Nov
30
2023
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What to Do With Company Stock If Your Company Goes Public

By | Growing Wealth, invest, Investing | Comments Off on What to Do With Company Stock If Your Company Goes Public

If your company goes public via an IPO, and you’re a stockholder, there are several things you can do, including standing pat and holding your shares, or selling them. But know that holding stock in your company when it goes public can be akin to a roller coaster ride.

There can be a lot of anticipation as the IPO date approaches, but no one really knows what will happen on opening day or during the weeks that follow. With that in mind, before you decide to hold or sell, there are some things to take into consideration.

What Happens During an IPO

During an initial public offering, or IPO, a company offers shares of stock for sale to the general public for the first time — hence the phrase “going public.” Shares of the company are given a starting value known as an IPO price, and when trading begins, the price can rise amid investor demand, or fall if there is little demand.

In any case, the stock will now have some type of value on the open market. As an employee, you may have a stake in the company before the IPO through employee stock options, restricted stock units (RSUs), or you may own shares in the company outright.

Employers may offer stock options and restricted stock units (RSUs) as part of a compensation package to help retain top talent and align employee and company incentives — encouraging employees to work hard to make the company, and its stock, successful.

Stock options give employees the right to buy a specific number of shares of the company, at a set price, by the option’s expiration date.

When company stocks start trading on the open market, depending upon any restrictions, employees can decide to hang on to their shares or sell them and use the proceeds to help meet other goals.


💡 Quick Tip: Keen to invest in an initial public offering, or IPO? Be sure to check with your brokerage about what’s required. Typically IPO stock is available only to eligible investors.

[ipo_launch]

Making It Through the Lock-Up Period

That said, when a company goes public, shares and options are often subject to a lock-up period — typically 90 to 180 days — during which company insiders, such as employees, cannot sell their shares or exercise stock options.

Companies typically don’t want employees to flood the market with their stock, which could have a negative effect on the stock price while the company is getting its feet off the ground. When the lock-up period is over, employees are free to exercise their options and sell their shares.

While you’re in the lock-up period, even if it appears that your stocks are suddenly worth a lot of money, that money isn’t in your hands yet. It may be tempting to start spending as if it is, purchasing big-ticket items or putting a down payment on a house. But a lot can happen between an IPO and the end of a lock-up period. So, as the saying goes, don’t count your chickens before they hatch.

The stock market is volatile, and can involve a high degree of risk. If you spend money you have on hand assuming that you’ll be able to pay yourself back once you sell your stock, you may be in for a rude surprise if stock prices fall before then. It may be better to wait until the lock-up period is over before making any big money moves.

Selling Your Shares

If you have decided to sell, the how and when will depend on many factors, but some things that may impact your decision might be whether you own shares outright, have access to shares through employee stock options or through RSUs, and whether the stock has vested. If you already have shares of company stock in-hand, you can usually sell those as soon as the lock-up period ends.

RSUs, on the other hand, are a transfer of restricted stock shares from your employer to give you a certain number of stocks or grants that vest at a later date. Once it does so, the stock is yours to do with what you will. It’s important to note that when restricted stock vests or is transferred to the employee, the fair market value of the stock is included in the employee’s taxable wages. In some cases, RSUs are not taxed until they are fully vested and the company has IPO’d.

You may also have employee stock options, which function much differently than RSUs. A stock option essentially grants you the right to buy company shares at a predetermined price, known as a strike or exercise price.

Stock options are also normally subject to a vesting schedule, but once they vest, you do not have to exercise your right to buy shares immediately, but all stock options come with an expiration date, the last date the option holder must exercise the options or lose them.

For example, say an employee’s exercise price is $60, but the company stock is worth $50 when that employee’s shares vest. If the employee exercised their stock options, they would still have to pay $60 per share, which is more than the stock is worth at that time.

At this point, the stock option is essentially underwater and its value is negative. The employee might choose to wait to exercise their options until the value of the stock is above the exercise price and they can sell the stocks for a profit.

IPOs can be volatile, with share prices swinging up and down. Employees may want to wait for a stock’s prices to stabilize after an IPO to suss out whether it’s the right time to exercise their options.

Options If You Sell

When the lock-up period is over, you may choose to sell your vested shares. In some cases, employees may want to hold on to stock, especially if they anticipate that the price will go up. Other employees may feel they should hold on to stocks out of a sense of loyalty.

