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Welcome to SoFi’s personal finance help center. While you don’t need to be an expert, it is important to have a good foundational knowledge on personal finance. Start exploring the information below to help you make informed and healthy financial decisions.
When people think of money management, a few important personal finance tips always come to mind, including setting financial goals, creating a budget, tracking spending, and managing debt. Before getting in-depth into each of those strategies here are a few articles to give you a good baseline knowledge on money management and personal finance.
One of the most important steps to get your finances on track is to set your financial goals. By understanding what is important for you and your money, you can then lay out your options to see what you want to save for and how much you want to save. Not everyone will have the same personal financial planning goals—and that’s okay. If you don’t know where to start, here are some common financial goals to consider.
Unexpected expenses happen all of the time. Whether it’s car maintenance, a medical bill, or home repair costs, it’s important to have extra cash on hand to cover these bills. If you don’t already have an emergency savings fund, it may be a good idea to start with this as your first financial goal. Consider setting aside three to six months worth of expenses for this fund. That way if you need new brakes next year, you’ll be able to cover that last minute cost.
How to Start an Emergency Fund
This is a common financial goal many Americans have. With the high interest rates that credit cards have, it can be tough to stay on top of your debt. If you have a mountain of credit card debt, making this your primary financial goal may help you stay on track and tackle that debt. It could be a good idea to create a pay-off plan and put more towards your payment each month than the minimum.
Retirement may seem far away, but saving now can help you live the life you want after your 9-to-5 is complete. It’s okay to start small—small amounts can grow over time. In fact, if you start investing in your 20s it can make a difference of hundreds of thousands of dollars by retirement age. Different careers will offer different opportunities. If your company offers a 401(k) plan, you could start there and automatically transfer a certain amount of money from each paycheck to go into that account.
Remember that these aren’t the only financial goals that are important. Maybe you want to pay down your student loan debt or have debt from taxes that you want as your number one priority. Whatever makes sense for your situation is where you should start.
There are many reasons to save money—building retirement savings, saving for a house, creating a vacation fund, or saving for an emergency fund, to name a few. Some personal finances management strategies that are easy to implement right away include: getting rid of unnecessary expenses, creating a budget, automating bill pay, cutting down spending, and keeping track of your finances.
Depending on how far away your goal is may determine where you keep those funds. For example, retirement savings would be best saved in an IRA or a 401(k), whereas an emergency fund may be best held in a high-interest savings account. By keeping money for different goals separated, you can better understand if you’re on the right track to achieve that goal.
This goes hand in hand with budgeting. It’s hard to build a budget when you don’t know where your money is going in the first place. This is where tracking your spending comes in. By taking a look at what you’re spending each month, you can determine areas where you’re overspending and see opportunities to cut back.
It can be tough to know what to change if you’re not measuring in the first place. You may think you spend $100 on gas each month, but it could be a lot more when you actually take a look at your monthly bank statement. Tracking your spending doesn’t need to be a restricting practice. Don’t feel like you can’t spend money on things you want. Instead, look at what you’re spending and shift your priorities so you can cut back in some areas for other things you want.
You’ve probably heard this before, but budgeting is one of the most important aspects of achieving healthy financial habits. A budget doesn’t have to be strict or hold you back from things you want to do. Building flexibility into a budget is essential to staying on track. Budgeting may seem like a lot of work in the beginning, but once you have it set up, all that’s left is tracking and refining.
There are many ways to budget, and what might work for you may not work for other people. It might help to start with your end goal and work back from there. Once you have your ultimate goal you can research different budgeting strategies and figure out which one works best for you. Below are a few popular budgeting methods to try.
This method of budgeting helps you account for every single penny. With zero-based budgeting, your income minus your expenses should equal zero. Every expense will have a purpose, whether that’s for paying bills or keeping extra money in your checking account for emergency expenses. This doesn’t mean that your budget each month has to be the same. Depending on your needs, these figures may change each month.
This is an interesting method that relies on cash transactions. You allocate certain amounts of money per category in cash in an envelope (you don’t have to use an envelope, but just somewhere to keep it organized) and once all of the cash is gone for that category you have to stop spending. This system may not work for everyone, as many people like to use credit cards or debit cards for making purchases. The benefit of this method is that it makes spending tangible.
If you are looking for a budgeting method that offers specific insights, the line item budget may work for you. This method is very easy to create in a spreadsheet by grouping related costs together, tracking both income and expenses. Traditionally used by businesses, it can be modified for personal use as well.
For this method, there are three categories you’ll allocate your spending and savings to. Fifty percent will go to essential needs (groceries, health insurance, mortgage payments etc.), 30% for discretionary spending (personal spending like clothes or a video streaming account), and then 20% will go to savings. For this budgeting method it is important to prioritize savings.
