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Laundry rooms are important, but they’re often not the prettiest of rooms. They also tend to be sandwiched into small spaces or hidden in inconvenient areas of the home. No wonder some homeowners consider remodeling them.

But whether you should undertake a laundry room remodel depends on the size of the space, the kinds of new appliances you want to install, and any special décor touches you’d like to add, among other factors.

A remodel might be worth it if it creates a perky and efficient space or a room that has multiple functions.

Before Starting Your Laundry Room Remodel

If you’ve been thinking about giving your laundry room a clean start, you’ve probably got a lot of ideas and inspiration swimming in your head.

Before embarking on your project, think through what you’re hoping to accomplish by asking yourself the following questions.

What’s the Scope of the Project?

Some upgrades involve small improvements like new paint and cabinetry, while others call for tearing through walls, moving plumbing, or even relocating your laundry room to another area of the home.

Appliances should also be considered. Will you need a new washer and dryer, or do you plan on using the ones you currently have?

What Do You Plan to Use Your Laundry Room For?

While most laundry rooms are used solely for handling laundry, others also act as mudrooms and storage for cleaning supplies, sports gear, and bulk shopping items like bottled water, paper products, and pet food.

What your laundry room is used for will affect the laundry room remodel ideas available to you.

Recommended: Guide to Buying, Selling, and Updating Your Home

How Often and When Do You Do Laundry?

If you have a large family and do washing and drying frequently, that will influence the design of your new laundry room. You may need ample counter space for folding, a fold-down ironing board, or bins to hold each person’s clean clothing.

If you tend to do the laundry during the day, you might want to consider adding a window for some natural light. And if you’re more likely to wash clothes in the evening, under-cabinet lighting may help.

What Are Your Must-Haves?

Some homeowners might want bins and baskets to keep things tidy. Others may be looking to add features like a sink or build out their laundry room to accommodate more counter space.

Whatever your desire, it’s a good idea to list the elements that you can’t live without so you can build them into your budget.


💡 Quick Tip: Don’t overpay for your mortgage. Get a great rate by shopping around for a home loan.

How Much Can You Spend?

The scope of your project will dictate your budget and how you plan to pay for your remodel.

Some homeowners could see a laundry room remodel as a way to increase their home’s value and opt to borrow to pay for the project. Others might choose to keep things scaled down so they don’t spend beyond what they have on hand. A home improvement cost calculator can help you figure out how much your project might run you.

Laundry Room Remodel Ideas

Now that you’ve got the foundation of your project mapped out, it’s time to envision how your laundry room remodel will take shape. That will depend on the following factors.

If You Have Limited Space

Small laundry rooms can still pack a punch, thanks to creative ways to maximize your available space. You can do that by tucking laundry baskets under counters, adding a rod under cabinets to hang clothes, and using wall space for hooks to hang laundry bags or baskets that can hold clothespins, detergent, and dryer sheets.

Don’t forget that laundry rooms don’t need to be actual rooms; if you’re short on space, consider tucking your washer and dryer into an unused closet and installing a farmhouse door for easy access.

Depending on its size, you can then use the prior laundry room as a guest room, home office, nursery, or kids’ playroom.

Recommended: What Are the Most Common Home Repair Costs?

If You’ll Be Using the Room for More Than Cleaning Clothes

The list of ways to use a laundry room is endless, and will largely depend on each household’s needs.

•   Got a large dog? You might consider installing a pet-washing station, especially if you are already planning on undertaking plumbing work.

•   Need a quiet place to conduct conference calls at home? A fold-down workstation meets both communication and laundry needs.

•   Larger families may tuck an additional fridge in the laundry room.

•   People who love to entertain may find storage for plates and glassware in the laundry room.

Your Budget

A laundry room remodel can quickly add up if new plumbing, cabinetry, and construction work are involved.

If you find yourself running beyond what you’re willing to spend, think of creative ways to get the laundry room you want without breaking the bank.

That might entail painting cabinets instead of replacing them, using open shelving instead of custom built-ins, and opting for durable paint in place of tiled backsplashes.


💡 Quick Tip: A home equity line of credit brokered by SoFi gives you the flexibility to spend what you need when you need it — you only pay interest on the amount that you spend. And the interest rate is lower than most credit cards.

DIY vs Calling In an Expert

Many homeowners are comfortable with do-it-yourself projects. In a laundry room remodel, these might include painting, replacing cabinetry, and installing shelving and hanging rods.

