11 Benefits of Being an Entrepreneur

11 Benefits of Being an Entrepreneur

Entrepreneurship is booming in America. According to the latest U.S. Census stats, almost 5.4 million new ventures were registered in 2021, a 23% uptick from the year prior. While entrepreneurship is often portrayed as being exhaustingly hard, its many upsides are clearly enticing more and more people to dive in.

What are the benefits of being an entrepreneur? They can range from setting your own hours to having unlimited earning potential to realizing a personal dream. Some people nurture an idea for an innovative product or service for years and then set to work bringing it to life. Others are on a mission to help their community or a specific segment of the population.

Still others set out with the simple goal of making a lot more money than their current 9-to-5 gig pays.

Whatever your motivation, the benefits of becoming an entrepreneur can have a major positive effect on your life. Here, we’ll take a closer look at the perks of starting your own venture. They just may motivate you to take this next giant step in your career and charter your own path.

Read on to learn:

•   What is an entrepreneur?

•   How does entrepreneurship work?

•   What are the benefits of being an entrepreneur?

What Is an Entrepreneur?

An entrepreneur is a person who starts their own businesses to bring their dreams to life. Whether they envision opening a better coffee bar or developing a fitness app, they invest time and capital in their business ideas and work diligently to make them successful. Entrepreneurs often partner with other investors, employ workers, and take risks as they seek success.

Typically, an entrepreneur is an inherent problem-solver with a can’t stop, won’t stop attitude. In addition, many are brimming with confidence and conviction that their idea is a terrific one. They refuse to stay discouraged and just see the word ‘no’ as a temporary setback at worst.

The U.S. is full of success stories of entrepreneurs, whether that means the likes of Microsoft’s Bill Gates, Amazon’s Jeff Bezos, or any of the folks who win on Shark Tank. Many of these experienced numerous failures and pressure to give up from family, friends, and potential investors but persevered.

While the wealthiest entrepreneurs are popular symbols of accomplishment and can make it look easy, the truth is that most entrepreneurs have spent countless hours and tremendous sweat equity behind the scenes to become successful.

How Does Entrepreneurship Work?

Entrepreneurship is the opposite of 9-5 jobs. Instead of punching a clock or working on a project for a company, you depend on your own efforts to bring in some type of income. The grind can be brutal, especially at first when you probably aren’t making money.

However, entrepreneurship means more than wanting to work for yourself. To live as an entrepreneur, you need an idea for a business, service, or product to focus your efforts. For example, you might see an opportunity to succeed with a superior product or be the first to serve a niche market.

As an entrepreneur, you bet on yourself, which means you invest as much of your time and money into your business aspirations as possible. You might leave your job to pursue your dream or put in hours before or after your day job to get your business going. Either way, successful entrepreneurs often reach a point where they grow their company enough that they must dedicate all their time to it, hire others to take on some of the workload, or partner with investors.

In addition, many entrepreneurs create social change through their business efforts. For example, TOMS Shoes is a multimillion-dollar company that has provided shoes, clean drinking water, and medical care for hundreds of thousands of people in need.

Recommended: 46 Tips for College Graduates Joining the Real World

Benefits of Being an Entrepreneur

Now that you understand how entrepreneurship works, here are some pros of being an entrepreneur.

1. Ability to Work from Anywhere

One of the key benefits of becoming an entrepreneur is you typically have the ability to work from home or anywhere else you may be. Since you can run many types of business online, you often only need a laptop and internet access to work as an entrepreneur. A work-from-home budget can be an economical way to launch your venture. So, whether you prefer your living room, a coffee shop, or a beach (as some digital nomads do), you have the freedom to set up shop wherever you like without necessarily paying rent for a workspace.

2. Having a Flexible Schedule

In addition to working from anywhere, you choose when you’ll work as an entrepreneur. As a result, you make your own hours,which may give you room for family time, exercise, or errands during the day.

Worth noting: Since the “office” never closes, some entrepreneurs are known to toil 16-hour days (or longer) to realize their aspirations. For this reason, setting your own hours can be a double-edged sword that may lead to overwork and burnout for some. Proceed with your eyes wide open, and remember that work-life balance can be valuable.

3. Ability to Make Key Decisions

As an entrepreneur and business owner, the buck stops with you, which is another empowering benefit of being an entrepreneur. You’ll decide how the business runs, the product or service to focus on, and the target market you’re trying to reach. You pick your team, your partners, and your company culture as the business grows.

Recommended: Can I Use a Personal Checking Account for Business?

4. Growth in Leadership

A successful business requires an able leader. In all likelihood, entrepreneurship will give you opportunities to develop as a business owner and manager. You can learn new skills and expand your knowledge.

As a result, as you continue your professional journey, you’ll probably become an effective boss, operations manager, and business development wrangler. All of which are pros of being an entrepreneur.

5. Ability to Give Back to Your Community

Success as an entrepreneur usually means growing your business to the point where you hire employees. As a result, your efforts create wealth and economic opportunities in your community, helping others support their families and accomplish their dreams. Additionally, successful business owners and entrepreneurs can invest in other companies and donate to charity, benefiting those around them. There’s one more way this can be an upside of entrepreneurship Your business mission may be one that uplifts others. Perhaps you’re developing a healthier snack food, for instance, or an app that helps people reduce their stress levels.

