15 Ways to Stay Motivated When Paying Down Debt

Staying Motivated When Paying Off Debt

Debt: It’s something many of us live with, but it can really bog down our finances and prevent us from meeting our money goals.

Paying off debt is a long-term commitment that requires discipline, and staying motivated until your debts are paid off can be a major challenge. Consider these examples:

•   If you have a student loan of around $43,000, it can take almost eight years to pay off with monthly payments of around $450, according to the Education Data Initiative.

•   If you have $10,000 of credit card debt at an 18% interest rate and want to pay it off in three years, you’ll have to pay $362 every month.

It may sound daunting, but here’s a pep talk: The advantages of paying off debt are well worth the effort. You will have a higher credit rating and qualify for better loans in the future. And with more money to spend each month, you can invest and build a nest egg toward retirement or simply save for luxuries like vacations.

To help you buckle down and say goodbye to your debt, read on to learn how to stay motivated while paying off your debt.

Why It’s Hard to Stay Motivated When Paying Off Debt

How to stay motivated while paying off debt can be tough. It can seem like an uphill, almost endless battle. Depending on how much you have to pay off, the process may seem as if it requires some uncomfortable (and even unfair) sacrifices you’d rather not make.

However, with some smart strategies to change your money mindset, you’ll find that paying down debt becomes easier as you learn better money management.

If you are ready to get rid of debt, read on to learn 15 ways to stay motivated.

15 Ways to Help You Stay Motivated When Paying Off Debt

Here are 15 tips to help setting yourself up for success. They’ll give you a boost as you consider how to stay motivated while paying off debt.

1. Remember the “Why”

Why have you decided to pay off your debt? Are you tired of never having as much spending money as you’d like and watching the debt pile up? Do you hate the idea of dollars flying out of your bank account to pay for interest?
Do you have financial goals that are falling ever further out of reach?

Whatever your reasons, remind yourself regularly why you are working so hard and monitor your progress so that you can see the results.

2. Get Organized

Achieving a goal is easier if you have a plan. Your strategies to become debt free might include consolidating your debt with a lower-interest loan, or you might decide to get a roommate and save on rent.

Whatever your method, plan a budget that you can live with and set up automatic payments each month so that you don’t have to think about your bills daily. (This will also help you avoid late fees.) Then, be disciplined, stick to your budget, and watch your debt diminish.

Quick Money Tip:Typically, checking accounts don’t earn interest. However, some accounts will pay you a bit and help your money grow. An online bank account is more likely than brick-and-mortar to offer you the best rates.

3. Have an Accountability Partner

Telling someone you are working on paying down debt can help motivate you. Called an accountability partner, this person could be your spouse, a friend, or a financial advisor. If you worry about telling your accountability partner that you fell off the proverbial wagon, remember that nobody’s perfect. Don’t beat yourself up. Just get right back on track with some encouraging words from your partner.

4. Put Yourself in an Uncomfortable Situation

Achieving a goal often takes acknowledging the difficulty saving money can present and then pushing through it. Paying down debt will require making changes to your lifestyle so that you can live more economically.

That might mean going out less with friends, not spending so much on clothes, or moving in with parents temporarily. Feeling uncomfortable is not a bad thing; it can be a powerful motivator. You will power through any feelings of deprivation to get on better financial footing going forward.

5. Track Your Progress

When you initially decide to tackle accumulated debt, it can seem overwhelming. By tracking your payments and your diminishing debt, you will see progress. This in turn can give you confidence and enhance your saving motivation as you stick with your plan.

6. Have a Vision Board

How to stay motivated while paying off debt can involve having a vision of what you will do once you are debt free. Use that as a motivator, not just in your mind but in your home. Perhaps you want to take a vacation to London once you better understand your credit score and then boost it by cutting down your debt. (As you lower your debt ratio versus your credit limit, for instance, your score will likely rise.)

If you want to reward yourself with travel, post your goal where you can see it so you are reminded each day of your intention. You might want to create a vision board with photos of your goal to help spur you on. Whether it’s photos of the West End theaters or teatime at a posh hotel, those photos can be motivating.

7. Celebrate the Small Wins

Find ways to reward yourself as you gradually pay down your debt. These special treats should be inexpensive (so as not to blow your budget) but meaningful. It could be reading the latest book by your favorite author, a meal out with friends, or buying yourself new running shoes. Build room into your budget for rewards.

8. Have Like-Minded Friends

Surround yourself with people who will encourage you to spend less rather than overspend. Friends who like going out to expensive restaurants or shopping at expensive stores are not going to help your cause. There are lots of ways to socialize that do not require spending a boatload of cash. For example, grab a coffee with a friend, or go for a hike. Don’t let keeping up with the Joneses (when the Joneses are big spenders) foil your efforts.

9. Reach out to Others

Knowing that you are not the only one fighting debt is comforting, and hearing success stories will encourage you to continue. Seek support by listening to others.

Podcasts on personal finances and online discussion platforms can provide community and give you ideas on how to manage your debt.

10. Focus on the End Date or End Goal

Have an end date or a final goal, and mark it on your calendar. Plan to reward yourself for your hard work when you reach it. It might be a weekend away or finding a new apartment now that you have freed up some cash in your budget. Looking forward to something will keep you motivated.

11. Listen to Sound Financial Advice

How to stay motivated to pay off debt comes down to making informed decisions that hasten the process. It’s important to make sure the financial advice you listen to comes from reliable sources. Many finance “gurus’ on YouTube and social media platforms may not give out the best advice. Find a financial advisor via recommendations if you are unsure of the steps to take to pay down your debt or need additional guidance.