Other projects — moving water lines, installing new sinks or drywall, and demolition — require hiring a contractor. Mapping out which projects you will need to outsource will affect your budget and may also affect the scope of your project.

Paying for It

Smaller laundry room remodels, like those that require just a new coat of paint or a retrofitting of shelving to maximize storage space, can be done with fairly little outlay, especially if you do it yourself or have a friend or family member lend a hand.

Larger ones, or those that call for extensive demolition, architectural work, or the services of a general contractor, will be more expensive, of course.

The size of the project — and therefore how much money you’ll need—matters, as does your timeline for paying back any loan.
Here are some options:

•   Cash may be a viable choice, especially for smaller projects.

•   A home equity loan allows you to draw on the equity in your house to get a lump sum upfront, which can finance larger or multiple projects.

•   A home equity loan of credit (HELOC) also leverages your house equity but gives you a revolving line of credit you can draw on if and when you need it.

The Takeaway

Laundry room ideas for remodeling range from DIY tweaks to major overhauls. A laundry room remodel may increase the value of your home or simply make life a little easier. Start by listing what you want to achieve and how you’re going to pay for it.

SoFi now offers home equity loans. Access up to 85%, or $350,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.

FAQ

Where do I start renovating my laundry room?

Begin with the big picture of your project and its purpose. Consider what you need from your laundry room. Do you want it to maximize efficiency as you wash, dry, and fold? Do you want it to double as storage space for bulk items or out-of-season coats? Do you want it to provide space where you can work on craft projects? Once you work out your needs and priorities, you can focus on the features you’ll need to make the space work for you.

How long does it take to remodel a laundry room?

The length of time remodeling your laundry room requires depends upon how extensive your remodel is, whether you need professional help or can do it yourself, and whether permits are required for the work you want, among other factors. If you’re repainting or adding a few shelves, you may be able to do it in a weekend. If you’re hiring contractors for work that involves your plumbing or electrical systems or requires them to move walls, it could take as much as four to six weeks.

How much does it cost to move a laundry room?

The price tag for moving your laundry room can vary a lot, depending on where you live and how well set up the new location is for plumbing and electricity — and, of course, what you want to have in your laundry room. The cost can run from $500 to $5,000 or more.

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Thinking about installing a new deck, replacing a front door, or even adding an extra bedroom to your home to help increase its resale value? Considering that your home is one of the biggest investments you’re likely to ever make, it makes sense that you’d be interested in increasing its value with some upgrades.

But as you probably guessed, not all remodeling projects provide the same return on investment (ROI).

Using Remodeling Magazine’s Cost vs. Value 2024 report, which compares the average cost of 23 remodeling projects in 150 housing markets, let’s look at some of the most popular home improvements based on estimated ROI, time commitment, and cost.

Things to Consider Before Starting a Home Improvement Project

It’s important to note that national averages only tell part of the story. Labor and supply costs, styles, and consumer preferences can vary by location. So before you dive into a project, you might want to consider hiring a contractor, real estate agent, or appraiser to come to your house and give an opinion on which upgrades might provide the most value based on where you live.

You may also want to factor in any immediate needs that a remodeling project can help satisfy. Let’s say, for instance, you’d like to add an extra bathroom. While you may only recoup part of your expenses, having an additional washroom may be worth the cost of a renovation.

Top Home Improvement Projects to Help Increase Your Home Value

Looking to prioritize your wish list? These remodeling projects earned top spots on the Cost vs. Value report.

Garage Door Replacement

Average Cost: $4,513

Resale Value: $8,751

Costs Recouped: 193.9%

General Time Commitment: A few days

Removing an old garage door and replacing it with an attractive, sturdy new one could return every dollar of your initial investment — and then some, according to the Cost vs. Value report. It’s an effective way to improve your home’s appearance from the outside while increasing your home’s functionality for years to come.

With an average cost of $4,513, which includes the door and the cost of labor, it’s also a relatively affordable renovation. While most homeowners would likely hire someone to help install the new garage door, it is something that you could potentially do on your own (with the help of a friend) over the course of a weekend.

If you hire someone to install the door for you, they will likely come to your home twice: first, to take measurements and give you a quote, and then again to install the door.

Entry Door Replacement (steel)

Average Cost: $2,355

Resale Value: $4,430

Cost Recouped: 188.1%

General Time Commitment: One week

A new, safe front door is an attractive quality to prospective homebuyers. Replacing your entry door and jambs with a steel door, “including clear dual-pane half-glass panel, jambs, and aluminum threshold with composite stop,” should get you a good bang for your buck, according to the Cost vs. Value report.