6. Choosing Who to Work With

As an entrepreneur, you might start your business slowly (a benefit of side hustles) or go in full tilt right from the start. Regardless of how you get going, you’ll determine who your partners and colleagues are, which can make for a very agreeable work life. Whether you occasionally speak with consultants, hire workers, or bring investors on board, you decide who gets involved with your business. Your independence as an entrepreneur allows you to intentionally create a work culture that fits your preferences. It’s empowering to have the ability to say “no” to working with someone who doesn’t fit your vision.

7. Being an Entrepreneur is Rewarding

One of the many benefits of becoming an entrepreneur is seeing success unfold, thereby proving the validity of your ideas and the impact they can have. Whether you develop a shampoo that people love or a service that helps disadvantaged students, knowing that your endeavor is finding an audience can be hugely rewarding.

In terms of finances, turning a profit on your business can be life-changing. Once you run payroll and address your business costs, every dollar earned is yours.

Whether you want to put money earned back into the business for more growth or use it to get a new car, seeing money roll in from your business can be incredibly satisfying. Instead of having a set salary, you’ll see how your very own efforts can drive your income and net worth.

8. Being Able to See the Fruits of Your Labor

Success as an entrepreneur is multifaceted and fulfilling: You can obtain financial freedom, see your business grow through meeting customers’ needs, mentor employees, and launch related (or unrelated) ventures. That feeling of having created something that clicks with an audience and builds a following is uniquely satisfying and can definitely boost your sense of pride and self-esteem.

Recommended: Common Signs That You Need to Make More Money

9. Creating a Positive Impact

Entrepreneurship goes beyond making an appealing product and profitable business. Your leadership can inspire others to pursue their dreams. Additionally, your company can create economic ripple effects, allowing others to achieve financial success and benefiting your city and beyond.

10. Income Is Decided by You

As an entrepreneur, you manage the money (at least during the start-up period). As your business evolves, you might get to decide whether you want to create jobs with better pay or scale your business quickly. You’ll also allocate funds and determine your own paycheck.

It’s a balancing act that you will be in charge of. For example, you might be less concerned with becoming a millionaire than you are with retaining quality employees for the long haul through robust compensation.

Recommended: How to Prepare Your Finances for a Recession

11. Networking Opportunities

Most successful entrepreneurs keep strong connections with others who are also starting their own ventures. For instance, you can learn from those who already had to rent workspace, run payroll, or deal with licensing arrangements. In the future, you might be the one tapped by a newly minted self-starter for that very same kind of information.

You’ll grow professionally through peer, mentor, and mentee relationships. No one knows it all, and tapping your network can be an effective way to solve business problems and find the right people to hire or consult.

The Takeaway

There are a myriad of benefits of being an entrepreneur, such as deciding your own schedule, boosting your earning power, and having the opportunity to impact people around you. However, successful entrepreneurship requires tenacity, willingness to learn from failure, and comfort with risk.

The beauty is that anyone can become an entrepreneur. Whether you start your business as a side hustle or leave your job to take the plunge, you have the power to create your own opportunity.

3 Banking Tips

1.    If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

2.    An emergency fund or rainy day fund is an important financial safety net. Aim to have all least three to six months’ worth of basic living expenses saved in case you get a major unexpected bill or lose income.

3.    If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.

Better banking is here with up to 3.25% APY on SoFi Checking and Savings.

FAQ

What are the drawbacks of being an entrepreneur?

The drawbacks of being an entrepreneur include not having a guaranteed wage or salary, possibly investing more hours into your business than you would at most jobs, and the real risk that your endeavor will fail. As a result, you might put all your time and money into a business venture only to end up with nothing to show for it.

Can anyone become an entrepreneur?

Anyone can become an entrepreneur; no specific certification or education is necessary. However, in some cases, business experience, a college degree, and professional training programs can increase your chances of being a successful entrepreneur.

How long does it take to become an entrepreneur?

One of the pros of being an entrepreneur is that it’s possible to become one quickly if you have a business idea plus sufficient available hours and capital to start your venture. However, finding success as an entrepreneur usually takes years of hard work.


Photo credit: iStock/PeopleImages

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/3/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
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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What Are Money Affirmations? Do They Actually Work?

Guide to Money Affirmations

Affirmations, or phrases you repeat to help promote positive thinking and self-acceptance, are everywhere, from “Just do it” on Nike leggings to “Happiness comes in waves” on beach-house pillows. But what about money affirmations? Can they put a sunnier spin on finances or even help you reach your financial goals? If you’re curious or just want to give them a try, this guide will be a good introduction.

Naturally, it’s not motivating to be down on yourself with any life goals, from weight loss (“I can’t even lose five stupid pounds”) to finances (“I will never dig out of this debt”). Researchers at George Washington University’s Global Financial Literacy Excellence Center recently reviewed data showing that 60% of respondents ages 21 to 62 reported feeling anxiety and stress when thinking about their personal finances. Furthermore, they found that those emotions are highly linked to problematic financial behaviors and decreased financial security.

