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We’re reading a lot about cryptocurrency being here to stay, but for many of us, it’s still not a regular part of our everyday financial lives. Why is that? Could be lack of education among investors, and the general lack of current, regular commercial use of cryptocurrency. However, if acquiring the right financial knowledge is a roadblock, let’s move that out of the way right now and do some schooling on cryptocurrency trading for beginners.

The Basics of Cryptocurrency

Cryptocurrency is digital currency (used exclusively online) that acts as a direct financial exchange between users without the involvement of a bank or other third parties. Think of it as an alternative currency to traditional forms of payment, like cash, checks, and credit cards.

The information used within the system is kept safe through the use of encryption techniques . These methods scramble the info to make the activity secret and difficult for outsiders to access.

When you and others use a cryptocurrency system, everyone and everything remain anonymous. Each exchange that takes place is woven into a group called “blocks” (hence the term blockchain), which again is coded (encrypted) in order to keep it private and secure.

The basic unit of value of cryptocurrency is expressed as a “token,” which is used exclusively by members of the group involved in the blockchain. Every time a transaction happens, a “miner” updates the blockchain (more about this later).

Cryptocurrency is not created by any bank system or government agency, which means it’s in a universe of its own. Also, it isn’t regulated to the same degree as other financial products, like banking and investments. At least not yet.

Many people find this freedom to be a very cool vehicle to ride. Its popularity is growing in an organic way too; this makes it hard to predict where it’s going and where it will end up.

Cryptocurrency can be bought and sold on special exchanges ; the most commonly known cryptocurrency is bitcoin. SoFi also allows users to buy and sell cryptocurrency.

Recommended: A Beginner’s Guide to Cryptocurrency

The Future of Cryptocurrency

Of course, not everybody is on board with cryptocurrency being a given for the future. Although there are have been more than 2,000 cryptocurrencies on the market, more than 800 of them are now no longer operational.

Another fact to note: the U.S. Securities and Exchange Commission (SEC) has denied more than a dozen applications for permission to list bitcoin exchange-traded funds (EFFs). The reason, though, could be to your benefit as an investor: the need to minimize risks of fraud and manipulation, and to increase investor protection.

“We’ve seen some thefts around digital assets that make you scratch your head,” SEC Chairman Jay Clayton said at CoinDesk’s Consensus Invest conference. “We care that the assets underlying that ETF have good custody and that they’re not going to disappear.”

That said, are you a believer? Are you thinking about taking a leap, or at least getting in on the ground floor, before the anticipated mad mainstream rush?

Let’s break down the details of cryptocurrency trading for beginners:

It’s in the Wallet?

Offline, cryptocurrencies are stored in “wallets.” A wallet is a software program that stores both private and public keys that allow you to send and receive digital currencies and keep an eye on your coin.

Hot wallets give you easier access, but they can also more easily be hacked. Cold wallets are harder to open. If you plan on holding on to your investment for a long time, you may want to opt for the cold wallet. If you need to dip into your coin more than occasionally, consider the hot wallet.

There are a number of wallet providers , and you’ll want to do some due diligence before choosing one.

Learn to Chill

Cryptocurrency is still a relatively new technology, which means it can act like a newborn: crying jags, not understanding how things work, crawling and stumbling, and behaving irrationally.

You’ll need to get used to huge price swings, instability when least expected, rollercoaster performance reports, and general anxiety on your part. Be sure you can take it.

Tune Out The Naysayers

Cryptocurrency trading for beginners means getting involved in a new idea. When that happens, get ready for the know-it-alls and Negative Nellies to tell you what’s what. You’re going to hear that cryptocurrency is overhyped, just a fad, or a wicked scam.

Of course, you’re going to do your due diligence and make up your own mind with educated decisions, so let don’t let them rattle you. Also, what may be true and unfortunate for one cryptocurrency may not be the same for another.

Get Professional Insights

Here’s the thing: Maybe cryptocurrency isn’t for you right now. The fact is, cryptocurrencies aren’t endorsed or guaranteed by any government—and they are volatile and involve a high degree of risk.

Not only that, but consumer protection and securities laws don’t regulate cryptocurrencies in the same way that they regulate traditional investment products. If you instead want to learn more about traditional investment products, now’s the time to check out SoFi Invest®.

With SoFi Invest, you’ll get access to financial planning and personalized advice, all based on how you want to invest and what your future goals are. All you need to do is make an appointment to chat with one of our SoFi Invest Advisors.—there is no obligation and no cost.

