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When you open a new checking or savings account, some financial institutions require you to make a minimum opening deposit, which might be anywhere from $25 to $100. In some cases, you may also need to meet certain ongoing minimum balance requirements to avoid fees or qualify for a certain annual percentage yield (APY).

Fortunately, there are banks, credit unions, and other financial institutions that don’t require a minimum deposit so you can stash and spend your money even if you’re low on cash. Here are key things to know about minimum deposit and balance requirements for bank accounts.

What Is a Minimum Deposit?

A minimum deposit is the lowest amount of money you need to open a new bank account with a bank or credit union. It can also refer to the minimum balance you must maintain in order to receive certain perks or avoid fees.

Minimum deposits vary depending on the type of account and the financial institution. Some banks do not request a minimum deposit to open a basic checking or savings account, while others require between $25 and $100. Generally, higher minimum deposits are associated with premium services and higher APYs.

If you’re in the market for a bank account, it’s a good idea to check with the bank or credit union to determine whether an initial deposit is required, your options for depositing the funds, and if there are any ongoing balance requirements.

Types of Minimum Balance Requirements

When researching checking and savings accounts, keep in mind that there are typically two types of minimum balance requirements. Let’s clarify those terms, since they can sometimes be used interchangeably and cause confusion.

Minimum Opening Deposits

A minimum opening deposit is the amount of money required to activate a new account, such as a checking, savings, or money market account, or a certificate of deposit (CD). Generally, a money market account or CD will come with a higher opening deposit than a basic savings or checking account.

You can usually make a minimum opening deposit by transferring money from an account at another bank or from an account you already have at that same bank. You can also usually make an opening deposit using a check, money order, or debit card. Keep in mind you are not limited to making the minimum opening deposit — you can typically open a bank account with more than the required minimum.

There are some financial institutions that offer accounts with no minimum opening deposits. However, it’s important to read the fine print. In some cases, these accounts may require you to make a deposit within a certain timeframe (such as 60 days) in order to keep the account open.

Minimum Monthly Balance

A minimum monthly balance is the amount of money that must be maintained in the account each month to enjoy certain benefits or avoid fees. These minimums can range anywhere from $100 to $2,500, depending on the institution and type of account. If you opt for an account with a balance minimum, you may be able to set up alerts on your bank’s app to let you know when your funds are slipping below a certain threshold.

Minimum balance requirements can vary in their specifics, but typically fall into one of these three categories.

• Minimum daily balance: This requirement means you need to maintain a minimum amount of money in your account each day to avoid fees or qualify for certain benefits, like earning interest.

• Average minimum balance: Banks calculate this by adding up the balances in your account at the end of each day over a statement period, then dividing that total by the number of days in the period.

• Minimum combined balance: This involves averaging the total amount of money you have across multiple accounts, such as a checking and a savings account, each month. This combined average must meet the minimum balance requirement to avoid fees or earn benefits.

How Do Minimum Deposits Work?

Minimum deposits work by setting a threshold that must be met to open or maintain a bank account. The minimum opening deposit is required to open a new account, while the minimum monthly balance must be maintained each month (or day) to avoid fees or earn a higher interest rate. It’s important to note that the minimum opening deposit is a one-time requirement, while the minimum monthly balance must be maintained on an ongoing basis.

In addition, some accounts may require a minimum monthly deposit (such as direct deposit of your paycheck) to qualify for certain account benefits, such as earning a higher APY or avoiding a monthly fee.

Real World Example of a Minimum Deposit

Let’s say you decide to open a savings account at XYZ bank. The bank has a $50 minimum deposit to open the account and to start earning interest, so you transfer $50 into the account from an account you have at another bank.

XYZ bank also requires you to maintain a monthly minimum balance of $250 to avoid a $3 service fee. You’re not a fan of fees, so you keep tabs on your account and make sure you always have at least $250 in the account. To help, you set up an automatic alert on your banking app to let you know when the account dips below $250 so you can top up the account and avoid fees.

What Happens If You Don’t Maintain a Minimum?

If you fail to maintain the minimum monthly balance required by your bank, you may be charged a fee, lose any interest you were set to earn that month, or forgo other perks. The specific consequences vary depending on the financial institution and the type of account.

The Takeaway

Minimum deposits are an important aspect of managing a bank account. When you open a new checking or savings account, you may need to make a certain initial deposit to activate the account. You may also be required to keep the balance in the account above a certain threshold in order to avoid a monthly service fee or earn a certain interest rate.