Could money affirmations help this kind of worry and negativity around finances? You can be the judge of that once you read this guide. You’ll learn the scoop on money affirmations, including:

•   Whether money self-talk works

•   25 top phrases for affirmations about money

•   How to choose positive affirmations for wealth

•   How to write your own finance affirmations.

What Are Money Affirmations?

Affirmations about money are positive statements that reflect on you and your relationship. They capture optimistic viewpoints on the dollars that pass through your hands (or stay in your savings account). Some people value these as being a step towards achieving financial success.

An affirmation can be as simple as “My finances will get better.” If you are, say, out of work and in debt, repeating such a statement may seem like putting on rose-colored glasses.

But many financial advisors and life coaches believe that looking on the bright side can manifest a positive change in prosperity and help you learn how to become financially independent.

Fans of finance affirmations say that repeating them can help you believe them and thus avoid impulsive or unwise money decisions, such as selling stocks or splurging on a vacation when neither is in your budget right now.
Repeating key words may help keep your financial goals top of mind.

Others, however, believe that these sayings don’t impact one’s money. It’s a very personal decision whether to implement affirmations or not.

Recommended: Personal Finance Basics for Beginners

How Do You Use Money Affirmations?

Financial affirmations can be used by anyone who wants a better relationship with money; no skills or prior knowledge required.

Those who believe in affirmations suggest saying them aloud or in your mind or writing them down to condition yourself into positive self-talk.You could jot them on a sticky note to post on your computer, mirror, fridge, and/or car dashboard. Some people like to put the words on their phone lock screen; others may prefer to write them in a notebook or journal daily.

The affirmation you choose will likely be something personally resonant. It might range from “The sunrise is free. I will watch it once this week” to “I choose to set aside savings every payday.”

The goal is to repeat the affirmations often enough to impact your outlook, enabling you to recognize how to achieve financial security.

The prevailing wisdom is to make time to repeat affirmations several times, at least once a day. Try turning to them when you are overwhelmed, sad, scared, or stressed to help move toward a shift in how you see yourself and your money skills.

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Do Money Affirmations Actually Work?

No golden rule exists–there’s no guarantee that if you repeat money affirmations, your financial well-being will improve. No matter what you see online, read in books, or watch on YouTube, no one knows 100% whether money affirmations, even if repeated 100 times, will truly improve finances and build wealth. But proponents believe in them.

Moreover, consider that research shows that stress and anxiety about money can lead to problematic spending decisions. Reinforcing positive self-talk with mantras might relieve fear and worry and result in a calmer, steadier, more productive financial mindset. Certainly, thinking positive is a win over negative self-talk.

Recommended: How to Develop a Healthy Money Mindset

Money Affirmations vs Money Mantras

The phrases “money affirmations” and “money mantras” are interchangeable. They are also sometimes called “abundance affirmations.” Whatever you call them, money affirmations for financial abundance may be a way to boost your positivity when it comes to managing your cash.

One technicality: While affirmations are usually sentences, mantras can sometimes be as short as just one word. (Om, for instance, is a simple sound you may recognize from yoga practice. But it has a complex meaning. In the Hindu tradition, om is said to contain the entire universe.) You could play with one-word money mantras, such as Confidence, Success, Savings, or Empowerment.

No matter what form the affirmations take, the words are meant to help you stay the course in reaching your financial goals.

Recommended: Tips for Overcoming Bad Financial Decisions

A (Non-Exhaustive) List of 25 Money Affirmations

If you’re curious and want to give affirmations about money a try, you’re in the right place. What follows are 25 sayings you can try out (whether you say them aloud, internally, or write them down) to hopefully build a more positive approach to your finances.

1.    I control money; money doesn’t control me.

2.    I can become financially free.

3.    I have the power to be financially successful.

4.    I have wealth beyond money.

5.    My income will exceed my expenses.

6.    My hard work will bring in more money.

7.    I will not stop myself from generating income.

8.    I will accept whatever wealth comes my way.

9.    I deserve the money coming to me.

10.    I have more than enough money.

11.    My finances will get better.

12.    I accept financial success.

13.    I will achieve my financial goals.

14.    I deserve success and happiness.

15.    I will use the money I earn for good.

16.    I am wise with my money.

17.    I can make smart financial decisions.

18.    I have the ability to overcome reckless spending.

19.    I can make my dreams a reality.

20.    My future self will thank me for being wise with money.

21.    Having wealth is integral for life.

22.    I can go beyond my financial goals.

23.    Debt will not stop me from reaching my financial goals.

24.    Saving money is a challenge I can accomplish.

25.    My investments will pay off.

How to Choose Your Money Affirmation

First, identify negative beliefs about money that may be holding you back. Perhaps you see yourself as a diehard shopper, not capable of resisting sales or making frugal decisions. For instance, do you buy kitchen gadgets (an air-fryer, a rice cooker, an ice cream machine) that you never use or a necklace at a friend’s jewelry party, when your jewelry box is already stuffed? Maybe “I am wise with my money” would be a good affirmation to try.
Choose affirmations that address and reverse negative money self-talk.

