or desktop computer.

Step 1. Open the App Store (you can locate this in Finder under Applications, or at the bottom of your home screen).

Step 2. Click the sign-in button or your name at the bottom of the sidebar.

Step 3. Click View Information at the top right of the window. You may be prompted to sign in.

Step 4. On the page that appears, scroll until you see Subscriptions, then click Manage.

Step 5. Click Cancel Subscription. If you don’t see Cancel Subscription, then the subscription is already cancelled and will not renew.

Accidentally Cancelled a Subscription? Here’s How to Restart

If you got a little trigger-happy and canceled the wrong subscription. Or perhaps you have a change of heart after canceling an app and want to get it back, realizing that you were just momentarily feeling guilty about spending money.

Step 1. Open the Settings app.

Step 2. Tap your name at the top of the page.

Step 3. Tap Subscriptions.

Step 4. Look for the list of expired subscriptions at the bottom of the screen. Tap the one you would like to reactivate.

Step 5. On the subscription page, tap the subscription option you want and then confirm your choice. You’ll now be resubscribed.

Recommended: Budgeting for Basic Living Expenses

How-to Tip: Setting Reminders to Avoid Unwanted Subscriptions

The next time you sign up for a new app that has a trial period promotion going on, you may want to set a reminder on your mobile device to cancel your app subscription. Say, you want to cut back and save on streaming services after having signed up for half a dozen different channels on a boring rainy weekend.

This could help you avoid unexpected monthly expenses and manage your money better to reach your short-term financial goals.

You could use your phone to ask Siri to set a reminder to cancel a subscription a few days before fees will kick in. Or, you could use the Reminders app on your phone or iPad.

Another option is to use Calendar to create a New Event for the date and time you want to cancel an app. To get a notification on that day, you’ll want to make sure the Alert section is set to “at time of event.” This move can help you reduce your spending.

Recommended: How to Make a Budget in 5 Steps

The Takeaway

Most subscriptions automatically renew unless you cancel them. If you sign up for a free trial and don’t cancel in time, you will end up paying a monthly fee that you likely won’t be able to get refunded.

A good way to make sure you aren’t paying for subscriptions you don’t want is to track your monthly spending and then set up a basic budget. Having a budget can help ensure that your spending is in line with your priorities and short-term financial goals. Your bank may offer tools to help you with expense tracking and overall budgeting.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

How do I cancel an active subscription on my iPhone?

To cancel an active subscription on your iPhone, navigate to Settings, click on your name, and then scroll to Subscriptions. Then, select the subscription that you want to cancel and tap Cancel Subscription. Confirm your choice to finalize the cancellation.

How do I cancel an unwanted subscription?

To cancel a subscription you no longer want, check where you originally purchased it (for example, via the company’s website, app store, etc.). Then, navigate to the platform’s subscription management section (account settings or Google Play, perhaps) and follow the cancellation instructions. If you can’t find the option to cancel there, contact the company directly.

Where do I find my subscriptions on my phone?

To find your subscriptions on your Android phone or iPhone, navigate to the platform’s respective app store or account settings. On Android, this is typically done through the Google Play Store app, while on iPhone, it’s within the App Store or Apple ID settings.

Photo credit: iStock/Suwaree Tangbovornpichet

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details 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.

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.

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.

SOBNK-Q325-074

Understanding your personal finances is the first step in taking control of your money and making it work harder for you. One valuable tool for determining your financial status involves using personal finance ratios, such as your debt-to-income figure or how your take-home pay gets divided up. These are akin to formulas that show the relationship between numbers and how your cash is tracking.

Calculating and considering these figures can help you manage your money better as well as achieve your short- and long-term goals. To help you put these important ratios to use, this guide shares eight formulas to help you optimize your money.

Emergency Fund Ratio

An emergency fund is the cash you keep on hand to pay for unexpected expenses, such as a job loss, a large medical bill, or a roof repair.

This fund acts as a safety net so you don’t have to go into debt or raid your long-term savings accounts to take care of the situation.

Formula: Monthly Expenses X 6 = Emergency Fund Ratio

To calculate your target emergency fund, you’ll want to add up your essential monthly expenses, or the minimum amount of money you need to live for one month. That includes your mortgage or rent, insurance, utilities, and groceries.

One common rule of thumb is to then multiply this by three months (as a bare minimum); while others may aim for six months or more (say, if you are part of a single-income family). This gives you a good number to shoot for keeping in your emergency fund. You can use an online emergency fund calculator to help you do the math.