It’s important to be aware of the minimum deposit requirements for your bank account. This helps ensure that you get all the perks of your bank account, while avoiding any unexpected costs.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

What is a minimum opening balance and how much is it?

A minimum opening balance is the initial deposit required to open a bank account. This amount varies depending on the bank and the type of account. For example, some banks may require as little as $25 to open a basic savings account, while others may require several hundred dollars for a checking account that earns interest.

What is a minimum monthly deposit and how much is it?

A minimum monthly deposit is the amount of money you must deposit into your bank account each month to avoid fees or earn certain perks, like a higher interest rate. This requirement varies by bank and account type. Some banks may not have a minimum monthly deposit requirement, while others may require a certain amount, such as $500 or $1,000, to be deposited each month to avoid fees.

What bank has no minimum balance?

Several banks and credit unions offer accounts with no minimum balance requirement. These banks include Ally, NBKC, SoFi, Discover, Connexus Credit Union, Ally, Capital One, and Chime.

Why do banks require an initial deposit?

Banks require an initial deposit to open an account for several reasons. First, it helps ensure that the account is legitimate and that the customer is serious about opening and maintaining the account. Second, it helps cover the costs associated with opening the account, such as processing paperwork and issuing a debit card. Finally, it helps the bank establish a relationship with the customer, which can lead to additional business in the future.

Photo credit: iStock/pinstock

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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 circ*mstances.

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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Source: sofi.com

In need of cash? Some apps can help — but they want to be your bank account, too.

Apps at banking fintech firms Dave and MoneyLion offer small, short-term cash advances to eligible consumers. If you open a bank account or set up direct deposit, the apps sweeten the deal with lower fees or larger borrowing amounts. Apps at other firms, such as Chime, Current and Albert, offer a similar perk for those with accounts: No-fee overdraft services that cover an expense when your account has nonsufficient funds.

But a single feature like extra cash between paychecks is likely not a good reason to wed yourself to a new bank account, says Adam Rust, director of financial services with the Consumer Federation of America, a nonprofit that represents consumer advocacy organizations.

Between banks and credit unions, consumers can choose from more than 8,000 federally insured banking institutions, he says. The flexibility to overspend may be one of many qualities you look for in a new bank.

Here’s how to think through these two separate financial decisions: Getting extra cash and choosing a bank account.

Extra cash: An enticing offer, but with strings

When you urgently need extra money, a hurdle like setting up a bank account — and potentially adding direct deposit — may seem easy to clear if it means getting the cash you need.

Dave’s fee for immediate funding is 5% of the advance amount for users with an external bank account, but just 3% for users with a Dave checking account. MoneyLion offers cash advances of up to $500 to users with external bank accounts, but increases the eligible advance amount to $1,000 if they set up direct deposit to a MoneyLion checking account.

The fee-free overdraft feature from Chime, Current and Albert will pay for certain customers’ transactions when they don’t have enough funds in their account, but only if they have a bank account that receives direct deposits. Chime requires at least $200 a month in direct deposits, and Current requires at least $500 a month. Albert requires direct deposits plus a subscription.

Apps with cash advances or overdraft coverage seem like helpful tools to bridge an income gap. They don’t check credit or charge late fees, and you can usually get a small amount of money — up to $250 covered for overdrafts and up to $500 from a cash advance app — on short notice. Your next paycheck or bank account deposit typically repays what you borrowed. And none of these apps have overdraft fees, which can be around $35 at banks.

But opening a new bank account just for a cash advance or overdraft feature might lead to unexpected inconveniences or worse. Switching banks is hard for a reason: You set up a relationship with a bank or firm, including using your bank account to pay your ongoing bills and subscriptions.

“That’s such a significant part of your financial life — it’s the foundation of your financial life — and to pick that because of a once-every-direct-deposit transaction seems, to me, like a risk of making a mistake,” Rust says.

Compare bank accounts based on low fees and available features

Choosing where to bank involves assessing available features and their associated costs. A good checking account typically has low or no monthly fees, low or no minimum balance requirements, a free ATM network and cheap ways to move money around.

Banking fintech firms — or neobanks — tend to check many of the boxes for a desirable checking account: low costs and some perks not often available at traditional banks. Dave and MoneyLion have $1 monthly fees, either as part of membership or for bank account usage. Chime and Current have no monthly fees. These four offer free ATM withdrawals nationwide through third-party networks, direct deposits up to two days early and cash-back rewards. Albert has all of these features but charges a nearly $15 monthly fee.

