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Apache is functioning normally

May 13, 2023 by Brett Tams

Because of economic uncertainty, some companies have resorted to pay cuts to help cut costs. For the workers affected, it likely means scouring their budgets to trim some of their expenses. Taking a pay cut means facing the reality of no longer living the same financial life.

If you’ve just taken a pay cut — or you’re worried that you might soon be facing one — here are four strategies to handle your finances after your salary is reduced.

1. Update Your Budget

First and foremost, create a budget if you don’t already have one. List all your expenses for weekly purchases, from groceries to gasoline and parking fees. Add monthly bills, including rent or mortgage, car loan, streaming services or cable, cellphone, utility bills, credit cards, student loans, and any other debt such as personal loans.

Next, examine all your expenses to see which ones you can lower or eliminate for the next six months. Add your income and include part-time jobs or side hustles, tax refunds, bonuses, and any child support or alimony. This will help you determine how much money you can spend for necessities, expenses, entertainment, and other things such as doctor visits.

In addition to a budget, create a plan for both short-term financial goals and long-term goals. A plan will help you determine when you can pay off any loans and how much you want to save for something like a down payment on a house.

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2. Track Your Spending

You could use a free money tracking app that can help you keep tabs on your spending and help manage your debt. To track your spending, decide if you want to track it daily, weekly, or biweekly. You might try different time periods before you decide on one.

After you track your spending for two or three months, you’ll see a pattern emerge that indicates where most of your money goes.

3. Cut Expenses

One place many consumers can cut costs is from entertainment, such as their streaming services. These can really add up. Canceling all or some of these services can improve your cash flow, which is how much money you have left over at the end of the month.

Another place where you can slash expenses is from your food budget. Consider using digital coupons, shopping at warehouse clubs, or going out to eat for lunch instead of dinner to save money on food.

Your expenses include debt such as credit cards, student loans, and personal loans. Paying more than the minimum balance, refinancing to a lower interest rate. and making extra payments can help you pay down the loan sooner.

Consider refinancing your student loans by checking out both fixed and variable rates. Interest rates are at historic lows. You might be able to pay down your credit card bills faster by taking out a personal loan; those interest rates are often lower. And if that’s the case, the debt could be paid sooner.

Automating your finances can make your life easier. This will also help you avoid paying late fees. You can either have your bills paid automatically through your checking account or set yourself a reminder on your calendar if you have some bills such as utilities that are a different amount each month.

You can also automate your savings. You can have money taken out of your checking or savings account each month and have it automatically invested into your workplace 401(k) plan or an individual retirement account (IRA).

In addition, you could consider opening an online bank account with a high-yield APY. That way, your savings could earn money for you as it’s sitting in your account.

Ways to Save

When your salary has been slashed, there are several ways you can save money immediately and long term.

Call your mortgage, auto loan, utilities, credit card, and student loan companies to see if you can defer loan payments for several months. Skipping a few payments can help you get back on your feet sooner. If the company cannot provide this option, see if the interest rate can be lowered on, say, credit cards.

Check with your local nonprofit organizations. Many provide food or partial payments for utility bills. Look online to see if stores are offering deals. Stock up on staples such as beans, rice, and pasta if they are on sale.

If you are still short of money, you might consider talking to family members and friends about obtaining a short-term loan.

Now might be the time to use credit card rewards for cash, food, or gift cards.

People who have been saving credit card rewards for a vacation might want to go ahead and use them now. Some credit card companies will let you transfer the rewards for cash to your statement or use them for food delivery.

Other companies let you use your rewards to receive gift cards. Using these gift cards at retailers that sell staples and necessities such as food, detergent, and other personal items can help you spend less money.

Many credit cards will give cash back on purchases such as food and gasoline. See which credit cards are the most beneficial for your financial needs before signing up for a brand-new credit card.

Another way to save money is to use cash for gasoline. Some gas stations offer a cheaper price for consumers who use cash. The savings can add up quickly, especially if you have a longer commute.

Finally, each month, look for other ways you can save money. If your credit card company denied your request last month to lower your interest rate, try calling again. Rules can change often.

4. Save for Retirement

While you could skip saving for retirement, it’s ideal to continue socking away some money each month from your paycheck into a 401(k) plan or IRA. The money you stash away for retirement can lower your taxable income, meaning you’ll owe the IRS less.

Continuing to save money for retirement is a good habit, especially if your salary reduction is temporary. Once you stop contributing to a retirement account, it can be difficult to catch up on your retirement savings. If you have your retirement contribution automatically deducted from your checking or savings account, saving for your future is easier.

The Takeaway

While it can be difficult to navigate a pay cut, creating a budget, tracking your spending, shopping for deals, and cutting expenses can help you save and get through a tough time.

In addition, opening a new savings account could help you maximize your money. With SoFi Checking and Savings you’ll earn a competitive APY and pay no account fees.

See how SoFi Checking and Savings can help your money do more.

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Apache is functioning normally

May 11, 2023 by Brett Tams

Save more, spend smarter, and make your money go further

Teenagers tend to have few financial obligations. They may need to work a part-time job to earn spending money, but generally, no one is expecting them to put food on the table or manage important assets. It’s usually understood that high schoolers don’t yet have the life experience or maturity for those kinds of responsibilities.

And yet, we allow them to take out tens and even hundreds of thousands in student loan debt before they turn 18. That’s a financial obligation on par with buying a home, entrusted to kids who can’t even rent a car. Unfortunately, it’s a reality for most young people looking to get a degree.

That’s why every student needs to be prepared for the harsh reality of borrowing so much money. The more prepared you are to pay back those loans as soon as possible, the less likely you’ll be struggling financially in your adult years. A strong repayment approach can mean the difference between a debt-free life in your 20s and a lingering debt burden in your 30s – and thousands in owed interest. Using a loan calculator with amortization schedule will show you how much your payments need to be in order to pay down the loan in a given time frame.

If you’re about to take out student loans or already have them, here’s what you need to know.

Know What Kind of Loans You Have

Student loans often get lumped into one group, but they can vary widely. The two main types are private loans and federal loans. Like their namesake, federal loans are offered by the federal government. A private loan is a loan offered by a private bank or credit union. Most students have federal loans or a mix of both federal and private.

Federal loans are considered a better option than private loans because they have more repayment and forgiveness options. They also tend to have lower interest rates.

Private loans often require a cosigner, someone who will take on the responsibility of paying off the loan if you default or can’t make payments. Most students have their parents act as the cosigner.

Write down what kind of loan you have, the account number, the interest rate and the amount you originally borrowed.

Know How Much You’re Borrowing

Many students sign up for student loans assuming they’ll be able to pay them off easily after graduation. Most don’t realize how much they’re borrowing until they’ve graduated and the loan comes due.

The best thing you can do for your future self is to look at how much you’ve borrowed so far, how much you’re taking out currently and how much you’ll need for the duration of your time in school.

