SoFi

Series I Savings Bond rates are set to change on May 1, 2024, when the new rates will be announced. To give some perspective, for Series I Bonds issued from November 2023 through April 2024, the yield (composite rate) was 5.27% for six months after the issue date. So, is now a good time to buy I bonds?

Investors with a long-term savings outlook who are looking for a safe investment may want to consider investing in Series I Savings Bonds, commonly known as I Bonds. I Bonds are similar to most bonds in that they are essentially a loan to an entity (in this case the U.S. government), with the promise to return your money with interest. I Bonds are different in that they may offer some tax breaks as well. Here are nine important things to know before you invest in I Bonds.

9 Important Things to Know Before You Invest in I Bonds

1. I Bonds May Offer a Higher Rate, But Not a Fixed Rate

For those looking for low-risk investment returns, I Bonds may be a good option, but they are not traditional fixed-income securities. I Bonds are a type of savings bond offered by the U.S. Treasury and backed by the full faith and credit of the U.S. government. They are unique in that they offer two types of interest payments: a fixed rate and a variable rate, which together provide the bond’s composite rate.

The fixed-rate portion is determined when the bond is purchased, and remains the same for the life of the bond. The variable rate gets adjusted twice a year (i.e., May and November), based on inflation rates. Investors may hold I Bonds for up to 30 years.

In May 2022, when inflation was high, I Bonds paid up to 9.62%. But as inflation cooled, the variable rate dropped. As mentioned, I Bonds issued from November 2023 through April 2024 have a composite rate of 5.27% for six months after the issue date, until the variable rate changes again.

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

2. Your I Bond Principal Is Guaranteed

Because I Bonds are backed by the U.S. government they have a low risk of default and offer tax-advantaged interest income. Furthermore, the principal is guaranteed. This means (unlike traditional, non-government bonds) that the redemption value will never decrease. This is one of the advantages of savings bonds as a whole. As a result, I Bonds are considered low-risk investments.

3. I Bonds Offer Some Tax Breaks

Tax-efficient investors may want to consider certain I Bond features. Because I Bonds are exempt from municipal or state taxes, this can be a boon for some investors. That said, while federal taxes usually apply, they could be deferred until the bond is ultimately sold or matures; whichever happens first.

Additionally, I Bond investors may use the interest payments for qualified higher education expenses, and receive a 100% deduction (this is called the education exclusion). Some restrictions apply, including:

•   You must cash out your I Bonds the year that you want to claim the education exclusion.

•   You must use the interest paid to cover qualified higher education expenses for you, your spouse, or your dependent children the same year.

•   You cannot be married, filing separately.

4. I Bonds Are Similar to E Bonds & EE Bonds

Investors who are familiar with the Series E Bond may also find I Bonds appealing. While Series E Bonds are no longer available from the Treasury, they can still be purchased from other investors who currently hold them. Historically, Series E bonds were also known as defense or war bonds.

Series E bonds were replaced by Series EE bonds (aka “Patriot Bonds”) in 1980. Today, like Series I Bonds, investors can buy EE Savings Bonds from TreasuryDirect .

An interesting feature of Series EE Savings Bonds is that, over a 20-year period, these bonds are guaranteed to double in value. And should the interest not be enough to double the value, the U.S. Treasury will top it up, giving the bond an effective interest rate of 3.5% per year during that period.

While I Bonds don’t offer the same guarantee, your principal is guaranteed and the bonds are designed to keep pace with inflation.

5. I Bonds Are Easy to Purchase

Investors can purchase electronic I Bonds online through TreasuryDirect in denominations over $25. The maximum amount of electronic I Bonds someone can purchase is $10,000 per calendar year.

In paper format, investors may use their tax refund to purchase up to $5,000 a year.

6. I Bonds Are a Long-Term Investment

In general, the primary risks in buying bonds revolve around redemption. What if you need your money before maturity?

I Bonds are generally a long-term investment. To start with, investors must understand that they have their money locked up for one year. After that, investors who redeem their I Bonds before they’ve held the bond for five years will forfeit the last three months of interest. (You can redeem an I Bond after five years with no penalty.)

As a result, those looking for a shorter-term investment may want to consider investing in Treasury bills.

💡 Quick 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 savings 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.

7. Other Investments Might Offer Better Returns

One possible advantage of investing in stocks, mutual funds, and ETFs is that investors could potentially make a profit if the stock or fund does well. For instance, historically, stocks have been shown to be one of the best ways to build wealth over time. However, there is also risk involved, and you could lose money if the investment performs poorly.

