How Much Does a Car Salesman Make a Year?

Car sales professionals make an average of $103,042 a year, according to Salary.com. While that’s more than what the average American worker earns annually, the job often requires long hours and your income may depend on how many cars you sell.

Let’s dive into what car salesmen do and how much they can make.

What Are Car Salesmen?

Car salespeople help customers shop for cars. Typical duties include answering questions about the cars on the lot, arranging test drives, and explaining financing options, warranties, and specifications.

Being able to build relationships with customers and close deals can help you succeed as a car salesman. Since car salespeople work directly with customers, the job may not be the best fit for introverts.


💡 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 Car Salesmen Make a Year?

The average salary for entry-level car sales positions in the United States is $38,680 per year, according to ZipRecruiter data. The pay for entry-level jobs in car sales will likely differ based on the dealership’s size, location, and car brand.

While some employers pay a base wage, others offer commission-based pay. Base wages tend to provide a more consistent monthly income, usually between $2,000 and $4,000. With commission-based compensation, you may earn a portion of each sale, typically between 20% and 30%.

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What Is the Average Salary for a Car Salesman?

If you’re looking to enter the field, you may wonder, how much does a car salesman make a year?

As mentioned above, the average annual salary for a car salesman is a competitive $103,042, per Salary.com, though pay can range between $88,987 and $119,501. High-achieving salespeople may make more than six figures, particularly if they are employed by luxury car dealerships or in regions with wealthy buyer demographics.

Commission-based arrangements are also a major factor in determining overall income.

Recommended: What Trade Makes the Most Money?

What Is the Average Car Salesman Salary by State for 2024?

A car salesman may not be the highest-paying job in most states, but it can provide a good living. This is especially true if you happen to work in a state like California, New Jersey, or Alaska, where the position tends to pay more. Let’s see how salaries in 2024 vary by state.

State Salary
Alabama $94,664
Alaska $112,418
Arizona $100,919
Arkansas $93,902
California $113,665
Colorado $104,103
Connecticut $111,058
Delaware $105,257
Florida $97,889
Georgia $99,984
Hawaii $108,111
Idaho $95,670
Illinois $105,875
Indiana $100,486
Iowa $98,611
Kansas $98,116
Kentucky $96,962
Louisiana $97,972
Maine $99,332
Maryland $106,242
Massachusetts $112,140
Michigan $102,195
Minnesota $105,597
Mississippi $91,892
Missouri $98,183
Montana $94,200
Nebraska $96,684
Nevada $104,154
New Hampshire $104,402
New Jersey $113,438
New Mexico $95,046
New York $109,956
North Carolina $98,920
North Dakota $98,941
Ohio $101,060
Oklahoma $95,273
Oregon $103,598
Pennsylvania $102,835
Rhode Island $107,988
South Carolina $97,283
South Dakota $90,800
Tennessee $94,726
Texas $101,290
Utah $97,499
Vermont $99,229
Virginia $102,423
Washington $110,553
West Virginia $92,787
Wisconsin $101,496
Wyoming $94,778

Source: Salary.com

Car Salesman Job Considerations for Pay and Benefits

Flexible schedules and possible commissions and bonuses are some attractive parts of being a car salesman. Plus, dealerships might provide extra incentives, such bonuses for hitting or exceeding sales goals, corporate cars, and expense reimbursements. Retirement plans, health insurance, and employee car discounts may also be included in the benefits package.

Recommended: Work-From-Home Jobs for Retirees

Pros and Cons of a Car Salesman Salary

As with any profession, there are advantages and disadvantages of working as a car salesman.

Pros:

•   Performance-driven earnings. Commission-based pay can boost your income, especially during strong sales periods.

•   Flexibility. Compared to standard 9–5 jobs, the position may offer flexibility in terms of work hours.

•   Career advancement. A successful car sales career can lead to managerial roles and a path for professional advancement within the dealership.