If you can’t seem to master money discipline and scrape together a few bucks to put into savings, it could help to stop the thinking that says you never will. Repeat a mantra such as “Saving money is a challenge I can accomplish” and it just might lead you to pass up another latte and make your own, or ride a bus instead of calling an Uber. Start where you are on your journey, even if it only involves taking a small first step.

Recommended: 7 Tips for Improving Your Financial Health

How to Write Your Own Money Affirmation

Some money advisors say that creating your own money mantra is more powerful than adopting someone else’s. Wondering why? Because you can directly address your own very personal struggles and goals.

Write the mantra in first person (from your point of view) as though it is already true. Keep it real and spin it from deprivation to empowerment. For example, if you’re tightening your budget, “I will not order pizza deliveries ever again” may be hard to live up to if pepperoni pies are a Friday night family treat.

A better affirmation might be “I will budget well and spend my grocery money mindfully.” That way, when you do order occasional pizzas, you will have planned for it and can feel good. This can help you avoid feeling guilty about ordering something that puts you in the red and focuses on the positive.

If it seems hard to write your own money mantra, jot down an incident of negative self-talk (“I can’t stop ordering books on Amazon”) and turn it into a confident phrase (“I choose to spend my money with intention”).

Recommended: How to Achieve Financial Freedom

The Takeaway

Money affirmations, aka money mantras or abundance affirmations, are phrases people repeat to replace a negative money mindset and create a positive one. Some experts say the words can turn self-defeating self-talk (“I will always be in debt”) into positive affirmations for wealth (“I have the power to be financially successful.”)

The goal is to say (aloud or to yourself) the affirmations regularly, perhaps posting them where you will see them often, such as on your car dashboard or computer screen. Those who put stock in affirmations believe that ultimately, the words can enrich and transform your financial journey.

3 Banking Tips

1.    Typically, checking accounts don’t earn interest. However, some accounts will pay you a bit and help your money grow. Online banks are more likely than brick-and-mortar banks to offer you the best rates.

2.    If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.

3.    When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.

Better banking is here with up to 3.25% APY on SoFi Checking and Savings.

FAQ

Do you need to have money affirmations to attract wealth?

No, there is no rule that says you must use money affirmations to attract wealth. However, some people (including financial advisors and life coaches) stand by these phrases. They believe that repeating the words often can empower people and transform their negative money mindsets, ultimately helping them smooth their financial journeys.

How often do I need to say my money affirmations?

Money mantra fans say you should repeat the phrases as often as you need to until you start believing them, at least several times daily. The general advice is to post your finance affirmations in places where you will see them often, such as on the refrigerator or mirror. You can say the words aloud, repeat them to yourself, or write them in a journal.

When is a good time to repeat money affirmations?

An ideal time to repeat money affirmations is when you’re feeling overwhelmed, sad, or stressed about your finances. For instance, if your credit card payment is late and payday is a week away, rather than sinking back into negative self-talk, you could repeat powerful money phrases. Doing so might help you accept your current burden and refocus on your goals in the moment.


Photo credit: iStock/s-cphoto

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/3/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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How to Make End of Year Donations

Tax-Deductible or Not? Your Guide to End-of-Year Donations

At the end of the year, when holiday celebrations and expressions of gratitude are in full swing, many people think about making a charitable donation. Maybe it’s the animal shelter around the corner from your home, or perhaps it’s a scholarship fund at your alma mater that does amazing work. Whatever pulls at your heart and makes you feel like you’re doing the right thing can be a good cause for donations.

From early fall right up to December 31 can be a great time to dip into your bank account and give. Also, it’s a good time to squeak by with a contribution before the calendar year comes to a close.

The organization you give your money to benefits. You get to enjoy the good feeling that comes with supporting a project or cause that you believe in. And you may also be able to lower your tax bill.

Here are some things you may want to consider when planning and making your end-of-year charitable donations. Read on to learn:

•   What qualifies as charitable giving?

•   Can you deduct charitable contributions?

•   How much of a charitable donation is tax deductible?

•   How can I maximize my charitable giving?

What Qualifies as Charitable Giving?

In the eyes of the Internal Revenue Service (IRS), a charitable donation is a gift of money, property, or other asset that you give to a qualifying organization, known as a 501(c)(3). To find out if an organization you’d like to support is eligible to receive tax-deductible contributions, you can search for it on the IRS’s database .

You may want to keep in mind that money or assets given to political campaigns or political parties do not qualify as tax-deductible donations. In fact, no organization that qualifies as a 501(c)(3) can participate in political campaigns or activities.

Organizations that engage in political activities without bias, however, can still sometimes qualify. So, a group can educate about the electoral process and remain within guidelines. They just have to go about it in a nonpartisan way.

Recommended: What is a Charitable Gift Annuity and How Does it Work?

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning 1% APY on your cash!


Can I Deduct My Year-End Charitable Donation?

In the past, charitable donations could only be deducted by tax filers who itemized their deductions. That means that rather than take the standard deduction, they chose the more complicated path of listing all of their eligible expenses.