However, a concentrated position in any one stock can open you up to risk. If the stock does poorly, it can have an outsized effect on a portfolio. To avoid taking on too much risk, it may make sense to use the proceeds from the sale of company stock to accomplish other goals, such as diversifying your portfolio or paying down debt.

Diversifying Your Portfolio

As mentioned, holding a concentrated position in any one investment can open your portfolio up to additional or unwanted risk. Imagine for a moment that your only investment was the stock you hold in your company.

If stock prices fall, your portfolio will likely feel the full effect of that downward pressure. Now imagine that you hold stock in 100 different companies.

If any one of them does poorly, the effect it will have on your portfolio will be much smaller.

This is the concept behind diversification. A diversified portfolio holds a mix of asset classes, such as stocks and bonds. And within these asset classes, a portfolio likely holds a mix of investments diversified across factors such as size, sector, and geography.

The individual assets in this mix will likely respond in different ways to different market conditions, which can help reduce volatility. For example, a spike in oil prices might hurt some manufacturing stocks but help petroleum stocks.

Selling shares of your company stock and diversifying among a broad group of asset classes might help reduce market risk and volatility inside your portfolio, leaving you less beholden to how one company performs.

Paying Down High Interest Debt

You may also consider selling shares of company stock to pay off high-interest debt. For example, if you carry a balance on your credit card, you could be subject to interest rates of 14% or more. At that rate, your balance can grow quickly, especially if you’re only making minimum payments.

Paying down high-interest debt and saving on interest payments can have a positive impact on your overall finances.

Investing in a Home

Buying a house requires careful planning, even more so when you plan on using company stock to help you do it. There are a number of factors you may want to consider.

First, you might carefully determine whether buying a home is a good investment. You could start by considering how long you plan to stay there. Buying a home comes with all sorts of extra costs, such as appraisal fees, inspection fees, and closing costs.

Housing prices can vary widely from region to region. Keep an eye on housing values in your area to help you determine whether they are likely to rise in the long term. You may want to check out websites that offer market value trends information for the area you are interested in buying.

If you are planning to sell your shares to purchase a house, consider being prepared to sell as soon as you’ve found a house and have been approved for a mortgage loan. Selling right away can help you lock in any gains and help keep you from being at the mercy of market movements. Lenders will also need to verify liquidation before loan closing if the funds are used in the home purchase.

Selling while you know you have enough money to cover a down payment, for example, will help you avoid the risk that stock prices will drop between approval and closing, which could leave you scrambling to find other assets to make up the difference.

Planning for an IPO

If your company goes public, you have options as to what you can do with your shares. Your company IPO and the vesting of your stock are scheduled events, so you can use that to your advantage. You might want to start making a plan as soon as you can if you decide to go the selling route. And make sure you understand the tax consequences of holding or selling your stock and make that consideration a part of your broader tax plan.

For example, RSUs vesting according to their schedule after an IPO might bump you into a higher tax bracket, providing an opportunity to mitigate those effects with other tax-efficient strategies like funding retirement plans. Talk to a tax professional to learn more.

Whether you’re curious about exploring IPOs, or interested in traditional stocks and exchange-traded funds (ETFs), you can get started by opening an account on the SoFi Invest® brokerage platform. On SoFi Invest, eligible SoFi members have the opportunity to trade IPO shares, and there are no account minimums for those with an Active Investing account. As with any investment, it's wise to consider your overall portfolio goals in order to assess whether IPO investing is right for you, given the risks of volatility and loss.

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

Should you exercise stock options before a company goes public?

It’s possible to exercise stock options before a company goes public, but it’s impossible to say whether any individual should, as circumstances vary between individuals and companies. It may be worth discussing your options with a financial professional.

Are stock options worthless if a company never goes public?

Stock options may become worthless if a company never goes public, or they may lose considerable value. There’s no guarantee that they will do so, however.

Is it better to exercise options before or after an IPO?

It may be relatively common to exercise stock options before a company goes public so as to best take advantage of any post-IPO share value increases.

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit 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.

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.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. IPOs offered through SoFi Securities are not a recommendation and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation.

New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For SoFi’s allocation procedures please refer to IPO Allocation Procedures.

Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

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Nov
30
2023
Making Sense of the Rising Cost of Medical School

Making Sense of the Rising Cost of Medical School

By | Debt Payoff, Fresh Out of School, Student Loans, student_loan | No Comments

The costs of medical school are rising at an alarming rate. According to Education Data, the cost of attending medical school rises by $1,500 per year.

