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A senior checking account usually comes with unique perks designed to provide support to senior citizens. As we get older our needs change, including our financial needs. That’s why some financial institutions offer these accounts, known as senior checking accounts.

So what exactly is a senior checking account? What perks does it offer and what are the possible downsides? And is it worth it vs. a regular checking account . We’ll fill you in on all of that, plus how to find a senior citizen checking account if you think it’s right for you.

How Does a Senior Checking Account Work?

A checking account, often simply referred to as a bank account, is a type of deposit account that gives consumers a place to safely store their money while still being able to easily access it and spend it. With a checking account, it’s possible to make purchases or payments with a debit card or a check.

So, what is a senior checking account then? A senior checking account functions the same as a normal checking account, but is designed for consumers of a certain age (usually in retirement).

What Is the Difference Between a Senior Checking Account and a Normal Checking Account?

Overall, senior checking accounts serve the same purpose as a normal checking account. However, a senior checking account may have certain age requirements and can come with unique benefits and senior discounts designed to provide support to senior citizens. Some of these benefits may include:

•   Free checks

•   No minimum balance requirement

•   No monthly service charges

•   No transaction fees

•   No statement processing fees

•   Waived CD penalties

These types of perks make it easier for senior citizens to manage their financial life.

Pros of a Senior Checking Account

A senior checking account enjoys the same advantages as a normal checking account, as well as additional perks.

•   Unique perks. Eligible account holders can enjoy special perks like free checks, and no minimum balance requirement, monthly service charges, or transaction fees.

•   Earn interest. It’s not guaranteed everywhere, but some senior checking accounts allow account holders to earn interest.

•   Secure. Thanks to FDIC insurance, funds stored in a checking account (up to a certain amount) are safe and secure.

•   Accessible. It’s super easy to access money stored in a checking account. Account holders can make as many withdrawals as they like in a variety of different ways including by visiting a bank, using a debit card at an ATM, writing a check, and making an online bank transfer.

•   Debit card. Typically, checking accounts come with debit cards which make it easy to pay for purchases without having cash on hand.

•   Direct deposits. Instead of waiting for paper checks in the mail, account holders can set up convenient direct deposits.

Cons of a Senior Checking Account

Of course, there are also disadvantages associated with senior checking accounts. Here are some to mull over:

•   Age requirements. Senior checking accounts often have age requirements, such as age 55 and over. Some banks require age 62 and up. It can be challenging to find one if below a certain age.

•   No interest. As briefly mentioned above, it is possible to earn interest with a checking account, but it’s fairly rare. Keeping money in a savings account can make it easier to earn interest.

•   Fees. While senior checking accounts tend to charge fewer or lower fees, they can come with account management fees, overdraft fees, and other fees.

•   Minimum balance. Again, some senior checking accounts don’t require a minimum balance, but some may.

How Can I Apply for a Senior Citizen Checking Account?

The process of opening a checking account for senior citizens looks the same as opening a normal checking account, but the applicant may be required to prove they are a certain age to be eligible.

While all banks and credit unions will have their own unique process for opening an account, consumers can generally expect to take the following steps to open a senior citizen checking account.

•   Complete the application. During the application process it is typical to provide identity and contact information during this stage.

•   Designate beneficiaries. Once their application is approved, they will need to choose a beneficiary for their account in the event they pass away.

•   Deposit funds. As briefly noted, some senior citizen checking accounts will require a minimum account balance, so the applicant may need to deposit that amount to open their account.

Is a Senior Checking Account Worth It Over a Normal Checking Account?

If someone is old enough to qualify for a senior checking account, it is likely worth it for them to choose this type of deposit account over a normal checking account. Both senior checking accounts and normal checking accounts share the same disadvantages, but senior checking accounts come with unique perks that regular checking accounts often don’t include, such as free checks and minimal fees.

Things to Consider When Looking for a Senior Citizen Checking Account

Before opening a senior checking account, here are a few helpful things to keep in mind.