12. Choose a Repayment Method that Makes Sense

There is more than one way to pay off what you owe, and the debt repayment strategies you choose should suit your particular situation and financial goals. You might choose the debt snowball method, where you pay off your smallest debts first, or you might pay off the debts with the highest interest rates first.

Feel as if you are in too deep of a debt hole? Consulting with a financial advisor or a credit counselor at a nonprofit can help you find the best ways to pay off debt faster.

13. Break Repayment Down to Smaller Goals

It helps to break down your task into smaller goals. For example, the first step might be to meet with a financial advisor for advice on debt consolidation or do your own research on the topic. This can help you lower the interest rate on the money you owe, making it easier to pay off.

The next step might be to arrange a loan with the bank and set up payments. Then, set goals to achieve after six months, 12 months, 18 months, and so on. It can help motivate you to pay off debt to see the individual steps that will get you there.

14. Earn Extra Money

You’ll pay off debt quicker if you can earn extra money. Think of ways to increase your income. Can you do overtime, gig work, or part-time work? You might meet new people and expose yourself to a whole new industry that interests you. Who knows? It could be the start of an entirely new career.

Recommended: 11 Benefits of Having a Side Hustle

15. Gamify Your Debt Repayment

Setting yourself a challenge can add a sense of fun to paying off debt, and it can boost your confidence. For example, set a goal of making an additional $1,000 this month from a side hustle. Or each month vow to briefly give up a typical bit of discretionary spending, such as no take-out coffee for one month. The money saved goes towards debt. Gamifying can help you reach your goals quicker, just make sure your challenge is achievable.

The Takeaway

Paying down debt is a long process, and it is not easy to stay motivated. Some of the ways to stay motivated when paying off debt are to acknowledge exactly how much you owe and then develop a plan, with clear benchmarks, to whittle it down. Reach out to others to learn their experiences, set achievable milestones, and reward yourself when you reach them. These steps will keep you going till you reach that debt free finish line.

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

FAQ

Does paying off debt make you happier?

Paying off debt may be difficult to start with as you adjust to changes in your lifestyle and budget. However, ultimately, being debt free is a huge relief. It can reduce your financial stress, and it frees you to do so much more with your money.

What are the benefits of paying off debt?

When you are debt free, a weight may well be lifted from your shoulders. Paying off debt can teach you to live within your means and not overspend. The money you were paying in interest on your debt can now be invested in a nest egg toward retirement or used for discretionary spending, like vacations. Lastly, taking control of your finances and paying off debt are huge accomplishments that can boost your confidence to tackle other challenges.

Is it worth it to pay off your debt?

Paying down debt avoids paying unnecessary interest over the long term. There are short-term benefits too. If you are actively reducing your debt, your credit score will likely improve. That can improve your ability to qualify for loans with lower interest and fewer fees in the future. You can also free yourself of the mental burden of debt.


Photo credit: iStock/BartekSzewczyk

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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Guide to New Money vs. Old Money

Maybe you’ve heard people mention new money vs. old money in conversation, perhaps in a whisper. Old money and new money both refer to wealthy groups of people. The key difference between old money and new money is how a person obtained their wealth.

In short, old money represents generational wealth — money that has been passed on from generation to generation in the form of cash, investments, and property. New money refers to self-made millionaires and billionaires, those who earned their money (or lucked into it, like in the lottery).

Pop culture and literary references to new vs. old money abound. For instance, James Cameron’s Titanic (1997) includes a depiction of the “Unsinkable Molly Brown” as new money, shunned by some snooty old money types. F. Scott Fitzgerald’s The Great Gatsby puts new money (Jay Gatsby in West Egg) and old money (Tom and Daisy Buchanan in East Egg) at odds throughout the course of the novel.

Why should it matter when and how someone built their wealth? Let’s take a closer look at this topic, including:

•   What is considered new money vs. old money

•   The difference between old money and new money

•   Tips for building wealth.

What Is Old Money?

Old money refers to people who have inherited significant generational wealth; their families have been wealthy for several generations.

In the past, old money would have referred to an elite class: the aristocracy or landed gentry. In the U.S., families like the Vanderbilts and Rockefellers represented early examples of old money. Today, old money families include the Waltons (Walmart), the Disneys (The Walt Disney Company), and the Kochs (Koch Industries). Should families like the Kardashians continue to generate and pass down wealth, they could one day be considered old money as well.

Recommended: How to Build Wealth at Any Age

What Is New Money?

New money then refers to people who have recently come into wealth, typically by their own labor or ingenuity.
Common examples of new money include tech moguls and self-made billionaires like Jeff Bezos, Mark Zuckerberg, and Bill Gates. Someone who wins millions of dollars in the lottery or becomes famous from a reality TV series (like the cast of Jersey Shore) would also qualify as new money.

You may sometimes hear the French term “nouveau riche,” which means “newly rich.” This tends to describe people who recently became wealthy and spend their money in a flashy, ostentatious manner.

Recommended: Building Wealth in Your 30s

Differences Between Old and New Money

So what is the difference between old money and new money? There are quite a few distinctions, but remember that these are all generalizations. Each person who obtains wealth is unique.

Source of Wealth

The most obvious difference between new money and old money is the source of wealth. Old money has been passed down from generation to generation. Each member of old money typically feels a fierce responsibility to protect — and increase — that wealth.

