Staircase Remodel Cost & Ideas

Staircase Remodel Cost & Ideas

Does staring at your outdated stairs make you want to climb the walls? You may be considering a staircase remodel or replacement.

A light staircase remodel could cost less than $1,000, while a total makeover could cost $10,000.

The most involved of stair makeover ideas, removing a staircase and replacing it with a new one, may cost $10,000 or more.

How Do You Remodel Stairs?

That’s the million-dollar question, really (and no, that’s not a budget estimate). Staircases are the sum of their parts, and each part is an opportunity to increase visual appeal, the value of your home, and your home equity.

Staircases are more than just a means to move from one level of a detached house or townhouse to another. They can be a major decorative element in a home.

Your staircase remodel may be fairly minor but pack a punch: painting the vertical spindles, restaining treads or risers, and adding a bold carpet runner.

Replacing the handrails and spindles, or otherwise changing the bones of the staircase, may require finding a contractor.

That’s especially the case if you want your staircase to meet current building codes (important for safety and when you’re selling the house).

Understanding the project scope from the outset can help ensure that the staircase remodeling cost makes sense.

Recommended: Home Renovation Cost Calculator

Staircase Elements and Materials

Being familiar with basic staircase anatomy can help you refine project goals and have productive conversations if estimates for the job are required.

The focus here will be on interior stairs.

Treads

The stair tread is the part of the stairway that is stepped on. Treads are often made of wood, although they may have another layer on top, such as tile or carpet.

Risers

Stair risers are the vertical pieces that connect the treads: the piece of the staircase in front of your toes as you’re walking up. Risers might be made of wood or an engineered wood product.

Spindles, aka Balusters

Spindles, or balusters, provide vertical support for the stair railing. Traditional staircases might have wooden spindles, while a more modern stairway might have metal balusters.

Handrails

Also called a banister, this part is simply the rail where you put your hands. Wood, composite, and metal are all standard, although there is room for creativity.

Newel Posts and Caps

The heftier vertical posts that go in line with the spindles and create endings to the railing are the newel posts, and the cap is the decorative element that tops the newel.

Handrails start and end at the newel posts. Materials mirror those of the spindles.

Guardrails

At open spaces on stairs or landings, guardrails must be installed.

Landing

A landing is a horizontal platform that begins or ends a staircase or serves as a transition between changes in stair direction.

Recommended: Average Cost to Remodel a House

Estimating the Project Scope and Cost

Familiarity with the elements of a staircase is helpful when deciding on the design and organization of the staircase remodel, even if it’s going to be done piecemeal, like refinishing the stair treads now and replacing the spindles and handrail later.

If you’re plotting your stair remodel, you have company. There are several reasons that home renovations are on the rise. The work-from-home trend is one.

Your home should be a comfy haven, but it will also likely turn out to be an investment that can help build generational wealth in your family.

Among these stair makeover ideas, minor ones can be done yourself. Others will require a licensed professional and a loan, such as a personal loan, unless you’re paying cash.

Painting the Stairs

Using paint made to withstand wear and tear is essential for the paint job to last. Look for floor, deck, or heavy-duty paint. Water-based, not oil-based, paints will prevent discoloration, especially on light colors.

Painting stairs requires proper preparation (cleaning and sanding), protecting neighboring surfaces, and possibly priming so the paint will adhere correctly.

Count on an average of $600 to paint all the corners, handrails, and balusters, plus $350 to $450 to paint the stairwell.

If this is a DIY job, a gallon of latex paint will average $20 to $50. Polyurethane to help protect the new paint finish might start at $50 per gallon. Sandpaper, paint rollers or brushes, tape, and drop cloths could add up to $70.

Stairs and age are often not a great pairing. As more people consider an accessory dwelling unit for an aging parent, that might mean an adult child moving into the two-story family home.

A new paint job, perhaps using light and dark colors on different parts of the staircase, will go a long way toward making it more inviting. Painting just the risers a bold hue can add interest, and some people even create a painted runner for their staircase remodel.

Refinishing Stairs

Refinishing stairs is a much more daunting task than painting. This involves stripping the current finish with solvents and sanding, which is easier to do on flat stair treads than turned spindles or vertical risers.

You’ll want to check for lead paint before you start stripping the paint.

You’ll need paint stripper ($50 per gallon and up), a premium heat gun (as low as $30), a power sander and sandpaper ($30 to $100), heavy-duty rubber gloves and a respirator mask ($45), and a scraper (as low as $8) to strip the original finish. Oh, and lots of time and patience.

If you’re getting bids to refinish hardwood stairs, the width and length of every step, along with the rise of each, will factor in. The price to refinish hardwood stairs and railings ranges from $4.50 to $8 per square foot for materials and labor.

Recommended: How Much Is My House Worth?

Replacing Staircase Components

Swapping elements like spindles, newels, caps, and handrails for a different style can dramatically change the overall look of a staircase.

If the staircase has historic elements, getting spindles or other pieces to match other elements in the home might require custom work if replacements can’t be found through architectural reuse or salvage sources.

Replacing carpet-covered treads with wood treads can rectify an outdated look, but realize that you may have to contend with lots of nails and staples under the carpet. Crowbar needed, stat. A contractor might charge $75 to $300 to remove the carpet.

The balusters will have to be replaced if you’re replacing the treads.

Here are some average replacement and installation costs, according to HomeAdvisor:

•   Handrail: $340 to $580

•   Newel post: $35 to $550

•   Balusters: $1,200 to $1,600

•   Treads and risers: $1,800 to $2,500

•   Carpet runner: $500 to $2,000

Expect to pay from $70 to $150 per hour on labor, and factor in any necessary permits, HomeAdvisor says.

Another source puts the cost of replacing the treads and risers at $3,000 to $4,000, including the work of master carpenters. Yes, you’ll see a range of estimates out there. If you’re getting bids, a lot depends on where you live, your choice of materials, and the size of the project.