Consider features they lack, too

Banking fintech firms often focus on a narrow set of accounts and features. None of the five mentioned offer joint accounts or business bank accounts, in case you manage money with a partner or run a small business. These firms don’t have branch networks for in-person services as an alternative to online or phone support. They’re also not part of the Zelle network, which enables nearly instant transfers across different banks. Other features, such as paper checkbooks, foreign currency and cashier’s checks, aren’t available either.

Most banking fintech firms have federally insured accounts through partner banks instead of being banks themselves. If the firms fail, there can be risks that bank failures don’t have. The Federal Deposit Insurance Corp. (FDIC) sweeps in to protect customers at failed banks to prevent any loss or delay to money access, but that doesn’t happen for bankrupt companies that partner with banks. Neobank failures can result in delays to accessing your money or bank accounts.

Even credit-related perks have limits. Dave and MoneyLion set caps on the amount users can borrow between paychecks. Overdraft features at Chime, Current and Albert have maximum coverage amounts — starting as low as $20 — and some transactions, like online bill payments or transfers, aren’t covered.

Bear in mind, too, that setting up direct deposit with a cash advance app’s bank account just to meet the criteria for a larger advance could disrupt your finances. Funneling your paycheck to two different banks may mean you’ll need another set of login credentials to access your account online, you may need another debit card — and things get even more complex if transfers take days to move from your new account to your primary one.

“It can obviously be a loss of convenience for the consumer to have multiple accounts or to have to only use their MoneyLion account because it could get them greater advances,” says Andrew Kushner, senior policy counsel with the Center for Responsible Lending.

Find alternatives for extra cash

Cash advances and overdraft coverage can be helpful if they’re used occasionally, but if you’re struggling to cover everyday expenses like gas and groceries, consider alternatives that require less commitment to an app and low or no fees.

Some national banks offer small, affordable loans to existing customers, and federal credit unions may provide low-cost payday alternative loans. Financial assistance programs from local nonprofits can help with necessities like food and clothing. Or consider taking out a low- or no-interest loan from a family member.

Source: nerdwallet.com

The peer-to-peer payment network Zelle offers free and almost instant transfers between bank accounts at different U.S. banking institutions. Launched in 2017, Zelle’s network has grown to include more than 2,000 participating banks and credit unions. Many, but not all, bank customers can find Zelle featured in their bank’s mobile app.

Using a bank that offers Zelle in its app has perks: There’s no extra app to download, and your bank may have higher transfer amount limits than what Zelle’s app allows.

Skip down to our lists to see if your bank uses Zelle.

12 online banks that use Zelle

We considered online banks with strong account offerings that participate in Zelle’s network. Click each bank name to read our review:

17 traditional banks that use Zelle

We considered the largest U.S. banks as well as various regional banks that we’ve reviewed. Click each bank name to read our review.

12 credit unions that use Zelle

We considered credit unions we’ve reviewed and that stand out due to their size or services. Some credit unions have geographic or other membership restrictions. Click each credit union name to read our review:

Don’t see your bank or credit union? See the full list of financial institutions in Zelle’s network on Zelle’s website.

Learn more about Zelle

Source: nerdwallet.com

Inside: Are you finding yourself struggling to cover unexpected expenses? This guide will teach you how to create a financial plan and budget that will help you avoid costly surprises.

Life is full of surprises, and not all of them are pleasant. Sometimes, these surprises come in the form of unexpected expenses, hitting when one least expects them.

This can leave you devasted financially. Over the years, we have been slapped with unplanned costs and left scrambling.

However, you can successfully navigate through the rollercoaster ride of money management.

The key is knowing “What are unexpected expenses?’ Along with the knowledge equips you to avoid or mitigate them.

This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosurehere.

What are Unexpected Expenses?

In the realm of personal finance, unexpected expenses are costs you haven’t foreseen or budgeted for. They strike out of nowhere, leaving you scrambling to balance your finances.

These expenses differ from other cost categories such as fixed expenses (weekly, monthly, and recurring costs like rent) and variable expenses (those that do not happen regularly but vary in cost like groceries).

The crux lies in not being able to anticipate these unplanned expenses, making them disruptive to financial plans.

What is an example of unplanned spending?

Unplanned spending often occurs when there’s an unforeseen event that demands immediate financial attention.