Members of new money have earned that money in their lifetime, whether for building a tech empire, becoming a famous actor, making it to the big leagues as a sports player, or even making money on social media as an influencer. Some new money members might come into money through a financial windfall like winning the lottery or a major lawsuit.

Long-Standing Traditions

Inheriting generational wealth comes with a responsibility: Old money recipients usually must protect the family’s wealth to pass on to future generations. For that reason, those who come from old money may stick to their traditional investments and ways of life. Many inherit their parents’ business and then pass it on to their own children.

Those who are self-made or come into money quickly do not have long-standing traditions to fall back on. They are often the first in their community to make multimillion dollar spending decisions. This can mean a steep learning curve and the need for guidance, which could make them vulnerable to poor advice and unscrupulous hangers-on.

Spending and Investing

How old and new money generally approach wealth management is one of their starkest contrasts.

Though they do live lavishly, members of old money can be more frugal (or calculated) with purchases than you might expect. For members of old money, spending is often more about investing than shopping for pleasure.

People who are a part of new money may feel more entitled to and excited by their funds. They may spend it more lavishly (and publicly). Some might feel that they worked hard to earn their money — and they’d like to enjoy it.
They might want to show off their newly achieved status with designer watches or mega mansions.

That’s not to say that members of new money don’t invest. Famous celebrities, athletes, and businesspeople often invest in real estate or buy companies to increase their wealth. Generally speaking, new money might make riskier investment decisions for faster yields. They’re not thinking about generational wealth to protect with tried and true investment methods.

Taken to its extreme, this can have disastrous results. It’s not uncommon to hear stories of people who make a lot of money for the first time and spend it all, leading to bankruptcy and even mental health issues.

Recommended: What Is Asset Management?

Leisure

The stereotypes might be a little tired, but in general, people associate old money with traditional activities like golf, skiing, horseback riding, and polo. On the flip side, members of new money might buy courtside seats to a basketball game, a garage full of shiny new luxury cars, or even a rocketship for a joyride into outer space.

Recommended: Knowing the Difference Between ‘Rich’ and ‘Wealthy’

Social Perception

Interestingly, some of the richest people in the world come from new money. They’re today’s self-made tech giants. Yet some members of old money may consider themselves to be a higher class than the likes of Gates and Bezos.

We’re speaking in generalizations here, but old money often perceive themselves — and are perceived by outsiders — to be more educated and refined.

On the other hand, the public may view members of new money as harder workers and more innovative — clear examples of the American dream.

Old and New Money Lessons

What lessons can we learn from old and new money? Even if you are not wealthy, you can learn some valuable life and financial lessons from considering the difference.

•   It’s hard to protect generational wealth. Old money is very privileged; there’s no denying it. But most families lose their wealth in just a few generations. Old money families do work hard to maintain and grow their wealth for their future generations. They are able to avoid seeing their fortune dwindle.

•   It’s important to analyze your spending. Many people who come into wealth quickly don’t take adequate steps to protect their funds and invest it wisely. Horror stories of lottery winners losing everything should be enough to remind us that — if we come into a large amount of money suddenly — we should take the time with a finance professional to build out our money management goals. Doing so may ensure your wealth grows, rather than runs out.

•   Stereotypes aren’t everything. Reflecting on the differences between old and new money, it’s important to note that these are merely stereotypes, and not everyone fits the bill. Just as one hopes that others don’t judge us before they know us, the discussion of old vs. new money is a reminder not to form assumptions about someone until you get to know them.

Recommended: How to Achieve Financial Discipline

The Takeaway

Old money refers to families who have maintained wealth across several generations. New money, on the other hand, refers to someone who earned their wealth in their lifetime. Key traits typically differentiate old vs. new money, but at the end of the day, both refer to members of a wealthy class that most people will not ever be a part of.

No matter how much wealth you have — and whether you inherited or earned it — it’s a good idea to protect it in an FDIC-insured bank account that actively earns interest. Check out SoFi’s online bank account, which earns a super competitive interest rate and has no monthly fees, which can help your money grow faster.

With no account fees and up to up to 3.25% APY, you’ll earn more interest in one week than you would in one year in a big bank’s checking or savings account—so you can get the most out of your money.

FAQ

Is it preferable to be from new or old money?

It depends on whom you ask. Old money members often regard themselves as a higher class, but they also have less agency to spend their money on “fun” things, as they have to guard their wealth for future generations. While members of new money might feel freer to spend on things they want, they can be more likely to run out of money if they don’t follow good financial planning.

Does new vs. old money matter?

If you are a member of the wealthy class, the distinction might matter to you. Those with old money might feel it’s superior to new, but those with newly minted wealth may well be proud of their success in building their fortune. However, most people are not considered to be new or old money, and so this shouldn’t affect their daily lives.

How has old vs. new money changed since the terms were first coined?

Old money once referred to the landed gentry in Europe, but in today’s world, it might refer to a few families who struck it big a century or more ago in the U.S. New money is more common nowadays, with the advent of television, sports, and social media as the source of riches.


Photo credit: iStock/South_agency

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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
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11 Tips for Surviving on $1,000 a Month

11 Tips for Surviving on $1,000 a Month

Living frugally can be a smart way to save money. While adopting a frugal lifestyle is a choice for some people, it may be a necessity for others. For example, you might be trying to figure out how to live on $1,000 a month if you’re in school or you lost your job and are trying to find a new one.

Getting by on $1,000 a month may not be easy, especially when inflation seems to make everything more expensive. But it is possible to live well even on a small amount of money.

