Maximizing Holiday Deals, Minimizing the Risk

The holiday shopping season seems to start earlier and earlier every year. Come October, and the most eager of stores are already popping up Christmas trees, twinkling lights, and holiday decorations for sale. Before long, the shopping craze will set in fully, Christmas carols ringing in the ears of shoppers filling malls across America.

Between Black Friday, Cyber Monday, and last minute holiday deals in late December—it’s no wonder Americans are spending a decent chunk of change buying gifts for the holiday season. Holiday spending is expected to increase by 4.1% in 2018.

According to the National Retail Federation , consumers plan to spend approximately $1,007.24 this year, up from $967.13 in 2017.

With the barrage of seasonal sales and holiday advertisements, impulse spending on decorations and gifts are almost guaranteed. And with the spike in sales around the holiday, it’s no surprise that fraud and identity theft are also at their peak during the holidays. During the 2017 holiday season, fraud attempts increased by 22% from Thanksgiving to December 31st.

So how are you supposed to get the perfect gift for everyone on your list, while also holiday shopping on a budget? With some careful planning, you can maximize your holiday spending, avoid holiday shopping scams, and keep your budget on track. Use these holiday shopping tips to conquer your gift list, with time to spare so you can enjoy the festive season with family and friends.

Set a Budget and Start Saving Early

If you’re trying to limit your holiday spending, set a budget. Make a list of who you plan to shop for, some gift ideas, and a spending limit for each person. Having a plan of action when it comes to holiday shopping on a budget will go a long way in ensuring you stay on track.

A great way to supplement your budget? Start saving for holiday shopping early. Try saving even just $30 a week toward your holiday shopping expenses. Having a nest egg of cash to spend on gifts can help you stick to your budget and avoid additional holiday-related credit card debt.

One option is to have a dedicated savings account for your holiday savings. SoFi Money® is a cash management account that offers easy access to your money. You can spend, save, and earn, all in one product, so it’s easy to track your budget and keep your holiday spending on track.

Be a Savvy Sale Shopper

The holidays are full of cheer, cozy gatherings, family, friends, and some pretty deep discounts and holiday sales. One of the best holiday spending tips is to have an idea of how much each item you plan to purchase should cost.

That way you know when you’re getting a great deal, or if the so-called super sale really isn’t that super. If you see what you think is a great sale but want to double check before you buy—take a look online at a price comparison site to get an idea of the going rate for an item.

If you find a cheaper price on the item consider ordering from that retailer or ask the store you are shopping at if they offer price matching. A lot of retailers will offer a price match if you can provide documentation of a lower price at one of their competitors.

Become a Couponer

Another holiday spending tip that can help you stick to your budget—become a couponer. If something is already on sale, use a coupon or online coupon code to amplify the savings even further.

Some coupons and certain stores will have policies in place to prevent aggressive couponing, but for the majority of stores, you could stand to score some serious savings by taking the time to find a coupon that applies to your purchases.

While you’re on the hunt for coupons for your purchases be aware of any suspicious coupons . There are quite a few sites that deal solely in providing users coupon codes to use while online shopping and thieves have caught on.

As you’re browsing for online coupons, be sure to never enter any personal information. Legitimate coupon sites won’t require you to buy something or enter personal information to gain access to the coupon code.

Consider signing up for the email list of your favorite stores or the stores where you plan to do the majority of your holiday shopping. Often stores will send sale alerts and coupon details via email to their loyal customers, so it can pay to subscribe.

When you do, be sure that you’re subscribing to the official store list. Phishing is an extremely popular online scam around the holidays, so be aware of any emails that seem suspicious or offer deals that seem unrealistic.

Shop Online

When you shop online you can avoid the crowds, long lines, and busy parking lots of the mall. You don’t even need to leave your house, let alone the comfort of your couch. Online shopping is expected to grow in popularity again this year, and it’s expected to account for 57% of all purchases .

Online shopping offers fast, easy, convenient, and nearly hassle-free shopping for customers who would prefer to spend time by cozying up by the fire. Around the holidays there are often online only discounts that can help you keep your holiday budget on track.

As you’re shopping online be sure to avoid popular holiday scams. When shopping online, it’s best to stick with reliable and trusted retailers. If you see an incredible deal from an unknown site there’s a very good chance it is just too good to be true.