TIPS, or Treasury Inflation-Protected Securities, are also a type of government bond designed to protect investors from inflation. The principal amount of a TIPS bond will increase with inflation, while the interest payments remain fixed. I Bonds are similar to TIPS but offer additional protection against deflation.

8. It’s Hard to Predict an I Bond’s Return Over Time

To maximize your return on investment when purchasing I Bonds, it is essential to understand the differences between the two interest rate components of the bond, and how they can play out over time.

I Bonds offer a fixed interest rate, which remains the same for the life of the bond, and the inflation-protection component, which adjusts with changes in inflation rates twice per year.

So if you buy an I Bond, the composite rate would be the same for the first six months after the issue date. After that, your rate would adjust with the current inflation rate. If inflation goes up, so would the rate of return. If inflation goes down, the bond’s inflation rate would likewise decrease.

And if you hold onto your I Bond for 10, 20, or 30 years, you would likely see some years with higher inflation rates and some years with lower inflation rates.

9. You Must Meet Certain Criteria to Buy an I Bond

To be eligible to buy I Bonds you must be:

•   A United States citizen, no matter where you live,

•   A United States resident, or

•   A civilian employee of the United States, no matter where you live.

Also, investors can only purchase I Bonds with U.S. funds. You cannot buy them with foreign currency.

The Takeaway

If you’re looking for a generally safe and reliable investment option, I Bonds may be worth considering. They offer tax breaks and other benefits that can make them a low- risk choice for your long-term savings goals. That said, because I Bonds come with a composite rate of return, it’s hard to predict how much your money will actually earn over time.

With I Bonds, your principal is guaranteed. If you buy a $1,000 I Bond, no matter what happens, you will get your $1,000 back.

If you’re interested in savings vehicles, there are alternatives to government bonds, including savings accounts with a higher APY (annual percentage yield). By exploring your options, you can choose the best option — or options — for you.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

---

Photo credit: iStock/Bilgehan Tuzcu

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.

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©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.

4.60% APY
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.

SOBK-Q224-1837041

Read more

If you’re trying to save some money, trimming some discretionary spending categories from your budget can be a good way to start.

But it isn’t necessarily the only or best way to save — especially if reducing or removing things like streaming services, concerts, or monthly massages from your budget makes it harder to stick to your plan.

Instead, it may make sense to track where your money is going for a few weeks and then take a look at all your spending categories to determine which cuts could have the biggest impact.

What Are Spending Categories?

Spending categories can help you group similar expenses together to better organize your budget. They can come in handy when you’re laying out your spending priorities, deciding how much money to allot toward various wants and needs, and determining whether an expense is essential or nonessential.

Many of the budgets you’ll see online use pretty much the same spending categories, such as housing, transportation, utilities, food, childcare, and entertainment. But you may find it’s more useful to track your spending for a while with a money tracker, and then create some of your own categories. You may choose to drill down to specific bills or go broader, breaking down your budget into just the basics.

By personalizing your spending categories, you may be able to put together a budget that’s more manageable — and, therefore, one you’re more likely to stay with.

How Do Spending Categories Work?

To customize your spending categories, it can help to gather as much information as possible about where your money is actually going.

You can start by looking at old bank and credit card statements to get a good picture of past spending. Your bigger spending categories should be easier to figure out. Those bills are often due on the same day every month and are usually about the same amount. But you’ll also want to keep an eye out for expenses that come just once or a few times a year (such as taxes, vet bills, etc.). And, if you use cash frequently, you’ll want to determine where that money went, too.

A tracking app can help you grasp the hard truth about your spending as you move forward. That cute plant you bought for your windowsill? Pitching in for a co-worker’s going-away gift? Those little splurges can add up before you know it.

Once your spending picture comes into focus, you can divide your expenses into useful personal budget categories, and start thinking about what you might be able to trim or cut out altogether.


💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

Examples of Spending Categories

Although it can be effective to organize your spending categories in a way that’s unique to you, there are a few basic classifications that can work for most households when making a budget: They include:

Essential Spending

•   Housing: This category could include your rent or mortgage payment, property taxes, homeowners or renters insurance, HOA fees, etc.

•   Utilities: You could limit this to basic services like gas, electricity, and water, or you might decide to include your cell phone service, cable, and WiFi costs.

•   Food: This amount could be limited to what you spend on groceries every month, or it could include your at-home and away-from-home food costs.

•   Transportation: Your car payment could go in this category, along with fuel costs, parking fees, car maintenance, car insurance, public transportation, and DMV fees. You could also include the cost of Uber rides.

•   Childcare: If you need childcare while you work, this cost would be considered necessary spending. If it’s for a night out, you may want to move it to the entertainment or personal care category.