Read on to learn the full story including:

•   Learning what does living on $1,000 a month look like

•   Separating needs from wants

•   Lowering your housing costs

•   Negotiating bills

•   Growing your income.

What Does Living on $1,000 a Month Look Like?

If your income is limited to $1,000 a month, you might be wondering exactly how far it will go. Breaking it down hourly, weekly, and by paycheck can give you some perspective on how much money you’ll actually have to work with.

An income of $1,000 a month is….

•   $230.77 as a weekly salary

•   $46.15 daily

•   $6.15 an hour, assuming you work 37.5 hours a week full-time

•   $11.54 an hour, assuming you work 20 hours a week part-time.

The numbers above assume that you’re talking about net income, which means the money you bring in after taxes and other deductions.

By comparison, the median household income in the United States is $67,521, according to Census Bureau data. That works out to $5,626.75 in monthly income.

Is It Possible to Live Off of $1,000 a Month?

Living off $1,000 a month is possible, and it’s a reality for many individuals and families. Again, you might be living on a low income because you’re in school. So your monthly budget might look something like this:

•   Food: $250

•   Gas: $100

•   School supplies/equipment: $50

•   Rent: $400 (assuming you’re sharing with roommates)

•   Utilities: $100

•   Miscellaneous: $100

As you may notice, there isn’t room in this budget for debt repayment or savings.

In addition to students living on a frugal budget, this kind of scenario may apply to older people on a fixed income. Retirees may choose to cut their expenses to the bone once they stop working. And in some cases, money may be tight because you’re getting through a financial hardship and income is lower than normal.

Can you live well on just $1,000 a month? That’s subjective, as the answer can depend on how responsibly you use the money that you have as well as what the cost of living is in your area. Being frugal and flexible are essential to making life on a smaller income work.

How to Live on $1,000 a Month

Figuring out how to live on $1,000 a month, either by choice or when money is tight, requires some creativity and planning. Whether your low-income lifestyle is temporary or you’re making a more permanent shift to financial minimalism, these tips can help you stretch your dollars farther.

1. Assess Your Situation

You can’t really learn how to manage your money better if you don’t know where you’re starting from. So the first step is creating your personal financial inventory to understand:

•   Exactly how much income you have

•   Where that money is coming from

•   What you’re spending each month

•   How much you have in savings

•   How much debt you have.

It also helps to consider why you might need to know how to live on $1,000 a month. For example, if you’re knee-deep in debt because you’ve been living beyond your means, that can be a strong incentive to curb spending and live on less.

2. Separate Needs From Wants

Needs are things you spend money on because you need them to maintain a basic standard of living. For example, needs include:

•   Housing

•   Utilities

•   Food

•   Health care

Wants are all the extras that you might spend money on. So that may include dining out, hobbies, or entertainment. If you’re trying to live on $1,000 a month, needs should likely take priority over wants. One good budget plan can be the 50/30/20 rule, which allocates 50% of one’s take-home pay to needs, 30% to wants, and 20% to savings.

Here’s a hard truth, however: When working with $1,000 per month, you may have to get rid of most (or all) of the wants to make your spending plan work. As you make your budget, focus on the needs first and if you have money left over, then you can add one or two small extras back in.

3. Lower Your Housing Costs

Housing might be your biggest expense, and, if you want to make a $1,000 a month budget work, getting that cost down can help. Some of the ways you might be able to reduce housing costs include:

•   Taking on one or more roommates

•   Moving back in with your parents

•   Renting out a room

•   Refinancing into a new mortgage

•   Selling your home and moving into something smaller or less expensive.

Are these options ideal? Not necessarily. Living with parents, roommates, or strangers who are renting out part of your home can mean sacrificing some of your privacy. Refinancing a mortgage or downsizing can be time-consuming and stressful.

But if you’re trying to get your budget to $1,000 or less, these are all legitimate ways to slash your housing expenses.

4. Get Rid of Your Car

Cars can be expensive to own and maintain. A car payment could easily run several hundred dollars per month. Even if you own your car outright, putting gas in it, buying tires, and paying for regular maintenance could still make a sizable dent in your income.

If you have the means to do so, selling your car could free up money in your budget. And you could use the money you collect from the sale to pad your savings account, pay down some debt, or simply get ahead on monthly bills.
If you do sell your vehicle, use an online resource like Kelley Blue Book to check your car’s potential resale value before setting a price.

5. Eat at Home

After housing, food can easily be a budget-buster, especially if you’re eating out rather than preparing meals at home. The good news is that there’s a simple way to cut your food costs: Ditch the takeout and restaurant meals.

Planning meals around low-cost, healthy ingredients can help you to spend less on food and still eat well. You can also save on food costs by:

•   Using coupons

•   Shopping sales and clearance sections

•   Downloading cash back apps that reward you with cash for grocery purchases

•   Relying on pantry staples that you can make into multiple meals

•   Trying Meatless Mondays (which means eating vegetarian on Mondays; meat tends to be a pricey buy)

•   Repurposing leftovers as much as possible.

You could also save money on food if you’re able to make things like bread, pizza dough, or pasta yourself using basic ingredients. When shopping at your local grocery stores, take time to compare prices online before heading out. And consider whether you can get in-season vegetables and fruits for less at a local farmer’s market.

6. Negotiate Your Bills

Some of your bills might be more or less unchanging from month to month. But others may give you some wiggle room to negotiate and bring costs down.