Before you make a purchase with an online retailer you’ve never heard of take the time to do a little research. You can protect yourself by looking up the retailer at the Better Business Bureau. You can also do a quick web search to read other customer reviews or complaints about the company.

Be suspicious of retailers that offer extremely low prices and don’t offer an address or phone number. The goal here is to avoid giving your credit card information to a scammer, who could then use your credit card or sell your information to another scammer.

As your shopping this holiday season, it’s a good idea to keep an eye on your credit card and bank statements to make sure there is no suspicious activity. If you see any purchases you didn’t make, contact your credit card company immediately.

Take Advantage of Free Shipping

One of the great perks of online shopping these days is a large number of retailers that offer free shipping. Some retailers even offer free 2-day shipping around the holidays to encourage you to order last minute gifts online and compete with large online retailers like Amazon.

Sometimes though, there can be issues when gifts arrive late, or even worse—not at all. Dishonest vendors will sometimes promise an item is in stock and able to arrive by your desired date when in reality it’s not. To avoid this, pay attention to where the item is shipping from, and order from reliable and trusted retailers .

Another reason packages never seem to arrive? Theft. If you’re concerned about package theft in your area there are a few options. Consider having the package delivered to work, if allowed by your employer. This way there will be someone there when the package arrives.

Another option is to have packages delivered to a pickup location offered by the retailer or carrier. For example, Amazon gives you the option to have packages delivered to an Amazon locker, where you can then pick up the package using a code. This could decrease the chances of package theft and comes at no extra cost.

Simplify Your Holiday Budget with SoFi Money

You’ve made your shopping list and checked it twice. You’re ready to hunt down all the best deals. If you’re looking for a way to make your holiday shopping even easier, consider opening a SoFi Money cash management account.

Plus, when your money arrives at our partner banks it is FDIC insured.

There are no account fees (subject to change) and you can open a SoFi Money cash management account in less than a minute. With SoFi Money you can track your spending and savings to ensure you are staying within your holiday shopping budget.

Ready to elevate your savings? Open a cash management account with SoFi Money today.

Ready to elevate your savings? Open an account with SoFi Money today.


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.
Each business day, cash deposits in SoFi Money cash management accounts are swept to one or more sweep program banks where it earns a variable interest rate and is eligible for FDIC insurance. FDIC Insurance does not immediately apply. Coverage begins when funds arrive at a program bank, usually within two business days of deposit. There are currently six banks available to accept these deposits, making customers eligible for up to $1,500,000 of FDIC insurance (six banks, $250,000 per bank). If the number of available banks changes, or you elect not to use, and/or have existing assets at, one or more of the available banks, the actual amount could be lower. For more information on FDIC insurance coverage, please visit www.FDIC.gov . Customers are responsible for monitoring their total assets at each Program Banks to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. The deposits in SoFi Money or at Program Banks are not covered by SIPC.
SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.

SOMN18123

Read more
stack of hundred dollar bills

How To Switch Banks in 3 Easy Steps

Choosing to switch banks can be a difficult decision. Many Americans are devout loyalists when it comes to their checking accounts, even when those checking accounts charge hundreds of dollars in fees each year pay almost nothing in interest.

In fact, just finding a fee-free place to stash your money could save you a whopping $750 a year . Fortunately, you do have choices for better checking and savings.

Because of the many options that are available to consumers, now is a great time to transfer funds from one bank to another and ditch the fees once and for all. If you’re in the market for a new account, follow these steps to find a new one, close your old bank account, and transfer your money to your new account:

Step 1. Choose a New Account for Your Money

There’s good news for those looking to find a better place to stash their cash, however. There are more options than ever when it comes to banking. Instead of staying stuck with an account that charges exorbitant monthly fees or offers abysmal interest rates, you can switch to an account that meets your needs and doesn’t charge any account fees at all.

That could mean no overdraft fees, no account minimum fees, atm fees, and no foreign transaction fees. Sounds good, right? More people are moving away from traditional checking and savings accounts, in favor of “deposit accounts,” which let you keep access to your cash while simultaneously earning a higher interest rate.

Step 2. Close Your Bank Account

In order to move your cash to a from one bank to another, or into a deposit account, you’ll need to close your old account. While this process can seem daunting, three easy steps will help you break up with your old bank once and for all.