•   Convenience. Scope out the bank’s features to make sure it’s super simple to use. Is it also possible to have a savings account at the bank or credit union offering a senior citizen checking account? Having both a checking account and savings account in one place is usually easier. Do they have a bank location nearby? Is their website a breeze to use? Keep convenience in mind when choosing where to open a new senior citizen checking account.

•   Bank type. Everyone has their preferences when it comes to banking. Take some time to consider if a traditional bank, credit union, or online bank is the best fit.

•   Features. Compare a few different senior citizen checking account options. What perks do they offer? Do they have a mobile app? What other financial products and tools do they offer?

•   Fees. Senior citizen checking accounts tend to have fewer fees than typical checking accounts. Still, it’s worth comparing the different fees each account charges.

The Takeaway

If you or a loved one is 55 or older, a senior bank account can offer unique advantages compared to typical checking accounts. Fees can be lower, you might earn a bit of interest, and checks may be free. All in all, if someone is old enough to qualify, they can likely enjoy a lot more perks with a senior citizen checking account.

Looking for a new bank with a lot of perks? Check out SoFi. If you open an online bank account with direct deposit, you’ll earn a terrific APY and pay no account fees.

FAQ

What is senior banking?

Senior bank accounts function the same way normal banking does. The only difference between banking products and services designed for senior citizens is that they offer unique perks suited for their life stage — such as not requiring a minimum account balance.

Which banks have the best checking accounts?

Getting the best checking account depends on the features that matter most to you. That said, online banks tend to have the same benefits since they don’t need to pay for bricks and mortar locations and pass the savings along to their customers with fewer fees and better APYs. Similarly, because credit unions are not-for-profit organizations owned by their members, they tend to pass their profits off to customers in the forms of lower fees and higher interest rates.

What is the age restriction for senior checking accounts?

The age restrictions for senior bank accounts depend on each bank and credit union that offers this type of account. They often range from a minimum age requirement of 55 to 62.

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

SoFi members with direct deposit 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.

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.

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.

Photo credit: iStock/Deagreez
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Global inflation and supply chain issues have derailed a lot of people’s post-COVID plans, including renovating or remodeling their homes. The cost of remodeling and renovating has risen partly because there’s a shortage of supplies, so retailers have raised prices on the supplies and materials they do have. Plus, the Federal Reserve Bank has raised interest rates in an effort to slow inflation, meaning home improvement loans cost more. This doesn’t necessarily mean homeowners must put off renovations, but it does mean that sticking to your home reno budget may require more creativity and planning.

How to Keep Inflation From Ruining Your Home Renovation Budget

Here are some strategies for keeping inflation from blowing your home reno budget:

1. Understand Renovation vs Remodel

People use the terms renovation and remodel interchangeably, but they are not the same thing. A renovation is fixing up what’s already there; a remodel is changing what’s there. That may mean expanding a room, or converting a pantry to a breakfast nook. Remodeling is usually more expensive because it is more involved and can include the need for permits, whereas renovations are often smaller projects that you can sometimes DIY. Before getting started with either, it can be smart to budget for the level of transformation you can reasonably afford in this economic climate.

2. Invest Wisely

One thing experts agree on is that the best home renovation or remodel investments are projects that can raise the value of a home at resale. Some of these projects include a kitchen or bathroom makeover, expanding outdoor space, and even just replacing the garage door. SoFi’s home improvement ROI calculator can help you identify some of these home investment opportunities.

3. Finance Carefully

Since you’re investing in your home, especially with the idea of improving its value, it’s smart to look for the right partner to help you strategize how to finance your project. It’s possible your project may be eligible for a home equity loan where you borrow against the value of your home for funds. Another financing option is a personal loan. Unlike the home equity loan, a personal loan for home improvement projects requires no collateral.

💡 Learn more about how home improvement loans work.