We’ll work with you to make sense of an investment strategy and help you map out a plan (and stick with it).

With an automated investing account with SoFi, we’ll invest in thousands of assets, actively managing them, which can help you get a clearer vision of your future path. To avoid veering off the road, we’ll automatically rebalance your investments as needed, so that they stay on track.

Make an appointment with a SoFi financial planner and start your path to a more healthy financial future. And whatever the future brings, you don’t have to take that path alone.

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The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including
FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member
FINRA / SIPC .
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Retirement is supposed to be the golden age of relaxation. Whether it be reading the garden, lazy days spent fishing, or early mornings on the golf course, when you retire, there are no bosses or daily meetings to preoccupy you. But what is the best way to get there?

Saving for retirement can seem daunting, especially when you consider housing expenses, student loan debt, and other day-to-day living expenses.

The average American retirement savings leave much to be desired. Most Americans nearing retirement age in the U.S. have only 12% of the recommended $1 million saved.

Actively preparing for retirement is one of the best ways to ensure you can spend your later years relaxing and enjoying your well-earned time off. There are a wide variety of accounts that allow you to save for retirement, from Traditional and Roth IRAs to a 401k, 403b, or other investment accounts. One of the most popular retirement vehicles is the 401k.

If you’re getting ahead on saving for retirement you may be wondering “how much should I have in my 401k?” While the answer to that varies depending on your financial situation, age, and more, there are a few retirement guidelines that can help you better prepare for the future.

What Is a 401k?

A 401k is an employer-sponsored retirement plan that allows both you and your employer to make contributions to the account. If your employer offers a 401k plan, you are most likely able to select a percentage or specific monetary amount to contribute to your 401k from each paycheck.

One of the major benefits of a 401k is that your employer can also make contributions. If your employer offers matching contributions, it makes sense to participate in the 401k plan, at least up until the matching maximum. Matched contributions are determined at your employer’s discretion, so check your company policy to see what is offered at your workplace.

There are two kinds of 401ks. When you contribute money to a traditional 401k, the money is tax deductible, but will be taxed when you withdraw it in retirement, at the income bracket you are in at that time. When you contribute to a Roth 401k, the money is taxed at the time of contribution, at the tax rate you are currently in. But it’s not taxed when you withdraw the money.

For both Roth and Traditional 401ks, the contribution limit for 2018 is $18,500. If you are over the age of 50, you are allowed to contribute an additional $6,000, known as a catch-up contribution. When you contribute money to a 401k, it is intended to be used in retirement .

Because of this, there is a penalty if you withdraw money before the age of 59 ½. On the other side of the age spectrum, if you do not begin withdrawals by the age of 70 ½, you will be faced with fines and penalties.

Average 401k Balance by Age

Your readiness for retirement will depend on a few factors; including your age, income, and expected retirement age. While everyone’s situation is different, it’s never too early—or too late—to start preparing for retirement.

To see if you’re on track with your retirement goals, take advantage of free online resources, like a retirement calculator that will help you estimate your financial readiness for retirement.

The earlier you start saving for retirement, the better. But if you’ve gotten a late start, there are ways to boost your retirement savings. As you age, your strategies for saving for retirement will shift. Here’s what to expect in your 20s and beyond.

In Your 20s

You’re just starting out in the work force and chances are you’re still paying off your student loan debt. While paying off your student loans and spending money on happy hour may seem more important than saving for retirement, the earlier you begin saving, the more time you will have to benefit from compound interest.

Compound interest is interest calculated on the initial principal and on the interest accumulated over the previous deposit period. This means saving for retirement in your 20s has significant advantages when you are finally ready to retire. Some experts think by the time you turn 30 , you should have saved one year’s salary toward your retirement. The average 401k savings for someone in their 20s in 2017 was $9,900.

In Your 30s

Your 30s are when you want to kick your retirement savings into high gear. It’s a good rule of thumb to up your retirement savings contributions to 15% of your monthly income . You may have other expenses like kids or a mortgage, but you’re also likely making a bit more money than you were in your 20s—so take advantage and invest some of that money in your future.

No one else will be looking out for your financial health in retirement. The average 401k savings for someone in their 30s in 2017 was $38,400.

In Your 40s

By the time you have reached your 40s, you should have a considerable chunk of change socked away for retirement. Common financial advice is that you have at least three times your annual salary saved at 40 if you intend to retire at 67. Often times, your 40s are also when you’re faced with financing your children’s education.