Picture this scenario: You take your car for a routine inspection; however, the car fails the inspection due to a defective part that needs immediate repair. Initially, you hadn’t allocated funds for this, but now you have to deal with this unforeseen cost – a classic case of unplanned spending.

Common Examples of Unexpected Expenses

Unforeseen financial events can leave many unprepared and struggling, adding unnecessary stress. This section will delve into examples of typical unexpected expenses that individuals often encounter, providing key insights into how to efficiently incorporate these into your financial plan.

By understanding and preparing for these unexpected expenses, one can effectively mitigate the surprise factor they pose, promoting a healthier and more secure financial state.

We have overcome many times and you can too!

1. Medical Emergencies and Healthcare Costs

Medical emergencies are prominent examples of unexpected expenses. Even with health insurance, costs can amass, thanks to high deductibles, co-payments, and therapies not covered by insurance.

One factor is paying for the medical costs, but the other weighing factor is loss of income when dealing with medical emergencies or critical diseases like cancer.

Overcome this by:

1. Contributing the max each year to your Health Savings Account (HSA). This way you have a bucket of money just for medical expenses.
2. Look into short-term disability insurance that can cover part of your lost wages while you can’t work.

2. Automatic Home or Vehicle Repair Needs

Home and vehicle repairs often sneak up as unexpected expenses. Time, accidents, natural disasters — all can cause wear and tear that demands immediate repair. The consequences of ignoring these repairs can be hefty.

Similarly, significant home repairs such as fixing a faulty HVAC system or leaky roof can set you back by thousands of dollars.

Overcome this by:

1. Be proactive with routine maintenance. Take care of your house and car before problems escalate.
2. Save the same amount each month for home and vehicle repairs separately.

Personally, we save $100 monthly for car repairs as one is a beater car. This amount will be increased to $350 to start saving for a new car. Conversely for home repairs, we keep a minimum of $1000. This amount will fluctuate depending on when we last did a major repair. Since we just replaced our HVAC, our funds are lower.

3. Natural disasters

Natural disasters, such as hurricanes, earthquakes, wildfires, and floods, lead to unexpected spending. The impact of these events can cause significant damage to homes, cars, and other property, leading to repair and replacement costs.

Furthermore, these situations might also necessitate expenses for emergency supplies, temporary shelter, and other necessities. For instance, Hurricane Katrina inflicted a staggering $196.3 billion in damage, illustrating the overwhelming cost of such unpredictable events.¹

Overcome this by:

1. Make sure you have proper insurance whether it is renter insurance or flood/wildlife insurance. Also, make sure you have the proper amount of insurance. As highlighted by the Marshall Fire where most people were underinsured. ²
2. Storing cash on hand at home in case of an emergency. A cushion of money will always be helpful.

4. Increase in Bills

Monthly bills are a constant in our lives, but what’s not constant is their amount. Landlords may raise the rent when leases are up for renewal, utility companies could increase their rates, and insurance premiums may also inflate periodically.

All these scenarios lead to higher monthly expenses. For example, the U.S. energy costs per household rose by 13% in 2022 reaching the highest percentage increase since it was measured. ³

Being unprepared for these increases can cause significant financial strain.

Overcome this by:

1. Get one month ahead on your bills. Then, you will start building a cushion. Also, known as aging your money – thanks to YNAB.
2. Be proactive and realize that with inflation high. All of your bills will likely increase in cost.

5. Overlooked Taxes

Overlooked taxes pose another source of unexpected expenditure.

A higher than expected tax bill can indeed surprise and unbalance your budget. This happened to my friend when she started her own fitness coaching business.

Uncertainties in estimating the exact tax amount, mathematical errors in filing, or an overlooked quarterly tax payment often culminate in an escalated tax bill. An audit from the IRS, though it may find no additional taxes owed, can lead to expensive fees from a CPA or tax attorney.

Overcome this:

1. Use a tax calculator to know what your estimated tax payment due.
2. Understand the common reasons you may owe higher taxes this year.

6. Pet Emergencies

Pet emergencies can bite a large chunk out of your budget without warning. For instance, if your cat suddenly starts having seizures or your dog gets hit by a car, the medical costs associated can spiral rapidly.

Emergency vet care can range between a few hundred dollars to several thousand dollars. For instance, a poisoning can range from $200-$3000. ⁴

Overcome this by:

1. Prevention methods like pet insurance can help you manage these costs effectively.
2. Decide in advance the maximum you are willing to spend on emergency vet care.