In 2012, Indiana University started sending out letters to current students explaining how much they owed and how much they would have to pay each month after graduating. Those letters proved to be very effective, reducing how much students borrowed by more than 10%. Three years later, the Indiana General Assembly passed a bill mandating that all state schools release similar letters to their students.

Knowing how much you’ve borrowed will make you more aware of your financial reality, and motivate you to find alternate ways of paying for school. You may try to take more classes per semester and graduate early or apply for more scholarships and grants. Even working a few hours a week in the student library or behind the front desk at your dorm can make a significant difference.

Most students borrow the maximum amount they’re allowed, but that’s not always necessary. Do a projection of how much your expenses will be this semester, including rent, groceries, transportation, utilities, parking, books and other fees. If you end up needing less than you anticipated, tell your loan provider that you’d like to take out less. If you need the same, then stick with that amount.

Looking at your loans on a semester-by-semester basis can help you borrow more or less depending on your circumstances. Create a budget each semester and stick to it, so you can be confident in the amount you’ve chosen to borrow.

Know Your Interest Rate

Every loan has its own interest rate which depends on the kind of loan, when you borrowed and other factors. Interest rates for federal student loans are determined by the government, but private lenders are allowed to charge as much as they want. Currently, federal interest rates for undergraduate loans are 5.05% and graduate degree loans are 6.6%. In 2017, the average variable interest rate for a private student loan was 7.81% and the fixed-rate average was 9.66%.

Know You Can Pay Back Your Loans Early

If you have federal loans, you can start repaying them while still in college. If you borrow too much or find a lucrative part-time job, you can use some of your income to pay back your loans. Doing that now will mean lower payments after you graduate.

If you have private student loans that don’t allow early payments, you can still save money in a savings account and put that toward your loans once they become eligible for repayment.

Know If Your Parents Took Out Student Loans for You

It’s not uncommon for parents to take out loans either from the federal government or a private lender. Some parents do so without telling their kids, because they want to help fund their education. Even if your parents don’t expect repayment, it’s always good to have an idea of how much they’ve sacrificed to get you there.

Other parents take out student loans and expect their children to repay them, as well as any individual bonds they borrowed. As a student you won’t have access to your parents’ loan information, so you have to ask them for the specifics. If you know you’ll eventually be on the hook for any debt your parents took out, you need as much information about the loans as possible.

Ask Your Parents if Any of Their Financial Information Will Change

How much grant and scholarship money you’re eligible for is often dependent on your financial need. Your parents’ income is the single most important factor in determining that eligibility.

If your parents’ income doesn’t fluctuate, you’ll generally receive the same amount every year. If your parents get divorced or your single parent remarries, then your FAFSA could look quite different for the coming year. When my friend’s dad lost his job, she immediately qualified for more need-based grants the following semester.

Know When Your Loans are Due

Even if you’re a freshman in college, it’s important to know when your student loans will come due. Federal loans give you a six-month grace period after graduation, so you don’t have to start repayment until the fall if you graduate in the spring. Private loans have their own system determining when the first payment is due, which varies from lender to lender.

If you’re a senior in college and plan to graduate this year, it’s not a bad idea to look up when your first bill is due. You don’t want to graduate May 15 and find out you owe $500 on June 1. Knowing when that first payment will hit can save you months of worry, and help you create a repayment plan in anticipation.

Know That Student Loan Debt is Real Money

When you first take out student loans, it’s easy to feel like the amount you borrow is just a number. You won’t be forced to deal with it for years, so that $50,000 total doesn’t actually feel like $50,000 dollars. For a teen used to making minimum wage at a coffee shop, that amount is hard to wrap your head around.

But make no mistake, that money is very real – and you will have to pay it back eventually. Acknowledging the reality of your situation can help inform the decisions you make about applying for grants and scholarships, working a side job and managing expenses throughout the year.

Talk to a friend or family member who graduated college with student debt and ask them about their experience. They may be able to shed some light on the reality of living with debt after graduation.

Where to Find Help

The financial aid office at your university can help you suss out where your loans are coming from, how much you’ve borrowed and how to contact your lenders. Once you know who your lenders are, you can reach out to them for more specific information.

You can find a list of the loans you’ve taken out by checking your credit report, which you can do via AnnualCreditReport.com. There are three credit bureaus that publish credit histories, so you’ll want to check all three if it’s your first time looking at your report.

Some lenders may fail to report student loans on your credit, so don’t rely on that exclusively. However, if your credit report shows student loans or other loans that don’t look familiar, contact that lender. It’s possible for lenders to report student loans to the wrong person if you have a similar name or social security number.

If you know you’ve taken out student loans and don’t see them on your credit report, that doesn’t absolve you of the debt. Mistakes made by the lender will still affect you, so be vigilant.

The views and opinions expressed in this content are those of the author and do not necessarily reflect the opinion or view of Intuit Inc, Mint or any affiliated organization. This blog post does not constitute, and should not be considered a substitute for legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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Zina Kumok is a freelance writer specializing in personal finance. A former reporter, she has covered murder trials, the Final Four and everything in between. She has been featured in Lifehacker, DailyWorth and Time. Read about how she paid off $28,000 worth of student loans in three years at Conscious Coins. More from Zina Kumok

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Apache is functioning normally

May 11, 2023 by Brett Tams

Having children can be rewarding, but thanks to higher rates of inflation, it’s also getting more expensive. Today, parents can expect to spend around $310,000 to raise a child from birth up to age 17, according to a recent Brookings Institution analysis of data from the USDA.

If you’re considering growing your family, understanding all the costs involved can help you prepare financially. Let’s take a closer look at the average annual cost of raising a child in the U.S. and how that figure has changed over the past two decades.

What Is the Cost of Raising a Child in the US in 2022?

Adjusting for higher future inflation, the Brookings Institution estimates it costs $310,605 for a middle-class family to raise a child born in 2015 up to age 17. Of course, the amount you end up spending depends on a number of factors, including household income, the cost of childcare, and where you live.

If you want more personalized insights to help you plan your spending, consider using an online calculator.

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A Comparison of the Cost of Raising in Child in 2000 vs 2022

The average cost of raising a child in 2000 looked much different than it does now, thanks in large part to the recent surge in inflation rates.

In 2000, a typical middle-income family could expect to spend $165,630 to raise a child to the age of 17. In 2022, that same family would spend $310,605, according to the Brookings Institution analysis, which adjusted the USDA’s most recent estimates for higher expected future inflation. Note that this amount doesn’t include extras like summer camp or birthday parties, nor does it factor in the cost of college.

Top Expenses of Raising a Child in 2022

When it comes to the average cost of raising a child from birth to 17, middle-income families can expect to spend around $17,255 per year. The following table shows where that typically money goes.