Total Replacement

Completely replacing a staircase is logistically and financially complex, but a millennial homebuyer, for example, might want floating stairs with open risers rather than a chunkier look.

Consulting a building or remodeling professional, such as a licensed construction engineer or residential architect, about safety and fire codes and potential structural implications for the home is a good step to take.

The cost to install a main staircase averages $2,000 to $5,000, according to Fixr. But the site gives a range of $15,000 to $100,000 to put in a floating staircase, so only bids will narrow the true cost of your staircase install.

Competent staircase installers may cost as much as the staircase itself.

Recommended: Common Uses for Personal Loans

The Takeaway

Stair makeover ideas include the fairly simple and the wow-worthy, and the cost of a staircase remodel ranges from a few hundred dollars to tens of thousands. Installing a new staircase will typically require several professionals.

If a staircase remodel or new staircase install is on your mind, one way to get quick cash is with a personal loan. SoFi offers fixed-rate personal loans of $5,000 to $100,000 with no fees and no collateral needed.

SoFi offers unsecured, fixed-rate personal loans that offer lower interest rates than you’ll typically find with credit cards. Checking your rate takes just 1 minute.

Fund your home improvement wish list with a SoFi Personal Loan.

FAQ

How much does it cost to redesign a staircase?

An architect and contractor may be required to structurally redesign a staircase. A staircase remodel, if done by the homeowner, could cost less than $1,000.

How do I modernize my stairs?

Consider changing out dated handrails. Paint can take years off.

Add a punch to the risers with eye-catching paint, tile, or even wallpaper. Consider a bold-colored or -patterned stair runner that allows the stair treads to be exposed at the edges.

A dramatic light fixture at the top of the stairway will offer both illumination and arty interest. And stair cladding — covering the treads and risers with wooden floor planks — will create a big transformation.

How do you renovate stairs on a budget?

Making less expensive changes, like adding a coat of fresh paint, replacing spindles, or adding a runner, can completely change the feel of a staircase — and the living space that surrounds it, making a house feel like a home.


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What Is Greenwashing?

What Is Greenwashing?

Greenwashing is when a company markets itself as more environmentally friendly than it actually is. Also known as “green sheen,” this tactic is used to attract consumers who prefer products with high environmental standards.

The term greenwashing is taken from whitewashing, which is when a company or individual conceals its wrongdoings by presenting a cleaned-up version of their actions that isn’t actually true.

A typical reason companies engage in greenwashing these days is that consumers want to purchase the most sustainable products they can. According to GreenPrint’s 2021 Business of Sustainability Index, 75% of millennials and 64% of Gen X consumers claimed they would spend more money on a more environmentally friendly product.

Before you buy products marketed as sustainable or eco-friendly, or invest in a green company that makes similar claims, it may help to know some of the red flags of greenwashing.

Identifying the Different Types of Greenwashing

There are a few common marketing tactics that constitute greenwashing. Many of these can be convincing, so in order to decide whether a company is engaging in actual greenwashing or not, you may have to do your own research.

Here are some red flags to look out for when purchasing a product, or investing in a company that claims to embrace sustainability or ESG investing (i.e. good environmental, social, and governance practices):

•   Vague terminology: Labels such as “eco-conscious,” “clean,” or “100% sustainable” don’t actually mean anything in terms of a company’s manufacturing processes or adherence to environmental policies. Be sure to research terms and standards that reflect actual environmental practices.

•   Imagery: If a polluting company uses marketing images of flowers, trees, beaches and so forth, they may be trying to appear more environmentally friendly than they really are. Be sure to check whether the product lives up to the advertising.

•   Greenwashing a traditionally polluting product: Companies may attempt to improve the branding of a product by making it seem more environmentally friendly without actually changing much or anything about it.

•   False associations: Brands can make it seem like they are endorsed by a third party when they really aren’t, or the third party is simply their own subsidiary.

•   Green products from a polluting company: A company might make a product that has a lower environmental impact, such as an electric vehicle, but manufacture it in a way that creates significant waste and greenhouse gas emissions.

•   Fabricated data: Companies might fund research that will have results that make them look better, or make data up completely.

Again, because socially responsible investing has grown so rapidly, and many companies want to attract the attention of investors and consumers, there is a commensurate growth on the greenwashing side, so it does pay to be cautious when making choices.

Example of Greenwashing

A few examples of what would be considered greenwashing are described on the U.S. Federal Trade Commission (FTC) website:

•   A company labels a trash bag they are selling as “recyclable.” Although this may be true, it’s unlikely that a trash bag full of trash will be emptied and then recycled on its own. This label makes the product appear to have an environmental benefit, but in reality it doesn’t.

•   In another example, a company labels a product as having 50% more recycled content than a previous product did. This makes it sound like a significant amount, but in fact the company may have increased the recycled content from 2% to only 3%, so there has been hardly any change in reality.

•   A company labels a product as “recyclable” but they don’t say specifically whether all parts of it are recyclable, just some parts, or just the packaging.

Other real-world examples include: an oil company that’s known for environmental negligence releasing advertisements that state their dedication to the environment — or companies promising to do environmental cleanups, but failing to actually follow through on those promises. You can compare these to alternative or solar energy companies that are making a difference.

💡 Recommended: A Beginner’s Guide to Invest in Solar Energy

The Negative Effect of Greenwashing on a Company

Although in the short term greenwashing can benefit a company if it leads to more people buying their products, there can be negative consequences. If consumers realize the company is engaging in greenwashing there can be a big PR backlash. Companies can also face legal ramifications for their misleading claims. And investors interested in true impact investing may take their business elsewhere.

In the long term, the biggest negative consequence is the actual environmental impact of manufacturing practices that are not, in fact, green or sustainable. Companies rely on clean water and air, quality soil, and a stable climate to operate. A thriving economy requires a healthy planet, and greenwashing ultimately doesn’t support either.