4. Have a Plan

Home renovation projects notoriously run over budget. Global supply chain issues are making that even worse. Many projects must happen according to a specific sequence, like receiving a delivery of plumbing supplies and scheduling workers before you gut the bathroom. If something goes wrong with the sequencing, it might mean you lose your workers to another job that’s ready to go, or you have to pay extra to expedite shipping. These hold ups can be expensive. That’s why it’s important to plan meticulously before you begin.

5. Be Flexible

Can’t get the Italian granite you were eyeing for the kitchen counters? What about slate, which can be a fourth of the price and can look just as stunning. Or Sintered Stone? Or steel? Deciding from the beginning to be flexible on the things you can, and uncompromising only on the materials or designs that really matter to you, can save you thousands.

6. Consider High Quality Items

Because there is generally lower demand for slightly higher quality and pricier items, those appliances and materials haven’t risen as much in price . So you might have an opportunity to get something you might have considered out of your price range for about the same as the more standard one.

7. Oversee the Project

The typical contractor fee for most general contractors to oversee renovation projects is 20% of the project , so if you’re planning a $50,000 remodel and you do the contracting yourself, you could save $10,000 right off the bat. But it will be your job to source and schedule the experts you need — plumbers, electricians, etc. — and oversee the work. Just remember: It’s not uncommon to pay to have a job done twice during renovations, so it’s wise to stay on top of workers if you choose this option.

8. Do Something Yourself

Using skills you already have, or picking up a few through online videos and in-person workshops, can save you some time and money. If you decide you can do the job yourself, and it isn’t one that requires permitting and licensing, you may be happy with your results. Doing it yourself does have its risks such as not ending up with the quality you could have by using a professional. On the other hand, if you have some skills, you might do a better job than a mediocre contractor who isn’t as invested in your home as you are.

9. Vet Your Craftsman

Hiring someone who does a poor job or damages your home is a common risk of home renovation projects. Shopping for carpenters, painters, plumbers, and others solely on the basis of price can very easily lead to problems, which can require more time and investment on your part to correct. Choosing a contractor that’s skilled and reliable requires taking the time to look at portfolios, ask questions, and seek recommendations and reviews.

10. Collect a few Bids

It can take more time, but getting bids from several different companies is a smart way to help keep your renovation costs low. Not only does this type of “shopping” give you options for how much you can pay for specific tasks, but it can also give you an idea of how different contractors would approach your project.

11. Shop Wisely

It can be easy to order items online or pick up everything from your local home remodeling store, but high shipping costs and limited in-store options can actually increase your expenditures. If you’re looking to minimize costs, settling for what’s most convenient isn’t likely to help you. Instead, taking the time to shop around thoroughly and think creatively about your renovation plans can help save you a bundle.

12. Price Match

If you find an appliance online that you really love, you may want to try bringing a copy of that ad to your local retailer, and asking them to match the deal. This way you not only save yourself shipping costs, but you also get the best price for the item you prefer.

13. Try Repurposing

Before you spend money replacing what you have, consider transforming your items instead. Perhaps you could refinish or paint your kitchen cabinets instead of replacing them. Changing the hardware and interior panels are also simpler options that can reflect your style. Sometimes small changes can result in big transformations.

14. Consider Salvaged Materials

You can sometimes save big using salvaged materials. Secondhand shops like Habitat ReStores can sell old kitchen cabinets, flooring, light fixtures, plumbing fixtures, and furnishings for a fraction of the original sale price. You can even find unused paint, hardware, and art. For additional options, online sites like Craigslist and Facebook Marketplace can provide useful, previously used items as well.

15. Be Creative Side

Pinterest can be a great source of budget friendly renovation ideas. You can spend a few hundred dollars on a mason jar light fixture; or you could make your own. How about creating a room divider with used pallets? Necessity is often the mother of invention, and you may discover a creative side you didn’t know you had by looking for creative design solutions.

The Takeaway

Inflation and supply chain problems can make home renovations and remodeling on a budget much more challenging, but not impossible. If you choose the best projects for added value; plan and shop for materials and craftspeople with care; and are willing to be creative and flexible, you can wind up investing less money, time and worry.