Cost category	Average percent (%) of spending
Housing	29%
Food	18%
Child care and Education	16%
Transportation	15%
Healthcare	9%
Miscellaneous	7%
Clothing	6%

Source: USDA’s Expenditures on Children by Families, 2015

Top Expenses of Raising a Child in 2000

Average middle-income parents in 2000 spent around $9,201 per year on child-rearing costs. As the chart below shows, housing and food were the biggest expenses. But compared to 2022, parents spent less on other things, like healthcare and child care and education.

Cost category	Average percent (%) of spending
Housing	33%
Food	18%
Transportation	15%
Miscellaneous	11%
Child care and Education	10%
Healthcare	7%
Clothing	6%

Source: USDA Expenditures on Children by Families, 2000

How to Reduce the Cost of Raising a Child Today

No matter when you become a parent, you’ll likely have some major expenses. The good news is, it is possible to save money while raising kids. Here are some tips to consider:

• Look for ways to lower housing expenses. Housing is the number-one expense for families, so finding ways to trim expenses there can really help you save. For instance, if you’re planning to move, you may want to expand your search to include smaller, less expensive homes located in neighborhoods with lower property taxes.

• Purchase secondhand clothes. Kids tend to outgrow their clothing quickly. Rather than spend a lot on new outfits, shop secondhand whenever possible. Tag sales, thrift stores, and consignment sites are all good places to explore.

• Make the most of your local library. Are expensive streaming subscriptions eating away at the family budget? Consider canceling some of those streamers and heading on over the local library. Not only can you check out books and audiobooks for free, you can also rent DVDs and enjoy free events.

• Shop generic. When it comes to basics like diapers, toiletries, and household cleaners, skip the fancy brand names and go for less-expensive generic versions.

Recommended: From One Child to Two: How to Financially Plan

More Financial Tips for Parents

Whether you’re looking to start a family or add to your brood, there are also some smart financial habits you can start today that can make it easier to afford raising children. As a bonus, these habits can also help you teach your child about money management.

• Pay down debt quickly. When a borrower takes on debt, they repay not only the amount they borrowed, they also owe interest and fees to the lender in exchange for borrowing the money. That’s why it’s so important to pay off debt quickly. The sooner you erase your debt, the less interest you’ll have to pay.

• Create a budget that grows with your family. Coming up with a budget — and adapting it to meet your current needs — can help your finances roll with whatever changes life has in store. It’s a good idea to sit down once a month to evaluate what’s working in the budget, what can be improved, and what new expenses are on the horizon. A spending app can also help you keep tabs on where your money is going.

• Prioritize savings. When you’re raising a family, it’s easy to let long-term savings goals fall by the wayside. One way to make saving second nature is to sock away a portion of each paycheck into a savings account or investment account. By paying yourself first, you’re better positioned to reach your financial goals, whether that’s putting multiple children through college, investing, or saving for retirement.

Recommended: Creating an Investment Plan for Your Child

The Takeaway

Having a family can be rewarding — and expensive. The average middle-class family today will pay around $310,000 to raise a child to age 18. Housing, food, and child care/education are among the top three biggest expenses. The good news is, there are ways to manage expenses and still save for long-term financial goals.

If you need help organizing your finances, consider using a money tracker app. The SoFi Insights app connects all of your accounts in one convenient dashboard. From there, you can see all of your balances, spending breakdowns, and credit score monitoring, plus you can get other valuable financial insights.

Stay up to date on your finances by seeing exactly how your money comes and goes.

FAQ

How much does it cost each year to have a child?

The average middle-class family will spend around $17,255 per year to raise a child.

How much does it cost to raise a child to 18 in 2023?

According to a 2022 Brookings Institution analysis of data from the USDA, a middle-class family will spend $310,605 to raise a child to the age of 18.

How much does a baby cost on average?

The average middle-income household family can expect to spend around $12,680 a year to raise a child from birth to 2 years of age, according to the most recent USDA data.

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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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Apache is functioning normally

May 11, 2023 by Brett Tams

One of the very few good moments of 2020 (besides the release of “Tiger King”, of course) was when federal student loans were put in an interest-free moratorium after the CARES Act was approved. The original plan was for payments to restart in September of that same year, but that didn’t happen. Instead, we got … [Read more…]

Apache is functioning normally

May 10, 2023 by Brett Tams

Inside: Are you thinking about moving out? This guide will help you figure out how much money you need to save and where to find affordable housing. Will $5k be enough to move out?

Moving out for the first time is a huge milestone. It’s a chance to start fresh, create your own space, and live on your own terms.

But it can also be a daunting prospect, especially when you’re trying to figure out how much it will cost.

You want to know if $5,000 is enough to move out?

But there are a lot of factors to consider before making the decision to move out, and we’ve laid them all out for you in this ultimate guide.

So whether you’re just starting to think about moving out, or you’re ready to start packing your boxes, read on for everything you need to know about making the big move.

How much money do I need to move out?

Experts recommend having at least $6,000 to $12,000 saved up before moving out.

However, it’s possible to move out with as little as $5,000 if you focus on knowing how to live cheap and have a stable source of income.

However, if you don’t have a job before moving out, the need for a huge savings account is huge.

How much money should I have if I want to move out?

The minimum amount of money required to move out will depend on where you plan to live and your living expenses.

Shortly you will learn factors to include initial moving costs, rental deposit, and ongoing costs like rent, utilities, and food.

If you are looking to move out in an HCOL area, then you will need more than an LCOL city. At this point in your life, it is important to understand HCOL vs LCOL and how it affects your finances.

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What are the expenses you should consider when moving out?

Moving out on your own can be a daunting and expensive task.

There are many expenses to consider when budgeting for your new place especially when you are learning how to move out at 18.

This guide will help you estimate the cost of moving out and provide tips on how to save money.

1. Rent/Utilities

The cost of rent varies depending on the location and size of the apartment or home, with the median rental cost in the US being around $1700 per month.

Along with rent, utilities like electricity, gas, water, and internet can cost around $400 per month.

To save money on rent and utilities, consider finding roommates to split costs or negotiating with landlords for a lower rent.

Rent is your biggest expense when figuring out the ideal household budget percentages.

2. Rent Deposit

When renting an apartment, you will typically need to provide a rent deposit. This deposit is a sum of money paid upfront to the landlord to cover any damages or unpaid rent at the end of the lease.

The cost of a rent deposit can vary depending on the location and the landlord’s requirements, but it can range from $1,000 to $5,000 or one to three months of rent.

To save money on a rent deposit, consider looking for apartments with lower deposit requirements or negotiating with your landlord for a lower amount. A clean rental history will help you with this.

3. Moving Expenses

Moving out can be an expensive process, but with some planning and budgeting, you can keep costs under control.

When considering moving expenses, be sure to factor in the costs of moving truck, packing supplies, such as boxes and tape, as well as the cost of hiring movers

To save money on these expenses, try finding free packing materials on Buy Nothing groups or ask friends and family to help you move. You can also minimize your possessions and have less to move.