•   Diverse work environment. Helping customers find a car that fits their needs and budget can be professionally satisfying.

•   Incentives and perks. Dealerships often provide extra bonuses and perks, such car discounts for staff members or opportunities for career advancement.

Cons:

•   Income volatility. If you earn a commission, your earnings could decrease during slow times.

•   Pressure to perform. Reaching sales goals is essential, and the stress of closing deals might lower your level of job satisfaction.

•   Long hours. In order to accommodate consumers, you’ll likely need to work weekends and evenings.

•   Customer relations. Resolving complaints and interacting with a variety of client personalities can be difficult.


💡 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

How much does a car salesman make? These professionals have the potential to earn $100,000 or more a year, especially if they can earn a commission based on their sales. They also have the chance to advance their careers and gain a variety of work experiences. That said, the job often requires long hours, income may not be steady, and there’s often a pressure to hit sales goals.

Whatever type of job you pursue, you’ll want to make sure your earnings can cover your everyday living expenses. Establishing a budget — and using online tools to help monitor spending — can help you make progress toward your financial goals.

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

Can you make $100k a year as a car salesman?

Yes, it is possible to make $100,000 or more as a car salesman. Your salary may depend on your location, base pay, the car brand being sold and how many cars you sell each month.

Do people like being a car salesman?

Some people love being a car salesman, but the job is not a good fit for everyone. Those who enjoy making sales and building customer relationships may enjoy a career as a car salesman.

Is it hard to get hired as a car salesman?

The difficulty of getting hired as a car salesman depends on factors such as the dealership, car brand, location, and your experience. If you’re a people person, willing to put in time, and eager to make sales, you can likely find a position at a dealership.


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*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.

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.

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Reasons High Earners Keep Living Paycheck to Paycheck

The number of people living paycheck to paycheck is rising, and not just among low-income workers. One-third of Americans with an annual income of $150,000 or more are struggling to pay their bills and have no money left over for savings. Reasons for this include high housing costs, a lack of financial literacy, and lifestyle creep.

So how do high earners end up living paycheck to paycheck, and what can you do to break the cycle?

What Does Living Paycheck to Paycheck Mean?

Most people expect to earn a “living wage.” The term refers to an income sufficient to afford life’s necessities, including housing, food, healthcare, and child care. That level of income should also allow you to save for an emergency, retirement and other goals to some degree.

When a person lives paycheck to paycheck, they can barely pay basic bills and have nothing left over to save for a rainy day. In the event of a pricey emergency — like a big medical bill or major car repairs — low-income families are financially wiped out.

High earners have more wiggle room. They have the ability to downsize their home or car and find other ways to cut back on expenses.

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Understanding the Paycheck-to-Paycheck Situation

According to a 2023 survey conducted by Payroll.org, 72% of Americans are living paycheck to paycheck, with Baby Boomers the hardest hit. When you are living paycheck to paycheck, as noted above, you have no ability to save. If you go into debt, you may not be able to afford to pay down the debt in a meaningful way.

According to research from MIT, the average living wage for a family of four (two working adults with two children) in the U.S. in 2022 was $25.02 per hour before taxes, or $104,077.70 per year. Compare that to the federal minimum wage of $7.25. Even in Washington, D.C., which has the highest minimum wage at $17, families make well below what is considered an adequate income.

But even households bringing in $200,000 or more say they feel the crunch. According to a Forbes study, 39% of those earning at least $200K described themselves as running out of money and not having anything left over after covering expenses. While they have the freedom to downsize their lifestyle, many people may not realize the precariousness of their financial situation until they’re locked into a mortgage and car payments they cannot afford.

Why Do Some Americans Live Paycheck to Paycheck?

The reasons why Americans live paycheck to paycheck vary. For lower-income workers, you can point to a higher cost of living and wages that have not kept up with inflation. For those with higher incomes, the issue is more about a lack of financial literacy and living beyond one’s means.