If your home renovation budget is a tad bit short of your dream, a home improvement loan from SoFi could give you the extra boost you need. With no collateral, no fees and the opportunity for same-day funding, SoFi can help get your project up and running in no time.

Photo credit: iStock/LightFieldStudios

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.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL0622011

Sure, a budget is an important tool to help you balance your income and your spending, keep your savings on track, and help you avoid debt. But, like many good things, it sometimes goes off the rails. A person might start a budget with the best of intentions but then find it hard to stick to it. Or they might encounter an emergency expense and have a hard time getting back in the groove.

Here, you’ll learn what the common pitfalls are and how to avoid these most common budgeting mistakes so your financial life can thrive.

10 Budgeting Mistakes to Avoid

Here are 10 of the most common budget mistakes people make. Get familiar with them and try not to fall into their traps.

1. Not Having a Budget

Some people make the budget error of…not having a budget at all. Maybe it seems too hard, too time-consuming, or too boring; you’d rather be watching a hot new streaming series or playing with your dog.

Nevertheless, if you don’t create and follow a budget, you’re missing out on major benefits:

•   You may not save enough for your future

•   You may feel stressed about reaching your long-term goals

•   You might spend beyond your means, which could land you in debt and strain on your financial resources.

Recommended: Common Financial Mistakes First-Time Parents Make

2. Not Tracking Spending

Tracking your spending can be one of the more tedious tasks required for budgeting, but it’s also an incredible, truth-revealing tool. How else would you know when you are above or below your limits? You risk blowing past your limit by overspending in some categories, meaning you’ll have less (or none) for other categories. For example, overspend on eating out, and you might have less to put toward your retirement savings. Fortunately, there are an array of expense-tracking apps (many are free) that can help simplify this process.

3. Not Having Emergency Savings

Experts recommend that you save three to six months’ worth of expenses in a dedicated emergency fund. This is money you can draw on in case of emergency medical expenses and car repairs, for instance. It also provides a cash cushion should you lose your job, giving you time to get back on your feet without going into debt.

Not having an emergency fund can torpedo your budget, requiring you to draw money from other categories to cover unexpected expenses, or requiring you to take on debt.

If you don’t have a rainy day fund yet, it may be wise to set up automatic deductions monthly. Even as little as $25 can begin building a buffer. Keep your emergency cash in a separate savings account so you aren’t tempted to touch it. And if you need to dip into the account, be sure to budget additional savings until you are able to replenish it.

4. Not Considering Cheaper Alternatives

Budgeting doesn’t necessarily mean giving things up. Sometimes it can mean looking for cheaper alternatives. For example, you could swap out a pricey gym membership for one at a more budget-friendly alternative. Instead of renewing the same car insurance you’ve always had, you could shop around online for a better deal. You might even call your credit card issuer to request a lower interest rate or try to negotiate a medical bill. All of these options can free up cash in your budget that can go toward meeting other goals.

5. Thinking That You Cannot Have Fun While on a Budget

One of the reasons people don’t budget is it can feel like a real slog and a buzzkill. They assume that in order to budget successfully, they have to give up doing things they like. However, that’s not necessarily true. While a budget ensures that your necessary expenses are taken care of first, it can also provide discretionary funds that can be used however you want, from going to see a movie to booking a weekend getaway.

You may also consider making budgeting more fun by rewarding yourself when you meet certain goals. For example, you may want to treat yourself when you pay off a credit card. Just be sure you’ve already earmarked funds to pay for your reward.

6. Saving for Too Many Things Simultaneously

Another budgeting mistake involves trying to save for too many things at once. In this situation, it’s easy to stretch yourself thin. You might start to feel like you’re spinning your wheels and are unable to follow your budget.