4. Renter’s Insurance

When moving out and renting a home or apartment, it’s important to consider getting a renter’s insurance policy to protect you from unforeseen events.

Home insurance, also known as renter’s insurance, is a special type of insurance policy that protects your property against losses or damage stemming from covered perils, including fires, storms, or theft. It can give you peace of mind and help you repair or replace your possessions in the event of unforeseen situations.

Insurance premiums are based on various factors, including where you live, how much you choose to insure, and your deductible. Your credit score and history may also affect your insurance rates.

5. Furniture and Appliances

When moving into a new home, it’s important to consider all the necessary expenses for furnishing the space. This includes appliances like a refrigerator, stove, oven, and microwave, as well as daily living items such as a mattress, table, and couches.

I remember when I moved into my first apartment by myself and there wasn’t a washer or dryer in the apartment. Just hookups. I had one of two choices: 1) rent from the management company for $35 a month or 2) buy new appliances with 0% interest for $35 a month. I choose option #2 and it saved me money in the long term.

To save money, consider buying used furniture from thrift stores or online marketplaces like Facebook Marketplace. You can also find plenty of free furniture if you are not picky.

By being thrifty and smart with your purchases, you can furnish your new home without breaking the bank.

6. Housewares

When moving out on a budget, it’s important to consider the essential housewares you’ll need to make your new place feel like home. Here’s a list of must-haves and their estimated costs:

By prioritizing these essential housewares, you can make your new place feel like home without breaking the bank.

Don’t forget to check out thrift stores and Facebook Marketplace for gently used furniture and household items. With a little creativity and resourcefulness, you can furnish your new home on a budget.

7. Internet and Phone Bills

The average cost of internet and phone plans varies depending on the provider and the plan you choose. However, you can expect to pay around $50 to $100 per month for internet and $40 to $80 per month for a mobile phone plan. In addition, there may be additional fees, such as equipment costs or activation fees, which can add up quickly.

To minimize these expenses, consider bundling services with one provider. Many companies offer discounts for bundling internet, phone, and cable services.

8. Credit Card Payments

If you thinking about moving out and are currently swaddled in debt, then you probably don’t have enough money to move out. If you have high-interest credit card debt, prioritize paying it off before moving out.

Automating savings on essential bills using Truebill can also help you manage your credit card payments while covering the costs of moving out.

Additionally, ensure that you have an emergency fund and enough money to stay a year to handle unexpected expenses.

Things may get harder if you have to pay for college without help from parents.

How to calculate your moving out budget

Moving out on your own requires careful planning and budgeting.

To calculate your moving-out budget, start by determining your monthly expenses once you move out. Make sure to include the factors discussed above.
Then, decide on your target move out date.
Now, figure out how many months you have to save.

For example, if your target move out date is in 6 months and you need to save $5,000 to cover your expenses, you’ll need to save about $833 per month.

Additionally, create an emergency fund to cover unexpected expenses such as medical bills or car repairs. Aim to save at least 3-6 months’ worth of expenses in your emergency fund.

By creating a detailed monthly budget and sticking to it, you can ensure that you can afford to live on your own and achieve your goal of moving out.

Tips and tricks on how to move out

So, you’re finally ready to move out and start your life as an independent adult.

But before you can start your new life, there are a few things you need to take care of first – like, you know, finding a place to live and figuring out how to pay for it.

Learn the lessons from those who did not move out with enough cash – like me.

Tip #1: Create a Budget and Stay Within Limits

Moving out with only $5000 can be challenging, but creating a budget and sticking to it can make the process much easier.

To start, subtract your monthly bills from your monthly income to determine your basic budget.

For instance, if you make $2500 per month and pay $1500 for rent and bills, you have $1000 left for living expenses.
Allocate $400 for groceries and other necessities, $200 for transportation, and $100 for utilities.
This leaves you with $300 for entertainment and other non-essential expenses.

To stay within your budget, consider using a budget binder to track your income and expenses.

Be mindful of living within your means and avoid overspending by resisting the temptation to spend your first paycheck on new household items or entertainment. Instead, opt for more affordable options such as walking around your new neighborhood or having a picnic in the park.

Tip #2: Reduce Expenses Where Possible

One of the hottest topics is becoming frugal green. To save money and the environment at the same time.

When it comes to furniture, try buying used or refurbished items or borrowing from friends and family. Additionally, cutting back on unnecessary expenses such as dining out and entertainment can free up more money.

By being resourceful and creative, it is possible to move out on a budget without sacrificing quality or comfort.

Remember to allocate 50% of your monthly pay towards necessary expenses, 30% towards things you want, and 20% for debt repayment and long-term savings.

Tip #3: Look for Low-Cost Rentals

Finding low-cost rentals can be a challenge, but there are several options available to those who are willing to be flexible and creative.

Renting a basement suite or studio apartment can be a more affordable option.
Consider couch surfing, subletting, or home-sharing arrangements.
Home-sharing can be particularly attractive as it allows you to pair up with an elderly homeowner who needs a little extra help in exchange for low rent.
Find a tiny home rental.
If you don’t mind sharing the space, you can also consider getting a roommate or looking into pod shares. Pod shares are co-living spaces where individuals rent a bed in a shared room, with access to other community spaces like a bathroom and kitchen.
Become a housesitter and be paid to move out. Learn more with Trusted Housesitters.

With a little bit of research and creativity, it is possible to find low-cost rentals that fit your budget and lifestyle. Remember to determine exactly how much you can spend on rent and be open to alternative housing solutions to help keep your costs at a minimum.

Tip #4: Look Into Getting Renters Insurance

When renting you are more than likely going to live closer to others, which means more things can go wrong. Don’t skip out on renter’s insurance, as it can provide the peace of mind and protection you need as a first-time renter.

Without renter’s insurance, unexpected disasters such as fires, storms, or theft can leave you with thousands of dollars in damages that you would have to pay out of pocket.

Renter’s insurance typically costs around $20 per month and can save you a lot of money in the long run. Some affordable options for renter’s insurance include Lemonade, State Farm, and Allstate.

It’s important to shop around and compare policies to find the best one for your needs and budget.

Tip #5: Plan for Emergencies and Unexpected Expenses

It is crucial to plan for emergencies and unexpected expenses.

Start by setting aside a minimum of $1000 for an emergency fund.

Ideally, you should aim to save at least three to six months of living expenses in a rainy day fund. Remember, having a contingency plan and emergency fund can provide peace of mind and protect you from financial hardship.

Tip #6: Start Saving for a Security Deposit

Remember to prioritize saving for a security deposit by setting a specific savings goal and putting aside a portion of your income each month before you move out!

With dedication and discipline, you can reach your goal and move out with confidence.

More than likely, if you are a good tenant, you should get your full security deposit back after your lease is over.

Tip #7: Start a Side Hustle

Starting a side hustle can be a great way to earn extra money while still maintaining your full-time job. You can earn extra income through various side hustles depending on your skills and interests.