Rising Cost of Living

According to the Federal Reserve, 40% of adults spent more in 2022 than they did in 2021. They spent more because monthly expenses, such as rent, mortgage payments, food, and utilities had all increased.

Low Income

Low incomes are another reason some people live paycheck to paycheck. This is particularly the case for people who earn minimum wage or live in areas with a high cost of living.

Poor Budgeting

Another reason some people are living paycheck to paycheck is that they lack basic financial knowledge and budgeting skills. It’s easy to overspend and accumulate credit card debt, but difficult to pay down the principal and interest.


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

Lifestyle Creep

Also known as lifestyle inflation, lifestyle creep happens when discretionary expenses increase as disposable income increases. In plain English: You get a raise and treat yourself to a new ’fit. And a fancy haircut. And a weekend at a charming B&B in the countryside.

Whether you can afford it is debatable. On one hand, you may be paying your credit card bill in full each month. On the other, you’re not saving or investing that money.

Factors Driving Financial Insecurity for Six-Figure Earners

Because of inflation, it is increasingly hard to buy a home, car, and other nice-to-haves. However, people may still expect and try to afford these things once they earn a certain amount. And if they have a taste for luxury items, they may struggle to maintain that standard of living and pay their bills.

It’s common for people to buy things on credit and then find that they cannot make the payments. Soon, they find themselves mired in high-interest debt.

How to Stop Living Paycheck to Paycheck

You can stop living paycheck to paycheck by living below your means rather than beyond your means. That requires earning more than you spend and saving the difference. The obvious steps to take are to increase your income and to live more frugally.

Once you have downsized your lifestyle, you can find relief quicker than you might think. And some changes may only be temporary. For example, you might have to work a part-time job for a short time until your debt is paid off.

Tips for Those Living Paycheck to Paycheck

Here are some changes you can make to get on the path to living below your means.

1. Create a Budget

You have to know where your money is going before you can cut back. By tracking your expenses, you can see what you are spending where. There are lots of ways to automate your finances and make it much easier to stay on top of things.

Then, create a budget where you subtract your non-negotiable expenses, or needs, from your net income. Non-negotiables are your housing costs, utilities, food, and transportation. Hopefully, you have some money left over to allocate to savings. If not, it’s time to look at how you can make your life more affordable.

Here are a few budget strategies to try:

•   Line-item budget

•   50/30/20 method

•   Envelope method

2. Cut Back on Nonessentials

Budgeting will help you find expenses that you can eliminate or reduce. For example, look closely at things that might seem insignificant. You are not necessarily bad with money just because you lose track of subscription services that you have forgotten about.

Be aware that a large cold brew on your way to work every morning can add up, and eating out or spending $30 on takeout each week adds up to over $1,500 annually. More consequential changes are downsizing your home, accepting a roommate temporarily, or finding a part-time gig to supplement your income.

3. Pay Off Your Debt

Debt is expensive. High-interest credit card debt and buy-now-pay-later (BNPL) schemes can eat up your income as you struggle to pay the minimum while the interest mounts up. Consider using a personal loan to consolidate debt and reduce the interest you’re paying.

4. Save for Emergencies

If you are living paycheck to paycheck, just one unexpected expense can cause you to spiral into debt. It’s important to have enough cash on hand. Once you have paid off your debt, start an emergency fund so that you don’t have to rely on credit if you experience an unexpected financial emergency. A rule of thumb is to have three to six months’ worth of expenses saved up.


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

5. Hold Off on Big Purchases

While you are trying to reduce expenses and pay off debt, hold off on buying big ticket items. For example, forgo an expensive vacation for a year and start saving toward next year instead. As much as you might like new furniture or a new car, try to economize for a while until you are in a better place financially.

6. Ask for a Raise

Asking for a raise is not an easy thing to do when money is tight. However, it could be well worth it. According to Payscale.com, 70% of survey respondents who asked for a raise got one. You are in a particularly strong position if your skills are in demand and your employer values you.