How to Avoid Greenwashing

Whether purchasing products or investing in companies, if you are looking for the most sustainable options, there are a few ways to avoid greenwashing.

1. Clear and Transparent Language

Watch out for vague terms and language. If a brand makes sustainability claims, look for specifics such as certifications, verifiable third-party endorsements, industry credentials, and details about exactly what the brand is doing.

2. Evaluate the Data

If a brand uses statistics and numbers to back up its sustainability claims, make sure they are backed up with credible data.

3. Compare Similar Products

A company may make sustainability claims when in fact their product has basically the same environmental impact as their competitor’s. Compare ingredients, packaging, and manufacturing information to see whether one product is really better than another.

4. Look Beyond the Final Product

Even if a company is improving the impact of its products, it may not be addressing the waste and emissions associated with its operations. If this is the case, they may be just making changes for marketing purposes. Check out their website and other materials to see how much effort is going into sustainability at the corporate level.

5. Look for Goals and Timelines

If a company is truly implementing a comprehensive sustainability plan, it would include measurable goals and timelines. Ideally those are shared with consumers at least to some extent.

6. Check Ingredients and Materials

Some terminology and product labels can be misleading. For instance, a company might say that their product is made from organic cotton or recycled plastic, when in fact only a small percentage of the cotton or plastic is organic or recycled and the rest is not. The FDA has no guidelines for what the term “natural” means, and according to the USDA the term simply means that a product is “minimally processed” with “no artificial ingredients.”

Greenwashing vs Green Marketing

There is nothing wrong with a company telling the story of its environmental initiatives and the steps it is taking to produce products more sustainably. That’s green marketing at its best and most transparent. By contrast, greenwashing is when a company attempts to cover up their bad practices using fake versions of legitimate claims.

Actual green marketing may include:

•   Certifications and endorsements from established regulatory organizations

•   Clearly labeled manufacturing processes

•   Recyclable, compostable, or biodegradable materials (but watch out for these labels, sometimes a product can actually only be composted or biodegrade in very specific conditions that aren’t realistic).

•   Products free from toxic chemicals

•   Use of renewable energy

•   Transportation measures such as EVs

•   Purchase of carbon offsets for any unavoidable emissions

•   In-office programs and measures such as renewable energy, LEED certified buildings, on-site composting, or elimination of single use plastic

•   Doesn’t use too much packaging, and ideally avoids plastic packaging

•   Circularity programs that allow consumers to send back the product for repair or reuse

•   High-quality manufacturing made to last rather than one-time or short-term use

•   Fair trade and ethical labor practices

•   Environmental programs outside the company, such as donations or volunteer efforts

The Takeaway

Greenwashing is a marketing tactic some companies use to align themselves with the growing consumer and investor desire for sustainable products and investments. It’s related to the concept of “whitewashing,” which means covering up the truth with a positive-sounding story.

Greenwashing can take a number of different forms, including imagery that appears eco-friendly (but doesn’t reflect anything about the actual product), advertising and marketing language that is misleading, or the greenwashing of traditional pollutants (e.g. fossil fuels and the like).

If you’re looking to make socially and environmentally conscious investments, hopefully the tips above will help you avoid companies that use greenwashing. One way to help you avoid greenwashing as you incorporate green companies in your portfolio is to invest in an ESG-focused exchange-traded fund (ETF), like the SoFi Smart Energy ETF (ENRG). These ETFs give investors exposure to a wide range of companies that support positive environmental outcomes without green sheen, which may help you make an impact and reach your long-term financial goals.

Take a step toward building your portfolio with SoFi Invest®.

FAQ

What is ESG greenwashing?

ESG greenwashing is the practice of using marketing tactics to exaggerate sustainability efforts in order to attract customers, employees, investors, or positive media attention.

What are the three most common kinds of greenwashing?

Three common types of greenwashing are the use of environmental imagery, misleading labels and language, and hidden tradeoffs where the company emphasizes one sustainable aspect of a product but they also engage in environmentally damaging practices.


Photo credit: iStock/fizkes

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Are 401(k) Contributions Tax Deductible? Limits Explained

As you’ve been planning and saving for retirement, you may have heard that there’s a “401(k) tax deduction.” And while there are definitely tax benefits associated with contributing to a 401(k) account, the term 401(k) tax deduction isn’t accurate.

You cannot deduct your 401(k) contributions on your income tax return, per se — but the money you save in your 401(k) is deducted from your gross income, which can potentially lower how much tax you owe.

This is not the case for a Roth 401(k), a relative newcomer in terms of retirement accounts. These accounts are funded with after-tax contributions, and so tax deductions don’t enter the picture.

How Do 401(k) Contributions Affect Your Taxable Income?

The benefits of putting pre-tax dollars toward your 401(k) plan are similar to a tax deduction, but are technically different.

•   An actual tax deduction (similar to a tax credit) is something you document on your actual tax return, where it reduces your gross income.

•   Contributions to an employer-sponsored plan like a 401(k) or 403(b) are actually taken out of your salary, so that money is not taxed, and thus your taxable income is effectively reduced. But this isn’t technically a tax deduction.

People will often say your 401(k) contributions are tax deductible, or you get a tax deduction for saving in a 401(k), but it’s really that your 401(k) savings are deducted from your salary, and not taxed.

The money in the account also grows tax free over time, and you would pay taxes when you withdraw the money.

Example of a 401(k) Contribution

Let’s say you earn $75,000 per year. And let’s imagine you’re contributing 10% of your salary to your 401(k), or $7,500 per year.

Your salary is then reduced by $7,500, an amount that is noted on your W2. As a result, your taxable income would drop to $67,500.

Would that alone put you in a lower tax bracket? It’s possible, but your marginal tax rate is determined by several things, including deductions for Social Security and Medicare taxes, so it’s a good idea to take the full picture into account or consult with a professional.