Even better, you and a friend can probably handle installation on your own, though you can certainly hire an installation expert. If you decide to go the pro route, they’ll likely need to come to your home to take initial measurements and then return for the installation. Another option is to measure and order the door yourself and just get help with the installation.

Recommended: 32 Inexpensive Ways to Refresh Your Home

Manufactured Stone Veneer

Average Cost: $11,287

Resale Value: $17,291

Cost Recouped: 153.2%

General Time Commitment: One month

Removing the vinyl siding and adding a stone veneer to the bottom third of your home’s street-facing façade is an effective way to help increase the value of your home, returning 102.3% of the cost of renovation. First impressions matter when it comes to selling a home, and stone veneer is a popular look right now.

Whether you tackle this project yourself or hire a handyperson to help with the installation, this project will take several days to complete. If you choose to hire someone, understand that the construction days might not be successive, so the exterior of your home could be under construction for several weeks to a month or longer.

Minor Kitchen Remodel (Midrange)

Average Cost: $27,492

Resale Value: $26,406

Cost Recouped: 96.1%

General Time Commitment: Four to eight months

When it comes to kitchen remodels, less may be more, at least when it comes to ROI. According to the Cost vs. Value report, major kitchen remodels recoup anywhere from 38% to 49.5% of costs. Meanwhile, a smaller upgrade recoups 96.1% of costs.

What does a minor remodel include? Think faster-turnaround jobs like installing a new sink and faucet or replacing items like cabinet fronts, cooktop, oven range, refrigerator with new models, countertops, or floors.

When creating your budget, you’ll probably want to factor in the cost of expert help, such as an electrician, plumber, and contractor. You’ll also want to be realistic about how long you can devote to the project — and be without a working kitchen. Expect several months at minimum for a remodel.

Wood Deck Addition

Average Cost: $17,615

Resale Value: $14,596

Cost Recouped: 82.9%

General Time Commitment: Three to six months

Nothing beats enjoying family and friends on a deck in your backyard on a sunny day. Potential buyers are typically rightfully happy to pay extra for a deck, and a wooden deck installation could recoup half of what you spend. And ideally, you’ll get the chance to enjoy the deck before you sell your home.

A deck installation is a pretty large project. It will likely need to pass an inspection and adhere to your city’s building codes, and it could increase your property taxes and home insurance costs. So it pays to get the job done right the first time, which may mean enlisting the help of a designer or architect. These pros can map out an initial plan, and a contractor can handle the building.

An online home renovation cost calculator can help provide you with a rough idea of how much a wooden deck — and any other home upgrade project — could cost.

HVAC Conversion/Electrification

Average Cost: $18,800

Resale Value: $12,422

Costs Recouped: 66.1%

General Time Commitment: Anywhere from 1-2 days up to several days, depending on whether your home requires structural changes

Replacing a fossil fuel-burning HVAC system with one that runs on electricity isn’t cheap. Nor is it one to try to DIY. But according to the Cost vs. Value report, you could stand to get back roughly two-thirds of what you put in. Homeowners who decide to make the conversion may also notice a savings in their heating and cooling bills. And there are environmental benefits to consider as well.

Unless you’re a licensed HVAC technician, this is a project best suited for the professionals. Consider speaking with a few different HVAC installation teams to compare potential systems and cost options.

Remodeling Projects With the Lowest Potential ROI

While these upgrades may not deliver the biggest returns, they could still be worth exploring if they fit your budget and lifestyle needs.

Primary Bedroom or Bathroom Addition

Average Cost: $164,649 for midrange; $339,513 for upscale

Resale Value: $58,484 for midrange; $81,042 for upscale

Cost Recouped: 35.5% for midrange; 23.9% for upscale

General Time Commitment: Four to eight months

Adding on a primary bedroom or bathroom may enhance your living experience, but it might not add much to your bottom line. Despite the project’s hefty financial and time commitment, it generally fails to deliver even one-third of the investment.

However, while not a great return, a home addition project of this size could change to the value of your home. For example, a $300,000 home that adds a primary suite for $164,649 could potentially return about $58,000 on the investment. A home that sells for $358,000 instead of $300,000 is a 19.3% increase in the home’s value. If you were to get enough use from the addition to justify the other cost you can’t recoup, it could still be a fine investment.