•   Medical Costs and Health Care: This could include your health insurance premiums, insurance co-pays and prescription costs, vision and dental care, etc.

•   Clothing: Clothing is a must-have, of course, but with limits. You may want to put impulse items in a separate category as a nonessential or discretionary expense.

Non-essential Spending

•   Travel: This category would be for any travel that isn’t work-related, whether it’s a road trip or a vacation in Paris.

•   Entertainment: You could get pretty broad in this category, but anything from streaming services and videogames to concerts and plays could go here.

•   Personal: This might be your category for things like salon visits, your gym membership, and clothes and accessories that are more of a want than a need.

•   Gifts: If you’re a generous gift-giver, you may find you need a separate category for these expenses.

Other Spending

•   Savings and investments: Though it isn’t “essential” for day-to-day life, putting money aside for long- and short-term goals is a must for most budgets.

•   Emergency fund: This will be your go-to for unexpected car repairs, home repairs, or medical bills.

•   Debt repayment: Student loan payments, credit card debt, and other balances you’re trying to pay off could fit in this category.

Pros and Cons of Spending Categories

The idea of making a budget can be daunting, particularly if you’re trying to fit your needs and wants into spending categories that aren’t suited to how you live. Here are some pros and cons to using categories for spending that might keep you motivated and help you avoid potential budgeting pitfalls.

Pros

•   More control: Creating a budget with spending categories that match your lifestyle can help you put your money toward things that really matter to you.

•   Less stress: If you’re living paycheck to paycheck even though you know your income is sufficient to cover your needs, a budget with realistic spending categories can help you see where your money is going.

•   Better planning: Whether you’re trying to save for a vacation, wedding, house, retirement, or all of the above, including those goals in your spending categories will help ensure they get your attention.

Cons

•   May feel limiting: Working with a budget can feel restrictive, especially if you’ve been winging it for a while or aren’t including enough discretionary spending.

•   Time consuming: It might take some trial and error to find a budget system that works for you. And if you’re budgeting as a couple, you’ll likely have to work out some compromises when determining your spending categories.

•   Requires maintenance: Budgeting isn’t a one and done. You’ll be more likely to succeed if you consistently track your spending to make sure you’re hitting your goals.

Common Spending Categories to Cut First

Often when you see or hear budgeting advice, it tends to focus on cutting back on small extras — $6 daily lattes at your favorite café, for example, or those weekly Happy Meals for the kids. Some other top spending categories that traditionally are among the first to hit the chopping block include:

•   Gym memberships

•   Dining out

•   Subscription services you don’t use anymore

•   Cable

•   Personal care services you can do at home for less, such as manicures and pedicures

•   Alcoholic beverages

•   Cigarettes and vaping products

•   Vacations

But it can also be useful to review, and potentially cut back on, how much you’re budgeting for basic living expenses, such as:

•   Clothing and shoes

•   Utility bills

•   Groceries

•   Insurance

•   Cars

•   Cellphones and computers

•   Rent

Tips for Customizing Your Spending Categories

As you create your spending plan, keep in mind that it doesn’t have to be like anyone else’s. If you track your expenses and use that information to create your personalized budget, you may have a better chance of building a plan you can stick with.

Here are some more steps to consider as you get started:

•   Be realistic. It may take a while to get to your goal, but doing even a little bit consistently can make a difference. Know yourself and do what you can.

•   Don’t forget irregular expenses. Bills that you pay every month can be easy to remember. (You might even put them on autopay to make things more convenient.) But infrequent expenses such as tax bills can get away from you if you don’t include them in your spending categories.

•   Avoid spending more than you have. Knowing how much you’ll have left after taxes each month is an important part of successful planning. An emergency fund can help you stay on track when unexpected expenses pop up.

•   Leave room for fun. Eliminating date nights and small splurges completely could make it much harder to stay with your plan.

•   Pay yourself. Make saving and investing goals a separate spending category.

•   Find a budgeting method that works for you. Whether it’s the popular 50/30/20 budget — which divides your after-tax income into needs, wants, and savings — or a detailed spending breakdown with multiple categories, try various budgeting methods until you find one that motivates you.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

Want to save some money but know you need to make some changes? Monitoring where your money is going every month can help you create a spending plan with categories that are customized to your needs, wants, and goals. A plan that’s realistic, but not too restrictive, can give you the kind of control and motivation you need to get and stay on track financially.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

With SoFi, you can keep tabs on how your money comes and goes.

FAQ

What are the four main categories in a budget?

The four main spending categories for most budgets are housing, food, utilities, and transportation. Once you’ve established how much you’ll need to cover these costs, you can move on to planning for other expenses.