For example, if you’re keeping your car, you don’t have to keep the same car insurance if it’s costing you a lot of money. You can shop around and compare rates with different companies, or ask your current provider about discounts. You could also raise your deductible, which can lower your monthly premium, but keep in mind that you’ll need to have cash on hand to pay it if you need to file a claim.

Other bills you might be able to negotiate or reduce include:

•   Internet

•   Cable TV (bonus points if you can get rid of it altogether)

•   Cell phone

•   Subscription services (or better yet, cancel them for extra savings)

•   Credit card interest.

Also, if you are hit with a major doctor’s bill, know that it can be possible to negotiate medical bills. It’s definitely worth talking with your provider’s office about this.

There are also services that will handle bill negotiation for you. While those can save you time, you might pay a fee to use them so consider how much that’s worth to you.

7. Learn to Barter and Trade

Bartering is something of a lost art, but reviving it could be a great idea if you’re trying to live on $1,000 a month. For example, say you need to cut the grass, but there’s no room in your budget to buy a new lawn mower to replace your broken one. You could barter the use of your neighbor’s mower in exchange for a few hours of raking leaves at their place.

Or, say that you have kids who have outgrown their clothes. Instead of resigning yourself to using a credit card to buy new outfits for school, you could set up a clothes swap with other parents in your neighborhood. You can clean out clutter and get things you need, without having to spend any money.

8. Get Rid of Debt

Debt can be one of the biggest obstacles to making a $1,000 a month income work. If you have debt, whether it’s credit cards, student loans, or a car loan, it’s important to have a plan for paying it down.

When you only have $1,000 a month to work with, you may only be able to pay a little to your debts at a time. But you might be able to make each penny count more by making debts less expensive.

For instance, you might try a 0% APR credit-card balance transfer to save on interest charges. Or if you have loans from getting your diploma that have a high interest rate, you may consider the benefits of refinancing your student loans to reduce your rate and lower your monthly payment.

If you’re really struggling with how to pay off debt on a low income, you may want to talk to a nonprofit credit counselor. A credit counselor can review your situation and help you come up with a budget and plan for paying off debt that fits your situation. One option is the National Foundation for Credit Counseling, or NFCC.

9. Adopt a No-Spend Attitude

When you want or need to know how to live on $1,000 a month, the fastest way to get overspending in check is to do a no-spend challenge. How this works: You commit yourself to not spending any money on nonessentials for a set time period.

A no-spend challenge can last a day, a weekend, a week, a month, or even a year. The time frame doesn’t matter as much as being all-in with the idea of not spending money on things you don’t need. And you might be surprised at how much money you’re able to save by avoiding wasteful spending.

10. Find Free or Low-Cost Ways to Have Fun

Living on $1,000 a month might mean you don’t have much room in your budget for fun. But you can still enjoy life without having to spend money.

Some of the ways you can do that include:

•   Checking out free events in your community, like festivals or fairs

•   Adopting hobbies that are low or no-cost, like walking or bike-riding

•   Checking out books, DVDs, and CDs from your local library

•   Volunteering

•   Visiting local spots that offer free admission days, like museums or aquariums.

Those are all ways to spend an enjoyable afternoon without costing yourself any money. And if you do want to do something that requires a little spending, you can use a site like Groupon to check for coupons or special deals to save some cash. Or try Meetup to see if any free or low-cost events of interest are brewing in your area.

11. Grow Your Income

If you try living on $1,000 a month and find that it just isn’t enough, the next thing you can do is figure out how to bring in more money. Fortunately, there are plenty of ways to do that.

Here are some ideas for making more money to supplement your income:

•   Increase your hours if you’re working an hourly job

•   Take on a part-time job in addition to your full-time job

•   Start an online low-cost side hustle, like freelancing or Pinterest management

•   Consider an offline side hustle, like walking dogs or shopping with Instacart

•   Sell things around the house you don’t need for cash

•   Check for unclaimed money online

•   Sell unwanted gift cards for cash.

The great thing about making more money is that you can try multiple things to see what works and what doesn’t. And you can also use found money, like bonuses, rebates, or refunds to help cover bills or shore up your savings.

The Takeaway

Making your budget work when you have $1,000 in monthly income is possible, though it might take some serious work. Drastically reducing expenses can be a great place to start, and bringing in more income can of course help too.

Changing banks is one more money-saving tip to know. When you open an online bank account with SoFi, for example, you can get checking and savings in one place. Plus, if you sign up with direct deposit, you’ll avoid the usual steep banking fees and earn a highly competitive up to 3.25% APY. Qualifying accounts can get paid up to two days early. If you’ve never considered an online bank before, those are great incentives to make a change.

Bank smarter with SoFi today.

FAQ

Where can you live on $1,000 a month?

The best places to live on $1,000 a month are ones that have an exceptionally low cost of living. In the United States, that may mean living in a rural area or a smaller city. When searching for the cheapest places to live, consider what you’ll pay for housing, utilities, transportation, and food – the non-negotiable “musts” in your budget.

How can I live on very little income?

The secret to living on a very little income is being careful with how you spend your money and minimizing or avoiding debt as much as possible. Keeping a budget, cutting out unnecessary expenses, and using cash only to pay can make it easier to live on a smaller income.

What is the lowest amount of money you can live on?

The lowest amount of money you can live on is the amount that allows you to cover all of your basic needs, including housing, utilities, and food. For some people, that might be 25% of their income; for others, it might be 75%; it really depends on your specific situation (household size, debt, etc.) and the cost of living. Residing in a less expensive area can make it easier to live on less of the money you make.