Again, these figures are purely hypothetical, and the value of expanding your home can depend on a multitude of factors. And if you decide to move ahead with a primary bedroom or bathroom addition, you’ll want to think through how you’ll finance the project. Some options include applying for a home improvement loan, using home equity, dipping into your savings, or using credit cards.

Recommended: Homebuyer’s Guide

Bathroom Addition

Average Cost: $58,586 for midrange; $107,477 for upscale

Resale Value: $20,334 for midrange; $34,997 for upscale

Cost Recouped: 34.7% for midrange; 32.6% for upscale

General Time Commitment: Four to eight months

A bathroom remodel tends to be cheaper than a primary bathroom addition, and it generally sees a slightly better potential ROI. But again, a bathroom addition or any large remodeling project should be considered in terms of both ROI and what you want to get out of your home while you are living in it. And that’s a calculation that only you and your family can make.

The Takeaway

Home renovation shows make upgrades look quick and easy. And while sometimes they can be, in many cases, renovations can be costly and time-consuming. As you consider which ones to make, you will likely want to factor in your return on investment (ROI).

Not all remodeling projects provide the same level of ROI. Projects such as replacing a garage door or adding a stone veneer to your home’s façade tend to see better ROI than adding an extra primary bedroom or bathroom. But ROI is only one consideration. You should also need to consider what you want to get out of your home and whether the time and cost of taking on a big project are worth it.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What home improvements offer the most value?

According to the Remodeling Magazine’s Cost vs. Value 2024 report, the top three home improvement projects that have the best ROI are: replacing the garage door (193.9% of costs recouped), replacing the entry door with a steel version (188.1% of costs recouped), and adding manufactured stone veneer to the home’s exterior (153.2% of costs recouped).

Which home improvement is least likely to increase the value of your home?

Wallpapering, built-in electronics, wall-to-wall carpeting, and a swimming pool are examples of projects that typically don’t increase the resale value of your home.

Does new flooring increase home value?

New flooring can potentially boost the value of your home, especially if your current flooring is worn or in poor condition. Hardwood flooring often provides significant ROI, though luxury vinyl plank and tile flooring can also add value.

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SOPL-Q225-016

A wedding day is typically a celebration you’ve dreamed of and eagerly anticipated, but it can also be a major expense. If you’re wondering if you should finance your wedding, here is some guidance when it comes to making that decision. From payment plans to personal loans and everything in between, options abound for making your big day happen.

Understanding Wedding Costs Before Making a Plan

SoFi’s most recent survey found that the median cost of a wedding is $10,000, and when you look at average costs, you may see figures like the $36,000 price tag shared by Zola, a wedding registry site. Of course, prices can vary tremendously depending on what you plan: A destination wedding or one held in a big city with 300-plus guests will likely be a much bigger expense than having 50 of your nearest and dearest gather in your grandmother’s beautiful backyard flower garden.

Breaking Down Wedding Expenses by Category

Here’s a look at some of the key contributors to the cost of a wedding, according to The Knot, a wedding site:

•   27%: Venue and rentals

•   24%: Catering, cake, and drinks

•   10%: Photography and video

•   9%: Floral and decor

•   8%: Music

•   6%: Clothing and beauty

•   5%: Wedding rings

•   4%: Wedding planner

•   3%: Guest entertainment

•   2%: Transportation

•   1%: Stationery

•   1%: Officiant

Setting a Realistic Budget

To set a realistic budget, it’s wise to delve into some real-world prices and see what’s affordable given your financial situation. You may find that swapping out a swanky hotel ballroom for local, loft-style event space can help you save money, or limiting the guest list to 75 people instead of 175 can be a route to having an affordable wedding of your dreams.

Developing a spreadsheet that lists out your total budget and how much you will spend on each category is a helpful exercise. Also consider what you might be able to borrow or what friends and family can help with (perhaps they can handle flowers and decor).

An online wedding cost calculator can help you set a realistic budget for your wedding, too.

8 Ways to Pay for Your Wedding

There are many variables that can affect the average cost of a wedding, including the time of year you say “I do,” the day of the week, the number of guests, the reception venue, and a host of other factors (such as unexpected wedding expenses).

Whatever your budget may be, here are some ways to fund your big day.

1. Personal Savings

Perhaps you have already saved up a nice bundle of cash that you can put toward your wedding. Or maybe you have just gotten engaged and have a year or two to save up enough money for your wedding. Using this kind of money to finance your wedding helps you avoid interest charges. Keep the cash in a high-yield savings account to help it grow via the power of compound interest.