Thirty-five years ago, medical students graduated with an average of $32,000 in student loan debt. Now, the average medical school debt for graduates is $202,450, according to the Education Data Initiative, with 73% of students graduating with debt.

The rising cost of medical school, plus the daunting number of years of education and training, is making some prospective medical students ask: Is an MD really worth it? That’s ultimately up to you.

It’s also worth noting that while medical school has traditionally been a path to a lucrative career, the steep up-front costs might be starting to make the endgame look less appealing.

This can be particularly true for would-be doctors interested in working in relatively low-paying fields, such as general practice (as compared to, say, anesthesiology).

While it might be relatively easy to pay down student loan debt for those entering a higher-paying specialty, a doctor going into general practice might take years (even decades!) to pay off their student loans.

To gain a better understanding of how much medical school actually costs, we’ll take a look at the costs of an MD, and some ways young doctors can get out of medical school debt faster after graduation.

How Much Does Medical School Cost?

The average medical school tuition varies depending on factors like whether the student is attending a public or private university.

The average total cost of in-state tuition for a student at a public university is $159,620. At a private school, the average total cost is $256,412.

But that’s only the cost of tuition, fees, and insurance — there’s also living costs to consider, which is why it’s useful to consider the entire cost of attendance (COA).

Each school publishes the estimated costs of attendance for their program, which typically not only include tuition and fees, but also costs like room and board, textbooks and supplies, and travel.

Why Is Medical School More Expensive Than Ever?

The rising cost of medical school tuition is part of a larger trend. It is estimated that the cost of college tuition and fees at private, nonprofit, four-year institutions in America grew at a rate of 3.5% from the 2021-2022 school years.

So what is driving the price increase? In general, college tuition has increased dramatically in the past 30 years, while wages have grown at a much slower rate. But what’s behind the dramatic uptick in college prices? The potential answer is two-fold. One factor is the demand for a college education has also dramatically risen over the last three decades.

Another factor more pertinent to public universities: a decline in state funding. It’s been observed in multiple states that as the education budget gets stripped, tuition costs paid by students also rises. And while lawmakers likely understand such a correlation exists, as long as federal financial aid is so freely available for students, there is likely little incentive to digress from such cuts.

How Long Does Paying for Med School Take?

So why do med students often go into so much debt?

It’s partly because the grueling requirements of their programs don’t often allow for part-time work. As a result, many students apply for financial aid to cover their college price tag, which means they graduate with significant amounts of student loan debt.

How long does it take to pay back the debt? Much of this depends on the student, the career path they take, and the medical loan repayments they make. However, the relatively low salaries young doctors earn during their residencies don’t typically allow for much opportunity to pay back loans until their first position after residency.

Let’s say, hypothetically, a borrower has federal Direct Loans, such as Stafford, PLUS, or a Direct Consolidation Loan. And let’s also say you can prove you have partial financial hardship (PFH), and qualify for an income-driven repayment plan.

In that situation, the monthly repayment would be capped at 10-15% of the borrower’s monthly discretionary income for a period of up to 25 years. After the 25 years, whatever hasn’t been repaid is forgiven (although that amount may be taxable).

However, if after residency, the borrower in question gets a position with an income that removes them from the PFH tier, they could switch to the Standard Repayment Plan for federal student loans and potentially pay off the loan more quickly.

Is It Possible to Shorten the Medical Debt Payment Timeline?

Here are some tips for those interested and able to shorten their repayment timeline, which can lower the amount of student loan interest paid over the life of the loan.

Repaying Loans During Residency

It is possible to start paying down medical school debt in residency. While some students may be tempted to put their loans in student loan forbearance in their residency years, doing so can add quite a bit in compounding interest to the bill.

Instead, consider an income-driven repayment plan to start paying back federal loans with an affordable payment. Another option is to look into SoFi’s medical residency refinance options to compare. Keep in mind, though, that if you choose to refinance your federal student loans, you will no longer be eligible for federal benefits and protections, including income-driven repayment plans, deferment, and student loan forgiveness.

Making Extra Payments

Another tactic to help pay off student loans faster is via simple budgeting. After getting your first position post-residency, consider committing to living on a relatively tight budget for just a few more years. Putting as much salary toward extra student loan payments as possible could potentially help cut time — and interest payments — off the repayment timeline.

Speeding Up Med School Debt Repayment With Refinancing Student Loans

If you refinance your medical student loans, iit may be possible to secure a lower interest rate and/or a lower required monthly payment – depending on the terms you choose, your credit score, and other factors.