Photo credit: iStock/David Commins


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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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What Does It Mean to Be Unbanked?

The term “unbanked” applies to an individual or household that doesn’t use a traditional banking account or credit union for financial services. An unbanked adult has no checking or savings account, relying instead on alternative financial services to pay for life’s expenses.

While the urge to store cash under a mattress may be strong for some, being unbanked can be both expensive and impractical. The benefits of using a financial institution may well outweigh those of the alternatives. However, many people encounter obstacles when trying to access a bank or credit union.

Here, you’ll learn:

•   What does “unbanked mean?

•   Why do people become unbanked?

•   What types of people are typically unbanked?

•   What are the pros and cons of being unbanked?

•   What are initiatives to help the unbanked?

What Does Unbanked Mean?

First, it’s important to give a definition of “unbanked.” If a person is unbanked, that means they are not served by a bank or similar financial institution. If you are over the age of 18 and have no checking or savings account and no credit or debit card, you are considered to be an unbanked adult.

You may wonder, how do unbanked adults conduct financial transactions? How do they go about cashing checks without a bank account and pay bills?

Many unbanked individuals deal in cash, whether by their preference or due to their circumstances. In order to conduct everyday financial transactions, they may use check cashing services, payday advances or loans, pawn shops, and/or make payments with cash or money orders.

Why Do People Become Unbanked?

People become unbanked for various reasons. These can include:

•   Lack of money to meet minimum balance requirements at financial institutions

•   Lack of the credentials needed to open bank accounts (say, a Social Security number)

•   An underlying distrust of financial institutions

•   A desire to avoid any fees involved in opening a checking or savings account, or the penalties for incurring a negative bank account balance

•   Inability to open an account due to having a previous account closed by a bank or credit union, or because they have bad credit

•   Living too far away from a bricks-and-mortar banking location or being unable to drive or take transportation to a financial institution

•   Lacking a computer, a Wi-Fi connection, and/or the tech skills to open an account online.

How Many People are Unbanked in the U.S.?

The United States has a considerable number of unbanked adults. A recent survey by the Federal Deposit Insurance Corporation (FDIC) found that over 6% of American households are unbanked, which accounts for about 14 million U.S. adults. According to a 2020-2021 Federal Reserve poll, 5% of adults in the United States are unbanked, having no traditional checking or savings accounts.

While these are large numbers, it’s worth noting that other nations have much larger percentages of unbanked people. The countries with the highest percentage include Morocco, Mexico, Vietnam, Egypt, and the Philippines, all with unbanked populations of 60% or more.

What Are the Types of People Who Are Unbanked?

The Federal Reserve of the United States estimates that most of the unbanked population fall into the following demographics:

•   Low-income: Families making below $25,000/year

•   Less-educated: A higher percentage of the unbanked never graduated from high school

•   Non-white: Blacks and Hispanics make up the majority of the unbanked

•   Women: More females are unbanked than males, possibly because some women don’t view themselves as in charge of household finances, with someone else in the family managing the bank account

•   Young people: They tend to be unbanked more often than older adults, possibly because they are college students, without jobs, and lack the financial means or the know-how to open an account. (It’s worth noting that some institutions offer college student bank accounts, which are specially designed to help students begin banking. These can be a useful option.)

What Is the Difference Between Unbanked and Underbanked?

You may also have heard the term underbanked as well as unbanked. An underbanked person typically does have a checking and savings account with an FDIC-insured institution, but regularly relies on alternative financial services. Despite having traditional accounts, they may still utilize check-cashing services, money orders, and short-term payday loans.

The Federal Reserve estimates that 13% of adults in the United States are underbanked. As with the unbanked population, this could be due to a lack of access to banking services, bad credit, a lack of financial or technical resources to open and maintain an account, a distrust of financial institutions, or having had a previous account closed.

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning up to up to 3.25% APY on your cash!


Initiatives to Help the Unbanked

Being unbanked can make it a challenge for a person to manage their money and build wealth. Fortunately, government programs and some financial entities are working to solve this issue. They are developing new ways to provide incentives and encourage unbanked individuals to choose traditional banking options. These include:

•   Eliminating banking fees. Getting rid of minimum balance requirements, monthly account fees, and other financial deterrents can encourage low-income individuals to open an account.

•   Developing banking apps. Banking on the phone or computer can help make it easier for people who don’t have a convenient banking branch or have physical challenges.

•   Second chance accounts. Some banks may offer a second chance checking account. When opening this type of account, the bank is willing to overlook bad credit, previously unpaid overdraft fees, or past forced account closures. The account will likely have some limitations, but it can be an on-ramp to a standard checking account.

•   Bringing back postal banking. Decades ago, an individual could perform basic banking transactions at their local post office—cashing checks, bill payment processing, sending money to other branches, and issuing modest loans. There is a movement to bring back these services, and some post offices are already offering to cash payroll checks and have the amount put on a debit card for a small fee.

•   Educational outreach. In 2021, the FDIC announced a “tech sprint” program, incentivizing participating banks to research and implement new ideas to reach the unbanked population in their communities. Among the offerings in development: workshops on how to balance your bank account and banking tutorial videos.

Why Is Being Unbanked a Problem?

Being unbanked can be a problem for a few reasons. For example:

•   It can be complicated and time-consuming to conduct banking transactions without having standard bank accounts.