There was a reprieve from this under the CARES Act which went into effect as the coronavirus pandemic unfurled. The IRS implemented a special new provision that allowed individuals to easily deduct up to $300, and joint filers to deduct up to $600, in donations to qualifying charities in 2021, even if they didn’t itemize. During this extremely stressful time, charitable giving became a bit easier for some thanks to this provision.

However, it’s important to note that this provision expired as of January 2022. Going forward, itemization is the way to go.

Recommended: 26 Tax Deductions for College Students and Other Young Adults

How Much of a Charitable Donation Is Tax-Deductible?

Wondering how much of a tax break you might get for your giving? The IRS sets limits on how much of a charitable contribution you can deduct from your taxes, and these are frequently updated. The amount is typically expressed in terms of the percentage of your adjusted gross income (AGI) that you may claim.

In 2021, this limit was increased to a full 100% of a person’s AGI. This change was made to entice people to donate to charities during what were perhaps among the most challenging times of the COVID-19 pandemic.

This guideline, though, has shifted for 2022. The limits were lowered again to an individual being allowed to deduct no more than 50% of their AGI for cash contributions to a charity. The top figure is 30% of AGI if you make a non-cash contribution, such as stock shares.

Of course, you are welcome to donate as much as you like. Just keep in mind that any charitable giving above those figures is not eligible for a deduction at tax time. Whether you’re looking to give $50 to your favorite local organization, or you’re considering a much larger charitable donation, these tax changes make it a particularly good time to do so.

Recommended: How to Reduce Taxable Income for High Earners

Tips for Making End-of-Year Donations

To ramp up both the impact and benefit of a charitable donation, here are some strategies you may want to keep in mind:

Making a Timely Donation

Don’t lose track of your timing: The deadline for charitable donations is December 31. If you’re looking to deduct the donation in the current tax year, you will want to make sure your charity has ownership of whatever asset you are donating by the close of business on the 31. You may also want to make sure that your preferred payment method is accepted by the charity so it doesn’t get kicked back and cause delays. Putting a reminder in your calendar for, say, mid-December can be a good way to make sure you don’t run late with your giving.

Recommended: What Happens If I Miss the Tax Filing Deadline?

Taking Advantage of Company Matching Programs

Your place of employment might have a matching program for charitable giving. They might, for example, match your donation amount dollar for dollar up to a certain amount. If so, it could significantly bump up the amount you could otherwise afford to give.

If you’re unsure about whether your company has a program, it can be worth reaching out to your HR department for further information.

Giving Rewards on Your Credit Card

If you are giving on a budget, you might consider donating rewards you earn on your credit cards, such as hotel points or airline miles. This can be a great way to use points or other rewards that would otherwise just expire. Many credit card companies, hotels, and airlines will make it easy to give your rewards to nonprofit organizations.

Recommended: Credit Card Rewards 101: Getting the Most Out of Your Credit Card

Donating Assets from your Brokerage Account

If you’re looking to lower your capital gains tax, you may want to consider donating assets from your brokerage account to a nonprofit. This may take some time and planning, but the benefits of donating an over-allocated position that’s outperforming can be worth it.

You may be able to receive tax advantages and rebalance your portfolio, while also helping an organization increase its assets.

Recommended: What Tax Bracket Am I In?

Setting up a Recurring Donation

You can get a headstart on next year by creating a recurring contribution now. Many organizations allow you to donate monthly through their websites using a credit card, so you might be able to earn rewards at the same time. By establishing your donation plans now, you won’t have to even think about end-of-the-year giving next year.

Keeping Good Records

If you want to deduct your donation on your taxes, you’ll want to make sure you have the right receipts to back up the transaction.

You’ll want to keep records of your donations. For cash donations under $250, you’ll either need a bank record (like a canceled check or bank statement) or a written acknowledgment from the charity which includes the date and amount of your contribution.

For cash donations over $250, a bank record isn’t insufficient. Instead, you’ll need something in writing from the charity which includes the date and amount of your donation.

If you are making noncash donations valued at $500 or more, you’ll need to fill out one or more of the IRS Form 8283 . If the donation exceeds $5,000 in value (say, if you gift a car you no longer need to a favorite local organization), you’ll also need to get a written appraisal from a qualified appraiser. The appraisal only needs to be submitted to the IRS if the donation’s value exceeds $500,000. If less than that, you can simply hold onto the appraisal in case you are audited.

Speaking with a Professional

An accountant can help answer any questions you may have about how tax laws will impact your tax contribution, as well as help you make the most strategic and efficient charitable donation.

Recommended: Are 401k Contributions Tax Deductible? Limits Explained

The Takeaway

Giving can be a good idea for a number of reasons. In addition to helping a nonprofit organization meet its operating costs for the year, you can feel good about what you are doing with your money, and you may also benefit from tax deductions.

Giving can also help you get the new year started on the right foot. If you’re looking for other ways to get your financial life in order (now, or any time of year), you may also want to consider signing up for an online bank account with SoFi.

When you open a SoFi Checking and Savings with direct deposit, you’ll earn a hyper competitive APY, and you’ll pay no fees.These two perks can help your money grow faster. You’ll also spend and save, all in one convenient place; how simple is that?