2. Wedding-Specific Savings Plan

You can also set up a wedding-specific savings plan. This means you have a dedicated amount into which you will regularly deposit a sum of money or use recurring automated transfers to stockpile cash in it. This can help you save enough money for your ceremony and celebration.

3. Family Contributions

Depending on your family situation, your parents and other relatives may be able to pay for some or all of your wedding expenses. It used to be common for the bride’s parents to pay for the wedding, but today, it’s often a matter of the family making a contribution toward the total cost, if at all.

4. Personal Loans

Personal loans are typically unsecured loans that can be used for almost any purpose. The interest rate charged can be lower than those of credit cards, and they offer a lump sum of cash (usually between $1,000 and $50,000 or even $100,000) that is then repaid in installments over a few or several years.

Some lenders specifically offer wedding loans, tailored to the needs of couples planning their big day.

5. Credit Cards

A convenient way to finance wedding costs can be breaking out your plastic. While this is a quick and easy way to pay vendors, be sure you are aware of and can afford this kind of high-interest debt. Also stay aware of your credit limit. Financial experts advise that having a balance that is more than 30% of your credit limit can negatively impact your credit score.

6. Wedding Funds or Registries

You can crowd-source money for your “I do” day by opening a wedding fund. Usually, the couple lets people know that they would prefer to receive cash vs. physical gifts from guests by directing invitees to a cash registry. This money can then be used to pay for wedding costs.

7. Side Hustles and Extra Income

Not everyone has the time or energy for a side hustle, but working a part-time gig can help you pump up your savings for your wedding. Whether that means selling your service as a pet photographer or driving a rideshare every other weekend, these pursuits can help you bring in extra cash to pay for a wedding.

You might also sell stuff you no longer want or need to bring in some additional money.

8. Vendor Payment Plans

You may find that some vendors, such as your event space or caterer, offer payment plans, allowing you to put money toward your debt over time. Check the details carefully to be sure that the interest rate and fees are fully understood and affordable.

The Pros of Financing a Wedding

Here are some of the upsides of financing a wedding:

•   You get your day with all the bells and whistles that you’ve dreamed of. You have the wiggle room to have more guests, a highly sought-after DJ or band, and food that will still be talked about on your anniversary. Mission accomplished in having a special day that will last a lifetime of memories, even if you don’t have all the cash waiting in the bank.

•   You might be able to borrow enough money to have a relaxing honeymoon, too, which might be nice after the stress of wedding planning.

•   You won’t deplete your savings to pay for your wedding. Starting your life together without an emergency savings account can be stressful.

The Cons of Financing a Wedding

Next, here are the downsides of financing a wedding:

•   When the wedding is long over, that monthly loan payment is still owed. Depending on the amount and term of the loan, that can be a big commitment.

•   Interest rates for loans and lines of credit typically vary based on the borrower’s credit rating and other factors. If you don’t qualify for favorable interest rates, you could end up paying a decent amount in interest over the life of the loan.

•   Taking out a loan also increases your debt-to-income (DTI) ratio. If you are planning on near-future large purchases that will require another loan, like a mortgage, having a high DTI ratio might make it more difficult to qualify for future loans, or might affect the rates you qualify for.

Creating Your Wedding Payment Strategy

Paying for wedding expenses can require a significant amount of cash, so it can be wise to be strategic about how you’ll pay your bills. Here are a couple of ideas:

Mixing Different Payment Methods

You don’t have to go all in on just one payment plan. For instance, if your caterer offers a super-low interest rate on their payment plan, you might want to sign up for that, and then use a personal loan to pay for other expenses, such as the wedding dress, rings, music, and photography.

As with any kind of loan or line of credit, but sure you understand the fees and interest rate (and whether, say, prepayment penalties are applicable). Either a lower interest rate or a shorter term may save money in the long run. A personal loan calculator or amortization table can help with this analysis, so you know exactly how much you are spending.

Timeline Considerations

Another important consideration when deciding on financing is how long of a run-up you have to the wedding itself. If you are planning on getting married in, say, two years, you could have a good amount of time to budget and save.

If, however, you are planning on a short engagement, then financing your wedding or asking for cash gifts might better suit your timeline.

Recommended: A Guide to Unsecured Personal Loans

Tips for Reducing Wedding Costs

If you’re having second thoughts about the cost of your wedding and how to afford it, know that with wedding planning, there’s usually a way to reduce expenses.