A lower interest rate could help reduce how much money is paid in interest over the life of the loan. Extending your loan term could mean a lower monthly payment – but keep in mind that you’ll most likely pay more in interest over the life of the loan.

While refinancing could help borrowers save money over the life of the loan, it does mean giving up the benefits that come with federal student loans, like income-driven repayment, deferment, forbearance, and student loan forgiveness specific to physicians.

But for borrowers who don’t foresee needing these services, refinancing might be a viable option.

The Takeaway

The cost of medical school has risen in the past 30 years, and so has the amount of debt med students take on to pursue a career as an MD. But a career in the medical field can potentially be both lucrative and rewarding, so for some, medical school can be worth the time, effort, and cost.

Borrowers who are repaying student loans from medical school may consider strategies like income-driven repayment plans, making overpayments, or student loan refinancing to help them tackle their student loan debt.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.


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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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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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Nov
30
2023
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How to Read Stock Charts as a New Trader

By | Growing Wealth, Investing, Terminology | No Comments

Learning how to read stock charts can feel similar to learning how to drive a car. It can be baffling at first, but once you learn the basics, including types of stock market charts, and the patterns they’re forecasting, you’ll hopefully get the hang of it.

With that in mind, learning how to read stock charts is a bit of a heavy lift, and can be difficult or intimidating for newer investors. Keep that in mind: It’ll take some time and practice before you feel comfortable! But the sooner you learn to decipher stock charts, the more useful that knowledge will be in your investment strategy.

The Art of Reading Stock Charts

Learning how to read stock charts can feel like you’re training in some sort of higher art. But again, with some practice, many investors can learn to do it and implement it into their investment strategy.

Understanding Chart Types

There are a handful of basic stock chart types, including line charts, bar charts, and candlestick charts. Thankfully, these charts are more or less exactly what they sound like.

For instance, line charts simply graph a financial security’s historical performance with a line, allowing investors to see the ups and downs over time. A candlestick chart, on the other hand, shows a stock’s high, low, opening, and closing prices for a specific time period. Bar charts also show a security’s price change over time, but there are some slight differences between bar charts and candlestick charts – often, bar charts aren’t color-coded, for example.

Decoding Stock Chart Data

Stock charts are relaying a lot of information about a stock’s performance over certain time periods. Taking that all into account can be difficult, but the main data points investors will want to try and utilize to guide their investment decisions involve prices, dates, and trading volume.

Before you proceed any further, though, you’ll want to make sure you know what stock symbols are.

Stock symbols, or tickers, are the series of letters, and sometimes numbers, by which a particular stock is uniquely identified. For example, the stock symbol for Apple is AAPL, and the stock symbol for Amazon is AMZN. Stock symbols are defined by the exchanges on which those stocks are traded — for instance, the New York Stock Exchange (NYSE) or the Nasdaq. These are the markets on which stocks and other assets are bought and sold. Stocks traded on the NYSE and Nasdaq can have tickers up to 5-letters long, but most are only 2-4.

With that in mind, using graphs and charts to figure out what’s happening in the stock market is the next step.
The first thing you’ll notice when looking at the chart itself is that it’s pretty much a line graph. Remember middle school math? You’re dealing with a basic X and Y axis—and the X axis refers to time.

On a stock line chart, the trend line is measuring the asset’s performance over that period of time. Investors might want to view the stock’s performance over a single day, week, or month, or see its long-run trend line over the past year or longer. It all depends on your personal trading goals.

Some stock charts may spell out the stock’s opening price, low price, high price, and closing price during a given time period, usually marked simply O, L, H, and C. Here’s what those figures each refer to:

•   The opening price is the first price at which the stock traded during the given time period.

•   The low price is the lowest price at which the stock sold during the given time period.

•   The high price is the highest price at which that stock sold during the given time period.

•   Finally, the closing price is the last price at which the stock sold before the exchange closed.

If the exchange is still open and the stock is being actively traded, the stock chart will likely display the last price, which is just what it sounds like: the last price at which the stock was successfully sold.

You might also see the change in that price from the one immediately before it, or last change, usually displayed as both a dollar value and a percentage.

For example, if you were looking at a chart for Company X (using a fictitious stock ticker, CMPNYX) stock, it might display the following string of letters and numbers:

CMPNYX 197.16 +0.05 (+0.04%)

In this example, CMPNYX is the ticker symbol, and $197.16 is the last recorded price of a single share sold on the exchange. That price was five cents higher than the trade immediately before it, meaning the value of the stock rose, in that time, by 0.04%.