Cancel Automatic Payments and Direct Deposits

If you’re like most of us, you rely on autopay to simplify your banking. This means that each month your various bills and subscriptions are automatically deducted from your primary account on their due date. To avoid falling behind on bills or accidentally getting your streaming service suspended, you need to turn off or redirect every automatic payment that currently comes out of the account you wish to close.

Take a look at your monthly account statement and make a list of every automatic deduction, from your electric bill to newspaper subscriptions. Once you’ve made your list, log in to your each of your service provider accounts and change your payment information.

You can either update your monthly payment, so they are deducted from your new account or choose to forego automatic payments until your new account is in order. If you cancel your automatic payments instead of transferring them to your new account, make sure to add each bill due dates to your calendar to avoid accidentally missed payments.

Additionally, you’ll need to re-route any paycheck direct deposits you have set up at the bank account you want to close. You can ask your employer to either issue you a paper check or redirect your paychecks to your other account.

Setting up direct deposit into SoFi Money
is easy with our pre-filled forms.


Wait For Any Pending Transactions To Clear

After you’ve canceled or rerouted all the automatic payments that deduct from the account you want to close, you will need to wait for any pending transactions to clear. These pending transactions are usually for bills or subscriptions that have one remaining payment left before the company can change your payment information.

Waiting for all pending transactions to clear ensures that your bills will be paid and your subscriptions will continue without facing any overdraft fees. Make sure there is enough money in the account you wish to close to cover any pending payments and then wait two weeks to one month for any automatic payments to be deducted.

Visit Your Bank

As millennials, most of us want to avoid frustrating interactions with salespeople and would prefer to figure out how to close a bank account online. Unfortunately, most big box banks have made it almost impossible to close a bank account online without visiting a bank branch in person.

Commissions for bankers have historically meant that the person behind the counter at a big bank might try to convince you to keep your account open, or even open a different account with the same institution. When you visit your bank, ask to close out your account.

They will likely require you to provide identification, sign a form consenting to the closure of your account, and will work with you to set up a transfer of your funds to a different account or issue you a check for the value of the money remaining in your account.

Fortunately for some of us, a few banks now allow you to close your bank account online, either by sending an email requesting to close the account, or chatting with customer service through the bank’s website. Check your bank’s FAQs to see if you can close your bank account online.

Whether you close your account online or in person, make sure to request written confirmation that the account has been closed. When you receive the letter confirming your bank account is closed, make sure to save it somewhere safe for future reference.

Step 3. Transfer Funds From One Bank Account Into Another

The bright spot in the often very long process of closing a bank account is getting your new, improved account funded. First, make sure to set up direct deposit from your employer directly into your new account. This will ensure that your pay appears in your account without having to deposit a physical check.

To set up direct deposit for a new account, visit your HR or pay office and provide them with the new account information, including the new account number and routing number.

To transfer funds from one bank account into another, you have a few options. If you close your account in person, you can ask your bank to transfer the remaining balance to your new account. Just make sure to bring along the new account and routing number. These transfers may take several days, so make sure to ask how long you should expect to wait.

You may also be able to get a check for the amount remaining in the account you’re closing directly from the bank, or even cash if it is a relatively small amount of money. If you get your remaining balance in cash or check form, make sure to deposit it in your new account right away. Funding your new account means your payments will remain interrupted and you can take advantage of any new perks right away.

Switching your money from one place to another can be hassle, but finding the right place to store your money can potentially help you save more and earn more. If you’re ready to spend, save, and earn, in one product, learn more about the SoFi Money® cash management account.



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.
SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
SEO18117

Read more

Planning for the Cost of Having a Baby

There’s nothing quite like the joy of planning for your first child. But don’t let visions of cute little onesies, bibs with clever sayings, and the perfectly decorated nursery distract you from planning for the cost of actually having a baby.

Hospital costs and basic needs such as diapers, formula, and even checkups can add up quickly. Factor in the cost of childcare, too, and you’re looking at potentially spending several thousand dollars in just the first few months.