A solution can be to narrow your focus. To prioritize your savings, first consider wants versus needs. For example, you may want to drill down on a single need, like creating an important emergency savings fund, rather than upgrading your mobile phone (which is a want, after all). Once your need is taken care of, then you can consider allocating funds for a want. Delaying gratification a bit can be a valuable tool when successfully managing your money.

7. Not Adjusting Varying Expenses Every Month

Some expenses, like rent and utility bills, are relatively fixed. Others, like how much you spend on groceries can vary from month to month. If you don’t compensate for that fluctuation, you may be making a budget mistake.

If you notice you are suddenly spending more each month in a certain category, be sure to adjust your budget accordingly, or look for ways to cut back on spending in that category. To protect yourself in times of high inflation, it can be especially important to monitor this. Your food, gas, and heating expenses may well run high for a while.

8. Not Taking Into Account One-Time Expenses

One-time expenses can be real budget busters if you don’t plan for them ahead of time. Estimate the cost of the expense, and spread out your savings over a couple of months.

For example, if you plan to attend a wedding that will cost $800, you could start saving $200 a month four months in advance so you don’t end up footing the bill all at once. Or let’s say you know you’ll be needing a set of new tires soon (currently averaging about $764 installed); start stashing away cash in advance so you don’t get hit with a major bill that sends your budget spiraling. Another category many budgeters overlook is gifts; birthday and holiday presents aren’t free, so remember to set aside funds to afford them without a hiccup.

9. Having an Unrealistic Budget

It’s easy to be optimistic and have the best intentions when you create your budget, but make sure it’s something you can realistically stick to. Otherwise, you may have a budget mistake on your hands.

You may be overly optimistic, for instance, if you allocate 20% of your take-home pay towards retirement savings. If you oversave in one area, like retirement savings, it can mean that you’ll incur credit card debt that’s hard to pay off to buy groceries. Be honest with yourself about how much you spend and how much you can save.

10. Having the Wrong Budget Method for You

There is no one-size-fits all budgeting strategy. As we mentioned above, there are a number of strategies you can use to help you build and stick to your budget. The best one is the one that works for you. Just because a budget strategy sounds good when you first learn about it or your best friend swears by it doesn’t mean it will work for you. It’s a budgeting error to cling to a system that isn’t working. If the technique you are using isn’t working, acknowledge that, and try something else.

The Takeaway

Now you know what is a common mistake made in budgeting; ten of them, in fact. By avoiding these pitfalls, you give yourself a better chance of sticking to your budget and meeting your financial goals. What’s more, you’re far less likely to be derailed by debt, whose interest payments can eat into your ability to save and manage your money.

Setting up the right bank accounts can also benefit your budget. Open a bank account online with SoFi and set up direct deposit, and you’ll be rewarded twice. Your money will earn a competitive APY, and you won’t pay any account fees. That’s a win-win that could help your money grow faster.

FAQ

What are some pitfalls of budgeting?

Budgeting pitfalls that can derail your financial goals include failing to have a budget, not tracking your expenses, forgetting to account for varying monthly expenses, and not building up an emergency fund.

What is improper budgeting?

Improper budgeting can occur if your budget is incomplete, if it’s overly ambitious (not recognizing how much you actually spend), or if you don’t update it with new sources of income or expenses.

Why do people fail in budgeting?

Your budget may fail for a variety of reasons, such as trying to achieve too ambitious or too many goals at once; not tracking your expenses; and sticking with a budgeting strategy that doesn’t fit your needs. If the latter is the case, try multiple strategies to find the one that suits you best.

Photo credit: iStock/Prostock-Studio

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.

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

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Your 40s are a pivotal point in your life. You may have a house, a family, aging parents, and a busy job by this time. College expenses for kids may be looming, as well as retirement a little farther off. Maybe you’re hatching a plan to start your own business soon or buy a beach house that’ll be your empty-nester home.

Each person will have unique financial goals in their 40s, which will depend on many factors, like lifestyle, salary, and acquired assets. Now is the perfect time to crystallize those dreams and get your money in top shape. You’re old enough to know what you want, and chances are, you have many peak earning years ahead.