By looking at how the trend line moves over the chart period, you can get a sense of the stock’s price and performance over time as well as its most recent statistics.

Volume corresponds to how many shares are bought and sold within a specific time period. In other words, it’s a measure of supply and demand. Volume is often represented as a series of bars running along the bottom axis of the chart. The bars’ size aligns with the number of trades made during that time period, and can be useful for guesstimating upcoming sales trends for that asset.

It’s not a perfect science, of course, but if a stock is trading at low volume — i.e., few shares are being bought and sold each day — it may indicate that the current price trend is about to change. Perhaps the stock is in poor demand because it’s valued too highly for the market. It could also just mean the investment is out of favor with investors.

On the other hand, a high trade volume might indicate that you’ll have an easier time selling the stock quickly if you’re considering short-term trading.

The Role of Technical Indicators

Investors and traders can use a variety of technical indicators to try and make sense of the market, too. That can include things like the 200-day moving average, which attempts to focus on overall pricing trends for a specific stock, or a variety of other trend and momentum indicators.

There are many technical indicators that investors can use to their advantage. It may be worth taking the time to learn more about each, and decide whether to fold them into your strategy.


💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.

Technical vs. Fundamental Analysis

We’ve discussed technical analysis, but fundamental analysis is another important element to introduce into the mix. Chart-reading, though, does rely heavily on technical analysis. For that reason, it may be worth revisiting some of the core reasons that investors will want to bone up on the subject.

The Case for Technical Analysis

Fundamental analysis focuses on a company’s underlying performance, whereas technical analysis is more focused on a stock’s performance. While there may be drawbacks to technical analysis, technical indicators are the type that will reveal patterns in stock charts that can be used to make investment decisions. While the buy or sell signals those patterns relay may or may not be faulty, those indicators are what investors are going to want to use when reading stock charts.

When Fundamentals Intersect with Charts

As mentioned, fundamental analysis concerns a company’s financial and operational health, more so than deciphering lines on a chart. Fundamental analysis involves looking at indicators such as earnings per share, price-to-earnings ratios, and return on equity, which can have an effect on how investors decide to buy, sell, or hold a stock. That, naturally, can dictate what a stock’s performance looks like on a chart – which is where it intersects with technical indicators, in many respects.

Essential Stock Chart Knowledge

When it comes down to it, investors may be best served by garnering essential stock chart knowledge involving the various styles of stock charts, their uses, and the language, or key terms, used to describe what those charts are displaying.

Stock Chart Styles and Their Uses

As mentioned, there are a few main types of stock charts: line charts, bar charts, and candlestick charts (there may be others, but we’ll stick with a few basic ones). Each shows the performance of a specific stock, albeit in different ways. Learning what those charts show, how they show it, and how to translate that information into action is ultimately what investors should aim to do when learning how to read stock charts.

Key Terms Every Trader Should Know

There are also a number of key terms that traders should know. The list can be lengthy, but should probably include words and phrases such as market capitalization (as discussed), price-to-earnings ratios, dividend yields, options, assets, and many more. You should become more familiar with them as you move through your investing journey – you’ll likely start using many of them yourself as your trading activity and strategies become more sophisticated, too.

Applying Your Stock Chart Skills

At the end of the day, learning how to read stock charts, for most investors, is all about one thing: applying that knowledge and making better-informed investing decisions.

How to Use Charts for Smarter Investing

There’s really no limit to the way that investors or traders can use charts to make smarter decisions. The more time you spend studying charts and learning what they show or say, the more information you’ll end up having at your disposal with which to make a decision. The issue, of course, is that all of that information still can’t tell you in all certainty what a stock’s value is going to do next.

That’s perhaps the most important thing to remember about stock charts: they are not a crystal ball, and there’s no guarantee that investors will achieve the outcomes they were hoping or planning for.

Can Charts Enhance Your Investment Strategy?

Stock charts can enhance your investment strategy by adding a whole new dimension – and pile of data and information about specific stocks – to your tool kit. But again, you can spend hours looking at charts, and that still doesn’t mean that a position or investment won’t blow up in your face. You may think of it this way – all investing involves a level of risk, but learning to use stock charts as a part of your strategy may help you gauge how big those risks are, and in some cases, avoid particularly risky investments.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit 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.

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.

Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

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Nov
29
2023

2024 Gas Cost Trip Calculator Table with Examples

By | Family Finances, relay, Tools & Calculators | Comments Off on 2024 Gas Cost Trip Calculator Table with Examples

Thinking about taking a road trip? The rising cost of gas might put a dent in your budget if you’re not careful. But how much will you spend on gas for a trip? What should your budget be?

Using a trip cost calculator can help you determine what you are likely to spend filling up your tank on a longer trip. Then you can use that information to decide whether it’s more cost-effective to drive, take a train or bus, or fly.

Let’s look not only at a gasoline cost trip calculator table, but also why you should calculate how much you’ll spend on gas and how you can save money filling up at the pump.

Why Use a Gas Cost Trip Estimator

You may think nothing of filling up your gas tank every few weeks when you’re only driving to work and the store. But consider how much gas you’d use for a trip from, let’s say, San Diego to New York City. With gas prices on the rise, understanding what it will cost you to fuel up for an entire trip can help you better budget your expenses.

Using a gas trip cost calculator can help you figure out how much of your entire trip budget will be dedicated to fueling up.


💡 Quick Tip: Online tools make tracking your spending a breeze: You can easily set up budgets, then get instant updates on your progress, spot upcoming bills, analyze your spending habits, and more.

How to Calculate Your Gas Cost Trip

To figure out how much gas will cost for a road trip, you can, of course, use a trip cost calculator. You’ll need to input basic details, like your type of car (different sizes and types of cars burn gas at different rates) and your route, and the calculator can estimate with real-time gas prices.

But a simple method is to look at your route and the total distance in miles, and divide this number by the number of miles per gallon your vehicle gets. (You can check your owner’s manual to find this out if you don’t already know). This will tell you the number of gallons of gas you’ll need for the entire trip.

Now you’ll need to know the price of gas so you can multiply it times the number of gallons you need. Since gas prices by state may vary wildly, you might take an average of prices found in five places along the way. Tools like Gas Buddy let you search for gas prices in a given city, so you can use this for research.

Gas Cost Trip Calculator Table
Let’s use the process I outlined above to illustrate how you can be your own gas calculator for trip costs.

Distance from San Diego to NYC 2,760 miles
Miles per gallon 22
2,760/22 125 gallons
Average gas price:

•   San Diego: $4.57

•   Albuquerque: $3.09

•   Saint Louis: $2.82

•   Indianapolis: $2.99

•   Philadelphia: $2.93

 Average: $3.28
125 gallons x $3.28 $410 gas budget

As you can see, it would cost about $410 for gas for the entire trip. Of course, this is based on an average cost of gas, and prices will fluctuate over time and in different towns and cities.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Examples of Gas Cost Trips

Let’s look at a few other examples of trips and how much they would cost in gas.

Distance from Los Angeles to Seattle 1,335 miles
Miles per gallon 22
1,335/22 61 gallons
Average gas price:

•   Los Angeles: $4.44

•   Stockton: $4.45

•   Sacramento: $4.99

•   Medford: $4.05

•   Portland: $4.99

Average: $4.58
61 gallons x $4.58 $279 gas budget
Phoenix to Dallas 1,067 miles
Miles per gallon 22
1.067/22 48.5
Average gas price:

•   Phoenix: $3.13

•   Benson: $3.61

•   Deming: $3.45

•   Fort Stockton: $3.15

•   Abilene: $2.79

Average: $3.23
48.5 gallons x $3.23 $157

Reasons to Calculate Your Gas Cost

So why should you bother using a road trip cost calculator? Well, most people don’t have unlimited funds when it comes to taking a road trip, so for starters, it can help you see how much you’d spend. You might decide it’s not worth driving if the cost exceeds what you’d pay for a flight, bus, or train ride.

Even if you’re not planning a big trip, looking at how much it costs to drive on a tank of gas can be helpful for maintaining your month-to-month budget. Once you understand how much you’re spending on gas, you might explore how to improve gas mileage to get more bang for your buck or you might limit how often you drive to save money.

Tips on How to Save on Gas Money

Speaking of saving money, let’s look at how to save money on gas.

Plan Where You’ll Fuel Up

If you’re planning a road trip, use a tool that shows you exactly where the cheapest gas can be found. You might be able to save $.10 or more a gallon simply by planning ahead. There are even some trip fuel cost calculators that will help you plan where to stop based on gas prices.

Consider How You Pay

There are different types of credit cards that can help you save at the pump. Branded gas credit cards often offer rewards that will shave off a few cents per gallon or give you a bonus after you’ve charged a certain amount of purchases.