One way to help stay on track of your finances is by automating everything you can. Automating your finances can help avoid late fees and stay on top of your budget. It may seem like a lot of work, but once you have everything set up, it will run on its own.
The first thing to automate is the deposit of your paychecks. Setting up direct deposit is an easy way to make sure your paychecks are added to your account each pay cycle. From there, you can set up an automatic transfer from your checking to your savings. This may make it easier to save as it will automatically get taken out.
Another way to automate your finances is by setting up autopay for your bills. Whether it’s for utility bills, credit card payments, or student loan payments, this could be a great way to stay on top of your monthly bills and avoid fees.
Similar to automating transfers to your savings account, you can do the same thing for your retirement account. Choose a specific account each month you want to save and set up an automatic deduction from your paycheck or your checking account to go into a retirement account. Check out these personal finance articles regarding automation.
Debt can be overwhelming and may seem impossible to conquer. Although it may not be a simple process, there are specific strategies you can put in place to help become debt free.
A good first step is to take account of all the debt you’ve incurred, which could include student loans, credit card debt, or car loans. From there you can create a debt reduction plan. You can mix and match strategies to create a plan that works best for the debt you have.
Here are some of the most common debt payoff strategies that people have seen success with.
This is quite a simple method of paying off your debts in order of smallest balance to largest. You gain momentum as each debt is paid off, like a snowball rolling down a hill. First, list your debt balances from smallest to largest, then make the minimum payments on all of your debt except for the smallest one. For your smallest debt, you’ll want to pay as much as you can each much towards it. Then, repeat this for all remaining debt.
Exploring the Snowball Method of Paying Down Debt
This is slightly different from the snowball method, as it focuses on interest rate rather than debt balance. For this method you would list out your debts in order from highest interest rate to lowest. Pay the minimum on all your debts except the one with the highest interest rate, instead you’ll throw everything you can at it. Repeat this process until all of your debt is conquered.
This is a potential strategy to check out if you have a mountain of credit card debt. When you have a large balance and a high interest rate it can be hard to tackle that debt. A balance transfer credit card will let you transfer your current credit card debt to a lower interest or no interest credit card. But, that introductory interest rate only lasts for a certain period of time, so it’s important to pay off your debt before that period ends.
Basics of Balance Transfer Credit Cards
Debt consolidation is another option to consider. For credit card debt, you could take out a credit card consolidation loan to pay off your current debt. You’ll then have a brand new loan (hopefully with a lower interest rate) with one monthly payment. Qualifying for a lower interest rate could help you save money over the life of the loan vs. continuing to pay the high interest that credit cards have.
Another important aspect of organizing your finances is to understand your credit score, which is a number that shows lenders how risky it would be for them to lend money to you. There are a few different data based factors that determine your credit score including:
Payment history (35%)
Amounts owed (30%)
Length of credit history (15%)
Credit mix (10%)
New credit (10%)
Payment history looks at your past bill payments. Did you pay all your bills on time? How many times have you had a late payment? Amount owed is the amount of debt you currently have. Lenders like to see a low credit utilization (the amount of credit you are using compared to how much you have).
Length of credit history is pretty straightforward. That takes a look at how long you have had a credit card account. Credit mix considers the different types of debt that you have. Do you have student loan debt or credit card debt? New credit takes a look at any new accounts you have opened recently or any new debts you have taken on.
FICO® credit scores are broken down into various categories to understand how good or bad your credit score is:
Exceptional: 800-850
Very Good: 740-799
Good: 670-739
Fair: 580-669
Very Poor: 300-579
Your credit score is not stagnant, meaning there are strategies you can employ to change your score. Paying off debt is one of the main ways to help improve your credit score. Also, paying your bills on time or taking on good debt (like a mortgage).
Not sure what your credit score is? SoFi Insights offers credit score monitoring at no cost. You’ll be able to track your credit score and get weekly updates to stay on top of fluctuations. Plus, you’ll gain understanding of the key factors contributing to your credit score and learn about the influence you have on them.
Learn more about how the SoFi Checking and Savings® mobile banking app can help you spend, save, and earn cash back.
The SoFi / Chargers partnership, in collaboration with Brotherhood Crusade, will assist underserved and under-represented South Los Angeles individuals in Achieving Financial Independence
LOS ANGELES, CALIF. – SEPTEMBER 17, 2020 – The Los Angeles Chargers and stadium naming rights partner, SoFi, the digital personal finance company, today announced a 20-year partnership between the two organizations focused on creating jobs, future leaders and addressing social injustice throughout the South Los Angeles region.