And when push comes to shove, many parents will put their child’s education ahead of their retirement savings. You’re now considerably closer to retirement than you were at 22, so consider opening an independents retirement savings account like an IRA, in addition to contributing to your company’s 401k plan.

Diversifying your investments may help reduce some investment risk. The average 401k savings for someone in their 40s in 2017 was $91,000.

In Your 50s

When you turn 50, you can begin making catch-up contributions to your 401k and IRA. You can contribute an additional $6,000 a year to a 401k and an additional $1,000 a year to your IRA. Take advantage of these catch-up contributions and continue to save.

Consider adding any bonuses or extra income into your 401k to boost your savings. The average 401k savings for someone in their 50s in 2017 was $152,700.

In Your 60s

As you get into your 60s, you can see retirement at the next exit. Now would be a good time to adjust your investments into less risky options. As retirement becomes more real, take the time to prepare for the unexpected and safeguard some of your investments. The average 401k savings for someone in their 60s in 2017 was $167,700.

But the average couple in their mid-60s will have to cover approximately $280,000 in health care costs. Make sure your retirement plan accounts for health care costs.

About 70% of Americans surveyed in 2016 said they plan to work as long as possible. Extending your working years could lead to financial gains down the road. Depending on when you were born, you qualify for Social Security benefits at different ages. If you were born after 1960, you won’t be able to collect Social Security until you are 67.

Invest with SoFi Invest®

If you are looking for opportunities to expand your retirement savings and complement your employer-sponsored 401k plan, consider investing with SoFi. If you have an old 401K, we can help you find out how much you are paying in management fees. Then, we can help you determine the impact of rolling over your 401K into an IRA with SoFi. Schedule an appointment here.

Additionally, at SoFi, we offer a competitive wealth management account with no SoFi management fees and members get complimentary access to financial advisors.

We’ll work with you to establish your financial goals and determine the risk profile you are most comfortable with. SoFi will work to diversify your investments and automatically rebalance your profile as needed. You can start investing with as little as $100.

Ready to take control of your financial future? See how a SoFi Invest account can help you reach your retirement goals.

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SoFi can’t guarantee future financial performance.
This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.
Diversification can help reduce some investment risk. It cannot guarantee profit or fully protect loss in a down market.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Advisory services offered through SoFi Wealth, LLC, a registered investment advisor.
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Target Date Fund Basics

Target date funds are becoming increasingly common when it comes to saving for retirement. A target date fund is a mutual fund with a passive mix of investments curated based on when you’re likely to retire.

They are also sometimes referred to as “set it and forget it” funds, and are relatively popular investment options because they are fairly easy to understand and offer a decent return on investment. You simply put your money in a fund with the target date you plan to retire—and you don’t have to think about it on the daily.

Target date funds surpassed the $1 trillion mark in 2017 —meaning that over $1 trillion in our retirement savings are now invested in these funds—and about nine in 10 employer retirement plans now offer target date funds as an option. Target date funds are, simply, funds organized around a target date for retirement.

For example, a 2050 fund means you are hoping to use those retirement funds in 2050. The idea is that by picking a fund aimed at a specific date, the mix of investments can change as you near that date.

This means you might have riskier investments with the potential for greater return earlier in the fund’s life, when retirement is decades away. Your investments gradually become less risky as retirement nears.

However, it should be noted—as with all investments—target date funds are not without inherent risk. You can lose or gain money if the stocks, bonds, or mutual funds you’re invested in go up or down. The return on investment is never guaranteed.

Additionally, even if two funds have the same target date (or similar names), it doesn’t mean they’re the same. The underlying strategy, risk, and asset allocation varies among the best target date funds.

How Target Date Funds Work

Typically, target date funds are mutual funds with a passively managed mix of assets. A mutual fund is a portfolio of stocks, bonds, and securities. You buy into the fund, as do other investors, essentially pooling your money and allowing you to buy a mix of assets you might otherwise not be able to purchase as an individual. Passively managed means you’re not actively trading stocks and securities.

How a specific target date fund shifts its asset mix over time is called its “glide path.” You’ll probably want to research the glide path before committing to a fund. You’ll also want to consider how much risk you want to take. Even though target date funds generally become more conservative over time, the specific risk and asset allocation varies from fund to fund.

