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Making a budget is often the first step in building a solid financial foundation. It helps you get better acquainted with how much money you earn, spend, and save. What’s more, it provides guidance and guardrails to help you hit the financial goals you’re focused on, whether that means saving for a vacation in Tuscany or the down payment for your dream house.

But budgets are not “set it and forget it” tools. The process can involve plenty of trial and error, and you may benefit from refining your plans along the way.

That’s where budgeting questions come in. The more often you check in with how your budget is going, the easier it becomes to tweak and stick with this key money management habit.

Knowing some of the most common budgeting questions to ask can help you fine-tune your financial plan so you can take control of your cash. Check out the list of questions below. When asked regularly, they can yield surprising insights and adjustments to enhance how you manage your money.

How Questions Can Help You Budget Better

Asking questions about budgeting can be a wise move because everyone’s financial situation is different. The way that your parents or best friends budget may be entirely different from the way you approach managing your money. By checking in and assessing where you stand, you can help improve your financial outlook.

The right budget questions can give you insight into things like:

•   Why you should budget in the first place

•   What you hope to achieve from keeping a budget

•   Where your biggest budget pitfalls are

•   How you can improve your budget

To put it another way, asking budgeting questions can help you better understand where you are financially, where you’d like to be, and how a budget can help you to get there.

In terms of how often you should be asking questions about budgeting, there’s no set rule of thumb. However, it’s a good idea to review your budget monthly to track any changes to your income or expenses.

An annual budget review can also help you see how your spending has evolved over the year. It’s also a good time to see what adjustments you might need to make as you set new financial goals for the year ahead.

14 Budgeting Questions That Can Help You

Not sure which budget questions to ask? The following checklist covers some of the most important things to consider as you make your monthly spending plan and keep tabs on it.

1. Am I Prepared for Unexpected Expenses?

Saving for financial emergencies is an important part of budgeting. When you don’t have money to cover an unexpected expense, you run the risk of having to use a high-interest credit card or loan to cover, say, a car repair or a major dental bill.

One of the first budget questions to consider is how much you have saved toward emergencies. If the answer is ‘0’ in liquid funds you could quickly tap, you may want to think about how much you need to save for emergencies and how to fit that savings goal into your budget each month.

2. What is a Good Amount for an Emergency Fund?

An often-cited goal for emergency savings is three to six months’ worth of expenses. However, a good amount for an emergency fund for you can depend on your income, expenses, and how much money you need to have in the bank to feel comfortable.

If you’re single and have side-hustle income on top of your regular paychecks from a job, for instance, you might be okay with one to two months’ worth of expenses saved. On the other hand, if you’re married with two kids and are the primary breadwinner, it’s a much different situation. You might be more at ease with nine to 12 months’ worth of expenses saved instead.

When you’re starting from zero, aiming for $500 or $1,000 can be a good way to ease into a savings habit. You can then review your budget monthly to see where you might be able to find additional money. Every little bit counts ($20 here, $35 there) until your emergency savings hits a level that allows you to breathe a sigh of relief.

Recommended: 6 Examples of When to Use Your Emergency Fund

3. How Much Debt Should I Pay Down Each Month?

Debt can make it difficult to reach your financial goals if a big chunk of your income is going to credit cards, student loans, or other debts. Generally, it’s recommended that no more than 36% of your monthly income should go to debt each month if you own a home, including your mortgage. If you rent, then your debts should be no more than 20% of your income each month, at least according to the Consumer Financial Protection Bureau.

The simplest answer to how much debt you should pay down each month is the maximum amount you’re able to pay, without cutting yourself short in other areas. The faster you can get rid of debt, the more money you can save in interest. And the more room you’ll have in your budget to fund other goals.

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

4. Did I Overspend? If So, Where?

This is another great budgeting question to ask when reviewing your budget monthly if you’re trying to stop overspending. Going through each budget category and analyzing how much you spent can help you pinpoint the money leaks in your financial plan.

Once you find the leaks, you can take steps to plug them. For example, if you noticed that you’re spending more money on dining out, then planning meals at home and committing to that plan is a relatively simple fix. Or you might decide to audit your subscription services and cut out anything you’re paying for but not using. Those are simple ways to cut back on spending.

5. Do I Need to Adjust Spending Limits?

Reviewing your spending each month can help you figure out where you might be overdoing it. But it’s also an opportunity to see how inflation and rising prices might be affecting your expenses. If you notice that you’re spending more on groceries or gas, for instance, then you may need to trim other areas of spending to compensate for those higher costs.