What is the 50/30/20 rule of budgeting?

The 50/30/20 rule is a budgeting method that allocates your take-home income to three main spending categories: needs or essentials (50%), wants or nonessentials (30%), and saving or financial goals (20%).

What are the four characteristics of a successful budget?

A successful budget usually includes accurate income and spending projections, realistic and personalized spending categories, consistent and frequent check-ins, and solid savings goals.

---

Photo credit: iStock/mapodile

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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.

SORL0324011

Read more

Clothing is an often overlooked expense when planning a budget, but pretty much everyone has to spend some money on clothes for work, off hours, and social occasions. Whether you are a trial attorney who needs a wardrobe full of quality suits or a landscaper who gets good and muddy, there are ways to buy clothing without spending a fortune.

Here, learn what factors go into retail pricing, where to buy quality clothes, and how to snag some bargains.

Understand What Goes Into Retail Pricing

Fashion brands establish pricing on a cost-per-unit basis. The final retail price is set by factoring in various expenses and business strategies, such as manufacturing and material costs and marketing and branding expenses.

Manufacturing Costs

The cost of raw materials, labor, packaging, and shipping are obvious factors that determine the price of clothing. But pricing is more nuanced than that. Popular brands or high-end brand names will set higher prices for their products on the assumption that they offer higher quality and better designs. There are also marketing costs to consider.

Brand Reputation

Whether a brand is perceived as a luxury brand, like Versace, or a value brand, like those sold at big box stores, will play a large part in pricing. For example, LuluLemon is a popular, in-demand brand that can price its clothing at the higher end of the scale. Sometimes a popular in-demand brand will have to slash its prices because it no longer holds the prestige it once did.

Supply and Demand

Supply and demand is a huge factor affecting the final price of a product. If a style, product, or brand is in demand, retailers can mark up the prices substantially. The fact that there is not enough to go around means people will likely pay more. (Inflation can be part of this equation, too.)

However, if the supply exceeds demand, retailers will have to drop the price to try to encourage sales so they are not left with inventory they cannot sell.

The Distribution Chain

Another factor in the price of clothing is the distribution chain. Some brands manufacture their own clothing and sell exclusively through their own retail outlets, which can help them keep the price lower. Warby Parker is an example of a retail brand that sells exclusively through their own retail outlets and website.

This business model means fewer add-on costs for the consumer. However, most brands sell through selected independent retailers who add on their own margin. Retailers set the final price by implementing their own desired markups, as well as any subsequent promotions and discounts to ensure they aren’t left with inventory.


💡 Quick Tip: Online tools make tracking your spending a breeze: You can easily set up budgets, then get instant updates on your progress, spot upcoming bills, analyze your spending habits, and more.

Seasonality

Some fashions are in demand for a season only and can be priced high until they lose their popularity. At that point, the price will drop or clothes are sold in a clearance sale as retailers try to get rid of old inventory.

You can save money by buying clothes in the off-season or when they are sold on clearance. There are also other ways to make sure you’re not blowing all of your budget on clothes.

Make Use of Coupons

Coupons are a sales strategy for retailers, but they also benefit the consumer. Consumers can shop online for less using coupons and other sales discounts. The buyer inputs a coupon code when they check out, and that code initiates a discount on the price.

Coupons can be found on many websites such as Saving Says, RetailMeNot, and SlickDeals. Also, many brands offer a discount if you sign up for their email list.

Buy Clothing from Consignment Stores and Thrift Shops

Buying second-hand clothes is one way to find quality clothes while sticking to a budget. Thrift shops and websites that sell pre-owned clothing are growing in popularity, particularly because of consumer interest in sustainable practices and brands that support the environment.

ThredUp is a popular online consignment and thrift store where consumers can buy and sell high-quality secondhand clothes. Other ideas for where to buy good quality clothes for less include ASOS Marketplace, Buffalo Exchange, Depop, Etsy, Poshmark, and Vinted.

Recommended: Guide to Selling Used Items

Buy During the Off-Season

Avoid buying on impulse by purchasing clothing in the off-season when you can find quality items on sale. Retailers want to get rid of stock when products are not in season. For example, few people are looking to buy ski gear in the height of spring or summer. Because there may be more supply than demand for ski gear at that time, retailers will reduce the price and sell the clothing at a discount.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Look for Clearance Sales

Fashion trends typically last one season, and then new styles and products appear on the market. Retailers may find themselves with too much inventory going into a new season. To sell the inventory and not lose too much money, they will sell items in clearance sales, often with slashed prices.

Also, certain retailers are known for having regular sales cycles, such as the Gap and Old Navy. These can be good resources for where to buy good quality clothes on sale.