Recommended: IRA vs 401(k): What’s the Difference?

Do You Need to Report 401(k) Contributions on Your Tax Return?

The short answer is no. Because 401(k) contributions are taken out of your paycheck before being taxed, they are not included in taxable income and they don’t need to be reported on a tax return (e.g. Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors).

Your employer does include the full amount of your annual contributions on your W2 form, which is reported to the government. So Uncle Sam does know how much you’ve contributed that year.

You won’t need to report any 401(k) income until you start taking distributions from your 401(k) account — typically after retiring. At that time, you’ll be required to report the withdrawals as income on your tax return, and pay the correct amount of taxes.

When you’re retired and withdrawing funds (aka taking distributions), the hope is that you’ll be in a lower tax bracket than while you were working. In turn, the amount you’re taxed will be relatively low.

How the Employer Match Works

When an individual receives a matching contribution to their 401(k) from their employer, this amount is also not taxed. A typical matching contribution might be 3% for every 6% the employee sets aside in their 401(k). In this case, the matching money would be added to the employee’s account, and the employee would not owe tax on that money until they withdrew funds in retirement.

How Do 401(k) Withdrawals Affect Taxes?

The tax rules for withdrawing funds from a 401(k) account differ depending on how old you are when you withdraw the money.

Generally, all traditional 401(k) retirement plan distributions are eligible for income tax upon withdrawal of the funds (note: that rule does not apply to Roth 401(k)s, since contributions to those plans are made with after-tax dollars, and withdrawals are generally tax free).

If you withdraw money before the age of 59 ½ it’s known as an “early” or “premature” distribution. For these early withdrawals, individuals have to pay an additional 10% tax as a part of an early withdrawal penalty, with some exceptions, including withdrawals that occur:

•   After the death of the plan participant

•   After the total and permanent disability of the plan participant

•   When distributed to an alternate payee under a Qualified Domestic Relations Order

•   During a series of substantially equal payments

•   Due to an IRS levy of the plan

•   For qualified medical expenses

•   Certain distributions for qualified military reservists called to active duty

For individuals looking to withdraw from their 401(k) plan before age 59 ½, a 401(k) loan may be a better option that will not result in withdrawal penalties, but these loans with their own potential consequences.

How Do Distributions From a 401(k) Work?

Once you turn 59 ½, you can withdraw 401(k) funds at any time, and you will owe income tax on the money you withdraw each year. That said, you cannot keep your retirement funds in the account for as long as you wish.

When you turn 72, the IRS requires you to start withdrawing money from your 401(k) each year. These withdrawals are called required minimum distributions (or RMDs), and it’s important to understand how they work because if you don’t withdraw the correct amount by Dec. 31 of each year, you could get hit with a big penalty.

Prior to 2019, the age at which 401(k) participants had to start taking RMDs was 70 ½. The rule changed in 2019 and the required age is now 72. When you turn 72 the IRS requires you to start taking withdrawals from your 401(k), or other tax-deferred accounts (like a traditional IRA or SEP IRA).

If you don’t take the required minimum amount each year, you could face another requirement: to pay a penalty of 50% of the withdrawal you didn’t take.

All RMDs from tax-deferred accounts like 401(k) plans are taxed as ordinary income. If you withdraw more than the required minimum, no penalty applies.

Recommended: Should You Open an IRA If You Have a 401(k)?

What Are Tax Saver’s Credits?

Making eligible contributions to an employer-sponsored retirement plan such as a 401(k) or an IRA can potentially lead to a tax credit known as a Retirement Savings Contributions Credit, or a Saver’s credit. There are three requirements that must be met to qualify for this credit.

1.    Individual must be age 18 or older.

2.    They cannot be claimed as a dependent on someone else’s return.

3.    They can not be a student (certain exclusions apply).

The amount of the credit received depends on the individual’s adjusted gross income.

The credit amount is typically 50%, 20%, or 10% of contributions made to qualified retirement accounts such as a 401(k), 4013(b), 457(b), traditional or Roth IRAs.

For tax year 2023, the maximum contribution amount that qualifies for this credit is $2,000 for individuals, and $4,000 for married couples filing jointly, bringing the maximum credit to $1,000 for individuals and $2,000 for those filing jointly. Rollover contributions don’t qualify for this credit.

Is your retirement piggy bank feeling light?

Start saving today with a Roth or Traditional IRA.


Alternatives for Reducing Taxable Income

Aside from contributing to a traditional 401(k) account, there are other ways to reduce taxable income while putting money away for the future.

Traditional IRA: Traditional IRAs are one type of retirement plan that can lower taxable income. Individuals may be able to deduct their traditional IRA contributions on their federal income tax returns. The deduction is typically available in full if an individual (and their spouse, if married) doesn’t have retirement plan coverage offered by their work. Their deduction may be limited if they or their spouse are offered a retirement plan at work, and their income exceeds certain levels.

SEP IRA: SEP IRAs are a possible alternative investment account for individuals who are self-employed and don’t have access to an employee sponsored 401(k). Taxpayers who are self-employed and contribute to an SEP IRA can qualify for tax deductions.

403(b) Plans: A 403(b) plan applies to employees of public schools and tax-exempt organizations, and certain ministers. Employees with 403(b) plans can contribute some of their salary to the plan, as can their employer. As with a traditional 401(k) plan, the participant doesn’t need to pay income tax on any allowable contributions, earnings, or gains until they begin to withdraw from the plan.

Charitable donations: It’s possible to claim a deduction on federal taxes after donating to charities and non-profit organizations with 501(c)(3) status. To deduct charitable donations, an individual has to file a Schedule A with their tax form and provide proper documentation regarding cash or vehicle donations.