You might also consider a cash back credit card that gives you cash or credits for your purchases once you’ve hit a certain threshold.

Look into Alternative Transportation

You may be quick to rely on cars to get around, but there are often other overlooked methods of transportation to consider. Whether it’s a bus, train, Uber, or plane, you might be able to save money by leaving your car at home.

You can also cut your gas costs by splitting them with a friend.

Another way to stick to your travel budget? A money tracker app, which can help you keep tabs on where your money is going while you’re on the road.

Only Use Premium if Necessary

Most cars run just fine on regular unleaded gas, which can be significantly cheaper per gallon than premium versions, especially if you’re on a long trip. Check your car manufacturer’s recommendations to see if you can use regular unleaded gas.

Drive an Empty Car

The heavier your car is, the more gas it burns. So if you’ve been lugging around something heavy unnecessarily, consider leaving the load at home before you drive.

Who Should Save Money on Gas

The real question is, who shouldn’t save money on gas? We could all benefit by keeping a little extra cash in our pockets.

That said, if you’re planning a long road trip, you’ll probably want to explore ways to improve gas mileage and to save on gas. Also if you have a long commute to work, you might be spending more on gas than necessary.

The Takeaway

Paying attention to how much gas costs, particularly for a road trip or long commute, is just smart financial planning. Whether you use an online version or crunch the numbers on a piece of paper, a gas trip cost calculator can help you figure out how much you may want to budget for fill-ups.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How do I calculate gas cost for a trip?

To calculate gas for a long road trip, divide the number of miles of the route by the miles per gallon your car gets. This is the number of gallons you’ll need to drive the distance. Then, average the cost of gas on your route and multiply this times the number of gallons to get the total cost of gas for your trip.

How much would 1 mile of gas cost?

Divide the cost per gallon by the number of miles per gallon your car will go. For example, if you pay $3.99 per gallon and your car gets 22 miles per gallon, driving one mile would cost about $.18.

How do you calculate fuel to destination?

To calculate how much fuel you’ll need to get to your destination, divide the number of miles of the remaining route by the miles per gallon your car gets. Then, average the cost of gas on your route and multiply this times the number of gallons to get the total cost of gas for your trip.

Photo credit: iStock/georgeclerk

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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Nov
28
2023
calculating finances

9 Money Hacks To Try This Year

By | Budgeting & Goals, Financial Independence | No Comments

Financial wellness doesn’t have to be complicated. While you’ll eventually want to work up to a financial plan that includes a detailed budget, savings goals, and a retirement plan, there are small things you can do today to set you off on the right foot. What follows are nine hacks for money that can help you get organized, save more, knock down debt, and master the basics of personal finance.

9 Money Hacks to Help Save You Money

These simple moves can help you boost your financial health, reach your goals, and avoid financial pitfalls like impulsive spending and unmanageable debt spirals.

1. Use Multiple Savings Accounts

Having a different savings account for each one of your goals — whether it’s a new car, a down payment on a house, or even a big vacation — can be a great way to keep track of your progress. If you only have one account, it can be difficult to know what money is earmarked for which goal. For example, if you have $15,000 in your savings account, it may be hard to track that you have $5,000 saved for an emergency fund and $10,000 for a home purchase.

Separate savings accounts makes it easier to prioritize the goals you’re eager to reach, allowing you to fund those accounts first. It also decreases the chances you will raid the account to cover another expense. If an account is clearly labeled Emergency Fund, you may think twice about using it for a trip to Tulum.

And since many banks now offer savings accounts that feature the same interest rate, no matter how low your balance, you don’t need to put all your savings in the same account to get the highest yield.

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

2. Ditch Your Low-Interest Savings Account

Is there anything better than money you don’t have to work for? The interest you’re paid for keeping money in a bank account is basically that. If you’re still using your first savings account, however, chances are you’re getting a low interest rate.

Right now, the best online savings account interest rates are around 5%. Traditional brick-and-mortar banks, on the other hand, generally offer rates that are close to the national average, which is currently 0.46%. If you have a $10,000 savings balance, choosing an account that pays 5% will earn you about $500 in a year. If it stays in a bank account that pays 0.40% APY, you would earn about $40. The difference increases the more you deposit and the longer you keep the money in the account.

Failing to open a high-interest savings account means you’re giving up free money.

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!

3. Put Saving on Autopilot

Automating your savings is a great way to separate your savings from your spending without any extra effort on your part. If you wait to see what you have left at the end of the month to make a manual transfer to savings, you may forget or, worse, you may have nothing left to move.