Keep in mind that hospital and day care costs vary from state to state, and that a complicated birth can quickly add thousands of dollars to your hospital bill. And that’s just the tip of the iceberg. Most shopping lists for newborns have more than 50 items and even if you plan to skip extraneous items such as a changing table, diaper pail, and fancy diaper bag, there are still plenty of basics you need to buy to keep your baby safe and healthy, including food, diapers, and a car seat.

Having a baby can be the most joyous time (but also an expensive time) in your life. Here’s a breakdown of the average cost of having a baby.

What is the Cost of Having a Baby?

Hospital Costs

The birth of a newborn is ranked third among the most expensive hospital inpatient stays in the United States, according to the U.S. Department of Health and Human Services Healthcare Cost and Utilization Project .

And this doesn’t even take into account Cesarean section costs. Nearly 32% of all babies are delivered by c-section, according to the CDC’s National Center for Health Statistics .

Prenatal care and delivery costs, including C-section costs, can span a huge range: from about $9,000 to over $250,000 . The average cost of having a baby is $5,000 to $14,500, but can easily rise depending on your insurance coverage and any complications for the mother or baby at birth. And even though many insurance companies offer maternity benefits, many policies demand at least some form of deductible for each family member.

For example, your newborn family member will probably be sent a separate hospital bill from mom’s bill, and baby will be expected to pay a deductible. If you (and baby) each have a $2,000 deductible , you’d be expected to pay the initial $4,000 for baby’s and mother’s hospital care, as well as anything else not covered by your insurance plan.

Car Seat

The hospital won’t let you take your baby home by car without a proper car seat , which can cost from $80 to $400. Most states also require you to have the car seat installed and checked for safety before baby’s first ride home. Fortunately, many hospitals, police stations, and fire stations offer car seat installations and inspections for free.

Diapers

Disposable diapers can set you back $30 to $60 per month. Cloth diapers might save you around $2,000 for the two years most babies are in diapers, but only if you plan to wash them yourself.

If you send your cloth diapers out to be laundered, then cloth diapers end up costing about the same as disposables. Baby wipes can easily add another $25 a month to your tally.

Formula

Even if mom breastfeeds for the first six months or even a year, many families find themselves eventually purchasing baby formula. Powdered formula can easily cost between $70 to $150 per month . Add to that the cost of bottles, and you’re looking at spending an additional $50 for bottles and up to $400 for entire bottle feeding systems (pumps, bottles, then later spoons, bowls, etc.).

Stroller

Once mom and baby are home, the family will want to go out for a walk and show baby the neighborhood (and get out of the house, too). That means you’ll need a stroller. Depending on how fancy you want to get, a stroller can cost anywhere between $50 to $1600 ; if you’re very active, all-terrain strollers can set you back around $300 to $1,200 . A high-end travel system that includes an infant car seat, car seat base, and stroller can cost more than $700.

Crib

Come bedtime, baby will need somewhere safe and comfortable to sleep. A crib can cost from $100 to $2,000, but you’ll also need a mattress and sheets, adding another $50 to $400 to your total (again, depending on how fancy you want to get).

High Chair

At around four to six months, you’ll probably start feeding your baby solid foods . That means you may need a high chair (between $60 to $300 ), baby-proof spoons and bowls, and baby food ($.50/jar at three jars/day = at least $45 per month).

Doctor’s Bills

It’s a fact of life that babies need frequent checkups. The American Academy of Pediatrics recommends that babies get checkups at birth, three to five days after they are born, and then at one, two, four, six, nine, 12, 15, 18, 24, and 30 months.

Even with a copay, you will likely be paying for at least a dozen doctor visits during your baby’s first years. It’s also not unusual for babies to get sick in between doctors visits. Many new parents may even take their child to the emergency room during their baby’s first two years, even though it might not be medically necessary , and potentially leave with a staggering bill .

All these items, essentially to protect baby and help baby to grow, can easily add up, making the average cost of having a baby more than $10,000 for your child’s first year.

About SoFi

SoFi offers useful financial products, from investing solutions to student loan refinancing. SoFi Money is a cash management account that has no account fees (variable and subject to change).

SoFi Money doesn’t charge you a penny to transfer money, or pay bills. And your SoFi Money cash management account provides overdraft protection and access to any ATM within the Allpoint® Network.