The Takeaway

Many Americans are living paycheck to paycheck, even high earners. The reasons why are linked to inflation, lifestyle expectations, and the ease with which people fall into debt. The remedy is to live below your means, and that often means making sacrifices.

If debt is a concern, temporary steps such as downsizing while you pay off your debt or finding additional sources of income are options. Identify where your money goes and stick to a budget to reduce unnecessary spending. Also, getting rid of high-interest debt and cutting back on eating out and other nonessentials can free up a significant amount of cash each month.

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

Does living paycheck to paycheck mean you’re poor?

Living paycheck to paycheck does not necessarily mean that you are poor, but it does mean that you are living beyond your means. Even high earners can find themselves in a position where they are living paycheck to paycheck, often due to mounting debt and lifestyle creep.

Lifestyle creep is when people spend more whenever their income increases. According to a Forbes study, 39% of those earning $200,000 or more described themselves as running out of money and not having enough leftover to save after covering expenses.

Is living paycheck to paycheck stressful?

Yes. When you live paycheck to paycheck, you may constantly worry how you will afford to pay for an emergency. It’s important to have an emergency fund, so that you do not have to use a loan or high-interest credit card to pay for something unexpected.

How many americans are living paycheck to paycheck?

Close to 80% of Americans are living paycheck to paycheck and are struggling to meet their monthly bills, according to a 2023 survey by Payroll.org. That’s an increase of 6% from the previous year.


Photo credit: iStock/Jacob Wackerhausen

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.

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

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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Why Side Hustles Are a Bad Idea

Despite the obvious appeal of side hustles — more money! — they’re not for everyone. If your side hustle makes you stress out, neglect relationships, or miss opportunities at your day job, then consider it a bad idea. Side hustles are only beneficial when they help you accomplish goals without sacrificing what matters most.

Side hustles are often promoted as a simple way to generate extra cash or fulfill your passions. However, the often-ignored price tag is physical and mental strain. Not to mention the time requirement and potential financial commitment necessary to get a gig going.

Read on to find out how to evaluate your options and goals before taking on a side hustle.

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What Is a Side Hustle?

A side hustle refers to a second job or source of income that people pursue outside their primary employment. The purpose may be to earn extra money, pursue a pet project, or develop skills in a different area.

A side hustle can take various forms, from freelance work or consulting to selling handmade crafts or driving for a rideshare service. Renting out property and offering tutoring services also qualify. The point is leveraging your time and skills to pad your budget or explore a wider field than your day job allows.


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

Pros and Cons of a Side Hustle

Browse the pros and cons below, and make a mental note of how many of each apply to your situation. If one side of the scales is considerably heavier, your decision may be obvious.

Pros of a Side Hustle

Here’s a breakdown of the benefits of a side hustle:

•   Develop Your Career: Side hustles can provide a valuable opportunity to develop skills, gain experience, and broaden your professional horizons. By taking on projects or roles outside your main job, you may acquire new competencies to help advance your career or get a promotion. Additionally, side hustles can demonstrate initiative, entrepreneurial spirit, and versatility to potential employers, enhancing your marketability and opening up new opportunities.

•   Switch Up the Norm: A side hustle allows you to break away from the routine of your primary job. This variety can be refreshing and stimulating, helping to prevent boredom and burnout. Whether you’re pursuing a different passion, exploring a new industry, or experimenting with creative projects, having a side hustle can inject excitement and fulfillment into your life outside work.

•   Build Your Network: Side hustles often involve interacting with different people and communities, which can expand your professional network. Whether you’re collaborating with clients, partners, or fellow freelancers, each connection presents an opportunity to exchange ideas, learn from others, and potentially uncover new career prospects. Building a diverse network through your side hustle can provide valuable support, mentorship, and referrals in your professional journey.