How to Pick the Best Target Date Fund for You

The best target date funds are the ones that match your needs, offer the right level of risk for your desired return, and have low management fees. The average target date fund asset-weighted expense ratio for 2017 was 66 basis points—which means 0.66%. And the typical investor pays 0.47% in fees because so many target date funds come from low-cost providers.

That same report found that Vanguard Group, Fidelity, and T. Rowe Price make up nearly 70% of target date fund assets. In addition to considering fees, here are some other issues to weigh when picking the best target date funds for you.

Pick the Right Target Date

You can choose the year you’re hoping to retire, but it’s not a requirement. If you want to be slightly more conservative, you could consider a target date that’s sooner than you plan to retire.

However, you should make these choices consciously (and plan accordingly—don’t pick a date sooner than your actual retirement and then be surprised when there’s not as much return as you want).

And check in regularly to update your target date as necessary—something most people don’t do. One research paper analyzed 34,000 participants in target date funds and found that investors were more likely to pick a target date ending in “0” rather than one ending in “5,” simply because it’s easier to round to zero.

Assess Your Risk Tolerance

A big question with any investment—and target date funds are no different—is how much risk you want and are willing to tolerate. Your risk tolerance can also change over time, and you may want to change the mix of your investments as that happens.

Do you want your target date fund to carry you to retirement or through retirement?

Some target date funds are “to” retirement, meaning they’ll hit their most conservative allocation at the target date and then won’t change much once you retire. But other target date funds are “through” retirement, meaning they continue to adjust and rebalance their mix of funds even after you retire.

Check in on the mix of investments and the fund’s glide path

It’s probably not a great idea to really “set it and forget it.” You’ll want to check in periodically to ensure your fund still meets your needs. Although many employers may automatically enroll you in a target date fund, it doesn’t mean you have to stay in the fund.

If you’re going to want to be more actively involved in investing for your retirement or more aggressive than a traditional asset allocation strategy, then a target date fund might not be right for you. Additionally, if you’re going to need or want more customization, then you might want a different investment product.

Before you decide on products and investment strategies, think about what your financial plans are and your goals for retirement. As a first step, use our retirement calculator to figure out how much you should be saving.

Investing with SoFi Invest®

It’s never too early—or too late—to take control of your retirement savings. If you’re ready to start actively preparing for retirement, consider investing with SoFi Invest. When you open a invest account at SoFi, you’ll gain access to a team of financial advisors who will work with you to create a long-term financial plan. You can get started with as little as $100, with no SoFi management fees.

Ready to invest for your future? Check out SoFi Invest today.

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SoFi can’t guarantee future financial performance.
This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.
Advisory services offered through SoFi Wealth, LLC, a registered investment advisor.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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It goes a little bit like this: You’re on a much-needed vacation with your family, having daiquiris on the beach while the kids have the time of their lives playing in the surf. Everybody is happy— you want to come back here every summer.

Then, a timeshare salesman approaches you in the resort lobby and offers you a free three-course dinner at a top restaurant in exchange for hearing out his pitch: a timeshare on this very beach, a great investment opportunity, and a deal that’s on the table for one day only.

The high-pressure timeshare salesman has become a cliché of resort towns everywhere, and with good reason. The timeshare loans they sign vacationers up for often have a high rate of default. But timeshares are still a popular way to vacation, and there are savvy ways to finance a timeshare. In fact, according to the American Resort Development Association (ARDA), 9.2 million U.S households own a timeshare. And some even own several timeshares.

So, are timeshares a good idea? It depends on how you think about it. If you’re looking for a vacation spot you can use whenever you want, you are likely in for an expensive disappointment. But if you’re looking for a vacation spot you can come back to time and again in your favorite location, it might make financial sense.

Staying in resorts and eating out can get expensive. Buying a vacation home can be even more expensive. If you understand that you’re purchasing a timeshare not as an investment but as a vacation experience—to spend time in with family and friends, it may actually be less costly and less stressful than other vacation options.

While purchasing a timeshare comes with risks, there are ways to be smart about timeshare financing. In this article, we’ll walk you through some timeshare financing options, so you can understand how it works and make a decision that’s right for your budget.

How to Finance a Timeshare Responsibly

When you buy a home, you typically finance it with a mortgage. When you buy a car, you can finance it with an auto loan. But there’s no direct lending market for timeshares, and on top of that, they usually don’t increase in value over time.