•   Being unbanked can be expensive as well. A person may have to pay high fees for check cashing and other services from predatory businesses. Plus, an unbanked individual won’t earn any interest on your money.

•   It can be risky to carry cash versus safely keeping it with a bank or credit union.

•   Unbanked people may struggle to build wealth and have a solid credit and banking history.

Pros of Being Unbanked

Being unbanked could be seen as a positive for some people. The upsides include:

•   Not having to deal with the bureaucracy or paperwork of opening and maintaining accounts at banks

•   No checking or savings account fees

•   No overdraft or minimum balance fees

•   No record of one’s finances, if a person wants that kind of privacy.

•   Can be seen as more convenient to use cash vs. using debit cards, ATMs, and bank branches.

Cons of Being Unbanked

As mentioned above, being unbanked can be problematic. Those who don’t have checking and savings account may find that:

•   Using money orders and similar products to pay bills can be costly (fees) and time-consuming.

•   Carrying and/or keeping cash at home can be risky; what happens if you are robbed?

•   No convenient direct deposit for paychecks. The unbanked may have to utilize a check-cashing or payday loan service, which can charge very high fees or interest rates.

•   No opportunity to build up a banking history or possibly a credit history for future borrowing.

•   No access to safe and convenient money transfers.

•   No opportunity to securely save money for the future.

•   No interest earned on your money.

•   No access to other products and services that banks may offer when you are a customer, such as cashback programs or better mortgage rates.

Opening a Bank Account

There are many reasons people may shy away from opening a bank account. That said, being unbanked has a number of disadvantages. Your money may not be as secure, and it may be more costly and time-consuming to conduct transactions. What’s more, your funds won’t earn interest and grow.

Opening a bank account can be a very simple process. For most people, what you need is:

•   A valid government-issued photo ID

•   A Social Security number or taxpayer ID number

•   Proof of address.

Then, once you’ve selected a financial entity you trust, it can be quite quick to complete the sign-up process, whether you do so in person or if you’re someone who can open an account online. What’s more, there are banks that will allow you to open an account without an initial deposit and that don’t have minimum balance requirements either.

For those who have past banking problems, like having had accounts closed before, a second chance account can be a good move. While it may not be a full-fledged standard account (there are typically limitations, such as no overdraft protection), it can be a positive step towards becoming banked.

By the way, if you previously had an account that’s now shuttered, it’s unlikely that you can reopen your closed bank account. It’s usually best to start over with a new account, at your prior financial institution or elsewhere.

The Takeaway

By choice or circumstance, millions of Americans are unbanked. Typically, this means they don’t have a checking or savings account and don’t participate in personal banking. There can definitely be a downside to being unbanked, including factors like spending more time and money to conduct banking transactions and not earning any interest on one’s funds. For many people, becoming a client of a bank or credit union can be a positive step towards improving their money management and gaining wealth.

SoFi can be a great option if you are just starting out as a banking client. Our Checking and Savings, when opened with direct deposit, can be a secure place to deposit your paychecks, pay bills, transfer funds, and enjoy peace of mind. Plus, you’ll earn a super competitive up to 3.25% APY while paying no account fees. Opening a SoFi bank account can be a great way to help your money grow faster.

Bank smarter with SoFi.

FAQ

What does it mean when a person is unbanked?

Being unbanked means an individual who doesn’t have access to or doesn’t use traditional financial services, such as checking and/or savings accounts or debit and credit cards.

What are the needs of the unbanked?

The unbanked need to hold onto cash securely, pay bills, and transfer funds. Without using the traditional banking system, they are likely to spend more time and pay higher fees and interest rates to conduct basic banking transactions.

How do unbanked people get paid?

Unbanked people can receive funds by cash, a money order, a money transfer service for cash pickup, or by receiving a prepaid debit card.


Photo credit: iStock/Deagreez

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
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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11 Great Songs About Saving Money

Sing and Save: Our Top Songs About Money

Music offers a surprising array of benefits to listeners. Its primary aim is entertainment, but it also allows for artistic expression. Some songs are energizing, some are relaxing, and others, research suggests, can even improve physical and emotional health and manage pain.

But did you know music can also teach us about money? While you shouldn’t comb your Spotify playlists for stock market advice, you might find a few financial nuggets of wisdom embedded in your favorite songs.

Here’s a selection of songs from various eras and genres that are all about money, whether saving or spending it. They might nudge you to think more about your finances and relate to other people’s struggles and triumphs with their cash.

So if you’re like Rihanna and you’ve got your mind on your money, check out these 13 songs about finance that span the decades.

13 Songs About Saving Money

In each finance song on this list (arranged chronologically by release year), the artist shares a different viewpoint on personal finance. Some singers glorify money; others show us that there are more important things in life. Some singers tout the independence that money gives them and the hard work that got them there; others dream of making more.

No matter what money lessons you take from the music, one thing’s for sure: These 13 songs about saving money (or spending it) will be stuck in your head all day.

Recommended: Tips for Better Money Management

1. “Pennies from Heaven” by Bing Crosby (1973)

The oldest finance song on our list comes from the legendary Bing Crosby and the film of the same name. “Pennies from Heaven” reflects the general feelings of the time. Released during the Great Depression, the song yearns for the financial freedom of the Roaring ’20s yet provides hope that the country will weather the storm.