•   Channel Creativity: Side hustles offer a platform for expressing your creativity, passions, and interests outside your primary job. Whether it’s writing, photography, crafting, or any other form of expression, a side hustle can bring more meaning and fulfillment than your 9-to-5. This outlet can serve as a source of inspiration, relaxation, and personal growth, enriching your life beyond the confines of your main occupation.

•   Increase Income: One of the most practical benefits of a side hustle is the extra money. Whether saving for a major purchase, paying off debt, or simply seeking financial security, the income from your side hustle can provide greater financial flexibility and stability. Likewise, having multiple streams of income can be a buffer against economic uncertainty and provide a safety net in case of job loss or another hardship.

Cons of a Side Hustle

On the other hand, these are the potential drawbacks of a side hustle:

•   Less Time to Relax: Side hustles require time and effort, eroding your leisure time. Working 60+ hour weeks can lead to fatigue and even burnout. When juggling your day job, side hustle, and personal commitments causes you to lose sleep, your quality of life can become unsustainably low.

•   Distraction from Work: A side hustle can encroach on your attention and focus during work hours. Constantly thinking about your other gig, responding to email, or taking calls while at your main job can detract from your performance. If colleagues or supervisors perceive your divided attention, this can also strain your professional relationships and undermine your credibility.

•   Managing the Stress of Two Jobs: Managing the demands of a side hustle on top of your primary job and personal responsibilities can significantly increase stress. Deadlines, client expectations, financial pressures, and the need to constantly switch between different roles and tasks can elevate anxiety. Chronic stress associated with balancing multiple commitments can affect your mental and physical health over time.

•   Sustainable Prices Can Be Elusive: Setting prices or negotiating rates for your side hustle services can be challenging, especially if you’re just getting started or dealing with imposter syndrome. Striking the right balance between competitiveness and fair compensation can be tricky, and you may encounter situations where clients or customers undervalue your work. Plus, breaking into a competitive market may require setting prices so low that you work at a loss for the first few months or even years. As a result, your side hustle may ding your budget instead of adding to it.



💡 Quick Tip: An online money tracker makes monitoring 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.

When Does a Side Hustle Make Sense?

Several ingredients are key for a side hustle to make sense for your situation. First, it’s essential to have a clearly defined reason for pursuing a side hustle. For example, you may want to generate income, follow a creative impulse, or pave a path to a new career. This clarity of purpose will guide your efforts and motivate you throughout your side hustle journey.

Second thorough research is crucial to understanding the market, demand, competition, and potential challenges associated with your chosen side hustle. This is significant even if you don’t have financial aspirations for your other gig.

For example, if you’re interested in fitness, is your specific angle better suited for a blog or a YouTube channel? Will you create a social media presence to drive more traffic? What kind of value are you delivering to your audience?

In a different vein, if you want to become a rideshare driver, which company offers the best pay? Do you have a presentable vehicle that you’re willing to put miles on? Answering these kinds of questions will help you make informed decisions and set realistic expectations. Not doing your homework will likely bring a lack of results, monetary loss, and frustration.

Next, understand the time commitment your side hustle will require. For instance, a few hours of woodworking on the weekend is less demanding than taking a constant flow of orders on Etsy. If your schedule is already full to the brim from your primary job, family responsibilities, and personal pursuits, incorporating a side hustle can do more harm than good. Even if you work a side gig with your significant other, it’s not the same as spending quality time together.

Finally, your side hustle should fit into the larger picture of your goals and values. For instance, you might start a side hustle in order to build a $5,000 emergency fund. Or you could take a software engineering course in the evenings that will help you eventually switch careers. In any case, your side hustle should have specific benefits and point toward a defined objective. Otherwise, you’ll burn time without accomplishing much.

The Opportunity Cost of a Side Hustle

The “opportunity cost” of a side hustle depends upon the resources you invest. When you dedicate yourself to anything, you lose opportunities to engage in leisure activities, spend time with family and friends, and take vacations. In essence, the opportunity cost of a side hustle equals the value you place on other aspects of life that matter most.