Consider Alternative Fabrics and Materials

Why does one t-shirt cost $50 and another $15? It could be because the $50 t-shirt has better quality fabric. Similarly, a pair of boots made of leather will be more expensive than a pair made of synthetic leather. In some cases, you might pay more for an item of clothing made of more durable or breathable materials. Investment pieces may be made of finer materials and crafted with more care to last longer.

However, if an item is serving a short-term fashion need, the quality of materials may be less important.

Also, less pricey synthetic materials may get a bad rap. For example, faux leather may be considered an unsuitable material for a shoe because it is unbreathable and less durable. Polyester is often compared to silk and is lambasted for not being “natural.” However, faux leather footwear may appeal to vegans, and polyester blouses last a lot longer than their silk counterparts. So, don’t discount alternatives.

Recommended: High-Paying Vocational Trade Jobs

See Before You Buy

If you do opt for the less expensive option, you might want to see the item before you buy it. If the item is too cheap and flimsy, it won’t last long. Check the seams and the hems to see if the stitching is acceptable, and check that the zip works. Buying a reasonably priced item of clothing is one thing, but there is such a thing as too cheap.”

Buy Less, Buy Better

Buying fewer clothes will save you money, so you might think about items to save up for, perhaps one or two quality pieces that will last the test of time. You can pair those quality and timeless pieces with other less expensive items. For example, a couple of quality suits for work can be paired with a number of blouses or shirts that come from a mid-range retailer. You can also build a wardrobe based on a basic color, like black or blue, so that all of your clothes can be mixed and matched.

Note: Also remember to note care labels when purchasing clothes. Those that say “Dry clean only” mean they will cost you more over their life in cleaning than those that can go in the washer or be hand-laundered at home.

Recommended Brands

Some mid-price quality fashion brands recommended by experts are COS, Everlane, H&M, Land’s End, LL Bean, and Uniqlo.

The Takeaway

Dressing well does not have to be a wallet-busting affair if you know where to buy quality clothes and which strategies to follow. In some cases, it is better to pay more for an item that will be durable and serve its purpose rather than to buy something cheap and experience frustration when it doesn’t wear well. However, even then, you can find discounts by using coupons, searching for clearance sales, buying second hand, or buying off season.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Where to buy cheap good quality clothes?

Consignment stores and thrift stores are good places to buy good quality clothes for cheap. If you want to buy new, popular mid-range fashion brands are COS, Everlane, H&M, Land’s End, LL Bean, and Uniqlo.

How do I not spend all my money on clothes?

Avoid spending too much money on clothes by setting a budget and sticking to it. Also, don’t buy on impulse and focus on buying a few classic, high-quality pieces to match with less expensive tops and accessories. Build your wardrobe around a color so that you can mix and match and get more wear out of your clothes.

How can I be fashionable on a low budget?

The trick to being fashionable on a low budget is to choose a few quality items that you can pair with inexpensive, trendier items.

---

Photo credit: iStock/pixelfit

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

SORL0324012

Read more

When you think about the cars wealthy Americans choose to drive (or choose to have someone drive for them), you probably imagine customized Bentleys, Rolls Royces, Ferraris, and Lamborghinis. And in some cases, you’d be right. Those luxury car brands — along with BMW, Mercedes-Benz, and Audi — are popular with the rich and very rich in the U.S. and worldwide.

But they aren’t the car brands of choice for all high-income consumers. Some of the wealthiest people in the U.S. are driving vehicles from manufacturers that might surprise you, including Fords, Toyotas, and Hondas.

Read on for a look at the surprising car brands that rich Americans are buying and why.

What Is a Luxury or “Rich People” Car Brand?

Brands that are popular with wealthier car buyers typically have a reputation for superior performance, craftsmanship, high-quality materials (inside and out), and advanced technology. They also may have extra amenities to make them more comfortable and attractive, and to provide a better driving experience.

Luxury car brands also generally offer a higher level of customer perks, such as extended warranties, complementary maintenance, roadside assistance, and concierge services.

Of course, cars from more prestigious brands have higher price tags. New cars range from $40,000 to more than $100,000 — and over $500,000 for a higher-end brand like Rolls-Royce. Before you settle on any particular brand or model, you’ll want to determine how much you should spend on a car.


💡 Quick Tip: When you have questions about what you can and can’t afford, a money tracker app can show you the answer. With no guilt trip or hourly fee.

Examples of Popular Luxury Car Brands

Several long-standing carmakers — and a few newer brands — are known to appeal to high-earning drivers:

•   Acura A division of Honda, Acura made the first true Japanese luxury car sold in America. Like Genesis below, Acura is known for offering buyers more bang for their buck.