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.
SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
PL18174

Read more
woman standing on her car

How to Make Your Sabbatical Leave Actually Happen

Who hasn’t dreamed of taking a sabbatical leave? Whether or not you love your job, taking a break from work can be an amazing opportunity to refresh and spend some time reflecting on your career trajectory. This time can also be used to travel to faraway places and work on new skills.

Asking for and executing a sabbatical takes a lot planning (and a little faith in the unknown). If you are planning to stay with your company, “having the talk” in such a way that won’t jeopardize your standing at work usually requires a strategy. Most workplaces do not yet have a standardized program for sabbatical leave, so expect to be navigating new territory with them.

Proper planning also helps assure that you’ll have enough money to thrive during your time away from work. While everyone’s employer relationship and financial situation is different, there is a blueprint you can follow to help guide you towards a successful transition to sabbatical leave. For more on how to take a sabbatical, including how to speak to your employer, budget, save, and make the most of your time, read on.

Asking to Take Your Sabbatical

Talking to your work about a potential sabbatical leave can be one of the most harrowing parts of the entire process. First, plan to have the conversation with as much advance notice as possible. If you’re planning to stay with your company, it’s important that you highlight the reasons why it’s a good idea for them—not just for you.

Avoid saying that you’re burnt out and instead list out the positive benefits to the business. Reasons could include: learning a new skill or language, making connections at home or abroad, or conducting independent research on behalf of your job. It can be a nerve-racking conversation, but just remember that you’re not the first person to ask, and the worst they can say is “no.”

In general, employers grant a sabbatical to employees who provide value. In the time leading up to the conversation, consider creating a niche for yourself at work if you haven’t already; this could be learning a skill no one else knows or even just being more of a joy to work with.

During the conversation, it’s a smart idea to point out some of these value-adds while offering to train a person to cover your duties while you’re away. Alternatively, provide a plan for how your work will be managed leading up to your departure and while you’re out on leave. That way, your employer will know you’re committed to a seamless transition and could be more likely to green light your leave.

Planning Your Sabbatical

Once you’ve spoken to work about whether a sabbatical is a possibility, it’s time to put concrete dates in the calendar and map out your sabbatical. Keep an open mind as you investigate different options, such as travel or educational programs. Spend some time thinking about what you want to accomplish, and how it could improve your life and career.

You’ll also need to spend some time on the logistical aspects of leaving work. For example, you’ll probably need to figure out what you’ll do for health insurance. Will your insurance from work cover you while you’re out on leave?

Will you need to stock up on certain medications if you plan to travel abroad? Another element of leaving town that you’ll likely want to consider is what you’ll do with your living situation. An option for long-term travelers is to sublet your space to someone who needs a furnished home.

How to Save for Your Sabbatical

When you’re mapping out your goals for your sabbatical, try to put a price on these goals. For example, if you want to spend some time backpacking in southeast Asia, look up flight and travel costs, investigate accommodation costs and daily budgets, and make a list of everything you’ll need to buy prior to take-off.

You may want to include travel insurance, if necessary, and remember to budget for small emergencies. If you have a family, you’ll want to consider how your absence of work may impact their financial needs.

Once you’ve determined approximately how much money you’ll need for your sabbatical, it’s a good idea to calculate how much you may need to save each month until your sabbatical begins. For example, say you want $8,000 for your sabbatical in six months.

You have $5,000 already saved and need to save $3,000 more. That means you’ll need to save $500 in each of the next six months to hit your goal. Is this realistic? Take a look at your current budget, and then set a realistic savings goal.

To save up money for a sabbatical, you may want to look for bigger ways to cut costs. This might mean moving to a more affordable place or taking on a roommate, shopping for cheaper car insurance, cutting cable, or eliminating eating out at restaurants.

If cutting costs won’t be enough, you can see if there is a way to pick up extra responsibilities and overtime hours at work. Or, consider picking up a side gig on the weekends. Babysitting, dog walking, and renting out a room in your house are all common side hustles.

One of the best ways to help reach your savings goals is to open up a separate savings account that’s specifically designated for sabbatical money. Not only can it help you be less inclined to spend the money as you save, but you may also get inspired as you see your stash grow.

When you open up a separate savings account, consider doing so with one that offers higher interest. In general, higher-interest accounts offer more bang for your buck than keeping your money in a traditional savings account.

SoFi Money: No account fees
and fee-free access to 55,000+ ATMs worldwide.