Start saving for the things that matter most to you with SoFi.


Photo credit: iStock/ThitareeSarmkasat

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/3/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
External Websites: 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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How Long Does It Take to Open a Bank Account?

How Long Does It Take to Open a Bank Account?

Depending on whether you are opening an account online or in person, this process can take anywhere from a few minutes to an hour. Whether you are opening a checking account or a savings account can also make a difference in how much time you will need to invest. Here, we’ll review what to expect when you open a new bank account, and we’ll also share some tips to help you accomplish this important financial task as quickly as possible. We’ll also offer guidance if, for some reason, you can’t open a bank account right now but are looking for ways to put your money in a safe place. Ready? Let’s get started.

What to Do Before Opening a Bank Account

To begin opening a new bank account, you’ll need to make two key decisions: where you’ll open the account and the type of account you want. Options about where to park your funds typically include the following:

•   Banks

•   Credit Unions

•   Online Financial Institutions

When people use the term bank, they are usually referring to brick-and-mortar ones, including the large national chains as well as smaller, more local ones. You can physically visit them, typically through a lobby or drive-through, and they offer a range of savings and lending services.

Credit unions, on the other hand, are a different kind of financial institution (usually brick and mortar as well). With this structure, account holders are members. Some credit unions are national; others are more regional in terms of their reach and their branches. Members usually need to meet certain guidelines to join, perhaps related to their job or geography, and they can often benefit from lower loan rates and higher interest when saving.

Online banks offer services that are likely to be similar to brick and mortar banks. However, account holders will bank through a website and/or mobile app. Because online banks don’t have the expense of physical locations to maintain, they can typically offer better interest rates and charge fewer fees than traditional banks.

Once you have made a decision about whether traditional or online banking or a credit union feels like the right fit for you, you’re ready to move ahead to the next step. The second key decision is what kind of account to open, perhaps a checking, savings, or money market account.

With a checking account, the account holder opens a checking account by depositing money into this account, whether in person, online, or through direct deposit. They then have the ability to write checks, use a debit card, or use an online payment system (like PayPal) to make purchases, pay bills, and so forth. Sometimes, the money in the account may earn interest.

With a savings account, once the money is deposited, the goal is usually for it to grow, perhaps as an emergency savings account or one designed to save up for a larger purchase. Financial institutions will differ in the interest rates they’ll pay, so you may want to shop around and see where you can get the best deals, noting whether there are minimum balance requirements and other qualifications required.

Money market accounts are another fairly common option. These are typically used to hold money that the account holder doesn’t intend to spend right away. Many money market accounts also come with convenient check-writing/debit-card features if you do want to tap the funds you’ve deposited. This type of account earns interest. (Opening an investment bank account is another option to explore if you are seeking an account that will grow your money as you save toward a longer-term goal. However, unlike the other accounts we have mentioned, these will not be FDIC-insured, so consider how much risk of loss you can tolerate.)

How Long Does It Take to Open a Bank Account?

If time is of the essence — say, you’ve just moved to a new town and need to get your banking set up, or you are a recent grad who’s just starting on “adulting,” you may wonder, “How long does it take to make a bank account?” Allow us to fill you in next.

Various kinds of financial institutions have different processes and timelines for creating a bank account. Completing the steps to open an account may be faster online than in person.

Online

Online applications typically have fields where you can quickly enter information or check a particular box. So, you may be able to complete the information in 15 minutes, especially if you have all of your personal data at hand.

Physically

It may take a bit longer to physically apply at a brick and mortar because you may need to wait in a line to see a teller and you may need to fill in the application by hand. Then, in general, figure that a bank may take a couple of days to verify your information and respond. Plus, if checks and/or a debit card are involved, those will usually be physically mailed to you, which can take a week to ten days till receipt.

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning 1% APY on your cash!


How to Open a Bank Account

Once you know the type of account you want to open and where, you can go to a physical location during banking hours or open the account yourself online, anytime and anywhere. Be prepared with government forms of ID, which can include a driver’s license, state ID, military ID, or passport. Also have your Social Security number handy.

Financial institutions will ask for personal information, including your name, address, telephone number, date of birth, and Social Security number to verify your identity. (Opening an account without IDs is possible, but will take some additional steps.)

The financial institution may check your credit before opening up the bank account. Usually, if they do, it is what’s known as a “soft” pull or inquiry that won’t appear on your credit report’s history. What’s more, the prospective account holder typically doesn’t need to have stellar credit to qualify; it’s just a checkpoint as the bank gets to know you and understand if you pose a risk in terms of keeping your account in good shape. If you’re concerned about this step for any reason, ask about the bank’s policy before proceeding.

Once an account is approved, you’ll need to agree to terms and conditions, perhaps by signing a physical document at a brick-and-mortar location or by checking an “I agree” button online. Then, you can make a deposit of funds that’s at least enough to meet the financial institution’s minimum requirement.

💡 Further help: What Do I Need to Open a Bank Account?