The most common side hustles are online jobs, such as transcription, virtual assistance, proofreading, blogging, freelance writing, data entry, graphic design, and web design. These jobs are flexible and eliminate the need for driving anywhere, requiring only a laptop or computer and a good internet connection.

In fact, learning how to make money online for beginners is a trending topic.

As you start your side hustle, put in as much time as you have available to maximize your earnings. Remember that a side hustle is unlikely to replace the need for a real job, but it can provide a great way to earn extra money and pursue your passions.

Tip #8: Plan Ahead and Create a Timeline

When planning to move out on a budget, it’s important to create a realistic timeline.

Start by mapping out all the expenses you’ll need to cover, such as rent, utilities, food, and transportation. Along with how much money you have already saved for unknown expenses.

Stay organized by keeping a checklist of everything you need to do and when it needs to be done. Don’t rush the process – take your time and make sure you have everything in order before making the big move.

Remember the millionaire quote, failing to plan is planning to fail, so take the time to plan ahead and create a realistic timeline.

Is 10000 a good amount to move out with?

According to various sources, $10,000 is generally considered enough to cover moving out expenses and leave room for emergencies.

However, the actual cost of moving out can vary depending on location, rent prices, and cost of living.

Learn how to save 10000 in a year!

FAQ

There are a couple of different ways to save more money including:

Cut back on frivolous expenses like eating out and buying new clothes.
Sell anything you have that you don’t want or need on websites like Craigslist, Facebook Marketplace, Depop, or eBay.
Consider getting an extra part-time job or side hustle to increase your income.
When it comes to furnishings, be thrifty by asking friends and family if they have anything extra they’re getting rid of or checking out second-hand or discount stores.

Set saving goals and track your expenses using a spreadsheet. That will give you a clear picture of what is and is not possible.

Renter’s insurance is highly recommended, and in some cases, required by leases. It provides protection against unforeseen disasters such as fires, storms, or theft that can damage or destroy your possessions.

While it may seem like an unnecessary expense, it is usually affordable and can save you a lot of money compared to paying out of pocket for damages.

Not having renters insurance can leave you vulnerable to unexpected expenses and potential financial ruin.

You should not spend more on your rent payments than you are comfortable.

Just like with getting a mortgage, you should spend no more than 30% of your take-home pay on rent payments.

You don’t want to be stressed about finances, so you should set a realistic budget for rent that allows you to comfortably cover all of your expenses while still having some money left over for savings.

So, is 5000 enough to move out?

It really depends on your situation.

If you’re moving to a cheaper area and don’t have many expenses, you might be able to make it work.
However, if you’re moving to a more expensive city or have a lot of bills, you might need to save up more money.

When determining how much money is needed to move out, there are several factors to consider, which we covered above. These include where you plan to live, your living expenses, initial moving costs, ongoing costs, and emergency funds.

It’s essential to have a budget and do the math to determine the minimum amount required for a smooth transition to independent living on a tight budget.

Ultimately, it’s important to do your research and figure out what’s best for you.

Source: moneybliss.org

Apache is functioning normally

May 10, 2023 by Brett Tams

Save more, spend smarter, and make your money go further

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Save more, spend smarter, and make your money go further

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Apache is functioning normally

May 8, 2023 by Brett Tams

Housing and transportation may be the top line items in a typical family budget, but the cost of meals and groceries can also be significant. In fact, food prices increased 8.5% between March 2022 and March 2023, according to the Bureau of Labor Statistics’ most recent Consumer Price index report. While all consumers are impacted by price hikes, families in particular may be feeling the pinch at checkout.

If you have a larger family, creating a budget can help keep you from overspending at the grocery store. But how much should you allocate for food each month? Keep reading to learn more about creating a grocery budget for a family of five.

Average Grocery Budget for American Family of Five

When coming up with your grocery budget, it helps to first understand how much you can expect to spend on food. The average household spends roughly $438 per month or $5,259 per year, on at-home food, according to the most recent statistics available from the Bureau of Labor Statistics.

But how much should you budget for groceries if you have a family of five? A good starting point is the USDA’s food plans, which include four spending levels: thrifty, low-cost, moderate-cost, and liberal. According to the latest food plan available, here’s what a family of five should plan to spend on groceries:

Spending level	Cost per month	Cost per year
Thrifty	$922	$11,064
Low-cost	$991	$11,892
Moderate-cost	$1,233	$14,796
Liberal	$1,488	$17,856

Source: USDA food plans

How Much to Budget for Groceries Per Person

How much a family of five end up budgeting for groceries depends on a number of factors, like how much the store charges, the type and amount of food purchased, and whether they use a grocery delivery service.

Want to figure out how much to allocate in your food budget for each family member? You can refer to the USDA food plans above for a general idea of monthly and yearly costs, and divide the amounts by the number of members of your family. You can also look at the last three to six months of your family’s grocery bills and calculate a monthly average. Divide that amount by the number of members of your family.

Once you see how much you’re actually spending per person each month, you can adjust your budget accordingly.

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How to Prioritize Your Grocery Spending

When you’re feeding a large family, you want to make the most of your grocery list. The best way to prioritize your food spending is to create a monthly budget and stick to it. Having a plan in place makes it easier to curb grocery store splurges.

If you’re new to budgeting, you may want to use the 50/30/20 rule. This framework calls for earmarking 50% of your monthly after-tax income on things you need (such as food, housing, and transportation), 30% on things you want (such as a new outfit or tickets to a concert), and 20% on savings and debt repayment.

Another helpful tool to consider is a budget planner app, which allows you to easily set spending and savings goals and monitor your progress.

How to Stay Within Your Grocery Budget

Staying on top of a grocery budget can be challenging, especially when you have a larger family. The following tips can help:

Don’t Shop When You’re Hungry

When your stomach is grumbling in the middle of the grocery store, chances are you’re more likely to give in to cravings. This may leave you with a cart full of impulse buys, which could add to your overall cost.

Make a Shopping List

Writing down everything you need before you start shopping is a good way to ensure you only pick up the items you need and are in your budget.

Embrace Meal Planning

Create a weekly menu ahead of time so that when you hit the store, you know exactly what ingredients to buy. If your finances allow, consider reserving a small chunk of the budget so that each family member can pick out a treat for that week.

Recommended: How to Create a Budget in 6 Steps

How to Budget for Restaurants and Dining Out

While eating at home can be more cost effective than dining out, many memories are made at restaurants. If your family is planning to have meals out, how much should you expect to spend?

The average American household spends $3,030 on dining out, according to the most recent data available from the Bureau of Labor Statistics. However, larger families should expect to spend more.