•   Audi The German car manufacturer began gaining popularity stateside in the 1970s, and grabbed even more fans in 1980 when it unveiled the innovative Quattro, an all-wheel-drive sport coupe.

•   BMW Another German company, BMW sold 362,244 vehicles in 2023, setting a new annual record for the brand in the U.S. BMW is the best-selling luxury auto worldwide.

•   Cadillac Cadillac is America’s most prestigious domestic luxury automaker. Owned by General Motors, the brand has long been a favorite of older drivers. Models that appeal to younger buyers include its Escalade SUV and CTS sport sedan.

•   Genesis Genesis is a newer car brand (launched in 2009) that built its reputation by offering luxury at a competitive price. Its parent company is the Korean automaker Hyundai.

•   Land Rover The Land Rover brand, which began in England but now is owned by the Indian automaker Tata Motors, sells only SUVs. Its iconic Range Rover debuted in America in 1989.

•   Lexus Owned by the Japanese automaker Toyota, the carmaker was named the most reliable of all car brands in 2023 and 2024 by J.D. Power Associates. Lexus is known for its upscale designs, comfortable cabins, and a smooth, quiet ride.

•   Mercedes-Benz The German company, which has been making cars for more than 100 years, is known for its loyal fan base, attention to detail, and focus on customer service and comfort.

•   Tesla Tesla Motors is an American car brand that makes vehicles that run on electricity.

What Car Brands Are Rich Americans Choosing?

Luxury brands like BMW, Mercedes-Benz, and Lexus are among the most popular with wealthy American car shoppers who are looking for reliability, prestige, extra amenities, comfort, and top customer service. And Teslas, which range in price from about $43,000 to well over $100,000, remain among the top-selling electric vehicles in the U.S.

But the line between luxury and mainstream brands is blurring, according to the car-shopping website Edmunds. Carmakers like Ford, Volkswagen, and Mazda are adding more upgraded models to their lineups, while high-end makers are offering smaller and more affordable cars.

And then there’s a much-publicized report from Experian Automotive, which found more than 60% of Americans who earn $250,000 or more aren’t sticking strictly to luxury brands. When Experian crunched the numbers in their huge database to see what wealthier folks choose to drive, it turned out there were three Honda models, a Toyota, and a Volkswagen on their Top 10 list.

Rich and famous car buyers also tend to like their pickup trucks. And though the Tesla Cybertruck is the new celeb must-have, you might also see photos of Dwayne “The Rock” Johnson or Lady Gaga driving their Ford F150s, Sean Penn gassing up his Nissan Titan, or Ben Affleck in his Dodge Ram 2500.

Recommended: Car Value vs Truck Value

Pros and Cons of Luxury Car Brands

There are many reasons why people long to drive a luxury car — from the prestige to the performance to the high-end amenities and potential add-ons. But there are pros and cons to buying the kind of cars rich people often own:

Pros

•   High-end brands are generally known for their reliability and advanced technology.

•   Because luxury cars can quickly depreciate in value, used models can be found at bargain prices — especially if you’re buying a high-mileage car.

•   Luxury car brands often offer a more comprehensive warranty and other customer perks.

Cons

•   The cost of a high-end car can get in the way of important financial goals or keep you from enjoying things you care about, like good food and wine.

•   Luxury models tend to depreciate in value much faster than mainstream cars.

•   A luxury car can cost more to insure, and when the warranty runs out, it will likely cost more to repair.

Recommended: Should I Buy a New or Used Car?

Popular Alternatives to Rich Car Brands

While you’re saving up for a car, and before deciding which car brand you hope to purchase, take time to prioritize what you want from your ride. You may find you can get what you’re looking for without paying luxury prices. For example…

•   Safety First According to the Insurance Institute for Highway Safety, 2024’s safest cars include models from Kia, Honda, Mazda, Toyota, Nissan, and Subaru.

•   Luxe Interior U.S. News & World Report named Volvo, Chevrolet, Ford, Hyundai, GMC, Kia, Jeep, and Honda among the car brands with the nicest interiors in 2023.

•   Designer Chassis The Toyota Prius, Honda Accord, Hyundai Santa Cruz, Kia Soul and EV6, Jeep Wrangler, Mazda 3, and Ram 1500 all made U.S. News & World Report’s list of the best looking cars of 2023.

•   Most Reliable When Consumer Reports road-tested and ranked 34 car brands this year, the top 10 included Subaru (#2), Honda (#4), Mini (#6), Kia (#7), Mazda (#8), Toyota (#9), and Hyundai (#10).

