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What’s your runway?

That is, how long could you cover your expenses if you lost your job or faced some other hardship?

Sobering questions like these are on all of our minds as uncertainty about the economy consumes much of the country. Last month concerns about tariff policies and a potential recession turned Americans’ expectations about future income prospects negative for the first time in five years, according to The Conference Board’s Consumer Confidence survey.

If you have enough saved to cover three to six months worth of living expenses — as experts recommend — you’re already ahead of the game, since many people don’t.

But figuring out how to stretch those limited dollars over an unemployment gap of unknown length can still be stressful. You can take control of your finances — and be better prepared — by planning out exactly what steps you would take if you’re laid off. Create an emergency financial plan, as it were.

There are no set rules for these kinds of plans, and for some, it might be enough to make a quick mental list of backup options.

But you can get as detailed as you want, writing up a step-by-step plan for what you would cut from your monthly budget when and how you would pivot if your reserves are dwindling. The key is the timing: determining what you would do right away and which extra steps you would take if your unemployment was extended.

Here are a few questions an uber planner will want to answer as they create their emergency financial plan:

1.    Would you be eligible for unemployment benefits, and if so, how much could you expect to collect each week? This roundup of rules for each state can help.

2.    How much monthly income will your household have without yours? This would include unemployment benefits, SNAP or other government assistance you may be eligible for, a spouse or partner’s income, investment income, and alimony or child support.

3.    What are your baseline monthly expenses — your rent or mortgage payment, utilities, food, gas, debt payments, etc. — and how much do you spend on optional things? Can you rank those optional or discretionary items from most to least cuttable? (For instance, maybe you cancel streaming services and stop getting takeout right away, but only stop your gym membership or kid’s piano lessons if your savings fall to a certain level.)

4.    Could you take on any temporary or part-time work while you look for your next permanent role? If so, how much could you earn?

5.    At what point will you consider taking more drastic measures and what will those be? Could you borrow on your credit cards or take out a loan? Apply for forbearance with one or more lenders? Dip into your 401(k) or IRA?

So what? Unemployment most typically lasts about 10 weeks, but 23% of the people unemployed in April had been out of work for at least 27 weeks, according to government data. Having a healthy emergency savings and a plan for using it can help you prepare you for whatever happens. Plus, confronting the worst-case scenario often reduces stress and anxiety — and gives you back control of the uncontrollable.

Related Reading

•   5 Things to Do to Come Back From a Layoff (SoFi)

•   Reducing the Harms of Unemployment (University of North Dakota)

•   In Case of Emergency, Break Glass: Managing Household Liquidity (Vanguard)

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

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Before the Internet, recommendations for investing and managing your money were the exclusive purview of bow-tied stockbrokers, high-brow wealth managers and credentialed financial planners. The only free advice came from family members or friends who might occasionally share a hot (and potentially dubious) stock tip.

Now, there are so many options — many of which are free or low-cost — that it’s hard to know how to choose or which ones to trust.

There are robo-advisors and AI-driven investing and budgeting apps. There’s free or low-cost advice from some financial institutions (SoFi included.) And there are online resources: everything from investing courses to government tools to non-profit educational websites. Many people even look to YouTube “finfluencers” and rags-to-riches videos.

In short, while technology has democratized investing and revolutionized consumers’ access to financial advice, it’s also complicated things. Americans looking for guidance must now judge not only which types of human input are valuable, but how important human input is at all. (And on social media, how “human” is the input from people you don’t know — and more importantly who don’t know you.)

Determining where to turn for financial guidance can be overwhelming, and sometimes even paralyzing. But understanding your options — including potential pitfalls — is empowering. As you explore what’s out there, here are a few things to keep in mind, plus some tips for gauging whether the advice you’re getting is worthwhile.

The Advent of Finfluencers

Social media platforms like TikTok, Instagram and Youtube have become popular sources of financial advice for the younger generations that use them most.

Among U.S. adults seeking advice, 43% of millennials (people born between 1981 and 1996) and 49% of Generation Z (people born between 1997 and 2012) get it from social media, making it their most popular source after friends and family, according to a 2023 Bankrate survey. Conversely, baby boomers most commonly rely on financial advisors, with just 6% turning to social media for guidance.

Social media often resonates with younger people who are looking for affordable ways to make money or accessible answers to gaps in their financial knowledge (more on that later). Many may also feel marginalized or intimidated by more traditional advising models — or even skeptical of them, experts say.

On platforms like TikTok or Instagram, the personalities are entertaining and approachable, the posts and videos are relatable, and financial influencers (or “finfluencers”) — real estate investors, financial advisors, or lawyers who sometimes have millions of followers — post plenty of stock trading recommendations, tax advice and other tips at no cost.

But there are risks to getting advice this way. For one, the guidance is a one-way street. Finfluencers don’t know your situation or circumstances. They often make money through sponsored posts and affiliate marketing, and they have little reason to feel loyal or accountable to you.

Plus, unlike credentialed investment advisors and financial planners, finfluencers don’t have to pass tests or adhere to specific standards. This can be particularly dangerous if they have a hidden agenda.

“There is little monitoring or regulation governing finfluencers’ activities, even when they make half a million dollars a year and their identities are hidden behind pseudonyms,” three business professors wrote in a Harvard Business Review article last month.