Off-Season and Weekday Discounts

The high season for weddings is usually late spring through fall. That’s when demand and prices are highest. You may be able to save big by booking a winter wedding or early spring one.

Similarly, you’ll find that costs tend to peak for weekend weddings. If you can swing, say, a Thursday night instead of a Saturday, you could save a significant amount.

DIY Elements

Think about how you could save money by DIY-ing some aspects of your wedding vs. paying a professional. Also, you might tap friends and family to contribute. For instance, if you have a friend who loves to bake, perhaps they would make your cake. Or if you have a friend with a flair for photography, they could shoot your pictures as a gift to you and your partner. If you have a cousin who’s in a band, they might play at your wedding for free or a reduced rate. Perhaps your family members would be happy to create centerpieces and bouquets from affordably sourced flowers. Think freely, and call in those favors!

Any of these ideas will help you save money and avoid financing your wedding’s full cost.

Prioritizing What Matters Most

There’s no law that you have to have a traditional wedding. If what matters most to you is having a wedding that involves dancing till dawn, or having 200 friends and family members with you as you say your vows, go ahead, but then perhaps do a potluck meal so you don’t have to shell out for a huge catering bill, too.

If you’re a foodie, maybe your wedding celebration could be a small dinner in a private room at your favorite restaurant after the ceremony. By prioritizing what matters most to you on your special day, you can have a wonderful wedding without landing in deep debt.

How to Avoid Wedding Debt Altogether

If you are looking for some inspo on how to avoid wedding debt, consider these possibilities:

•   Postpone the wedding. You might be able to avoid borrowing altogether by postponing the wedding to give yourself time to save the money to pay for it. Cutting unnecessary expenses might free up some money in your budget. Or earning extra money by taking on a side hustle might be a good way to add to your savings.

•   Use a zero-interest credit card. Using a credit card to pay for wedding expenses might be another option. While a personal loan might offer a lower rate than a credit card, you might find credit card offers with low introductory rates — perhaps even 0% — for a limited time. If you’re confident that you can pay the card off in full before the introductory rate ends, this could be an attractive option.

•   Ask your family to contribute. Asking parents for money might not be the most appealing option, but it might be a worthwhile consideration. Even though the average age of newlywed couples is rising, which might mean more couples are established financially before they marry, it’s still common for the couple to have help paying for the wedding.

•   Elope. If your priorities are saving for a down payment on a house or paying off college debt, maybe you are the kind of person who would be comfortable eloping or having a city hall ceremony and Champagne with just a few of your nearest and dearest. That can definitely be a way to avoid debt from financing a wedding.

The Takeaway

Your wedding is a special day, but it can be a very expensive one. Think carefully about how to budget for and finance your wedding, which can often cost five figures. Some ideas are saving the money, asking loved ones to contribute, using vendor payment plans, and taking out a personal loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What’s the best way to pay for a wedding?

There is no one best way to pay for a wedding. Your personal finances and the kind of wedding you are having will play a role in deciding what works best. By saving up for a wedding or asking for help financing it, however, you may be able to avoid some or all of the interest charges you’ll encounter if you take out a loan or use a credit card.

How far in advance should we start saving for our wedding?

A wise way to figure out when to start saving is to calculate how much your wedding will cost, subtract how much relatives might contribute, and then divide that sum by how much you can save every month. So if you want to raise $10,000 and you and your partner can put aside $500 a month, then it would take 20 months to accumulate the funds needed.

Is it common for parents to pay for weddings today?

It is less common than in the past, but many parents do pay for weddings or at least make a contribution to the cost. Since the age at which people marry is rising, it’s become more common for the couple to have the financial means to pay their own way.

How can we ask for money instead of gifts?

You can put the word out tactfully among friends and family, or use a wedding website that clearly shows your registry preference is cash vs. gifts. Zola, Honeyfund, The Knot, and Joy are among the options you may find. Compare fees and features to find the best fit.

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If you’re saving money towards a wedding, it’s wise to keep it in a high-yield savings account, where it’s safe, accessible, and earning interest.

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When a trader issues a buy or sell order, that’s the trade date. The settlement date, which is when the security legally changes hands, is generally one day later.

The period of time between the trade date (designated as T) and the settlement date can vary, depending on the security in question. Starting in 2017, that window was two days, or T+2. But in 2024 the SEC made a new rule that most trades should settle within one day, or T+1. Different securities are subject to different rules.