You may also decide to adjust spending limits down if you want to dedicate more of your budget to saving or debt repayment. So again, instead of eating out you might stick to having meals at home which can be more cost-effective. If that saves you $100 a month, you could add that sum to your emergency fund or make an extra payment to your student loans.

6. What Are My Money Priorities?

Knowing your money priorities is important as they can influence the financial decisions you make. You could ask this budgeting question monthly. Too often? Aim to consider it at least once a year to see how life changes might affect your answers.

For example, your money priorities might include spending on travel or recreation in your 20s. But once you hit your 30s, your focus may shift to saving, paying down debt, and taking other steps to work toward financial stability.

Recommended: 5 Ways to Achieve Financial Security

7. Am I Tracking Toward My Financial Goals?

Tracking your financial goals can give you motivation to stick with your money plan. It’s also an easy way to see how you’re progressing toward them.

Whether your goals include paying down debt, building an emergency fund, or saving for a vacation, you can ask this budget question monthly to gauge how you’re doing.

If you see that you’ve made little progress over the past few months, for instance, you can then ask yourself what you can do to change that and get closer to your goals.

8. Am I Happy About the Purchases I’ve Made?

Some things you have to spend money on, but others you buy because you want to. That’s the difference between needs vs. wants, and understanding that is an important part of budgeting.

If you find yourself spending money more often than you’d like on things that aren’t necessities, ask yourself what you’re getting from those purchases. Dropping $5,000 on a once-in-a-lifetime vacation might be justified if you get a chance to create lasting memories. Spending that same $5K on new clothes, on the other hand, might give you a temporary boost, but you may end up regretting that purchase later.

Considering what you’re getting from spending money can give you clarity on your financial priorities. It can also help you to identify bad money habits that might be hurting your financial situation.

9. What Would My Budget Look Like Without Debt?

Living debt-free might seem like a dream but it’s possible to make it a reality with the right plan. If you have debt that you’re paying down monthly, ask yourself what your budget might look like if you didn’t have to make those payments. That could give you a push to dedicate more money toward debt repayment so you can eliminate those obligations faster.

There are lots of debt reduction strategies you can use, including the debt snowball and debt avalanche techniques. If you’re tracking your debt repayment progress and aren’t getting ahead as fast as you’d like, you might review your budget to see if another method might be more effective.

When it comes to credit card debt, you might investigate balance transfer credit card offers, which give you, say, 18 months during which you pay no interest. This can help some people pay down the amount they own. You might also seek advice from a nonprofit credit counselor.

10. Is There a Way to Increase My Income?

Making more money can give your budget a boost. When income goes up, paying bills becomes less stressful. It may also be easier to knock out debt or grow your savings.

How often you ask yourself this budget question can depend on your situation, but it’s worth pondering it at least once a year. Some of the ways you might be able to increase income include getting a part-time job, taking on more hours at your current job, negotiating a raise, or starting a low-cost side hustle.

11. How Much Should I Budget for Investments?

Investing money and saving it are two different things. When you invest money, you’re putting it into the market where it has more opportunity to grow. There’s greater risk involved vs. saving, but the rewards can be greater as well.

The amount you should budget monthly for investing can depend on how much you have left after covering basic expenses, how much you’re saving for emergencies or other short-term goals, and how much you’re paying to debt. (You also want to spend a little on those “wants” mentioned above; otherwise, you’ll end up feeling deprived.)

Depending on the details of your situation, aiming to invest 10% might be a good place to start and you can build on that amount year over year as you pay down debt or increase your income. (Typically, experts recommend that 20% of your monthly after-tax dollars go towards savings; how you allocate that 20% between investments and other forms of savings is up to you.)

12. How Much Should I Save Each Month for Retirement?

Paying yourself first is a fundamental rule of personal finance and it’s a good way to build the wealth you need to retire. As you approach your budget monthly or yearly, consider how much you’re saving for retirement.

The exact amount you’ll need to save monthly will depend on your retirement goals and age. Financial experts often recommend saving 10% to 15% of income for retirement, for instance, though you might need to double or even triple that if you’d like to retire early or you’re getting a late start.

Look at what you’re putting into your 401(k) at work if you have one. If you’re not getting the full company match, then consider bumping up your contribution rate. And if your budget allows it, you might think about opening an Individual Retirement Account (IRA) to save even more for the future.

13. What Are My Goals This Month?

Financial goal-setting is something you can do for the long-term. For instance, you might want to save $50,000 for a down payment on a home or $1 million for retirement. But you can also set goals that you hope to achieve month to month.

For example, you might set a goal of getting three car insurance quotes from different companies if you’re hoping to get a better rate. Or you might have a goal of not spending money for 15 days out of the month. These kinds of short-term goals can help you move ahead financially without losing sight of your bigger money picture.