Some newer cash management accounts offer easier access to your money.

If you’re unable to save enough prior to your sabbatical, but don’t want to miss out on the opportunity, there are other options available to you, such as taking out a personal loan. A personal loan can supply the funds you need now so you can start your trip sooner than later.

If you do decide to borrow for your sabbatical, look for a low interest personal loan so you don’t end up paying back too much more than you originally took out. Another feature to keep in mind is prepayment penalties.

Some lenders actually charge you for paying back the loan early. Finding a personal loan with an interest rate that makes sense for you—plus no prepayment penalty—to help keep the repayment more reasonable for your budget and income.

Starting Your Sabbatical Leave

You’ve been approved for your sabbatical and are saving money; what else can you do to prepare? Before taking a break from work, it’s a good idea to update your résumé, otherwise you might forget important accolades, skills, or projects you’ve worked on. While you’re at it, double-check that your LinkedIn profile is up to date. If you’re leaving your job, this is an especially good idea—you’ll be so happy you took the time.

Make a plan for each day that you’re gone on sabbatical. Think about big goals in terms of how many hours each will require to accomplish in full and build a schedule. This may seem like overkill, but if it’s your first experience away from the structure of work, you might find the freedom difficult to manage. And while the freedom to build one’s own schedule is part of the joy of taking a sabbatical, you also don’t want the lack of a plan to hinder you.

Last and most importantly, feel confident in your decision. We live in a cultural environment where stepping away from work makes us feel guilty or unproductive or both, but this really shouldn’t be the case.

Every person deserves to spend some time exploring both the world and their passions free from the demands of a nine-to-five. There’s a good chance you’ll look back on your time away as some of the most productive and valuable in your life. And anyway, work isn’t going anywhere.

See why a SoFi Money cash management account could be a great place to save for your sabbatical leave. Another option is to check out a SoFi vacation loan to see if it can help turn your sabbatical dream into a reality.


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.
SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
PL18177

Read more

How Much Does it Cost to Start a Business?

Looking to start your own business? You’re not alone. A survey from America’s Small Business Development Center found that almost half of millennials want to start their own business within the next three years. And that’s no surprise. Small businesses are thriving all around us, from small-time side hustles auctioning antique VHS tapes online, to full-fledged independent bookstores.

Starting your own business allows you to be your own boss, work in an area you’re passionate about, and grow your income faster than many traditional jobs. The biggest challenge to becoming a small business owner, however, is navigating small business startup costs.

In fact, the most common concern when it comes to starting your own business is the cost. The thousands of dollars usually required to start a business can seem like a barrier to entry for many who want to jump into the business world. In fact, for 45% of millennials, access to capital is the biggest hurdle to starting their own business.

Unsurprisingly, the average cost to start a business varies widely depending on the type of business. Some businesses have almost zero startup costs, while others, like storefronts and restaurants, require significant capital to get up and running. Even when small businesses require more startup capital, there are more ways than ever to fund your dream.

Typical Small Business Startup Costs

Every business costs money to run. Whether you are paying employees, restocking shelves, or hosting a website, the old adage is true: you have to spend money to make money. And unfortunately, some of the biggest business costs can come during the startup phase, when you are defining your business goals, finding a location or purchasing domain names, and generally investing in the infrastructure.

In order to make sure that your business is on firm financial footing, it is important to estimate your small business startup costs in advance. This list of common small business startup expenses gives you an idea of what you’ll need to budget for:

Office Space

No matter what your business is, you’ll need somewhere to work. Will you need to lease a storefront or will you buy a membership to a co-working space or startup incubator? Will you need to pay utilities? If you’re planning on working from home, will your new business increase your electric or internet bills? Office space costs vary widely from free to thousands of dollars per month.

Licenses, Permits, and Insurance

Some businesses, especially storefronts and restaurants, require more legal leg work than others. If you’re starting a native-plants landscaping business, will you need a permit? If you’re starting a new bar, will you need a liquor license?

Licenses and permits vary by city and state. Most, however, require that you pay a fee to apply. Likewise, your new business may require an insurance policy to protect you in case of future litigation. While daunting, these costs help regulate businesses and protect consumers. Planning ahead for them will make sure that your small business thrives.