That’s why investors need to know the timing of the actual settlement date, as that’s when they officially own the security, which may impact other trading decisions.

What Is a Settlement Date in Investing?

The settlement date in investing refers to the date that an investor takes legal ownership of a given security. It’s the day that a transaction or trade is final, in other words. It’s like buying a car or house — the transaction process may take some time, but it’s not really final until the keys are handed over.

Since 2017, the basic settlement date for a transaction was two business days after the trade date. That changed in May of 2024, when the SEC decided to accelerate the settlement process to one business day.^[1]

Types of Settlement Dates

Depending on the type of security involved in a trade or transaction, settlement dates may vary. That said, you can generally expect a settlement date to be one business day following the sale or purchase of a stock, bond, or exchange-traded fund (ETF). This is sometimes referred to as “T+1,” meaning “trade date, plus one day” to settle.

However, some types of securities, like bonds, may require between one and three business days (T+3).

Note that the time to settle is the same whether you’re investing online or through a traditional brokerage.

Trade and Settlement Dates Explained

To recap, the trade date is the day that an investor actually executes a trade from their brokerage account — they decide to buy or sell a security, and go through the necessary steps to make the transaction. That day, say it’s a Tuesday, is the trade date.

Again, if you’re buying stock, it’ll take one business day for everything to settle. So, if you made the trade on Tuesday, the settlement date will probably be on Wednesday (one business day later).

These delays between the trade date and settlement date are built in, and there’s not much you can do to speed it up — it’s more or less how stock exchanges work.

Why Is There a Delay Between Trade and Settlement Dates?

Given modern technology, it seems reasonable to assume that everything should happen instantaneously. But settlement rules go back decades, to the creation of the Securities and Exchange Commission (SEC) in 1934, when all trading happened in person, and on paper.

Back then, a piece of paper representing shares of a security had to be in the possession of traders in order to prove they actually owned the shares of stock. Paper transactions sometimes took as long as five business days after the trade date, or T+5.

Recommended: A Brief History of the Stock Market

What Is the T+1 Rule?

The T+1 rule refers to the fact that it now takes one day for a trade to settle. For example, if a trade is executed on Tuesday, the settlement date will be Wednesday.

Note that weekends and holidays are excluded from the T+1 rule. That’s because in the U.S., stock exchanges are open from 9:30am to 4:00pm Eastern time Monday through Friday.

Before the T+1 rule took effect in 2024, the general rule for settlement dates was T+2.

What Investors Need to Know About T+1

The T+1 rule in settling applies to trading of stocks, and some mutual funds. Some bonds settle at T+1, T+2, or T+3.

Investors who plan on engaging in cash-account trading need to know about trade vs. settlement dates. Cash accounts are those in which investors trade stocks and ETFs only with money they actually have today.

Meanwhile, margin trading accounts allow investors to trade using borrowed money, or trade “on margin.”

An investor may notice two different numbers describing the cash balance in his or her brokerage account: the “settled” balance, and the “unsettled” balance. Settled cash refers to cash that currently sits in an account. Unsettled refers to cash that an investor is owed but won’t be available for a few days.

Are T+0, or Real-Time Settlement Dates Possible?

Market observers have called for the T+1 rule to be reevaluated, as the settlement process could be accelerated in order to improve trading conditions.

Clearinghouses — which serve as middlemen in financial markets, and ensure the transfer of a security goes through — successfully lobbied for the settlement process to be changed from two days to one. Before that, market volatility prompted greater scrutiny of regulations surrounding clearing and settlement. That included a lot of trading during the meme stock frenzies in 2020 and 2021.

Moving to T+0 (or real-time settlement) would need the approval of the SEC and collaboration with dozens of Wall Street stakeholders. But the real-time transactions made possible in the cryptocurrency market by blockchain technology have escalated chatter about modernizing securities markets.

Potential Violations of the Trade Date vs Settlement Date

Knowing the difference between trade date vs. settlement date can allow investors to avoid potentially costly trading violations.

The consequences of these violations could differ according to which brokerage an investor uses, but the general concept still applies. Violations all have one thing in common: They involve the attempted use of cash or shares that have yet to come under ownership in an investor’s account.

Cash-Liquidation Violation

To buy a security, most brokerages require investors to have enough settled cash in an account to cover the cost. Trying to buy securities with unsettled cash can lead to a cash-liquidation violation, as liquidating a security to pay for another requires settlement of the first transaction before the other can happen.