To deduct non-cash donations, they have to complete a Form 8283. For donated non-cash items, individuals can claim the fair market value of the items on their taxes. from the IRS explains how to determine vehicle deductions. For donations that involve receiving a gift or a ticket to an event, the donor can only deduct the amount of the donation that exceeds the worth of the gift or ticket received. Individuals are generally required to include receipts when they submit their return.

Earned Income Tax Credit: Individuals and married couples with low to moderate incomes may qualify for the Earned Income Tax Credit (EITC). This particular tax credit can help lower the amount of taxes owed if the individual meets certain requirements and files a tax return — whether or not the individual owes money. Filing a return in this case can be beneficial, because if EITC reduces the amount of taxes owed to less than $0, then the filer may actually get a refund.

The Takeaway

Individuals who expect a 401(k) deduction come tax time may be disappointed to learn that there is no such thing as a 401(k) tax deduction. But they may be pleased to learn the other tax benefits of contributing to a 401(k) retirement account.

Contributions are made with pre-tax dollars, which effectively lowers one’s amount of taxable income for the year — and that may in turn lower the amount of income taxes owed.

Once an individual reaches retirement age and starts withdrawing funds from their 401(k) account, that money will be considered income, and will be taxed accordingly.

Another way to maximize your retirement savings: Consider rolling over your old 401(k) accounts so you can manage your money in one place with a rollover IRA. SoFi makes the rollover process seamless and simple. There are no rollover fees. The process is automated so you’ll avoid the risk of a penalty, and you can complete your 401(k) rollover quickly and easily.

Help grow your nest egg with a SoFi IRA.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.
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.
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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Guide to Idle Funds: Where to Put Them

Guide to Idle Funds: Where to Put Them

Idle funds are funds that aren’t serving any specific purpose or working for you in any way. This is a term that’s often used when discussing business and government finance. It’s common for government entities and corporations to have idle money sitting in cash reserves until it’s ready to be used for specific expenditures.

It’s also possible for individuals to have idle cash. For example, you might keep a few hundred dollars stashed in your dresser. That money is technically idle, since it isn’t earning you any interest. The good news is that it’s easy to put idle funds to work so your money has a chance to grow.

Learn how to do just that with this guide, which addresses:

•   What are idle funds?

•   How do idle funds work?

•   What are examples of idle funds?

•   What are the pros and cons of idle funds?

•   Where can you park idle funds?

What Are Idle Funds?

In personal finance, idle funds or idle savings refers to money that isn’t being invested or otherwise earning interest. Idle funds may be held in cash or sit in a deposit account at a bank, credit union, or other financial institution. They can be called idle savings, idle cash, or idle money, but it all means the same thing. It’s money that’s doing absolutely nothing. It’s not appreciating in any way or earning you interest.

Here’s another way to think of idle funds. Imagine you’re in a car that’s idling at a stoplight. You’re not moving forward toward any specific destination and you’re not gaining anything; in fact, you’re just burning gas. When you allow your money to sit idle, you’re not getting closer to your financial goals either.

As mentioned, businesses and governments may keep idle savings on hand that don’t earn any interest. They can do so if they plan to spend that money later for a specific purpose, such as an expansion project or funding government contracts. But it’s possible that you might have idle funds without realizing it, which can be a missed opportunity to build wealth.

How Do Idle Funds Work?

Idle funds work by, somewhat ironically, not working for you. Normally, when you deposit money into a savings account, money market account, or investment account, those funds can grow over time. The bank may pay you interest on deposits, or you earn a solid rate of return on the money you’ve invested with your brokerage. Either way, you can end up with more money than you started with thanks to compounding interest.

Compounding means earning interest on your interest. The more often interest compounds and the higher the interest rate earned, the more your money can grow. For example, if you deposit $1,000 into an interest-bearing account and earn a 7% annual rate of return, that initial amount would grow to $7,612 after 30 years, even if you never add another dime.

With idle savings, that doesn’t happen. Your money doesn’t earn interest or any kind of return. If you deposit $1,000 into an idle funds account (or have it sitting in a piggy bank) on Day 1, you’d still have that same $1,000 on day 10,000, assuming you don’t make any withdrawals. Since you’re not putting money into a savings account or another account where it can earn interest, idle funds don’t benefit from the power of compounding.

What Is the Value of Idle Funds?

You might assume that the value of idle funds is the same as the money’s face value. So $100 in idle cash would be worth $100. But it’s important to keep the impact of inflation in mind. Inflation refers to a continuous rise in consumer prices for goods and services for an extended time period. In the U.S., the Consumer Price Index (CPI) is one of the most commonly-used measures for tracking inflation.

When inflation is high (as it recently has been), your money doesn’t go as far. If gas goes from $3 a gallon to $5 a gallon, for example, it costs more to fill up your tank. When you have idle funds that aren’t earning interest, your money can’t keep up with the pace of inflation. That’s why personal finance experts recommend keeping some of your money in a savings account or investment account as a hedge against the toll inflation takes.

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning up to 3.75% APY on your cash!


Real Life Examples of Idle Funds

Idle money can take different forms but again, it’s all money that isn’t working for your benefit or advantage in some way. Here are some examples of idle funds you might have right now:

•   You get a rebate check in the mail that you forget to deposit. Since this money isn’t being used to grow savings, it’s idle.

•   Every day, you dump out your coins and dollar bills into a jar that you keep in your closet. Even though you’re saving, this is idle savings because you earn a 0% interest rate.

•   Instead of separating some of your money into a savings account, you keep all of your funds in a checking account that doesn’t earn interest. While you might use some of this to pay bills and technically put it to work that way, the rest of your money in the account is idle because it doesn’t grow.

You can also have idle funds if you have money in any type of savings or investment vehicle that doesn’t earn interest. A zero-coupon bond, for instance, doesn’t pay interest to you but instead, allows you to purchase the bond at a deep discount.