What to Do If You Cannot Open a Bank Account

If you’re turned down for a bank account (yes, unfortunately; it does happen), the first step can be to check the rejection letter for a reason. If that isn’t clear, then ask the financial institution why the account couldn’t be opened right now. Also ask about the timeframe to remedy the situation and/or reapply. How long does it take to get a bank account approved after a rejection? It’s possible that the solution is simple, perhaps requiring more information or a clarification.

If credit history is an issue, you can work on fixing that. In the meantime, you could try other financial institutions with different guidelines. It may be easier to be approved by an online bank. Also, some banks have products specifically designed for people who are trying to build or repair their credit. They may come with more restrictions but can serve as a bridge between now and when you can qualify for other bank accounts.

The Takeaway

If you’re ready to open a bank account, whether it’s a checking or a savings account, you’ll have choices of doing so at a brick-and-mortar bank, an online bank, or a credit union. Typically, working with an online bank will be your quickest option, with an account potentially being set up in just a few minutes. The same process at a physical bank can take an hour (not including travel time), and you will possibly then need to wait for approval of your application. Depending on your needs, you may find that an online bank is able to get you up and running, ready to receive funds, and pay your expenses in the shortest possible time, which can be super-convenient in today’s hectic world.

SoFi: Online Banking to Suit Your Needs

SoFi Bank, N.A. knows you don’t have time to wait in line and meet with a bank representative for half an hour, an hour, or more just to open an account. That’s why we’re ready to help you open an bank account online as quickly and easily as possible, with just a few clicks. What’s more, you can benefit by getting your paycheck up to two days early, paying no account or overdraft fees, and reaching your financial goals more quickly. Even more reason to check us out: We are offering checking and savings accounts with a competitive APY.

Better banking is here with up to 3.25% APY on SoFi Checking and Savings.

3 Great Benefits of Direct Deposit

1. It’s Faster
As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.

2. It’s Like Clockwork
Whether your check comes the first Wednesday of the month or every other Friday, if you sign up for direct deposit, you know when the money will hit your account. This is especially helpful for scheduling the payment of regular bills. No more guessing when you’ll have sufficient funds.

3. It’s Secure
While checks can get lost in the mail – or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.

FAQ

What do I need to open a bank account?

Financial institutions will typically want to see government forms of ID, such as your driver’s license, state ID, passport, or military ID. You’ll need to share personal information, such as your name, address, phone, and email address, along with your date of birth and Social Security number. Also, you often need to make an initial deposit of funds, although specifics vary by bank.

How much money do you need to open a bank account?

It depends! Financial institutions vary in terms of how much they require as a minimum deposit amount, with some not having one at all. Sometimes, banks will charge a fee if you don’t maintain a certain balance in your account, so compare financial institution policies to find one that works well for you.

How fast can I open a bank account?

If you’re referring to the actual process of applying, it can be as fast as 15 minutes or so. Approvals, however, may take anywhere from an instant to a couple days, especially at brick-and-mortar banks. Also, it can take a week or more to get physical checks and/or a debit card by snail mail.


Photo credit: iStock/Vladimir Sukhachev

SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/3/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Guide to Reopening a Closed Bank Account

Guide to Reopening a Closed Bank Account

Sometimes, an account holder may decide to close a bank account and then later change their mind. Other times, a bank may close an account — perhaps one that the customer wanted to keep open. In either case, the question may arise: “Can you reopen a closed bank account? If so, what are the steps?”

This post will answer those questions for some of the more typical situations that could lead to having a closed bank account that you’d like to reopen.

Why Might You Need to Close a Bank Account?

Account holders may decide to close a bank account for a variety of reasons, including the following:

•   No longer needing the account

•   Moving to a new location

•   Lack of convenience

•   Dissatisfaction with the account

•   Issues meeting minimum requirements

Here’s more about each.

No Longer Needing the Account

Sometimes, you simply might not need a bank account anymore. For example, if you’d set up a separate savings account to save enough money for a down payment on a house or for a vacation, after you’ve accomplished those goals, you might decide that you don’t need multiple bank accounts anymore.

Moving to a New Location

If you’re moving to a new community that doesn’t have a branch of your financial institution nearby, you may decide to close your bank account and open a new one that’s more readily accessible in your new town. Moving doesn’t create a problem when someone banks solely online, but it can lead someone to switch banks if they prefer in-person options.

Lack of Convenience

Another potential reason someone might switch banks is due to a lack of convenience, such as a bank’s hours being incompatible with their schedule or the bank not having a widespread enough network of ATMs. When banking becomes inconvenient through a certain financial institution, that could spur someone to seek a more practical solution.

Dissatisfaction With the Account

Whether it’s poor customer service, a lack of desired services, or fees that are too high, customers sometimes close their accounts and go elsewhere because they aren’t satisfied with their current financial institution.

Issues Meeting Minimum Requirements

If a bank requires you to maintain a certain balance to keep the account open or to avoid hefty fees, an account holder may opt to close the account if they’re struggling to meet those requirements. By closing a savings account with a minimum balance that’s just out of reach, for instance, someone could avoid incurring fees each month when they don’t make the minimum balance requirement.

Is It Bad When a Bank Closes Your Account?