Let’s look at a hypothetical example: Say Mira wants to buy $1,000 worth of ABC stock. Mira doesn’t have any settled cash in her account, so she raises more than enough by selling $1,200 worth of XYZ stock she has. The next day, she buys the $1,000 worth of ABC she had wanted.

But because the sale of XYZ stock hadn’t settled yet, and Mira didn’t have the cash to cover the buy of ABC stock, a cash-liquidation violation occurred. Investors who face this kind of violation three times in one year can have their accounts restricted for up to 90 days.

Freeriding Violation

Freeriding violations occur when an investor buys stock using funds from a sale of the same stock.

For example, say Jay buys $1,000 of ABC stock on Tuesday. Jay doesn’t pay his brokerage the required amount to cover this order within the one-day settlement period. But then, on Thursday, after the trade would have settled, he tries to sell his shares of ABC stock, since they are now worth $1,100.

This would be a freeriding violation — Jay can’t sell shares he doesn’t yet own.

Incurring just one freeriding violation in a 12-month period can lead to an investor’s account being restricted.

Good-Faith Violation

Good-faith violations happen when an investor buys a security and sells it before the initial purchase has been paid for with settled funds. Only cash or proceeds from the sale of fully paid-for securities can be called “settled funds.”

Selling a position before having paid for it is called a “good-faith violation” because no good-faith effort was made on the part of the investor to deposit funds into the account before the settlement date.

For example, if an investor sells $1,000 worth of ABC stock on Tuesday morning, then buys $1,000 worth of XYZ stock on Tuesday afternoon, they would incur a good-faith violation (unless they had an additional $1,000 in their account that did not come from the unsettled sale of ABC).

With these examples in mind, it’s not hard for active traders to run into problems if they don’t understand cash-account trading rules, all of which derive from trade date vs. settlement date. Having adequate settled cash in an account can help avoid issues like these.

Settlement Date Risks

Given that a lag exists between the trade date and settlement date, there are risks for traders and investors to be aware of — namely, settlement risk, and credit risk.

Settlement Risk

Settlement risk has to do with one of the two parties in a transaction failing to come through on their end of the deal. For example, if someone agrees to buy a stock, but then does not pay for it after ownership has been transferred. In this case, the seller assumes the risk of losing their property and not receiving payment.

This tends to happen when trading on foreign exchanges, where time zones and differing regulations can come into play.

Credit Risk

Credit risk involves potential losses suffered due to a buyer failing to hold up their end of a deal. If a transaction is executed and the buyer’s funds are not transferred before the settlement date, there could be an interruption in the transaction, or it could be canceled altogether.

History of Settlement Dates

The SEC makes the rules regarding how stock markets operate, including trades, and even what a broker does in regard to retail investing. As such, the SEC is tasked with creating the clearance and settlement system — a power it was granted back in the mid-1970s.

Prior to the SEC’s involvement, exchanges and transfers of security ownership were left up to participants, with sellers delivering stock certificates through the mail or even by hand in exchange for payment. That could take a long time, and prices could move a lot, so the SEC came in and set the settlement date at five business days following the trade date.

But as technology has progressed, transactions have been able to execute much faster. In 1993, the SEC changed the settlement date to three business days, and in 2017, it was changed to two days. In 2024, it was officially made T+1.

The Takeaway

The trade date is the day an investor or trader books an order to buy or sell a security, and the settlement date is when the legal exchange of ownership actually happens. For many securities in financial markets, the T+1 rule now applies, meaning the settlement date is usually one business day after the trade date — not including weekends or holidays. An investor therefore will not legally own the security until the settlement date.

While there’s been chatter that the settlement process needs to speed up to real-time settlement, it’s still important for investors and traders to know these rules so they don’t make violations that lead to restricted trading or other penalties.

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FAQ

What’s the difference between trade date and settlement date?

The trade date is when an investor initiates a buy or sell order, and the settlement date is when ownership of the underlying security is actually transferred. That now happens one business day after the trade date (also called T+1), owing to an SEC rule change in 2024.

Is the settlement date the issue date?

Typically, the settlement date and issue date are the same, as the settlement date is when a security actually exchanges hands. But there are times when the two can be different, concerning specific types of securities.

Why does it take one day to settle a trade?

The one-day lag between the trade date and settlement is designed to give a security’s seller time to gather and transfer documentation, and to give brokers time to clear funds needed for settlement.