Read on for financial planning tips for your 40s, including:

•   Why it’s not too late to start budgeting and saving in your 40s

•   What are the right financial goals for 40-year-olds

•   Ways to save for children’s college expenses

•   How to save for retirement

•   What financial goals you should meet in your 40s.

Why Turning 40 Is a Big Deal

Where personal finances are concerned, your 40s are a big deal. You’re most likely approaching the height of your career and earning potential. Research from the Bureau of Labor Statistics says that primetime for earnings usually hits between age 35 and 54.

But you may also have many more expenses, such as planning for college for your children, planning for retirement, and caring for aging parents. Your 40s are a complicated decade where sound financial planning is crucial for a secure future.

Why It Is Not Too Late to Start Financial Planning in Your 40s

If there is one thing that is certain in life, it is uncertainty. Things change. Many people return to school in their 40s to boost their earning potential. Some take the plunge and dive into an entrepreneurial venture. Some leave the workforce entirely to focus on raising a family.

Whatever your life brings at this stage, you still have a couple of decades to plan for the years ahead, including your retirement, so set some goals now. It’s advisable to set long-term goals (5+ years), mid-term goals (2 to 5 years), and short-term goals (1 to 2 years). Having this staggered approach can help you balance your varied aspirations. Different timelines can demand different tactics.

Financial Planning Tips in Your 40s

So how exactly can you successfully manage your money in your 40s? Here are some tips for developing a financial strategy, saving money in your 40s, and more.

Pay Off Credit Cards and High-Interest Loans

Pay off as much high-interest debt as you can. This debt, typically the kind charged on credit cards, can be a major drain on your finances. Currently, credit card interest rates hover near 20%, which can throw a wrench in your budget if you’re carrying a balance.

You don’t need to stop using plastic completely, but you do want to whittle down what you owe. Credit cards can actually boost your credit score if you use them wisely and pay off the balance each month. If you can’t easily prioritize this debt and pay it down, options include:

•   Getting a balance transfer credit card, which will allow you to pay no or low interest for a period of time and catch up on payments

•   Taking out a debt consolidation loan at a lower rate to pay off the cards

•   Talking with a low- or no-fee credit counselor for guidance.

Invest in Physical and Mental Health

Healthcare can be one of the biggest expenses a person faces, so it pays to take care of yourself. The healthier you are, the fewer services and interventions you will likely need, and the less you will pay in deductibles each year. Most importantly, your quality of life and ability to earn will be so much greater if you are physically and mentally healthy. Take steps to assess your wellness and address any issues that are brewing. Also make sure that you choose the right health insurance plan for your specific situation.

If you have aging parents, talk to them about their health insurance plan and finances so that you understand how they are handling their wellness costs and have peace of mind.

Look More Closely at Retirement

At age 40, many people decide now is the right time to start saving for retirement. Or perhaps they already have a retirement plan or a 401(k) through their employer that they haven’t revisited recently.

Whatever your exact situation, your 40s are a good time to focus on your plan. You might think about increasing your 401(k) contributions, opening a Roth IRA, or finding a taxable investment account. Also, if you get a raise or bonus, why not put a chunk of it towards saving for your future?

You’ll likely want to consider how much of a nest egg you will need to retire and whether your current plan will get you there. If you pay for a professional financial planner, they can help you figure out how to save money in your 40s and maintain your desired standard of living into retirement.

Plan for Children’s Expenses (College, Careers)

It can be a shock when you realize that your baby is suddenly heading to college, and the cost of paying for their education may be an even greater surprise—and not necessarily a pleasant one. It can be very expensive. That’s why, when it comes to budgeting for couples or single parents, paying for higher education is often a major (and majorly challenging) goal.

There are saving plans specifically designed for college; for instance, 529 plans offer many benefits. If your children are not headed to college, other savings options like certificates of deposit (CDs) might be a better way to invest in their future. Teach your children sound financial management skills so you won’t be supporting them in their adulthood.