•   Biggest Bang for Your Buck Honda and Kia had the most models on U.S. News & World Report’s list of the “2024 Best Cars for the Money.”

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Tips for Choosing a Car Brand

If you’re set on buying a luxury car, or if you’re still trying to decide which brand or model is right for you, here are a few things to consider:

•   Does the luxury car brand you’re looking at offer something you can’t get from a mainstream carmaker? It can help to test-drive cars from a few different brands to compare the features that are most important to you. You might end up confirming your decision to go with the luxury brand. Or you may find a mainstream model that offers high-end comfort and performance but at a more competitive price.

•   Do you plan to hold onto the car for a while, or will you sell it in a few years? Some luxury brands and models tend to lose value more quickly than others. (Here’s how to spot a good car-value estimate.) So you may want to research your top picks before you sign on the dealer’s dotted line and drive your new car off the lot.

•   Could you be satisfied with a used car from your favorite luxury brand? Because luxury brands tend to depreciate faster, you may be able to find a used model that’s much more affordable than buying new.

•   Can you afford it? Before you fall in love with that pricey BMW or Benz, you may want to take a look at another “b” word: your budget. Using a free budget app can help you figure out how much you can spend on your down payment, monthly car payment, and auto insurance costs, and if those costs will mesh with your other expenses and financial goals.

The Takeaway

Purchasing a luxury car is mostly an emotional decision: You buy one because you want it, not because you need it to get around.

If you’re rich, and you can afford to pay for the perks and prestige of an upscale brand, you may not give the cost a second thought. But even some wealthier car buyers are choosing mainstream brands, perhaps because they’ve found a model they want or they don’t care about the extras or the label.

How can SoFi help? Just as with any major purchase, it’s a good idea to do some research before you buy your next car. SoFi Relay can help you track your spending, monitor your credit, build a budget, and more. Once you run the numbers and know where you stand, you can feel more confident about your purchase, no matter what car you decide to buy.

See exactly how your money comes and goes at a glance.

FAQ

Which car brand is driven most by millionaires?

Though wealthy consumers are known for buying luxury car brands like Rolls-Royce, Mercedes-Benz, Jaguar, or Porsche, you might also find them driving mainstream brands such as Honda, Toyota, and Ford.

What is the most common car for rich people?

BMW is the best-selling luxury carmaker in the world.

What percentage of millionaires choose to buy used cars rather than new cars?

In their 2010 book The Millionaire Next Door, authors Thomas J. Stanley and William D. Danko state that nearly 37% of the millionaires they surveyed reported buying used cars. But in some cases, a millionaire’s “used car” may be one of several vehicles the driver owns, or even part of a collection of classic or vintage autos.

---

Photo credit: iStock/mevans

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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.

SORL0324013

Read more

The average barber’s salary is $52,123 a year, according to the latest data from ZipRecruiter. But barber salaries can range from about $17,500 to more than $86,000.

How much money you can make as a barber may depend on several factors, including education, certifications, experience, and where you’re located. Here’s a look at what barbers do and how they get paid.

What Are Barbers?

A barber’s main job is to cut and style hair, usually for male clients. Barbers also may trim or shave facial hair, fit hairpieces, and provide hair-coloring services.

To become a barber, you must obtain a license in the state where you plan to work. Licensing qualifications can vary, but you’ll likely have to meet a minimum age requirement, have a high school diploma or equivalent, and have graduated from a state-licensed barber program. You may also have to pass a state licensing exam.

A barbershop often doubles as a social hub where men can go to swap stories and catch up on the latest news while they enjoy a little personal care. If mingling with clients all day isn’t your thing, you may want to check out jobs with less human interaction.


💡 Quick Tip: Online tools make tracking your spending a breeze: You can easily set up budgets, then get instant updates on your progress, spot upcoming bills, analyze your spending habits, and more.

How Much Do Starting Barbers Make?

An entry-level salary for a barber can range from $8.41 to $41.35 or more an hour, according to ZipRecruiter. Brand-new barbers tend to earn the highest hourly wages in New Jersey, Wyoming, and Wisconsin.

Recommended: What Trade Jobs Make the Most Money?

What Salary Can a Barber Expect to Make?

Barber jobs in the U.S. can pay anywhere from $17,500 to $86,000 or more, according to ZipRecruiter data. How much you can expect to make may depend on several factors, including how many hours you work and how many clients you serve; if you live in a region with more competitive pay; and if you work on commission, rent a chair at a shop, or own your own barbershop.

Here’s a look at the average barber’s income by state.