Tips for Reducing Your Grocery Budget

Looking to lower your grocery bill? Consider these simple strategies:

• Buy in bulk

• Shop at discount retailers

• Choose generic brands

• Meal prep for the week

• Shop sales

• Join rewards programs

• Use coupons

• Use a credit card that earns cash back rewards

Tips for Getting Help If You Can’t Afford to Buy Groceries

Families that are struggling to pay for food have several government resources they can turn to for help. Food stamps (also referred to as SNAP benefits), the WIC program, school meal programs, and food assistance programs are all worth looking into. Depending on the program, you may need to meet certain criteria, such as an income limit, in order to be eligible.

Examples of the Cost of Common Groceries

As anyone who has stepped foot in a grocery store lately can attest, food costs are going up. But just how much depends largely on where you live. Still, it can be helpful to understand national prices so you can prepare your food budget accordingly. Below is the national average of six common items, according to an NBC News analysis of NielsenIQ data.

Average Cost of Groceries in 2022
Orange juice (60 oz.)	$4.01
Chicken eggs (dozen)	$4.05
Chicken breast/lb	$3.90
Fresh ground beef/lb	$5.96
Bacon (16 oz.)	$5.39
Loaf of bread	$3.27

How to Stretch Your Grocery Budget

Stretching a grocery budget requires careful planning. A few places to start: planning meals for the week, taking advantage of weekly ads and local deals, and shopping at more affordable grocery stores. Savvy shoppers can even design meals around the discounts and coupons being offered at the more affordable grocery stores.

Another strategy is to buy in bulk where it makes sense. Purchasing larger amounts of staples like rice, flour, and paper products can provide a better bang for your grocery buck.

Recommended: Free Credit Score Monitoring

The Takeaway

Food is a major expense for most Americans, but perhaps more so for larger families. Creating a budget can help keep costs in check. On average, a family of five spends anywhere from $922 to $1,488 a month on groceries, according to USDA monthly food plans. If you’re looking to curb your spending, consider meal planning, buying in bulk, and shopping at more affordable grocery stores. If you need help paying for groceries, government programs like SNAP benefits and WIC can provide support.

To make budgeting for groceries and other expenses easier, consider using a money tracker app. The SoFi Insights app connects all of your accounts in one convenient dashboard. From there, you can see all of your balances, spending breakdowns, and credit score monitoring, plus you can get other valuable financial insights.

Stay up to date on your finances by seeing exactly how your money comes and goes.

FAQ

What is a realistic grocery budget for a family of five?

Depending on how much you have to spend on food, a realistic grocery budget for a family of five may range anywhere from $922 to $1,488 a month on groceries, according to USDA monthly food plans. To determine how much your family should spend each month, consider adding up the last three to six months of grocery bills and finding the monthly average.

How can a family of five save money on groceries?

There are steps a family of five can take to save on groceries, including meal planning, taking advantage of coupons and weekly deals, and making a shopping list ahead of time. Those strategies allow families to spend more mindfully and, ideally, lower their grocery bill.

What is a reasonable grocery budget?

The average American household spends $5,259 per year on groceries, according to the most recent statistics available from the Bureau of Labor Statistics.

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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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Apache is functioning normally

May 4, 2023 by Brett Tams

It’s easy to overspend, especially when you can buy things online with a couple of clicks or simply swipe a credit card. But over time, those purchases can really add up.

Approximately one in five American workers run out of money before their next payday, according to a recent survey. And, sticking to a budget is a problem many people have, other research shows.

Fortunately, there are strategies that can help you develop healthier spending habits. Here are six ways to stop spending money.

Ways to Curb Spending

1. Mapping Out a Budget

Without a budget, you can spend money mindlessly, without thinking much about it. Mapping out your spending patterns and essential expenses by creating a household budget can help you see where your dollars go and figure out where to cut back. In short, it can teach you how to be better with money.

To create a budget, start by tracking your current spending patterns. Check your monthly bank statements or receipts from recent purchases. You can also use a free tool to track your spending, which makes the process even easier.

Identify essential expenses from non-essential ones. Necessary spending includes such items as housing/rent, groceries, utilities, healthcare costs, and transportation. Non-essential costs are things like eating out, leisure travel, and entertainment. You may be surprised to see how small daily purchases — such as eating out for lunch every work day — can add up to a lot of money spent over the course of each month.

Once you figure out how much you tend to spend in each expense category, it may be easier to identify places where you could cut back and reduce excessive spending. A monthly budget can allot specific amounts of money for vital expenditures, savings, investing for retirement, and fun activities, too.

Recommended: 10 Personal Finance Basics

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2. Calculating Hourly Earnings

A night out may not seem like a huge splurge in the moment — especially when compared to your total earnings for the month. But, that same expense can quickly appear more significant, when you tabulate how many hours of work are needed to pay for it.

To figure out your hourly pay, divide your after-tax pay by the number of hours worked. If you get paid twice a month and work a 40-hour week, divide your total earnings by 80 (two weeks times 40 hours).

For instance, a birthday dinner and drinks with friends that costs $200 would translate to eight hours of work if you earn $25 per hour.

Whether that spend feels worth it is a personal decision, but determining how much you earn per hour may provide incentive to stop spending — or to consider carefully before you do to make sure the expense feels worth it.

Recommended: 15 Creative Ways to Save Money

3. Understanding What Triggers Spending

Whether it’s the gourmet food section at the grocery store, the Instagram influencer with the covetable closet of clothes, or that friend who drops big bucks on concert tickets, for all of us, the urge to spend can be triggered by emotions and outside influences.

Even something as seemingly innocuous as the physical shopping environment — think in-store displays, prominent markdown messaging, and subtler cues like store layout — can trigger people to want to spend. When figuring out how to stop spending money, it can be key to understand which emotional or psychological cues make you take out your wallet.

There are a couple ways that understanding your spending triggers may help. For starters, you might plan ahead to avoid scenarios that make you more prone to spend. And, when the urge to shell out cash strikes, evaluate whether the purchase is really necessary or if it mainly feels good but isn’t really helping you in the long run. These tactics can help you manage your money and feel in control.

4. Shopping with a Plan

Of course you can’t always avoid spending triggers. We all have to shop sometimes. Still, it may be easier to avoid the temptation to overspend by creating a shopping list and sticking to it.

For example, going grocery shopping may be easiest to do right after work. But, that time of day may also coincide with when you’re at your hungriest. Hungry shoppers, research shows, tend to buy more non-essential items.

Creating a set list of items to pick up can help you focus on what you really need — rather than buying out of want.

5. Sleeping on It

Before you buy something, take some time to think it over, rather than impulse spending.

Mulling over purchases can be beneficial. You can impartially evaluate whether you might still treasure the item months down the line, or more or less ignore it once the shopping impulse fades.

Studies show that activities that provide instant gratification, such as impulse shopping, activate feel-good chemicals in the brain. But, if that purchase comes at the expense of your long-term goal to save, buying now could set you up for deep regrets later on.

“Sleeping on it” for a few hours (or even days) may give you some necessary psychological distance from the urge to buy.