Also ask yourself what is the financial cost of your side hustle? You might have to invest money to purchase materials or pay for marketing. You might also give up overtime at your primary job. That’s cash that could go into savings, investments, or paying off debt.

Likewise, your time could be going into skill development for your day job, leading to promotions or raises. Plus, your employer might sponsor specific types of professional development, resulting in free training that moves your career forward and increases your salary.

Ultimately, the opportunity cost of a side hustle varies depending on individual circumstances, goals, and priorities. It’s essential to carefully consider these factors and assess how the benefits of the side hustle compare to the time and money.

Examples of Side Hustles

While there are unusual ways to make money, side hustles are typically more accessible. Here are some side hustles that match with a range of backgrounds and skill sets:

•   Freelancing: Offer services such as writing, graphic design, programming, bookkeeping, and more. You’ll take projects on a contract basis with multiple clients.

•   Dog Walking: Providing exercise and companionship for dogs by taking them on walks on a regular or as-needed basis.

•   Blogging: Creating and maintaining a consistent feed of valuable written content on a topic you love or have expertise in. Find out how much it costs to start and run a blog.

•   Non-Medical Senior Care: Assisting elderly individuals with daily tasks (shopping, bathing, housework, etc.) and providing companionship to support their wellbeing.

•   Babysitting: The tried-and-true income-generator for teenagers and adults alike. You’ll care for children in the evenings and on weekends when parents are busy or need a break.

•   Personal Assistant: Providing administrative support and assistance to individuals or businesses. You’ll manage schedules, run errands, and handle correspondence. You can also be a virtual assistant and provide numerous essential services (bookkeeping, arranging travel, etc.), therefore creating a side hustle from home.

•   Handyman: Offering services to repair, maintain, and improve residences. You can specialize in one or more areas: plumbing, electrical work, carpentry, or general home tasks.

•   Crafting: Creating handmade goods and artwork, such as jewelry, clothing, and home décor, to sell online or at craft fairs.

•   Cooking/Baking: Crafting you can eat! Get to work in the kitchen to make treats, desserts, or meal kits for sale.

•   Private Tutor: Providing personalized academic instruction to students in a particular subject or skill, often on a one-on-one basis.

•   Self-Publishing: Writing and publishing books or other written works independently, without the involvement of traditional publishing companies. Self-publishing is inexpensive because your work will be accessible as an ebook.

•   Teaching Online Courses: Creating and delivering educational courses or tutorials on a specific topic via online platforms is another side hustle from home.

•   Product Tester: Testing and reviewing products or services for companies or brands, often providing feedback and insights based on personal experience.

•   E-Commerce: Selling products or services online through a website or online marketplace, which may involve sourcing or creating products, managing inventory, and handling customer inquiries and orders.

When Is a Side Hustle Not Worth It?

A side hustle may not be worthwhile because of the toll on your physical, mental, and financial wellbeing. Here are more specific ways that a side hustle can negatively impact your life:

•   Burnout: Working an 8-hour job and dedicating 2 to 4 additional hours per day to your side hustle leaves little room for anything else. The demands of a side hustle can result in excessive stress, fatigue, and burnout.

•   Missed Career Advancements: Devoting significant time and energy to a side hustle may detract from opportunities for advancement in your primary job. They can also keep you from visualizing a sustaining career. So if you’re in a job you don’t like, a side hustle can act as a bandage instead of a cure. It’s advisable to focus on switching vocations instead of supplementing your income through another unsatisfying side job.

•   Unhealthy Lifestyle Habits: A demanding side hustle may lead to poor eating choices due to lack of time for meal prep, insufficient exercise, and disrupted sleep. Over time, these habits damage physical health and overall quality of life.

•   Strained Relationships: Spending excessive time on a side hustle can strain relationships with family, friends, and romantic partners. Missing significant events or quality time with loved ones due to work commitments can lead to feelings of resentment and isolation.