In fact, in 2023, more than a third of investors younger than 55 said they had acted on financial information they got online or on social media that turned out to be misleading or incorrect, according to a survey conducted for the insurer Nationwide.

(P.S. SoFi financial planners are required to make recommendations in your best interest. And we offer unlimited access to them with a SoFi Plus membership.)

An Evolving Definition of Financial Advice

How we get financial advice is one aspect of the changing landscape. But even what counts as financial advice is morphing.

Traditional guidance has revolved around things like investing, buying a house, or planning for college or retirement. But a 2024 PolicyGenius survey found that those who turn to social media are often looking for “finance hacks” on topics like day trading or so-called infinite banking.

Some can be useful, others dangerous.

For example, cash stuffing (a super simple budgeting method where you can only spend the cash you’ve stuffed in an envelope) has reportedly drawn more than 3 billion views on TikTok and can help people avoid overspending or getting into credit card debt. But there are also reckless posts like “Avoid Paying Your Debts” or “Avoid Making Your Next Mortgage Payment Using this HACK!”

The Timing of Financial Advice

Financial advice can take on greater urgency later in life, once your wealth has had more time to grow.

But Americans can only correctly answer fundamental financial knowledge questions about half the time, and younger people tend to have even fewer of the basics mastered, according to TIAA Institute, which measures the nation’s financial literacy every year.

That means guidance on topics like saving for retirement can be even more valuable earlier on. (For instance, waiting an extra 10 years to start means you’ll need to invest much more to get close to the same result.)

How to Gauge Credibility

The plethora of options makes it hard to gauge when you’re getting financial advice you can trust. You may encounter certain things that don’t pass the smell test, and other things that give you comfort. Here’s how to know if you’re on the right track.

Red flags

•   Promises of guaranteed or exceptional returns. Outside of CDs, they don’t really exist.

•   Suggestions that you can avoid paying taxes. Legal strategies to minimize your tax bill are fine. Hot “tips” on how to skirt your bill are not, and will attract attention from the IRS.

•  Complaints on FINRA’s BrokerCheck database. FINRA, the regulator of brokers and the firms they work for, exists to protect investors from unscrupulous actors, so checking their records is key. (Just know that not all complaints make their way into the database.)

Good signs

•   Transparent, easily readable disclosures about fees.

•   Calculators that let you model various financial scenarios.

•   Advice to take the long-term view — after all, markets go up and down.

•   Prudent guidance on a diversified portfolio across low-cost funds, stocks and bonds.

Image Credit: Bernie Pesko/SoFi Source: Adobe Stock

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

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You want to buy a house. But mortgage rates are twice what they were less than four years ago. Should you wait?

You could, but experts don’t see much relief on the horizon. The average 30-year fixed mortgage rate is 6.81%, and economists at the Mortgage Bankers Association don’t see that dropping below 6.4% through at least 2027. Property values also continue to go up after skyrocketing 43% during the first two years of the pandemic. This is great once you own, but not so great when you’re looking to buy.

Looking at mortgage rates over time does give some helpful perspective, though. Those pandemic-era deals below 3% were an aberration. Before the Great Recession, rates had never dipped below 5%. And double-digit interest rates were the norm in the 80s.

Of course, home prices relative to income are much higher now compared to the last few decades. The median sale price on a single-family house in the U.S. has risen well over $100,000 just since the pandemic in 2020. And steep prices are a lot tougher to stomach when your borrowing costs are higher, too.

Of course, home prices relative to income are much higher now compared to the last few decades. The median sale price on a single-family house in the U.S. has risen well over $100,000 just since the pandemic in 2020. And steep prices are a lot tougher to stomach when your borrowing costs are higher, too.

In fact, buyers of a typically priced home today are signing up for a monthly housing payment of $2,860, according to data from the real estate broker Redfin. That’s roughly $1,200 higher than when rates started rising at the start of 2022.

So what? If you’re looking to buy a house sooner rather than later, you might need to adjust your approach and expectations. Higher mortgage rates could be the new normal and real estate prices, while not climbing as fast as before, are still climbing.

A few strategies to help you adapt:

•   Buy now, refinance later. If you can afford to buy at today’s mortgage rates, you can aim to refinance your loan at a lower rate in the future to lower your payments. Just be prepared if rates don’t drop, since there’s no guarantee.

•   Apply for an “ARM” loan rather than a fixed-rate loan. Rates on adjustable-rate mortgages (ARMs) may be lower than those on fixed-rate mortgages, at least for the first three to 10 years. That can make it a more budget-friendly option, especially if you’re not planning to live in the home forever. Just know that if rates rise after that initial period ends, your costs will go up.

•   Try lowballing or asking the seller for concessions. Even though prices are high, sellers don’t have the same upper hand they once did. List prices are rising more than twice as fast as sale prices , according to Redfin, showing buyers have increasing leverage. (For more on this and other strategies, read 5 Things to Do If You Don’t Want to Wait to Buy a House.)

Related Reading

•   5 Things to Do If You Don’t Want to Wait to Buy a House (SoFi)

•   Is It Finally a Buyer’s Housing Market? What to Know About Home Prices, Rate ‘Lock-In’ (USA TODAY)

•   Buying a Home Now Requires $50K More Income Than Renting (Axios)

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

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