So what are your timeshare financing options? First, let’s look at how not to finance a timeshare. The first option most interested buyers are faced with is developer financing. Typically, a timeshare resort developer works with a lender that offers high-interest personal loans, and they encourage you to make a decision right away while you’re at the presentations. According to ARDA, buyers pay an average of $20,000 for a timeshare interval, though prices can range from depending on the property.

Developer financing is often proposed as the only timeshare financing option, especially if you buy while you’re on vacation. Another option, however, is to plan ahead. If you’re ready to purchase a timeshare, secure financing beforehand so that you have the funds in hand when you negotiate the sale. This way you have time to shop around for a good financing deal—and possibly save up some money to put toward the purchase as well.

Choosing a Vacation Home

When you purchase a timeshare, you’re sharing the property with a number of other timeshare owners and typically have the right to use the property at the same time every year.

You can trade days with other owners and sometimes even try out other properties around the country (or around the world) in a trade. In addition to the initial purchase price, you’ll also be required to pay your share of the maintenance fees that cover the costs of property upkeep and cleaning. These maintenance fees often increase over time.

Once you’ve considered the financial responsibilities that come with the timeshare and your budget, choosing the right place often comes down to where you want to be, and what you need in terms of space and amenities.

Since selling a timeshare can be difficult and sometimes involve a financial loss, you’ll want to make sure you’re purchasing a timeshare in a place that your family will want to return to for a long time—and can easily get to. That way you don’t end up paying for a place you don’t use.

Preparing Financially for a Timeshare

A good financial scenario to be in when buying a timeshare is to have a steady income that will allow you to keep up with maintenance fees and travel to your timeshare each year. If you plan to finance the purchase, look over your financial profile and creditworthiness.

Your income, creditworthiness, the term of the loan and other factors, will determine the rates that lenders will offer you. Resolving any issues impacting your credit score may help improve your financial profile.

You’ll also want to consider your budget over the next few years. Are there any other major purchases you are planning to take on? Do you anticipate a new added cost like a new family member? Any type of financial shift in coming years should be accounted for before you finally sign on.

Smarter Ways to Finance a Timeshare

There are a few alternatives to financing a timeshare with financing offered by a developer. Of course, you can wait and save up the cash to purchase the timeshare outright. If you’re looking to finance the purchase, there are still several good options.

One option is to use a current credit card. This option often involves less paperwork, but does come with a high cost in terms of interest rates. This option should be used if you are putting most of the purchase price down in cash up front and just need to put the last little bit on a credit card. You should also only do this if you are certain you can pay off the remainder in a relatively short amount of time.

Taking out a home equity loan is another option. With a home equity loan, you are borrowing money against the value of your home. These loans can be relatively easy to secure from a lender, because your home is often used as collateral.

They also come with potentially much lower rates than other types of loans . There are a few drawbacks, however: There’s more red-tape and risk as you’re putting your home on the line. Home equity loans are typically used for expenses or investments that will improve the resale value of your primary residence.

Securing a personal loan at a competitive interest rate can be an even better solution for financing a timeshare. Depending on your financial profile, you may qualify for a much lower interest rate than financing from a developer or a high interest rate credit card would offer. A personal loan also allows you to choose terms that work for you. On top of that, a personal loan is relatively easy to secure.

Timeshares are often thought of as a way to guarantee vacation time in your favorite location each year without having to buy a second home. If you do your homework and weigh the risks, they can be a good way to vacation with family and friends and make a lot of memories along the way.

Thinking about using a personal loan to finance a timeshare? Check out SoFi.com and check your rate in just a few minutes.

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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit.

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You probably already know that you should have an emergency fund—a bit of extra cash on hand in case of an unforeseen event, like getting laid off or needing to move.

But many of us don’t know more than that. How much should you have? How, exactly, do you save that cash? And should you focus on building this fund or paying off debt first?

SoFi advisor and Certified Financial Planner Alison Norris recently talked about all of this and more at a recent #WealthWednesday discussion on the SoFi Member Facebook page. (Yep, SoFi members have daily access to complimentary advisors on social media and via phone—check out more about the SoFi Member Benefits.)

And today, we’re bringing that discussion, as well as other common questions about emergency funds and her expert answers, to you.

How much should I have in an emergency fund?

Your emergency fund should be three to 12 times the amount you spend monthly. The exact amount should reflect your risk aversion to unexpected unemployment. If you have reason to believe you could quickly land another job—say, you’re a software engineer in San Francisco—then you might be comfortable with three months’.