Pros of Idle Funds

For governments and businesses, it can make sense to have some idle cash on hand. For example, if there’s a budget shortfall, then a corporation could dip into their idle funds to cover operating expenses.

In terms of why having some idle funds might be a good thing when discussing your personal finances, here are the main pros:

•   Idle funds can be highly liquid, meaning you can access your money when you need it.

•   Keeping idle money in cash at home means you’re not paying steep fees to a bank.

•   Waiting to invest idle savings gives you time to research the best investment options for you.

•   There’s generally very little risk of losing money in idle funds.

•   Putting idle funds to work can be as simple as opening an interest-bearing savings or investment account.

Cons of Idle Funds

While there are some positives associated with idle funds, there are also some drawbacks to keep in mind. Here are some of the biggest cons of idle money:

•   When cash sits idle, it’s not earning interest, and you’re not growing wealth.

•   If you’re keeping idle savings in cash at home, you run the risk of it being lost or stolen.

•   Keeping all of your money in idle funds means you’re not working toward any financial goals.

•   Delaying investment of idle funds can mean missing out on the power of compounding interest.

•   Cash sitting in idle funds can lose purchasing power as inflation rises.

Parking Places for Your Idle Money

If you’d like to put your idle funds to good use, there are several places you can keep that money in order to earn interest. When deciding where to keep idle cash, consider what kind of access you’d like to have to those funds, the interest rates you could earn, and the fees you might pay.

Here are some of the different savings accounts to have for idle funds if you’d like to grow your money.

Certificates of Deposit

A certificate of deposit account is a time deposit account. When you deposit money into a CD, you’re agreeing to leave it there for a set time period, until what is known as its maturity date. The bank pays you interest on your deposit, and, once the CD matures, you can withdraw your initial deposit and the interest earned. Or you could roll it over into a new CD.

CD accounts can be a good place to keep idle funds that you know you won’t need any time soon. Online banks can offer competitive rates on CDs with no monthly fees. Just keep in mind that you might pay an early withdrawal penalty fee if you take money from your CD account before maturity.

Brokerage Account

Brokerage accounts are designed to hold money that you invest. For example, you can open a taxable investment account or an Individual Retirement Account (IRA) at a brokerage. The rate of return you earn on your money can depend on how you choose to invest it.

Some brokerages can also offer cash management accounts to hold money that you plan to invest later. These accounts can function like checking accounts, but they can also earn interest. Depositing some of your idle funds into a cash management account at your brokerage can help you earn some interest until you’re ready to invest it.

Recommended: How to Set up a Health Savings Account

High-Yield Savings Account

A high-yield savings account is a savings account that pays an above-average interest rate and annual percentage yield (APY). Traditional banks can offer high-yield savings accounts but you’re more likely to get competitive rates from an online bank. Online banks can also make high-yield accounts more attractive with low initial deposit requirements and no monthly fees.

Opening a high-yield savings account for idle funds could be a good move if you’d like to keep some of your money liquid and accessible. You can link a high-yield savings account to a checking account for easy transfers. Depending on the bank, you may also be able to get an ATM card with your savings account for added convenience.

I Bonds

An I Bond is a type of savings bond that’s issued by the U.S. Treasury. I Bonds can earn a competitive interest rate that’s based on inflation. Putting money into I Bonds could be a good use of idle cash if you’re worried about inflation eating into your spending power. Just keep in mind that I Bonds, like CDs, are designed to be longer-term investments and cashing them out early could cost you some of the interest earned.

Banking With SoFi

Having idle funds (money that’s just sitting and not appreciating) isn’t necessarily a bad thing. However, it’s important to understand what you could be missing out on if your savings or cash isn’t earning any interest. If you’re unsure what to do with idle money, an online bank account can be a great place to keep your cash while you weigh the options.

SoFi offers a Checking and Savings account in one convenient banking package. You can pay bills and save in one place, while earning a hyper competitive APY on deposits. And you won’t pay any account fees, which can help your money grow faster.

Better banking is here with up to 3.75% APY on SoFi Checking and Savings.

FAQ

What is the best option for me to activate idle funds?

If you have idle funds, depositing them into an online savings account can be the fastest way to put them to use. Online banks can offer savings accounts with great interest rates and no monthly fees. You can link your online savings account to your checking account for convenient access to your money.

Are idle funds always a bad thing?

Idle funds aren’t always a bad thing if you’re planning to invest or save them at some point in the near future. For example, you may have $1,000 sitting in a cash management account at your brokerage that you plan to invest in stocks. Since that money does have an end goal, the fact that it’s idle in the meantime isn’t so bad.

Can idle funds every improve your money?

Having some idle funds could offer reassurance if you’d like to have a go-to stash of cash on hand for emergencies. Whether idle funds can improve your money depends on where you’re keeping them, how you plan to use them, and whether you have other funds that are actively working for you and earning interest.


Photo credit: iStock/Ivan Halkin

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 3.75% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 12/16/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
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27 Weird & Unusual Ways to Make Money

27 Weird Ways to Make Money

If you’re interested in bringing in more cash, you may be happy to know there are countless weird ways to make money, from selling your hair to testing food to beekeeping. With the median weekly income hovering around $55,640 and inflation chipping away at Americans’ paychecks, many consumers seek extra income by starting part-time work or a side hustle. In fact, 40% of Americans currently have a side hustle, according to Zapier data.

So, if you want to pad your wallet with extra cash, here are some odd ways to make money in your spare time.

Benefits of Weird Ways to Make Money

Generating additional income is a key benefit of starting a side hustle, and sometimes you need to be creative about how to do that. When you hit on an idea that pulls in more cash, you can use that to afford some small splurges (go ahead and get that pricey salad you love twice next week), but it can also help in more lasting way.

Granted, there are pros and cons of getting a second job or multiple side hustles, but if you bring monthly income (whether $100 or $1,000 per month), you’ll reap the following advantages:

•   Repay debt. High-interest debt, especially from credit cards, can gobble up your income and inhibit financial growth. Paying off debt is a huge step forward in your financial health.