Some people go back to school in their 40s to help them move to the next level at work or prepare for a new career. If you are among them, create a budget that includes all your expenses and income. Project those numbers into the next few years to help you plan your life and stay on track financially.

Choose or Revisit Insurance Plans

In addition to health insurance mentioned above, your 40s can be a good time to consider disability insurance. If something happens to you and you cannot work, you could be forced to use your retirement and emergency funds sooner. Whether you choose short-term vs. long-term disability insurance, a policy can protect you by providing a safety net.

Death is an unavoidable life event, so review your life insurance policy (could you get a better deal elsewhere?) and be sure you have drafted a will. Parents who plan and pay for their funerals ahead of time ease the burden on dependents. The median cost of a traditional funeral is around $7,848, according to the National Funeral Directors Association. An insurance policy, a payable-on-death account, or prepaying at a funeral home can be good options to fund end-of-life expenses.

If you are shopping for life insurance, there are many online comparison tools that let you quickly see some different offers and how they stack up. It’s an easy way to start the process.

Keep Emergency Funds in Good Shape

Life is full of unexpected twists and turns. Some of them are not so fun, like having your car conk out, the roof leak, or your job suddenly come to an end. In times like those, you will need access to funds to cover your costs. That’s why having an emergency fund is important; with enough money to cover three to six months’ worth of your basic living expenses in a savings account, you’ll have peace of mind. If you don’t yet have a rainy day fund, start putting money aside each month (even just $25). Funnel any “found money” (say, a tax refund) to this savings account too.

Invest in a Diversified Portfolio

Growing your wealth often involves investing. While it does carry risk, it can yield big rewards. For instance, the annualized Standard and Poor’s (S&P) 500 return over the last 10 years was a healthy 14.7%. You might invest on your own, with a broker, or with automated financial planning. The vehicles you choose will depend on your risk tolerance. Some people invest in CDs and bonds, which are relatively low risk, while others enjoy speculating on the stock market. Manage your risk by never investing more than you can afford to lose.

Some people prefer to invest in stocks using dollar-cost averaging—investing a fixed dollar amount regularly, regardless of the share price—which can help you to build a diversified portfolio while minimizing volatility over the long term.

How Technology Can Make Managing Finances Easier

Managing finances and investments is so much easier in the digital age. Mobile banking and finance apps mean that you can manage your finances from your armchair 24/7. Online lenders offer favorable investment and savings options, and online trading platforms allow anyone to trade on the stock markets.

Where Should I Be Financially by 40?

Financial goals by age 40 vary. One rule of thumb is to save 15% of your income each year, but this figure is subjective and depends on many factors, including your existing assets.

The Takeaway

It’s never too late to take control of your finances. In your 40s, you are likely entering your prime earning years, so it’s a good moment to focus on paying down debt, preparing for the next chapter of your children’s lives, and saving and investing to get ready for retirement. With some wise money moves, you’ll be set to make the most of this decade and beyond.

One path to help pump up your cash: Choosing a bank that could help your money grow faster, like SoFi. Open an online bank account with direct deposit, and you’ll earn a competitive APY and pay zero fees. Plus, we make checking your balance and completing transfers super quick and easy.

FAQ

What financial goals should a 40-year-old have?

Ideally, a 40-year-old would be building a nest egg for retirement, paying down high-interest debt, and finding ways to sensibly pay for children’s college fees and meet other financial obligations. How much anyone needs to achieve these goals depends on many factors, such as lifestyle, income, and financial obligations.

How much should a 40-year-old have saved?

How much a 40-year-old should have saved depends on their current and future lifestyle and needs. A rule of thumb is to save 15% of your income each year towards retirement, but it will be different for everyone.

How can I build my wealth in my 40s?

You can build wealth in your 40s by paying down high-interest debt, choosing the right savings and investment vehicles, and planning for retirement.

Photo credit: iStock/shapecharge

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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.

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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.

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.

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.

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