State	Average Salary for a Barber
Alabama	$49,572
Alaska	$53,033
Arizona	$50,968
Arkansas	$40,073
California	$46,632
Colorado	$50,860
Connecticut	$47,890
Delaware	$48,177
Florida	$40,869
Georgia	$46,181
Hawaii	$51,460
Idaho	$44,515
Illinois	$46,962
Indiana	$52,044
Iowa	$47,980
Kansas	$44,493
Kentucky	$42,214
Louisiana	$44,134
Maine	$45,672
Maryland	$46,693
Massachusetts	$53,224
Michigan	$42,137
Minnesota	$50,551
Mississippi	$47,266
Missouri	$45,239
Montana	$50,200
Nebraska	$45,804
Nevada	$50,144
New Hampshire	$54,449
New Jersey	$53,861
New Mexico	$50,829
New York	$60,841
North Carolina	$43,866
North Dakota	$52,473
Ohio	$49,290
Oklahoma	$44,358
Oregon	$52,559
Pennsylvania	$55,714
Rhode Island	$48,681
South Carolina	$44,791
South Dakota	$49,593
Tennessee	$47,059
Texas	$44,130
Utah	$46,849
Vermont	$60,007
Virginia	$47,628
Washington	$53,744
West Virginia	$43,029
Wisconsin	$52,882
Wyoming	$53,101

Source: ZipRecruiter

Recommended: Highest Paying Jobs by State

Barber Job Considerations for Pay and Benefits

A barber’s compensation is traditionally set up in one of two ways:

•   Renting a chair or booth: Barbers who rent a chair at a barbershop pay the owner or franchise a fee for the space where they work, but they keep the rest of what they earn. This can give barbers more control over their work schedule and the services they choose to offer.

•   Earning a commission: Barbers who work on commission are paid a percentage of what they earn (typically between 40% to 70%). Or they could receive a predetermined hourly wage or salary plus a bonus commission. New barbers may choose to work a few years on commission to gain knowledge of how the business works and build a clientele, and then switch to renting a chair.

In addition, barbers can earn tips, usually about 15% to 20% of the price of a haircut or other service provided. Online tools like a money tracker app can help you keep track of your spending and saving from month to month.

Pros and Cons of a Barber’s Salary

As with any job, there are pros and cons to working as a barber, including:

Pros

•   Attending a barber school can take less time (usually a year or less) and is far less expensive than getting a college degree. Tuition is about $14,000 on average (not including books and supplies), but costs can range from about $4,000 to $25,000, depending on the program. Financial assistance may be available through federal or private student loans, grants, and scholarships.

•   Job prospects for barbers are good. According to the U.S. Bureau of Labor Statistics, employment for barbers is projected to grow by 7% over the next decade, which is faster than the average for all occupations.

•   Popular barbers often can work the hours they choose while serving clients who appreciate their creativity — and reward them with their loyalty and generous tips. If you like the idea of becoming an entrepreneur, you may even decide to start your own business someday.

Cons

•   It can take time to build a reputation and a reliable list of repeat customers. In the meantime, you may experience some income instability, and tips may vary from one client to the next. This could make budgeting and spending difficult at times.

•   As a barber, you may not receive the same employee benefits that other careers generally offer, including health insurance, a 401(k) or similar retirement plan, paid sick leave, or vacation pay. You might have to work nights, weekends, or a fluctuating schedule that makes it hard to plan your social life. And you may have to pay for your own work tools.

•   You might also want to consider how long your career as a barber might last. Though it can be a fulfilling job, the work can be hard on your neck, back, hands, and feet.


💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

The Takeaway

Your income potential as a barber will likely depend on where you work and the loyalty of your clientele. If you’re a creative and skilled stylist who likes keeping up with the latest trends, and you have good social skills, being a barber could be a great career choice. It also can help to have some business skills, as you may face unique challenges when it comes to managing your income, tracking your cash flow, planning for retirement, and paying taxes.

FAQ

Can you make $100,000 a year as a barber?

Once you establish yourself and build a solid clientele, you may be able to earn six figures as a barber. Your success, though, will likely depend on how in demand you are, how willing you are to travel or work long hours, the clientele you cater to, and if you own your own shop.

Do people like being a barber?

Though barbering can be hard work, barbers on Payscale.com gave their job an average of 4.2 stars out of 5. If cutting hair and providing other personal care services is your passion — and you’d enjoy building a bond with your clients — you could find a career as a barber is right for you.

Is it hard to get hired as a barber?

According to the U.S. Bureau of Labor Statistics, the job outlook for barbers should be solid for at least the next decade. If you get the proper training, become a licensed barber, and can demonstrate that you have the skills and demeanor for the job, it shouldn’t be too hard to find work.

---

Photo credit: iStock/dusanpetkovic

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL0124043

Read more