What’s more, succeeding at small financial goals can build your confidence to tackle larger ones.

14. How Can I Stay Consistent In Keeping My Budget?

Making a budget is important, but sticking to it matters even more. Examining your income and expenses monthly matters, but asking the key question, “How can I stay consistent with my budget?” can also be vital. Doing so can help you figure out what might be tripping you up and what you can do to be more consistent with your spending plan.

You might decide to do weekly or biweekly budget check-ins versus reviewing your budget once a month. Or you may ask a friend to be your accountability partner and help you stay on track with spending. Those kinds of things can help you get more comfortable with budgeting so that it’s easier to stay focused with spending month to month.

The Takeaway

It’s common to have questions about budgeting, even if you’ve been in the habit of making a budget for a while. The great thing about making a budget is that there’s always room to tweak and improve things. Asking the right budget questions is a good way to figure out what’s working (and what’s not) so you can make the most of your money each month.

FAQ

How many budget categories should I have?

There’s no single right answer to how many budget categories someone should have. It’s possible to have 100 budget categories or more, depending on how much detail you go into when dividing up your income and expenses. At a minimum, you may want to have a budget category for fixed expenses, another for discretionary expenses, one for variable expenses, a category for saving, and a category for debt.

What does a realistic budget look like?

A realistic budget takes into account all of your income and divides it up to pay for your needs (including debt repayment) and some wants, as well as allowing room for saving. It should allow you to manage your money without feeling stressed or anxious.

How do you plan a budget?

Planning a budget starts with understanding your income and then diving into your expenses. As you make your budget, you can assign income to each expense you have starting with the most important ones first. That usually means housing, utilities, food, transportation, and insurance. Paying down debt is also often a priority. From there, you can continue dividing up income to cover discretionary spending and savings.

Photo credit: iStock/MicroStockHub

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

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

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

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

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

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

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

SOBK1022012

It’s hard to escape the current news of global inflation, with many people experiencing double-digit price hikes on necessities. What exactly is inflation? It’s a measure of the average price level of goods and services over time. When a country experiences inflation, its currencies’ purchasing power gets reduced. People feel the pinch, and their money doesn’t go as far.

Inflation can adversely affect an economy, including reduced output and increased unemployment. Hyperinflation, or incredibly rapid, out-of-control price increases of more than 50% per month, does the same, only worse.

The U.S. inflation rate reached 9.1% in June 2022, the highest rate since 1982. This has caused increased mortgage rates, and increased prices for goods and services. That said, if we look at other countries, we’ll see that there are far worse cases when it comes to inflation.

In this article, we’ll review 10 incidents of some of the worst hyperinflation in history and its consequences.

Worst Hyperinflation in History

Inflation is typically considered high when it exceeds the rate of economic growth. For example, when prices rise faster than wages, then workers’ purchasing power declines. This can lead to a decrease in demand, i.e., reduced travel during the holidays, which can cause businesses to reduce production and result in a recession. If you’re wondering whether inflation is good or bad, you are likely to recognize the negative impact this can have.

Here are 10 examples of when inflation got really out of hand:

1. Greece: October 1944

Greece faced a severe period of inflation during World War II. The government needed to finance the country’s war effort, the black market, and profiteering. Prices doubled every 4.3 days. The situation became so bad that some people were even forced to eat insects to survive.

The government responded by introducing price controls and rationing, but these measures failed to bring inflation under control. In the end, the Greek people suffered greatly until the situation improved in 1947.

Recommended: How Rising Inflation Affects Mortgage Rates

2. Yugoslavia: October 1994

Yugoslavia was also hit by an inflation crisis that caused the value of their currency, the Dinar, to drop. The prices doubled every 34 hours. As a result, it was difficult for citizens to purchase everyday items like food and clothing. Many resorted to smuggling goods to get by.

The government attempted to fix the problem by introducing new bills with higher denominations, but this caused more chaos and confusion. In the end, Yugoslavia abandoned its currency altogether and adopted the German mark as its official currency.

3. Germany: October 1923

In October 1923, Germany faced a period of extreme inflation. The government had printed too much money to finance war operations, and prices were skyrocketing. More than a wheelbarrow full of bills was needed just to buy a newspaper. People were losing their life savings, and the economy was in chaos.

To halt inflation, the government introduced a new currency called the Rentenmark. This stabilized the currency, and Germany began to recover from the crisis.