Inventory

If you’re starting a business that sells products, you’ll need to have a stock of your product ready to go. This is true whether you’re planning on starting an internet-based business or a storefront. Calculating stock as part of your start-up costs ensures that you can buy your product in advance so that you’re ready to serve customers from day one.

Payroll

Many small businesses start out as a company of one, but if you’re planning on starting a small business that requires employees, their salary is one major startup cost you’ll have to cover. Employees power your business and having adequate funding to pay them fairly ensures that they will do their best work to help you and your business succeed.

Advertising

Getting the word out about your new business is one of the most important things you can do to ensure that business starts off strong. Whether you want to advertise on social media or take out a billboard, your startup costs should reflect money you plan to put toward taking out ads for your business.

Differences in Startup Costs Based on Industry

Of course, the actual cost of starting a small business can vary wildly depending on what exactly your business is. Here’s what you might be looking at to start some of the most common types of small businesses in the United States:

Online Business Startup Costs

Like brick and mortar stores, the cost of doing business online varies depending on the type of business. If you’re selling products, you will need to invest in inventory, and if you’re providing services, you may need to hire employees.

One benefit of starting your small business online, however, is that the startup costs can be pretty small. After all, most internet-based small businesses don’t require you to rent office space, which can be a major savings. If your online business doesn’t require you to purchase stock or hire employees, you may be looking at startup costs of
under $500 .

Storefront Startup Costs

If your business idea requires a physical space, your startup costs might range from $2,000 for a small kiosk inside a mall or park to more than $250,000 for something like a clothing or home goods store.

Although $250,000 might seem like a daunting number, remember that many smaller, independently owned stores began with a much smaller budget. Many small business owners get by on only $30,000 in startup money.

Restaurant Startup Costs

If you’re betting on bringing in bank by selling your grandma’s famous bánh mì, you could be looking at startup costs of anywhere from $15,000 on the low-end for a food truck or cart to up to $3.5 million to buy a franchise restaurant. Most small restaurant costs, including coffee shops, fall somewhere in the $80,000 to $250,000 range.

How to Finance Your Startup Business

Many who want to start a business are daunted by the initial costs, but funding your passion project has never been easier. From calling on friends and family to using smart savings strategies, there are plenty of ways to fund your business.

Friends and Family

Perhaps one of the most common ways to raise money for your small business is asking friends and family to invest in you. Some will inevitably want to support your passion project merely because it makes you happy. Other friends and family may be excited to loan you money.

Friends and family loans can be ideal for financing a new small business because you can negotiate low-interest rates, flexible pay-back schedules, and avoid bank fees. Of course, borrowing money from friends and family can quickly become complicated by family drama, so make sure to agree on conditions before taking out a family loan.

Outside Investors

When we hear about startup companies, we frequently hear about so-called “angel investors” sweeping in to fully fund new businesses, but there are other practical ways to fund your small business with outside investors.

Some small businesses use crowdfunding platforms to find investors who each contribute a small amount, and others use startup funding networks to find investors looking to fund their specific type of business. Outside investors want to know that your business is likely to succeed, so you’ll need a solid business plan and a dose of charm to land outside funders.

Personal Savings and Investments

Most people end up covering some of their small business start-up costs out of their own pocket. Self-funding your new business venture can be the most convenient option. After all, if you’re your own funder, you don’t have to worry about family drama or picky investors. And putting your own money on the line can be an extra motivation to make sure that your business is set up to succeed.

Of course, it can seem overwhelming to save up enough money to fund your small business. Luckily, there are easy ways to manage your money. Switching a SoFi Money®, for example, allows you to spend, save, and earn all in one place—all with no account fees (subject to change).

In addition to using a SoFi Money cash management account, you can also leverage an investment account with SoFi in order to make smart investments in the market with the help of a qualified advisor.

Using SoFi Invest allows you to make an investment plan that meets your goals, whether that’s buying a building for your new tote bag-making enterprise or covering the full startup costs of your new photography app. Whatever your goals, SoFi Invest can help you get there quicker.

Every business is different, but SoFi can help you leverage your money so that you can be the boss, CEO, and primary investor in your dream. Learn more about how SoFi can help you tackle your small business startup costs.



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 Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.

MN18133

Read more
TLS 1.2 Encrypted
Equal Housing Lender