•   Financial Costs: Some side hustles require upfront investments of time and money, for purchasing inventory or equipment, marketing expenses, or training courses. If the return on investment does not justify these costs, the side hustle may not be financially sustainable in the long run.

•   Not-So-Passive Income: Many side hustles require active participation and ongoing effort to generate income, which can limit scalability and long-term earning potential. Without the ability to create passive income streams, you’ll constantly trade time for money without achieving financial freedom.

•   Neglecting Personal Growth: A side hustle that consumes all available time and energy may leave little room for hobbies or other interests. Over time, this can lead to stagnation and dissatisfaction with your lifestyle.

Side Hustle Tips

A side hustle can quickly get out of hand or detract from your life if you’re not careful. Here’s how to create a practical side hustle that serves your needs:

•   Start Small: When beginning a side hustle, starting with manageable tasks or projects that don’t require a significant investment of time or resources is wise. Starting small allows you to test the waters, gain experience, and assess the viability of your chosen side hustle without taking on too much risk. As you gain confidence and experience, you can gradually expand and scale your side hustle over time.

•   Play to Your Strengths: Identify your special skills, interests, and areas of expertise, and leverage them in your side hustle. By focusing on activities that align with your strengths, you’re more likely to enjoy the work, excel at it, and differentiate yourself from competitors. This approach also allows you to maximize your earning potential by offering high-value services or products that cater to a specific niche or market. Remember, this doesn’t mean you must stick to your current skill set. Your interests and abilities can also lead you to pick up new skills.

•   Maintain Your Performance at Work: Balancing a side hustle with a full-time job means prioritizing high performance and professionalism in your primary job while pursuing your side hustle. To that end, it’s recommended to set boundaries for the time you dedicate to your side hustle and to manage your schedule efficiently. By maintaining your performance at work, you can preserve your job security and opportunities for advancement.

•   Aim at a Goal Instead of a Job: Instead of treating your side hustle as just another job, set out to achieve specific goals or milestones that align with your long-term aspirations. Whether your goal is to generate additional income, pursue a passion project, or transition to full-time entrepreneurship, having a clear vision and purpose for your side hustle will keep you motivated and focused on what truly matters to you. By focusing on goals rather than simply exchanging time for money, you can create a more fulfilling and meaningful side hustle.

The Takeaway

Side hustles can be a bad idea when they damage your quality of life. While picking up a side gig can create more income, this result must be weighed against other priorities, including advancement in your day job, time dedicated to relationships, and alternatives that slowly but surely create passive income.

Asking yourself whether a side hustle is a good move might not be the most relevant question. Instead, you can ask yourself if a second job makes sense after developing a clear vision of the future.

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

Are side hustles risky?

Side hustles can be risky because of the opportunity cost of picking up extra work. Specifically, a side hustle can drain time and financial resources, add unmanageable stress to your life, and lead to worse quality of life because of the sacrifices required to work a second job. As a result, it’s essential to evaluate your circumstances and identify your goals before starting a side hustle.

Are side hustles a waste of time?

Side hustles can be an excellent way to generate more income, develop yourself professionally, or transition to a different career. However, they can also be a waste of time if you don’t set goals and create a realistic plan when starting. So a carefully planned side hustle that fits into the larger picture of your life can provide massive benefits, while picking up more work to simply stay busy can lead to missed opportunities in your professional and personal life.

Is starting a side hustle really worth it?

Starting a side hustle can be worth it for additional income, pursuing passions, or expanding your skill set. However, it requires careful consideration of the potential drawbacks, such as time constraints, increased stress, and the risk of hindering career advancement. Ultimately, the value of a side hustle depends on your aligning it with personal goals, managing resources effectively, and maintaining a healthy work-life balance.


Photo credit: iStock/JLco – Julia Amaral

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.

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.

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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Top Spending Categories to Cut When You’re Trying to Save Money

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.

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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.

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How to Buy Quality Clothes Without Spending a Fortune

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.

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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.

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