2. “Sittin’ in the Sun” by Louis Armstrong, Jack Pleiss, & His Orchestra (1953)

The next saving money song on our list comes from the legendary Louis Armstrong. “Sittin’ in the Sun” is so powerful that it made it on an album of his greatest hits. Armstrong paints a simple picture of sitting in the golden sunshine and counting one’s money. He speaks of the comfort of knowing what’s stored in his bank account.
Though Armstrong likely had a different point to make, his song is a reminder that having an emergency fund socked away is never a bad idea.

3. “Can’t Buy Me Love” by the Beatles (1964)

One of the Beatles’ biggest hits takes a more scathing view of money. Sure, it can buy you diamond rings, as Paul McCartney points out. But the one thing money can’t get you — no matter how much of it you have — is love. It’s a simple but crucial lesson: Money’s necessary for survival and can get you nice things, but the most important things in life can’t be bought.

Recommended: Common Misconceptions About Money

4. “Money” by Pink Floyd (1973)

A well-covered hit from the Dark Side of the Moon album, “Money” starts with the “ka-ching” and register sounds of retail transactions. It’s a haunting sound once you know the lyrics that soon follow: The song serves as a reminder that money and greed can be bad. The lesson to walk away with? While it’s important for your family’s safety, health, and comfort to have money, don’t forget to share with those less fortunate and to take time for more important things.

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

5. “Money, Money, Money” by Abba (1976)

“Money, Money, Money” by Abba paints a picture of a girl who works hard but is still struggling with her bills.
She hopes to land a rich guy because it’s “always sunny in a rich man’s world.” But if that doesn’t work, she contemplates going to Vegas or Monaco and gambling her way to wealth. Perhaps not the wisest of financial plans, but with a fun rhythm and lighthearted lyrics, it’s easy to see why this song is one of Abba’s biggest hits.

Recommended: How to Get Caught Up on Late Payments

6. “The Gambler” by Kenny Rogers (1978)

An example of brilliant storytelling, “The Gambler” could have several deeper interpretations — and may spark a debate between listeners as to whether the titular gambler dies at the end. On the surface, though, it’s a killer song about two men on a train, one of whom is a gambler sharing important advice: “You’ve got to know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run.”

7. “She Works Hard for the Money” by Donna Summer (1983)

One of the most popular songs by the Disco Queen is “She Works Hard for the Money.” It’s hard not to jump up and dance when this one comes on the radio, especially if you can relate to the protagonist: a woman who works day in and day out to provide for herself. The lesson here? People who work hard, no matter how much they make or what line of work they’re in, deserve respect and credit for what they do.

Recommended: 5 Ways to Achieve Financial Security

8. “If I Had $1,000,000” by Barenaked Ladies (1988)

This song doesn’t take itself too seriously — just as you’d expect from a group that calls itself Barenaked Ladies. But somewhere in all the silly lyrics, you’ll notice a theme: Though the singer may splurge on a limousine or, weirdly, John Merrick’s remains, he insinuates that money wouldn’t change him or his partner.
They’d still eat Kraft dinners, just more of them (and with fancy ketchup). The takeaway from this song is that money can change who we are, but we shouldn’t let it.

Recommended: Money Management Tips for College Students

9. “Mo Money Mo Problems” by Notorious B.I.G. (1997)

Perhaps the clearest finance lesson from these songs that talk about money hails from this hit from Notorious B.I.G. The takeaway, after all, is right there in the title. As we hear in the song, “It’s like the more money we come across, the more problems we see.” Money can solve a lot of problems, but don’t forget that it can bring on new problems you might not be expecting.

Recommended: Why Do We Feel Guilty After Spending Money?

10. “Bills, Bills, Bills” by Destiny’s Child (1999)

How could we put together a list of songs about saving money without featuring Beyoncé? This song, which came out when Bey was still in Destiny’s Child, is all about female empowerment. In it, the protagonist is in a relationship with a man who is using her for her money — and she’s having none of it. The song is a healthy reminder that, while it’s OK to treat friends, family, and partners to nice things, you shouldn’t let yourself be taken advantage of.

11. “Billionaire” by Travie McCoy feat. Bruno Mars (2010)

“Billionaire” is a song that many of us can relate to. Most people will never become a billionaire, but it’s fun to imagine what we’d do if we had that much money. While the song is playful and isn’t packed with useful tips, it’s a reminder that it’s OK to have big financial dreams. Some may be unrealistic, but you need a big dream to keep you motivated and working hard.

Recommended: The Importance of Saving Money

12. “Thrift Shop” by Macklemore & Ryan Lewis feat. Wanz (1973)

Macklemore’s brand of humor is on full display in “Thrift Shop.” In it, the rapper criticizes spending money on designer clothes when there are so many better finds in thrift shops. Sure, it’s OK to splurge on yourself now and then, but being frugal — whether it’s shopping at thrift stores, packing a lunch, or borrowing books and movies from the library — is a great way to save money and build your wealth.

13. “Budapest” by George Ezra (2014)

The final entry on our list of songs about saving money comes from George Ezra and carries a message similar to “Can’t Buy Me Love.” In “Budapest,” Ezra promises his love interest that he would abandon all his wealth and belongings if it means he could be with the one he loves. This song is yet another reminder that possession may be nice but our relationships with people are even nicer.

Recommended: How to Get Better with Money

The Takeaway

Music can entertain us, energize us, relax us, and even heal us. But it can also teach us — about life, about love, and yes, even about money. These 13 songs about finance are just the tip of the iceberg. So turn on the radio or dig through your music streaming service, and put in those earbuds the next time you’re working on your budget. You just may learn something useful.

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


Photo credit: iStock/Talaj

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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
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