Whether it’s bad when a bank closes your account depends on why the bank closed it — and situations can vary. According to the governmental agency, the Office of the Comptroller of the Currency , banks typically can close accounts for nearly any reason without providing notice.

That being said, common reasons why a bank may close an account can include:

•   Low or no activity: Banks may place an account in a dormant status after a certain period elapses with no transactions. When an account is dormant, it’s not technically closed, but the account owner is no longer able to make transactions. How long it might take for an account to go dormant depends on both state laws and a particular bank’s policies.

   After an account has been dormant for a period of time, a bank may close the account and forward the funds to the proper state government, labeling them as “unclaimed property.” At this point, you’d need to submit a claim to your state’s treasury office to obtain that money.

•   Suspicious activity: A bank will close an account if it has proven the account to be involved in fraudulent activity. When the bank initially suspects fraudulent behavior (whether the account holder was the perpetrator or the victim), the bank will likely freeze the account to investigate. Red flags can include large transactions, frequent account activity (especially if that activity is new or different), and transfers to overseas accounts.

•   Excessive overdrafts: If an account holder regularly spends more from an account than what’s available, this leads to negative balances and bounced checks. A bank can charge overdraft fees and require that the account holder bring in sufficient funds to return the account back to the minimum balance required. If that happens frequently or if funds are not restored, however, the bank may close the account.

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning 1% APY on your cash!


How Do You Reopen a Closed Bank Account?

If you’ve closed your account (rather than a bank doing so), you can typically submit a request to reopen your account. This can be done online, over the phone, or by visiting a branch in person, with the exact process varying depending on the specific financial institution.

Another option you have in this situation is to simply open a bank account that’s new, whether at your previous financial institution or at another one of your choice. When choosing your account, it’s worth exploring the different types of savings accounts you might consider.

On the other hand, if your account was closed by the bank, whether or not you can reopen it largely depends on the reason for the closure as well as your bank’s policies.

Tips for Reinstating a Troubled Account

In general, the first step in reinstating a troubled account is to talk to your financial institution about why your account was frozen, put into dormant status, or closed. Ask what you need to do to address the issues. You can also review your account agreement. If you believe that a bank wrongfully closed your account, you can file a written complaint .

Here’s guidance on how to reopen closed bank accounts in three scenarios.

Reopening a Dormant/Inactive Account

This is one of the simplest issues to address. If you receive a notification that your account is considered inactive or dormant, contact your bank to find out how to make it active again. The bank may allow you to make a deposit to the old account, or they may have you open a new bank account.

💡 Recommended: What Do You Need to Open a Bank Account?

Reopening an Account After Closure Due to Excessive Overdraft

Financial institutions need to monitor their levels of risk and, if they close a bank account for excessive overdrafts, the account holder would need to talk to the bank to see if they are willing to reopen the old account or if they’d allow them to open a new one. Different banks will have different policies. You may be required to pay off your negative balance, sometimes within a specified timeframe, before you can reopen your account.

Reopening an Account Closed for Suspicious or Fraudulent Activities

If a bank believes that a customer is engaged in fraudulent behavior (rather than being a victim of it), then it may be difficult to reopen an account or to open a new one with the institution. Contact the financial institution and be prepared to demonstrate how any activity in your account that appeared suspicious was, in fact, not fraudulent or not your fault.

The Takeaway

Whether or not you can reopen a closed bank account largely depends on why it was closed in the first place. Sometimes, an account holder in good standing decides to close a bank account and later changes their mind. In that case, the financial institution will almost certainly allow them to have an account there again. Other times, the bank closed the account, perhaps because of excessive overdrafts, suspicious activity, or lack of use. In those instances, talk to the financial institution to see what steps you need to take.

If you’ve closed your account and are interested in starting fresh, you might look into an online checking and savings account with SoFi. There are no account or overdraft fees.

Better banking is here with up to 3.25% APY on SoFi Checking and Savings.

FAQ

Can a bank close your account?

Yes, it can. According to a governmental agency that oversees financial transactions, banks can close accounts for virtually any reason without notice.

Is it bad when a bank closes your account?

Whether it’s bad depends upon the reason why the bank closes your account. Sometimes, a bank account is closed because of inactivity. Other times, the bank may have flagged the account for suspicious or fraudulent activity. Another reason why a bank may close an account is excessive overdraws.

Can you reopen a closed account?

Whether you can reopen a closed account depends on who closed the account (you or the bank), the reasons why the account was closed, and the bank’s policies. Talk to your financial institution to find out what steps you would need to take in order to reopen your account.

How do I prevent my bank account from being closed?

To prevent your bank account from getting closed, talk to your financial institution about the reasons why your account is troubled. Explore what solutions might exist to keep your account open and return it to good standing. It might also be beneficial to brush up on your financial habits and the basics, such as how savings accounts work.

Will a direct deposit reopen a closed account?

No. If an account is closed, the direct deposit funds will have nowhere to be deposited and so the transaction will not go through. To address this situation, talk to your bank about reopening the account and let your employer know that there is an issue with the account tied to your direct deposit.


Photo credit: iStock/Delmaine Donson

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
External Websites: 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.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/3/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
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