There are two ways to automate your savings: One is to split up your direct deposit and funnel part of it into a savings account; the other is to set up a recurring transfer from your checking account into a savings account for the same day each month (ideally right after you get paid). If you have different savings accounts for different goals, you can choose to have a set amount for each account.

4. Pay Down High-Interest Debts

Credit card annual percentage rates (APRs) are now averaging a record 28.93%, up from 26.72 percent in 2022. To whittle down high-interest debt, consider making at least one extra payment on your credit cards per month. If you have multiple balances, here are two ways to knock them down:

•   The snowball method With this approach, you make your extra payment on your smallest debt, while maintaining minimum payments on the others. When that debt is paid off, you focus on paying off the next-smallest debt, and so on.

•   The avalanche method Here, you put your extra payment towards the debt with the highest interest rate, while making minimum payments on the others. When that debt is paid off, you focus on the debt with the next-highest rate, and so on.
The money you save in interest payments can then go towards saving (and earning interest).

5. Audit Your Subscriptions

There’s a good chance you are paying monthly for things you no longer need or use. To find out, review your credit card or bank statement to see what subscriptions services you’re paying for each month. Do you have cable, but only watch streaming services like Netflix and Hulu? Are you paying for streaming services you never, or rarely, watch? You might also audit your music services — if you are paying for more than one, you might keep your fave and get rid of the others.

The monthly fee for each streaming service may seem small but, when you pay it every month, year after year, it can seriously add up.

Recommended: How to Track Your Monthly Expenses: Step-by-Step Guide

6. Put a Free Budgeting App on Your Phone

Keeping tabs on how much is going in and going out of your accounts is crucial to financial wellness. But who wants to spend hours coming through statements? A budgeting app does the work for you, and many are free (at least for the basic service).

Popular budgeting apps, like Goodbudget, EveryDollar, and PocketGuard, allow you to connect with your financial accounts (including bank accounts, credit cards, and investment accounts) and give you a bird’s eye view of your finances. Right from your phone, you can see what’s in your bank account, your current credit card balance, what you’re spending the most money on, how your spending compares to last month, and more. This can be eye-opening and help you make smarter financial decisions.

💡 Quick Tip: Want a simple way to save more everyday? When you turn on Roundups, all of your debit card purchases are automatically rounded up to the next dollar and deposited into your online savings account.

7. Practice the 3-Day Rule

Online shopping has made it easier than ever to impulse buy. You’re only one click away from a new jacket, blender, or television. So try this smart spending hack: Whenever you see something you want to buy, either online or in-person, DO NOT buy it that day. Put the purchase on pause for at least three days. Tell yourself that if, after three days, you still want the item, and you can afford it, you’ll buy it. This gives you time to reflect. You may well decide that you don’t need or want the item that badly. If you’re worried about missing a “one-day” or “flash” sale, don’t — retailers run sales all the time.

Recommended: How to Stop Spending Money: 7 Strategies to Curb Overspending

8. Use Cash

This may sound counterintuitive, but spending cash can actually help you save money. The reason: When you spend in cash, you actually have to physically give up your money when you spend it, unlike with a credit or debit card.

You might try taking out a set amount of money for discretionary spending for the week, and when the money is done, you’re done spending. Or, consider using the envelope budgeting system, where you take out a certain amount of cash for the week and divide it into envelopes for food, gas, etc. As you see the money go down in each envelope, you’ll have to think hard about every purchase.

9. Gradually Boost Retirement Savings

.
You may have heard that you “should” be putting 15% of your income into your 401(k) or other retirement fund each year. It’s a solid goal. But for many young people, it may not be remotely realistic. That said, you shouldn’t give up on the whole idea. Why not try baby steps? You might start by putting just 1% of each paycheck into your retirement fund, then increase it by 1% every three to six months.

While 1% is a small percentage of your annual earnings today, after 20 or 30 years it can make a big difference in your account balance when you retire. That’s because the longer you give your money a chance to grow, the better.

Recommended: When Should You Start Saving for Retirement?

The Takeaway

Getting a better handle on your finances may perennially be on your to-do list. The problem is that this goal can seem too vague and too overwhelming to even know where to begin. The good news is that you don’t have to overhaul your personal finances overnight. Simply adopting some smart money habits (or hacks) can snowball into long-term financial stability and wealth. And there’s no better time to start than today.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.


SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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.

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