•   Boost retirement savings. Take advantage of the power of compounding interest by stashing more money into your IRA or 401(k) – your retired self will thank you!

•   Achieve financial stability. Your extra money can build an emergency fund that allows you to handle unexpected expenses or survive for a few months without work, protecting you from the consequences of sudden job loss or a downshifting economy.

•   Follow your passion. While your day job might not be the career path of your dreams, a side hustle allows you to explore what you love and earn money along the way. For example, your woodworking hobby or love of knitting can become a profitable business.

•   Accomplish a financial goal. Whether you want to take an overseas vacation or update your kitchen, making extra money can help you afford a financial goal without taking on debt or dipping into your savings.

•   Grow professionally. Although your second job might be unusual, such as becoming a professional eater, it will allow you to make new connections, acquire new skills, and open the door for career opportunities.

•   Structure time intentionally. Another job will cut down your free time, but this can be a net positive – for example, it can help you direct the hours you have to yourself to what matters most, such as spending time with friends and family. Hard work can help highlight the good times with the ones you love.

Quick Money Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

Making Money: 27 Unusual Ways

If you’re looking for ways to make money from home or in the outside world without loads of special training, check out this list of weird ways to make money.

1. Renting Your Backyard for Campers

No matter where you live, if you’re in a house, your lawn could be a sought-after destination for adventurers and budget vacationers. Via websites like Hipcamp, you can advertise a comfortable, affordable place to stay for a couple of nights for backpackers or vanlifers. Bonus points if you’re near popular attractions. At Hipcamp, the average active host pulls in between $8,000 to $15,000 per year.

2. Becoming a Professional Sleeper

Another one of the strange ways to make money is by sleeping (seriously!). Despite its necessity and benefits, sleep is mysterious to us, and the scientific community has much to research about it. For instance, you could become a subject for researchers trying to better understand sleep. One University of Colorado study paid almost $3,000 for a study to be completed in less than a day. Sleeping also has commercial utility in various situations. For example, you might try out a company’s products, such as a prototype pillow or sleep mask. To find gigs, set up some search-engine alerts with keywords such as “sleep study” or “sleep tester” and also comb job boards, especially at universities doing research.

3. Renting Out a Shed

Have enough room on your property for extra boxes, appliances, or tools? An app like Neighbor lets you rent out your extra storage space for other people’s possessions, processes payments for your services, and is free to use. It’s like Uber or Airbnb – but with your attic or garage.

Recommended: What to Know About Renting Out a Room in Your House

4. Test Websites

You can be a professional web surfer by testing websites for companies wanting to improve their online capabilities. Tasks range from clicking a link to finding a specific page on a website. A few minutes a day could earn you income (anywhere from 10 cents to 10 dollars per assignment, depending on the time required), and payments usually come to you through a convenient app like Venmo or PayPal.

5. Being a Professional Mover

Moving is a challenge and can be a very stressful experience. People will pay big money for help packing, cleaning, and transporting items. This job is physically demanding, so it may not be for everyone. You can work weekends for a moving company or become an independent mover with a company like U-Haul. You might also advertise your services locally if you have a van and access to moving supplies.

6. Professional Eating

Here’s another odd way to make money: If you can gulp down food in a matter of minutes, professional eating is a viable side hustle. Local restaurants might give rewards for accomplishing food challenges. In addition, Major League Eating hosts food challenges across the United States with cash prizes for winners. Want to aim high? The annual Nathan’s hot-dog eating contest pays a $10,000 prize.

Recommended: How to Manage Your Money 11 Tips to Do It Right

7. Cuddling

Today’s modern, fast-paced world can deprive people of physical touch, a vital factor in mental and emotional health. Cuddle Comfort is a secure website that sets up platonic cuddling sessions. At $80 per hour or more, you could be well-compensated for helping others snuggle up and feel less isolated.

8. Befriending a Stranger

If you’re personable and love embarking on new experiences, being a professional friend may be right for you. RentAFriend.com is a website helping those lacking companionship. Whether you’re walking through a park or attending an evening event, your job is to spend time with people looking for friendship, make interesting conversation, and let your personality shine. Rates typically range from $10 to $50 an hour.

9. Being a Test Subject

Looking for more crazy ways to earn money? Ziprecuriter estimates that working full time as a test subject can earn you over $80,000 annually. By participating in market research, psychology studies, and more, you can turn your spare time into profitable experiences where you can reap the financial rewards.

10. Selling Plasma

Blood plasma is helpful for medical studies and healthcare procedures. It can save lives during surgery complications and aid scientific breakthroughs. Your body naturally produces this valuable substance, which you can sell twice per week in a process that’s similar to donating blood. For most people, the process has no side effects.

Plasma donors receive payment in a prepaid card and can earn hundreds of dollars monthly. Plus, companies like CSL Plasma pay new donors $1,000 for their first month of service to sweeten the deal.

11. Joining Writing Contests

If you have a way with words, a writing contest could be right up your alley. Whether you write as a creative outlet or to explore new ideas, you can get paid for your passion by entering a writing contest. Dozens of free and fee-based contests exist, meaning you can find your niche, enter your pieces, and hopefully win the top prize. As a bonus, you’ll receive reviews of your work and pointers for sharpening your craft. Search online for opportunities.

12. Being a Food Tester

Who doesn’t love to eat? This delicious pastime could become a weird way to earn money if you become a food tester. You might test new snacks and meals for a large corporation like Apex Life Sciences, sample high-quality products, or write reviews as a freelance food taster. A typical fee might be $15 for a 15- to 45-minute session.

13. Reviewing ‘Sensitive Content’

Another unusual way to make quick cash is to review sensitive content for websites like YouTube and Reddit. Millions of users post content every day, making it almost impossible to review all of it. Therefore, large companies hire people to review sensitive content to ensure everything is appropriate for the internet.