4. Zimbabwe: November 2008

Thanks to years of economic mismanagement by the government of Zimbabwe, in November 2008, inflation hit its peak. The country’s inflation rate was, month over month, 2,600%, or more than 231 million percent on a year-over-year basis. Those mind-boggling numbers meant that a loaf of bread cost what 12 new cars did a decade ago

To mitigate the issue, the government printed large amounts of money without backing it with gold or other assets. This resulted in a rapid depreciation in the value of the currency. As prices increased, people started losing faith in the currency, leading to even more hyperinflation.

The situation became so desperate that most people could not afford necessities such as food and medicine. The high inflation rate also made it difficult for businesses to operate, and many companies went out of business.

Worried about your retirement savings? See how SoFi can help put things in perspective.

5. Hungary: 1946

Hungary experienced a high level of inflation after the end of World War II. The country’s currency, the Forint, was not pegged to the U.S. dollar or any other currency. As a result, it was vulnerable to sharp devaluations. In addition, Hungary was still recovering from World War II, and the government was trying to stabilize the economy by printing money, a factor that can cause inflation, to finance its reconstruction efforts.

As a result, prices doubled every 15.6 hours, and the average person’s standard of living declined sharply. In the second half of 1946, Hungary was home to the most worthless currency in the world, with a banknote carrying a denomination of 100,000,000,000,000,000,000.

6. Argentina: 1975

Starting in 1975, Argentina’s inflation rate increased by an average of more than 300% per year until 1991. Several factors caused the situation including the increase in the money supply without an equal increase in goods and services. This led to an increase in prices. Another reason was the decline in agricultural production, which led to higher food prices. Political instability also contributed to high levels of inflation.

Recommended: How Does Inflation Affect Retirement?

7. Sudan: 2021

Inflation in Sudan has been an ongoing problem for several years. The main drivers of Sudans’ hyperinflation are:

•   The depreciation of the Sudanese pound

•   The high rate of population growth

•   The increase in government spending

To address these problems, the government has implemented several measures, including devaluing the currency and reducing spending. Unfortunately, though, these measures have not been fully effective, and inflation continues to be a major issue. As of 2021, the inflation rate was 359.09% compared with 2020.

8. Iran: 2022

Inflation in Iran is a problem that has been going on for many years. The value of the Rial has decreased significantly, and the cost of living has increased dramatically. Undoubtedly, this has caused significant hardship for the people of Iran. As of May 2022, inflation was impacting food and beverage prices at a rate of over 80%.

To combat the high levels of inflation, the Iranian government has put various price controls in place. However, these controls have been ineffective, and the inflation rate continues to rise, currently at more than 50% as of summer of 2022.

9. United States: 1917

The worst inflation rate ever recorded in U.S. history reflects how harsh life during wartime can be. The highest figure was in 1776, when the rate of inflation was 29.78%. But, that was more than 100 years before the CPI (consumer price index) was introduced. Since its inception, the highest inflation rate ever recorded in the United States was 20.49% in 1917. The country went to war and had to finance that effort by printing more money.

10. Yemen: 2021

Inflation has been a major problem in Yemen recently; the rate in 2022 stands at approximately 19%. But that’s an improvement over a year or so ago; as of 2021, inflation was at 63.77%.

The country’s currency, the Riyal, had been falling in value for years up to that point. People were struggling to afford anything. Many families had to choose between eating and heating their homes. Hospitals were running out of medicine, and schools closed because they couldn’t afford to pay teachers anymore.

Recommended: How Much Has College Tuition Outpaced Inflation?

What Is the Most Inflated Currency?​​

In the world of finance, there’s a variety of currencies that get used in different countries. While some currencies are more valuable than others, the Venezuelan bolívar earned the dubious honor recently of being the most inflated currency in the world. That’s due to Venezuela’s astounded inflation rate of 200,000%.

The Takeaway

As you can see, inflation affects everything from a loaf of bread, to your kids’ college tuition. That said, if we look back at the worst cases of inflation, we’ll see that many attempts to “fix” the issue revolve around printing money. Unfortunately, it didn’t work out well for many countries. Will we learn from the past? Who knows. But the current inflation rate in the U.S. seems like a mere irritation compared with other historical examples.

That said, of course you want your money to work as hard as possible for you. When you open a high interest bank account with direct deposit, you’ll earn a competitive APY, and you won’t pay any fees.

Photo credit: iStock/AlexSecret

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

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

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

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

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

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

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

SOBK0622046

As the world’s oldest form of crypto, Bitcoin is considered a store of value and a form of payment. Waves, a newer crypto, is more of a groundbreaker in the DeFi space.

Bitcoin was developed as an alternative to traditional currencies and financial channels. Waves, on the other hand, was created to allow users to launch their own applications and digital tokens. If you’re weighing whether to invest in Bitcoin vs. Waves, consider the advantages and disadvantages of each.