If, on the other hand, you’d expect a longer job search—for example, you’re in a specialized line of work, or a finding a new job would likely entail moving to a new city—your emergency fund should reflect that

Also, consider this: Would you be willing to amend your lifestyle if income slows or something costly crops up? If you’re OK living on a friend’s couch eating ramen, then you might survive with a smaller rainy day fund. If you wish to keep living the life you’re accustomed to, then you may want more of a backup.

Where should I keep my emergency fund—my checking account, a savings account, or elsewhere?

You want to keep your emergency fund money “liquid,” or available to access as soon as you need it. It’s also smart to separate cash on hand from your emergency fund. Cash on hand can be left in your checking account, earmarked for paying upcoming bills. Your emergency fund works well in a FDIC-insured savings account.

With that said, many savings accounts only pay you 0.01% interest on cash balances. This doesn’t keep pace with inflation, so you’re essentially losing money. Instead, you might consider a high-yield savings account that earns 1.0% interest or more. Bankrate is a good place to compare your options.

What do you suggest if you have roughly $5K built up so far for an emergency fund and also about $3K in credit card debt?

Should I wipe out the debt and then build the fund back up, or chip away at the debt and maintain the fund?

I might suggest knocking out that credit card debt in full. Here’s the order of operations that works best for most:

•   1. Keep enough cash on hand to pay recurring bills and avoid living paycheck to paycheck. (This isn’t your emergency fund, just cash that’s good to have on hand.)

•   2. If your employer matches contributions to a retirement plan, max out that match.

•   3. Pay off consumer debt, including high-interest credit cards.

•   4. Build your emergency fund.

Also keep in mind that the comfort of having a cash cushion and not living on the financial edge may outweigh other purely financial benefits of wiping out high-interest debt. Sleeping soundly at night is another benefit to building up an emergency fund.

Could a credit line be considered a pseudo emergency fund?

While I don’t have credit card debt, I do have a ton of student loans I want to pay off more aggressively. My credit cards would allow me to live for a good three months or so if I needed to.

I commend your desire to pay off your student loans aggressively, but I wouldn’t do so if it means you would instead have revolving credit card debt.

Say, for example, you have a 6% rate on your student loans and a 20% rate on your credit card loans, and $1,000 in outstanding debt with both. You’ll end up paying $140 less toward your student loan each year (maybe even less because there are tax deductions for student loan interest). I might suggest prioritizing the emergency fund while making minimum payments on your student loans.

What’s the best way to save up for my emergency fund, quickly?

The basic equation for wealth building is: Money In – Money Out = Money Saved.

But you don’t need us to tell you how math works. The key is to figure out which levers to pull to increase your odds of success.

Start by tracking your expenses, either in a spreadsheet or using a free service like Mint.com. You’ll quickly get a handle on your monthly cash flows, which will enable you to target an emergency savings goal tailored to your needs.

The next step is key: Pay yourself first. Schedule recurring auto-deposits into your savings account to coincide with your paychecks. You’ll find this cash flow will quickly become painless and invisible. More importantly, it ensures that when you overspend in a given month, it’s discretionary items—like eating out one more time—that get cut, rather than your savings.

I’m almost at my savings goal for my emergency fund. Where should I put my money next?

The earlier you save for retirement, the better, so you can let the power of compounding interest work for you. And even better than compounding is free money. For both reasons, the first place to invest for retirement should be in your employer-sponsored retirement plan, if you have access to one.

Many employers will match part of your contribution, which is essentially free money. Once that match is met, aim to keep contributing to tax-advantaged accounts. You can invest in the employer retirement beyond your match, contribute to an IRA, or (our preferred strategy) both. To understand which IRA account you can contribute to, use this IRA calculator.

From there, document your assets and liabilities. Know your good debt from bad. A mortgage or student loan? Good. A high-interest credit card? Not so good. Also write down your long- and short-term goals—for example, paying for wedding, saving for a house down payment, or even taking a summer vacation.

Once you’re saving for retirement, you can plan a savings or investment strategy for these goals, based on their time horizon.

Are you ready to start saving? Learn more about SoFi Invest® to see if it is the right fit for you!

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SoFi can’t guarantee future financial performance. This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite. Advisory services offered through SoFi Wealth, LLC, a registered investment advisor.
SoFi doesn’t provide tax or legal advice. Individual circumstances are unique. Consult with a qualified tax advisor or attorney.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi can’t guarantee future financial performance.
This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.
Neither SoFi nor its affiliates is a bank.
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