Liquid Net Worth Ratio

This liquid net worth formula is essentially an extension of your emergency fund. If you were to need funds as a result of an unplanned event or emergency, this metric looks at how many months of expenses would be covered by your liquid assets — funds that can be easily and quickly converted into cash.

Formula: Liquid Assets/Monthly Expenses = Liquidity Ratio

Liquid assets include your checking and savings accounts, as well as cash-like equivalents. For this number, you do not want to include other assets that are not liquid, such as your home, car, or tax-advantaged retirement savings accounts.

Monthly expenses include essential expenses that you accounted for above to determine your emergency fund ratio.

A common goal: maintaining a liquidity ratio of between three and six months.

Personal Cash Flow Ratio

Cash flow is a term often associated with companies. But this can also be a simple yet powerful personal finance ratio because it tells you how much is flowing in vs. flowing out of your accounts each month.

Knowing how much cash flow you have is useful because it tells you exactly how much money you have available to pay down debt or save or invest for your future.

Formula: Monthly (After-Tax) Income – Monthly Expenses = Personal Cash Flow Ratio

To calculate this, you’ll want to add up all of your average monthly take-home income, including your paycheck, any side hustles, and income from any investments or savings accounts that are available to you for spending.

Next, you can look at credit card and bank statements, as well as receipts, for the past several months to come up with the average amount you are spending each month. This includes necessities like mortgage or rent and utilities, and also discretionary spending such as eating out and entertainment.

You can then subtract your spending number from your income number and you’ll have your net cash flow. If that number isn’t where you want it to be, you can use these calculations as a starting point to make adjustments.

Generally, the higher your cash flow, the better off you are.

Housing-to-Income Ratio

This ratio is vital to helping you understand how much you can afford to spend on your home, whether you buy or rent. It is also an important metric that mortgage lenders use when they decide whether or not to approve your loan.

Formula: Monthly Housing Costs/Gross Monthly Income = Housing Ratio

It’s important to use total housing costs when you calculate this ratio. This includes: your monthly mortgage payments (or rent payments), property taxes, insurance, and utilities.

You can then compare that total cost to your gross monthly income (income before taxes are deducted). Financial experts often recommend keeping this number to 30% or less. In some areas with high cost of living, closer to 40% can be common.

The lower this number, the more affordable your housing costs are and the more income you have for other financial goals.

Debt-to-Income Ratio

The debt-to-income ratio is often used to determine a company’s ability to pay its debts. It works for individuals as well. It tells you what percentage of your income is being used to repay debts.

Formula: Monthly Debt Payments/Monthly Gross Income = Debt-to-Income Ratio

To calculate your debt payments, you’ll want to include credit card, student loan, and other consumer debt, as well as your mortgage payments. Your gross income is how much you earn each month before any deductions or taxes are taken out.

The common wisdom is to keep your debt at or below 36% of your gross income, but the lower your debt-to-income ratio, the financially healthier you likely will be.

Many people are surprised when they calculate this number to find just how much of their income is being whisked out of their checking account to repay debt, often at high interest rates. This ratio can help you rethink that situation.

Net Worth Ratio

Personal net worth is a measurement of an individuals’ total wealth. Your net worth ratio gives a little bit broader perspective than your debt-to-income ratio because it takes your total assets into account.

It is calculated as the total value of all your assets minus the total value of all your liabilities.

Formula: Total assets – Total Liabilities = Net Worth Ratio

To find this ratio, you’ll want to add up the current market values of all of your assets including your home, stock and bond holdings, checking and savings accounts, and any other financial accounts.

Next you’ll want to calculate your total liabilities. This includes any debt such as mortgages, credit card balances, car loans, personal loans and 401(k) loans.

You can then subtract your liabilities from your assets. The resulting number is, hopefully, positive, and the higher that positive number, the better for your financial health.

This is a snapshot of your net worth at this moment. You may want to calculate this metric periodically, perhaps quarterly or annually, to track your wealth. Ideally, you should see increases over time.

Savings Ratio

Since saving for the future is such a key part of personal finances, it makes sense there would be a personal finance ratio to help you gauge how you’re doing.

Your savings rate is expressed as what percent of your gross income you are putting away for the future, including retirement and other shorter-term financial goals.

Formula: Savings/Gross Income = Savings Ratio

To calculate this, you’ll want to add up your annual savings in any retirement accounts, including employer-sponsored retirement plans such as 401(k)s, traditional and Roth IRAs, and taxable accounts earmarked for retirement. Do not include your emergency fund or college savings accounts.