Remember, though; you may have to view some vulgar and upsetting content. So, if you have a weak stomach, this might not be your side hustle.

14. Recommend Items You Love

We all have our go-to essentials, like a preferred makeup brush or olive oil brand. Rather than just waxing poetic to your friends about them, you can write or post videos about your recommendations. Affiliate links online can earn you commissions. As a result, you can direct your web audience to your favorite company’s website and receive cash rewards when they make purchases.

15. Cleaning Pet Poop for Others

While not the most appetizing of propositions, that poop needs to get taken care of somehow. Pet owners without the time or physical ability to clean up after their beloved animals can make good use of your services. All you need is transportation and cleanup equipment to get started. You can build your clientele base by posting flyers around your neighborhood or advertising online. Consider charging between $40 and $100 to clean up a messy yard.

16. Host City Tours

Another unusual way to make money: If you live in a town that attracts tourists, you can conduct tours for visitors. You might have a passion for your city’s beloved parks or knowledge of its history. Whatever your specialty, you can build a website advertising your services or use an app like Showaround or FreeTour (where you earn money via tips) to put your skills to work.

17. Waiting in Line for Someone

While it’s boring when doing this for yourself, waiting in line in someone else’s place can be a profitable side hustle. Apps like Spotter or TaskRabbit allow you to connect with customers looking for someone to wait in line for a concert ticket, new tech gadget, or parking permit renewal. The more popular the event or product, the more you can charge (some people report having made $80 per hour). Plus, you can listen to an audiobook, podcast, or music while you wait.

18. Losing Weight

Here’s a weird way to earn money that’s also potentially healthy. Shedding pounds can also mean big capital gains with websites like HealthyWage. Here’s how it works: you set your weight loss goal and then wager a dollar amount of your choice that you’ll be successful. This setup gives you extra motivation by putting your money where your mouth is. If you hit your goal, you win prize money and receive your initial investment back. However, failing to hit your goal means losing your wager.

Recommended: 39 Passive Income Ideas to Build Wealth

19. Selling Your Hair

This opportunity is more selective, as you’ll have to grow your hair at least 10 inches long in most cases to sell it for a significant profit. However, if your hair grows quickly, you can pair this side hustle with others to generate income. Human hair is excellent for weaves, wigs, and scientific uses, and you can sell yours on websites like Hairworks.com or eBay.

20. Give Your Opinion With Online Surveys

If you love giving your opinion, filling out online surveys is a great way to earn extra cash. Platforms like One Opinion and Survey Junkie want anyone to share their detailed opinions on specific topics. Surveys can take anywhere from 5 minutes to one hour to complete. You can expect to make about $1 per survey.

21. Selling Digital Templates

Folks with a knack for design can enjoy selling digital templates and make thousands of dollars monthly. You can create e-book page layouts, brand kits, social media packages, and more. Using a site like Canva you can create endless digital templates that you can sell digital templates right from the comforts of your own home.

22. Beekeeping

Here’s another offbeat way to bring in money: Beekeeping is the practice of caring for bees so they can contribute to the growth of your garden or the environment. Before you can start making money, you will need to gain some experience (if you still need to). Once you gain experience, you can make money by selling bee products such as honey, providing pollination services, or educating others on beekeeping.

23. Organize Other People’s Things

We can thank The Home Edit and Marie Kondo for encouraging everyone to live a life of organization. But, while it comes easy for some, others may struggle to get started. So, if you enjoy organizing the closet, cabinets, papers, or anything, you could make between $30 and $130 per hour organizing people’s homes. To get started, sign up for sites like Thumbtack and Westtenth and let people know about your services.

24. Being a Statue

Believe it or not, you can make money without even lifting a finger, or actually moving at all. Acting as a statue on a busy street can help you earn some extra dough from passers-by and tourists who leave tips. Depending on the time and traffic of the location you choose, you can make as much as $60 to $80 per hour.

25. Taking Notes for Others

Another unusual way to make money is to sell your college lecture notes. Sites like StuDocu let you sell your notes to students who missed a lecture or need help getting through course material. Keep in mind that notes need to be typed, not handwritten. The top pay is around $22 for an upload.

26. Mystery Shopping

When you become a secret shopper or mystery shopper, you can earn cash by shopping at local retailers, completing shopping surveys, or taking photos of displays. Registering for an account with apps like Mobee or Marketforce can help you start earning extra money shopping.

27. Review Music

Music lovers can make extra money by reviewing unsigned artists online at Slicethepie. Some categories will pay more than others. However, all payments will be listed at the top of the category page so you can decide if the review is worth your time. Typical pay for those just starting out is less than 20 cents per review, but if you love listening, this could bring in some extra pocket change.

The Takeaway

Using these weird ways to make money can help you boost your savings, pay off debt, or allow you to get paid for doing something you love. So, whether you make extra cash sleeping, eating, shopping, or giving your opinion, you can inch one step closer to your financial goals.

Better banking is here with up to 3.75% APY on SoFi Checking and Savings.

FAQ

Where can I sell weird things?

Websites like Ecwid, Facebook Marketplace, Etsy, and eBay are just a few platforms where you can sell weird items like keychains, eccentric jewelry, or clothes. People have even marketed air on some of these sites.

How much money can I make from these weird ways to make money?

The amount of money you make in these weird ways will depend on the gig you choose and how much time you invest in it. For example, if you choose to start reviewing music and only post a few critiques, you might only make a dollar; if you clean up someone’s messy yard of dog poop, you might earn $100 per session after proving to be a competent and reliable provider.

Are any of these weird ways to make money illegal?

No, all of the crazy ways to make money above are legitimate and legal.


Photo credit: iStock/Diamond Dogs

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.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 3.75% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 12/16/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
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