What Is Waves (WAVES)?

Waves is an open-source blockchain network that allows users to create and launch custom decentralized applications (dApps) and cryptocurrency tokens.

Blockchain technology processes information using “nodes”: decentralized networks of computers that can drive faster, more secure transactions. Decentralization is a key feature of the crypto realm, which is sometimes referred to as decentralized finance, or DeFi.

Waves works in a similar way to Ethereum, in that the Waves network is typically used to create products that require a high level of security — often relating to finance, personal identification, proprietary data, etc.

Waves has its own decentralized exchange, called DEX, and a native token, WAVES. The token works as a medium of exchange for network users, much like ETH on the Ethereum network.

How Does Waves Work?

Practically speaking, the Waves network is designed so that users with little or no crypto expertise can create digital tokens. All you have to do is fire up the Waves app or web platform and use the network’s token-creation system.

Waves offers users a different approach than similar blockchain networks in that tokens created on the network do not use advanced smart contracts, but rather scripts in user accounts. If you want to get technical, Waves uses a variation of the proof-of-stake consensus mechanism (called “leased” proof of stake) to verify data on the blockchain.

What Is Bitcoin and How Does It Work?

Bitcoin is a virtual currency. Launched in 2009 using blockchain technology, it’s the oldest and largest crypto asset on the market. Bitcoin balances and transaction records are maintained on a public blockchain ledger.

All Bitcoin records, transactions, and ownership data are maintained and verified by a large network of computers around the world through a proof-of-work consensus mechanism. (This is different from the proof-of-stake mechanism that Waves uses.) Through that mechanism, “miners” upkeep the network and are rewarded with Bitcoin.

Bitcoin holders can send each other Bitcoins, assuming they each have a special digital wallet or crypto wallet designed for that purpose, and a private key, which is an address where digital assets are stored.

Because Bitcoin is so popular, some businesses accept Bitcoin in exchange for goods and services — which is not the case for many other cryptocurrencies. In that sense, Bitcoin can be used as a literal currency in some situations.

💡 Recommended: Bitcoin Price History: 2009-2022

Comparing Bitcoin vs Waves

By now you may realize that Bitcoin and Waves are intrinsically different. Here are some ways in which the two are similar, and how they differ:

Similarities

The biggest commonality between Bitcoin and Waves is that both have been integral to the growth of the crypto market. Bitcoin was the trailblazer, and its immense growth in value over the past few years attracted attention from all over the investment sphere. But Waves’ ability to give folks with little know-how the tools to launch their own tokens is also generating buzz.

Differences

Bitcoin and Waves differ in key ways. Foremost, Bitcoin is a digital currency, while Waves is a platform for launching tokens. They’re two completely different things.

The two have different goals and aims, too. As noted above, Bitcoin was developed as an alternative to traditional currencies and financial channels. Waves was created to allow users to launch their own applications and digital tokens — even if they don’t know much about crypto.

On a technical level, the two exist on different blockchain networks and use smart contracts in different ways. Because it was designed as a currency, Bitcoin didn’t originally have smart contract functionality. Now, a separate blockchain network called Stacks enables smart contracts for Bitcoin. The Stacks blockchain uses the STX token as a “gas” asset to pay for executing smart contracts.

Smart contracts on the Waves blockchain feature scripts written in Ride, a domain-specific language for developing dApps focusing on security and ease of development. Due to built-in limitations, running Ride scripts doesn’t require any “gas” fees.

Finally, it’s worth pointing out that there is a huge disparity in value between Bitcoin and Waves’ token, WAVES. While Bitcoin has traded at prices exceeding $65,000 in the past, WAVES can be purchased for much less — typically between $4 and $30.

The Takeaway

Bitcoin and Waves couldn’t be more different in functionality, underlying technology, and business goals. As the world’s oldest form of crypto, Bitcoin is considered a store of value and a form of payment. It was developed as an alternative to traditional currencies and financial channels.

Waves, on the other hand, was created to allow users to launch their own applications and digital tokens. Waves is more of a groundbreaker in the DeFi space, allowing entrepreneurs with minimal tech knowledge to create crypto products.

FAQ

Is Waves crypto legitimate and trustworthy?

Waves has been around since 2016, and its relative longevity in the crypto space is a good indicator of its legitimacy.

How safe is Waves crypto staking?

You can stake digital assets on Waves, which is one reason it attracts many users.

Who created and who owns Waves crypto?

Waves was founded by Sasha Ivanov in 2016, and the company is headquartered in Moscow. Since then, a parent company, Wave Labs, has been established in Miami, FL.

Photo credit: iStock/DjelicS

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