Compare that savings to your annual gross income (your earnings before taxes and deductions are taken out).

Generally speaking, you want to aim for a saving rate of 10% to 20%. Younger people may want to aim for a 10% savings ratio, and then gradually increase their savings rate as their income increases.

50/30/20 Budget Ratio

The 50/30/20 formula can help you manage your budget no matter what your income. It proves a simple guideline as to how to apportion your income so you can afford to pay your bills, have some fun, and also put money into savings.

Formula: 50% Essential Spending + 30% Discretionary Spending + 20% Savings = Budget Ratio

Essential needs are the largest allocation at 50% of monthly take-home income. These are bills you must pay including mortgage or rent, utilities, health insurance, minimum debt payments, and groceries. Housing will likely take up a big chunk of this category.

With this formula, you’ll want to keep discretionary spending at no more than 30% of your monthly take-home income. These are most likely the things you do for fun, like dining out, travel, clothing beyond what you need for work, and entertainment.

Saving for future financial goals accounts for the remaining 20% of monthly take-home income. This includes retirement savings, saving for a house, tuition savings, saving to repay debt beyond minimum amounts, etc.

Recommended: 50/30/20 Budget Calculator

The Takeaway

Personal finance ratios can give you a clear snapshot of your financial health in a variety of areas and help you make better decisions about money management and future planning. Once you’ve done some of these calculations, you may discover that you want to make some changes, such as watching your spending more closely and/or putting more money into savings each month. Having the right banking partner can help you optimize your money.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

What is the 50/30/20 ratio in finance?

The 50/30/20 budget rule says to allocate your take-home pay as 50% to necessities, 30% to discretionary (or “fun”) spending, and 20% to savings and additional debt repayment.

What is the 70/20/10 ratio for money?

With the 70/20/10 budget guideline, you put 70% of your after-tax income to needs and wants, 20% to savings and investments, and 10% to debt repayment or charitable donations.

What are the 5 basics of personal finance?

To effectively manage your money and meet your financial goals, many experts advise that you focus on these five basics: budgeting, saving, understanding credit, managing debt, and investing.

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details 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.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q325-082

There are times when you may need to move a large sum of money safely and speedily or get cash to someone in another country. A wire transfer can be a good solution.

A wire transfer is a way of moving money electronically between people or businesses. Perhaps you won a vintage watch in an auction, or you need to send cash to a friend in France who’s arranging a rental car for you. Those are a couple of the situations when a wire transfer could get the job done.

Here, you’ll learn more about this process, its cost, and the pros and cons of transferring money. Once informed, you’ll be able to make an informed decision about the best way to send and receive funds.

What Is a Wire Transfer?

A wire transfer is an electronic transfer of funds by banks or nonbank money transfer providers like Western Union and MoneyGram.

The term lingers from the era when transferring money — $2.5 million a year by 1877 — occurred via coded pulses of electric current through dedicated wires. (A sender would take money to a telegraph office, and an operator would use codes and passwords to “wire” the money to the telegraph office of the recipient.)

A wire transfer is an electronic transfer of money used around the globe.

These days, wire transfers allow a certain amount of money to be sent electronically from your bank account to a recipient’s bank account, anywhere, or vice versa.

How Wire Transfers Work

Banks and transfer service providers wire money for retail customers. They have varying processes and fees, so looking into the choices may save some money. Some details to consider:

•  Banks require account numbers in order to process wire transfers; transfer service providers do not.

•  Wire transfers can include a person’s name and other contact information or, for a cash-based transfer, be anonymous.

•  The banks and transfer providers will have different processing times, so money could be sent within hours if it’s a domestic transaction or a few days if it’s an international transaction.

•  Wire transfers are much like cashier’s checks. When someone is receiving money, the bank will treat the payment like cleared money, so as soon as the recipient’s account is credited, they can withdraw or spend the money.

•  When someone is sending money, the funds must be in their account before the bank will initiate the transaction. The money will be removed immediately after the wire transfer.

How Long Does it Take to Wire Money?

A wire transfer can be set up in minutes at a bank or wire transfer service. Then, once it’s sent, wire transfers will take up to 24 hours for processing when they are domestic.

International wire transfers can take between one and five days. They usually arrive within two days, but transfers made to or from a “slow-to-pay country” may add to that.

How to Wire Money in 5 Steps

Anyone interested in how to wire funds can follow these step-by-step directions to do it in an efficient and safe manner.