6. Finding It Cheaper

Of course, there are times when you’ll choose to spend money on specific purchases. Comparison shopping may help you cut back on expenses. You may be able to find the item cheaper elsewhere. Or, you might find a similar brand for less.

It’s also a good idea to keep an eye out for discounted pricing. Holding off on a bigger purchase until it goes on sale, at holiday time, for instance, may lead to additional savings.

Stopping Spending Money Starts with Awareness

Naturally, it’s not possible to stop spending money altogether. But adopting a few smart habits, such as budgeting, understanding your spending triggers, and shopping with a list, could help you take control of your money and spend less.

3 Money Tips

If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.
If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.
If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.

Better banking is here with up to 4.20% APY on SoFi Checking and Savings.

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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Apache is functioning normally

May 2, 2023 by Brett Tams

Getting more from your money doesn’t have to be a long-term project. Making some simple and strategic money moves over the next 30 days can help you reduce spending and increase savings, and take some of the stress out of dealing with finances.

The methods below can put you on track to achieving your financial goals.

Steps to Manage Your Personal Finances

As you put these personal finance moves into practice, remember that you’re aiming for progress, not perfection. You may want to do a bunch of them at once, or choose just a few to focus on.

1. Set Financial Goals

If you haven’t done so already, set some important long-term goals, like saving for retirement or your child’s child’s education. This can help you figure out how much money you need to dedicate to these milestones.

Setting short-term goals can be helpful, too. Maybe you’re saving for a special vacation next year. Or perhaps you’re planning to buy a new car in five years. Mapping out your game plan could help get you there.

2. Create a Budget

Start by adding up your necessary expenses, such as housing costs, utilities, insurance, car payments, and groceries, and subtract that amount from your monthly take-home income. Put what’s left toward paying down debt, and then make deposits into a high-yield bank account where your money can grow.

3. Set Up Direct Deposit

Are you still trekking to the bank to deposit your paycheck? Sign up for direct deposit so your money can go directly to your bank account.

While you’re at it, set up an automatic transfer so that a portion of your paycheck goes into savings every month.

4. Increase Retirement Contributions

If you’re eligible to participate in your company’s 401(k) plan, make sure your contributions are enough to take advantage of your employer’s matching funds, if they offer a matching contribution.

Each matching contribution varies by company. Many companies match 50 cents for every dollar you contribute, up to 6%.

5. Make $10 or $25 in Spending Cuts

Look for small expenses you can cut, and then direct the extra cash to savings or paying down debt, such as credit card debt. For instance, bring lunch to work a couple of days a week instead of eating out.

6. Look for Helpful Apps

A good app can help you monitor your spending and savings, keep you on budget, and set financial goals. Check out SoFi Insights® where you can track all of your money in one place.

7. Negotiate Your Bills

Call your Internet and cell phone providers to ask about lowering your monthly bills. There may be discounts or cheaper plans you can take advantage of.

When you call, be firm but courteous. Check out competitors’ rates, and if they’re lower, use those prices as a bargaining chip in your conversation.

8. Review Insurance Policies

Do you have enough car and home insurance to cover your needs? Do you have too much? Review your policies and add or subtract coverage as necessary. And shop around for providers that offer good coverage for less money.

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9. Check Your Credit Score

Your credit score is a number that represents your creditworthiness. Lenders use it to determine whether to let you borrow money and at what interest rate. Check your credit score. If it needs some work, try it by doing such things as reducing debt and paying your bills on time.

10. Review Your Credit Report for Potential Mistakes

You can request a free credit report from the major credit reporting bureaus — Experian, Transunion, and Equifax — at Annual CreditReport.com. Review your report for mistakes that could be negatively affecting your credit score, and contact the credit bureaus about any errors you find.

11. Look for Credit Cards that Offer the Best Rewards

Earn on your spending with credit cards that offer rewards. Look for those that match your interests. For instance, if you love to travel, find a card that offers travel rewards. But watch out for cards with high interest rates. If you’re not someone who pays their card off every month, it may be worth steering clear of these.

12. Use Credit Card Points

Your credit card rewards aren’t doing you any good if you don’t redeem them. So have some fun and plan a trip or a new purchase with the rewards you’ve accumulated.

13. Consider Refinancing Your Loans

If you have outstanding loans, such as a mortgage or student loan debt, explore refinancing at a lower interest rate.

A lower rate could help you save money in the long run. You may even be able to accelerate your repayment, depending on the terms you select when you refinance.

14. Sell Some Stuff to Make Money

If you’ve done some decluttering of the extra items around your house, think about selling the things you no longer need. They’ll go to a new home, and you’ll get some extra cash in your pocket.

15. Consider Cutting Costly Habits

The cost of certain habits can really add up. If you’ve been meaning to quit smoking or stop impulse shopping, for instance, use financial planning as an incentive to do so. You’ll save money and potentially get on the road to a happier, even healthier, you.

16. Talk about Money with Your Partner

Set aside some time to discuss finances with your significant other. Discuss goals for your money, spending habits, repaying debts, and so on. Conversations like this help make sure you’re both on the same page, and can help prevent money conflicts in the future.

17. Figure Out Your Market Value

Has it been a while since you’ve had a pay raise? Do some research to determine what you’re worth and how much you should be making. Then, use that information to ask your boss for a salary increase, or to find a job that pays you more.

18. Negotiate Credit Card APR

If your credit cards carry a high-interest rate, ask the credit card company to lower your APR to help you manage your debt. If you have a low credit score, they may say no. But you won’t know unless you ask.

Even if they turn you down, speaking to the credit card company may be helpful. For instance, they should be able to tell you what you can do to make lowering your interest rate more likely.

19. Use Your FSA Funds

If flexible spending accounts (FSAs) are part of your employee benefits package, be sure to use them for doctors appointments or qualified purchases. Money in these accounts may not carry over year to year, so if you don’t use it, you lose it.

20. Cancel Unused Subscriptions and Memberships

Did you subscribe to a music service or for a gym membership you rarely use? A 2022 survey found that 42% of people pay for a subscription they don’t use and have forgotten about. Score extra savings by canceling unused subscriptions.

21. Talk to a Financial Planner

When it comes to making money moves, you don’t have to go it alone. A financial planner can help you develop your goals and suggest strategies to help you reach them. You can look for a qualified planner with an hourly fee you can afford. It may be worth it if it can help you save more overall.

22. Consider a New Bank Account

As you take steps to improve your financial health, it makes sense to evaluate your bank account. There may be options that offer you more, such as a minimum balance or higher interest. Explore what’s out there to see what’s most beneficial for you.

If you’re ready to switch to a new bank account, a SoFi Checking and Savings account could help you reach your money goals. You’ll earn a competitive APY and pay no account fees.

Better banking is here with up to 4.20% APY on SoFi Checking and Savings.

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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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The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
SOBK0423050

Source: sofi.com

Apache is functioning normally

May 1, 2023 by Brett Tams

You’ve probably had to exchange foreign currency when traveling to another country, whether you were on a vacation or a business trip. And you likely realized it can be expensive.