SoFi and the Chargers will team up to put the community at the heart of this season’s activations at SoFi Stadium, creating digital experiences and innovative grassroots programs that have a meaningful future impact to those most in need. To help realize SoFi’s ambition for people to achieve financial independence, SoFi will be investing in community programs to support the launch of Bolt Academy. Created by Brotherhood Crusade – a 50-year-old grassroots organization dedicated to addressing the unmet needs of low-income, underserved, under-represented and disenfranchised individuals in South Los Angeles – and the Chargers Impact Fund, Bolt Academy will be a career training and leadership development program that will provide opportunities to work for the Chargers on game days at SoFi Stadium in 2021.
“At the beginning of our relationship with the Chargers, it was clear we shared a mission to advance educational and economic equality,” said Anthony Noto, SoFi CEO. “We’re proud to support the team and look forward to creating a positive impact in South Los Angeles communities.”
Starting this Sunday when the Chargers host the Kansas City Chiefs, SoFi is pledging to make It’s Good, for Good with the Chargers. For every successful field goal and PAT scored by the Bolts at SoFi Stadium during the 2020 NFL season, SoFi will donate $1,000 to Brotherhood Crusade to help fund financial literacy resources and tools for The Bolt Academy program.
“Supporting under-resourced communities has been a key Chargers initiative for many years,” said A.G. Spanos, Chargers President of Business Operations. “To have a partner not only share this mission but collaborate with us in the manner SoFi has is extraordinary. It is incumbent upon us to level the playing field for those in underserved communities and provide them with the same opportunities and tools others have access to in order to help everyone realize their full potential. We’re excited about the work Brotherhood Crusade and the Chargers Impact Fund are doing and look forward to seeing our future leaders in action at SoFi Stadium come 2021.”
SoFi is the exclusive naming rights partner of SoFi Stadium, the home of the Los Angeles Chargers and Los Angeles Rams. This additional multi-year partnership with the Chargers will provide SoFi with an array of marketing rights, benefits and designations that will connect the brand with Chargers fans throughout Los Angeles and will help drive awareness, build trust and support SoFi’s ambitions to reach and support members across America.
About SoFi
SoFi helps people achieve financial independence to realize their ambitions. Our products for borrowing, saving, spending, investing, and protecting give our more than one million members fast access to tools. SoFi membership comes with the key essentials for getting ahead, including career advisors and connection to a thriving community of like-minded, ambitious people. SoFi is also the naming rights partner of SoFi Stadium, home of the Los Angeles Chargers and the Los Angeles Rams. For more information, visit SoFi.com or download our iOS and Android apps.
About the Los Angeles Chargers
Now in their 61st season, the Chargers continue to stretch the imagination and put on the most exciting show in football. Behind the dramatic games, unforgettable highlights, beloved players, groundbreaking performances, idyllic Southern California setting and one of the best uniforms in the NFL lies an uncompromising drive for success – one rooted in toughness, resilience and old-fashioned hard work. A charter member of the American Football League, the franchise was established in Los Angeles in 1960 and called the Los Angeles Memorial Coliseum home during its first year of existence. From 1961 to 2016, the team played in San Diego and advanced to five of the first six AFL Championship games ever played. The Chargers claimed the 1963 AFL title and later joined the National Football League when the two leagues merged in 1970. Since the merger, the Chargers have gone on to appear in Super Bowl XXIX and have captured an additional 10 division titles. The Chargers were purchased by construction leader, philanthropist and real estate developer Alex G. Spanos in 1984 and have been under the guidance of Spanos’ eldest son Dean, the team’s current Chairman of the Board, since 1994. Dean Spanos’ sons – A.G. Spanos, President of Business Operations, and John Spanos, President of Football Operations – oversee the day-to-day operations of the franchise. The Chargers returned to Los Angeles in 2017 and, beginning with the 2020 season, will play their games in the franchise’s new multi-billion-dollar SoFi Stadium home. For more information, call 1-877-CHARGERS or visit https://www.chargers.com.
About Brotherhood Crusade
Celebrating 52 years of service to the Los Angeles community, Brotherhood Crusade was founded in 1968. The organization’s principal mission is to champion equality and equity by removing and/or helping individuals overcome the barriers that deter their pursuit of success in life and facilitate opportunities for a better quality of life by effectuating improved health & wellness, facilitating academic success, promoting personal, social & economic growth, providing access to artistic excellence & cultural awareness, increasing financial literacy and building community agencies & institutions.
Brotherhood Crusade has a history of building alliances with other organizations, corporations and foundations of goodwill that are committed to and understand the tremendous need for helping our community and people grow and prosper.
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