1. Make Sure You Have the Funds

Ensure that the money is in the sender’s bank account. Wire transfers cannot be sent if the money isn’t there.

2. Pick a Wire Transfer Service

The sender can transfer the money online or go to providers in person and use cash or a bank account, depending on the service. (Some services, like Western Union, may allow you to send money without a bank account.)

3. Fill Out the Forms/Create an Account

When sending money through a bank, senders will need to fill out forms and include their bank account information, their bank’s contact information, and the recipient’s bank account information, including the account number and contact information for the bank. They will also need to provide a government-issued ID and/or their online login information for the bank.

When sending through a wire transfer service, they may have to log in online or go to the service in person and link their bank account or take cash, choose the recipient’s country, delivery method, and account information, and fill out any other information that’s required.

Senders have to be careful that the bank account numbers they provide are accurate, or the money will not get to the recipient.

4. Include Fees in the Amount You Send

Banks and wire transfer services should be able to tell users what the fees are going to be upfront, and users will add those fees to the amount they are sending.

5. Ask for a Receipt

The last step in how to wire money is to get your receipt. This ensures that senders have a record of the transaction. If something goes wrong and no receipt exists, they have nothing to show that they sent the wire transfer correctly.

Recommended: How to Transfer Money From One Bank to Another

Pros of Wiring Money

Reasons that people might want to wire money include the following.

They Need to Move a Big Amount

Limits tend to be high, so wire transfers are common for real estate transactions and sending money to and from family members.

The Money Is There

With checks and debit cards, payment can bounce or an account can go into overdraft. With a wire transfer, that’s not possible, since the money must be there in order to be sent. A wire transfer request will be declined if someone has limited funds.

It’s Safer Than Checks

While checks are typically safe, mailing them is not necessarily. People could open mail that isn’t theirs and take checks out and try to cash them. Wire transfers offer a more secure alternative.

Money Can Be Sent Internationally

Say a person goes to work in another country but wants to send money to family members back home every month. With a wire transfer, that’s easily done.

Recommended: What Are Intermediary Banks?

Cons of Wiring Money

Wire transfers have a few possible drawbacks.

Cost

Expect to pay about $15 to $30 for an outgoing bank transfer within the United States, $0 to $15 for a domestic incoming payment, and $35 to $50 for an international outgoing payment and $0 to $30 for an international incoming wire transfer.

Juxtapose that with free or low-fee peer-to-peer payments or using a credit card and paying the balance when it’s due.

No Do-Overs

Wire transfers are typically irrevocable, so both sender and recipient should be sure that all of the required information is correct.

Potential Scams

Scammers may ask unsuspecting people to wire them money for goods or services and then never follow through, so it’s best to avoid wire transfers unless the sender and receiver know each other.

Unlike with a credit card, where someone could dispute the charge, the money may be gone forever once it’s sent.

Here are the pros and cons of wire transfers in chart form:

An Alternative to Wiring Money

If you want to move money but don’t want to use a wire transfer, here are some other options.

Peer-to-Peer Services

P2P payments usually can be made from a linked bank account or directly from the P2P account for free. You may already use some of these services, such as PayPal and Venmo.

Some providers do charge around 1.5% to 3.5% to process payments drawn from a credit or debit card.

Bank Account Money Transfer

You may also set up electronic transfers (you may hear the terms ACH and EFT used) with your bank. Funds can often be sent to any other bank account, not just those held at the same financial institution.

There may not be any account fees or service charges. Check with your bank to be sure.

While all can offer a secure transfer of funds, here’s how they compare on other fronts:

The Takeaway

Wire transfers can be an efficient electronic way to move funds between people or businesses. Depending on the specific details, such as whether the transaction is domestic or international and where the funding comes from, the timing and fees may vary. A good first step can be to check with your banking partner to learn what they offer.

FAQ

What is required to wire money?

To wire money, you will need the amount of cash available, a provider of the transfer (your bank or a service), the proper forms and/or account information filled out, coverage of any fees, and a receipt.

How much does wiring money cost?

The amount you will pay to wire money can depend on the financial institution and whether the money is moving to your account or into someone else’s account, and whether the funds are being sent domestically or internationally. You are likely to find fees from $0 to $50 per transaction.

What is the process of wiring money?

To wire money, you will need to have funds available and fill out paperwork with the recipient’s banking information. Part of the process may involve paying a fee also, and it’s wise to always get a receipt.

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details 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.

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.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®