Though you typically have to pay fees to access foreign currency, it’s worthwhile to learn how to do so for as little money as possible. Just knowing the ropes can help you shave down the moolah you pay to get a supply of euros, yen, or pesos.

In this guide, you’ll learn:

• Where can you convert currency?

• How can you get a good rate of exchange on converting currency?

• What are the best and worst places to convert currency?

The Benefits of Exchanging Foreign Currency

Though many places will accept credit cards overseas, it can still be useful to convert your dollars to foreign currency. Here’s why:

• There may be places that only accept cash, such as when you buy food at markets, haggle for souvenirs, or shop at stores that don’t accept any other form of payment.

• Having some cash is a great backup form of payment in case you run across issues with your credit card.

• Cash can be a helpful way to create a budget while traveling. Say, if you give yourself $30 a day for food, having that cash in your pocket can help you avoid going overboard vs. swiping too much with a credit card. That can keep your budget in balance.

• Exchanging foreign currency also gives you the potential advantage of avoiding currency conversion fees and staying within your vacation budget. For instance, some international retailers give you the opportunity to pay in local or your own country’s currency. If you choose the latter, you may get a poor exchange rate.

By exchanging foreign currency ahead of time, you may be able to avoid paying more than necessary and better take advantage of more favorable exchange rates.

Finding Places to Exchange Currency

Now, for the question of where to exchange currency: In general, the best places to exchange foreign currency are locations you can visit before you head to the airport.

Banks and Credit Unions

Most major commercial banks will have foreign currency available for you to exchange. Your bank may only charge you the exchange rate and no additional fees depending on the currency you want to exchange. In this case, you may nab the most cost-effective method to exchange currency.

Your financial institution may offer several ways to request foreign currency — online, over the phone, or at your local branch.

Not all banks keep every possible currency on hand (and the same holds true for credit unions), so you may need to do some advance planning. It could take several business days to exchange currency.

Recommended: What Is a Foreign Currency Bank Account?

Withdrawing Cash Before You Leave On a Trip

It may be a good idea to have some cash on hand to exchange as you need it while traveling, especially if you’re unsure of how much you need. Keep in mind that you may have fewer options for saving on fees.

However, if you convert cash as you need it, you won’t be stuck wondering what to do with leftover foreign currency after you return home.

Another option is to withdraw cash in local currency at ATMs overseas. Ask your bank if it has any fee-free ATMS in international locations. If not, double-check to see if there are any fees, and what foreign exchange rate you may be subject to. Depending on what you learn, it could be a smart move and be a good solution to where to convert currency.

Online Currency Conversion

The last answer to “Where can I exchange currency” is with online currency conversion companies. Many offer competitive fees and exchange rates. Some may only charge you the mid-market rate — known as the “true” exchange rate or what banks charge each other. Conversion fees may be a flat rate or a percentage of the amount you exchange.

These services, like Travelex, may make cash available at their bricks-and-mortar locations or get funds to you at home.

Another advantage of online currency conversion companies is the convenience. In many cases, you may be able to initiate a currency conversion 24/7. You may also be able to receive the foreign currency as soon as within a few minutes.

If you choose to go this route, compare fees and exchange rates to see what the best fit is for your situation.

Recommended: How to Deposit Foreign Currency in Your Bank Account

Worst Ways to Exchange Foreign Currency

Now that you know where to exchange currency, take a closer look at some places to avoid, where converting currencies can wind up being more expensive than necessary.

Airport Kiosks

Exchanging your cash at kiosks at the airport usually results in some of the highest fees and less favorable exchange rates out of all the options mentioned above. However, they can be a convenient option, especially if you weren’t to exchange any currency ahead of time.

Prepaid Debit Cards

Though it depends on the prepaid debit card you choose, you may be able to use this kind of plastic outside the U.S. at international ATMs. If you do, however, you may be subject to fees such as third-party ATM fees and foreign transaction fees. Plus, the foreign currency exchange rate may not be great.

Some foreign currency conversion services may offer these cards; again, check fees and rates to see if this is a good deal.

Local Currency Conversion Kiosks

You may find currency exchange kiosks at highly-trafficked tourist attractions or even your hotel. Like airport kiosks, they’re a convenient place to exchange currency, but you could be paying high fees and facing lower than average exchange rates.

Alternatives to Exchanging Foreign Currency

Instead of exchanging cash and using it while traveling, you might use your credit or debit card if you’re traveling to another country.

Using Your Credit Card On Trips

When using your credit card overseas, try to choose one that doesn’t charge foreign transaction fees. That way, you’re not paying more fees than necessary. As mentioned above, choose to pay with your credit card in local currency to avoid paying more fees. (There is also the option of international credit cards you might explore.)

You’ll probably also want to avoid using your credit card for a cash advance during your trip. In most cases, you’ll end up paying a cash advance fee and interest starts to accrue immediately.

Before going on your trip, make sure to notify your credit card issuer or bank of your plans. That way, they don’t accidentally deny your transaction believing it’s fraudulent. Fortunately, though, credit card protection likely covers you if you are scammed while traveling.

Using Your Debit Card in a Foreign Country

Debit cards are typically backed by Mastercard or Visa, brands which are known around the world. You may find that you are able to use your debit card for transactions when traveling, especially where those brands are welcomed. Your debit card may also help you withdraw cash from an ATM internationally.

The Takeaway

Exchanging foreign currency before you go on your trip is most likely your best option as it tends to offer the best fees and exchange rates. Using your credit card is also great, either as a backup, or if you want fraud protection. Whichever option you choose, shop around to ensure you’re getting the best fees and rates.

Working with your bank is the best way to ensure you’re financially sound when you go on your trip. And having the right banking partner will also keep you in good shape every day when you’re home. A SoFi Checking and Savings account — though it doesn’t currently offer foreign currency exchange — has plenty of features designed to help you maximize your hard earned dollars. This includes no account fees, automatic saving features, and a competitive annual percentage yield (APY). Plus, you’ll spend and save in one place, which can simplify your money management.

Better banking is here with up to 4.20% APY on SoFi Checking and Savings.

FAQ

Do banks exchange foreign currency?

Yes, most banks will exchange foreign currency. However, the types of foreign currency available will differ from one bank to another. Your financial institution may need a few days to get the currency you need.

Is it better to go to a bank or currency exchange?

In general, it’s usually better to go to a bank because you may not have to pay conversion fees depending on the currency. However, currency exchanges may also offer competitive currency exchange rates.

Where can I change currency for free?

When wondering “Where can I exchange currency?” one place where you may be able to do so for free is at your bank. This, however, will depend on the currency and your bank’s policy.

Photo credit: iStock/Anurak Tepkhamtai

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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.
SOBK0223015

Source: sofi.com

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Know You Can Pay Back Your Loans Early

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Ask Your Parents if Any of Their Financial Information Will Change

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