7. Delayed payments

Delayed payments may not be an external expense, but the repercussions can be just as financially challenging. This affects your income stream, potentially leading to difficulty in managing your financial obligations.

For example, if an employer goes bankrupt, salaries might be delayed or even indefinitely withheld. According to research, late payments can cost businesses $3 trillion globally, affecting both personal financial planning and business operations.⁵

This is a highly stressful situation.

Prepare yourself financially by:

1. Aging your money. By getting one month ahead of your bills, you can scrap through a delayed payment. YNAB coined this term.
2. Start saving for a large rainy day fund.

8. Gifts and Special Occasions

Commemorating special occasions can lead to unexpected expenses. Life events such as birthdays, weddings, baby showers, and retirements, traditionally require gift-giving.

While typical gift giving on Christmas or birthdays should be part of your planned variable expenses. Saying yes to being a bridesmaid can definitely set you back a few thousand dollars. These are costs that we often fail to factor into our budgets.

Overcome this by:

1. Setting aside money monthly to cover gifts and special occasions.
2. If saying yes to a special event will hamper your finances, then you may have to politely decline the invitation.

9. Unexpected Travel Costs

Unexpected travel costs can significantly impact your budget, particularly when they arise from unplanned events such as attending a funeral or a wedding. The costs of last minute travel can vary widely depending on the destination, distance, and mode of transportation.

To manage these expenses, consider driving or taking public transportation for shorter trips, exploring less expensive lodging options, and creating a meal plan that limits dining out.

Overcome this by:

1. Setting aside a regular amount in a travel fund can help prepare for these unexpected costs that tend to crop up every year.
2. Decide if taking the unplanned trip is something you can feasibly manage with your current financial situation.

10. What You Forget to Budget for

Some subtle but regular expenses often sneak past our budget plans. This is why we have a full list of budgeting categories so hopefully, you don’t miss anything!

Consider online subscriptions and memberships: Many services offer free trials, but the charges kick in if not canceled. Other overlooked budget items may include pet care, parking fees, and toll fills—small amounts that may seem insignificant but can considerably dent your budget over time.

Overcome this by:

1. Review your checking account and credit card bills to see all of your expenses for the past year. Write down those unexpected expenses that came through.
2. Now, make a plan for how to spend your money in advance with your findings.

This helps you prepare for unexpected expenses

Here are simple tips to make sure you employ the habits of a financially stable person.

Tip #1 – Building an Emergency Fund

Building an emergency fund is a fundamental strategy to brace for unexpected expenses. This fund acts as a financial buffer, providing the economic security to cover unexpected costs without tapping into monthly budgets or savings aimed at other goals.

As a starting point, aim to save $1000 and then work your way up to save a month’s paycheck. Start small and build over time – every penny set aside helps to mitigate future financial stress.

Tip #2 – Properly Utilizing Sinking Funds

Sinking Funds are a sagacious tactic to prepare for larger, infrequent expenses. They allow you to systematically and gradually save up for anticipated financial obligations such as vacations, holiday gifts, car maintenance, etc.

By assigning a specific amount to save each month, by the time the need arises, you’ll have a pool of money ready. With platforms like YNAB, creating sinking funds becomes easier, letting you monitor your progress month by month.

This is how we have less frequent unplanned costs than we did in our 20s.

Tip #3 – Saving for the Larger Rainy Day

Beyond smaller emergency funds and sinking funds, saving for the ‘larger rainy day’ is a crucial tactic to avoid financial duress caused by unexpected expenses. This refers to padding your savings to cover larger, more substantial financial shocks that might require more than just a few months’ worth of expenses.

It may take time to build such a fund, but even a small contribution each month can result in substantial savings over time.

Tip #4 – Pick up a Side Hustle

One way to strengthen your financial resilience against unplanned expenses is to start a side hustle. This could mean picking up extra shifts at work, selling handcrafted items online, or using skills like photography or writing for freelance work.

With the rise of the internet, making money online is really easy and simple to get started. We have a few side hustles to shield against unforeseen costs.

Tip #5 – Budget Properly and Stick to It

Budgeting is an essential line of defense against unexpected expenses. By tracking your income and comparing it against both predictable and variable expenses, you can calculate how much money can be saved each month.

Regular budget check-ins help ensure you’re staying on track, steadying your financial footing.

Tip #6 – Regular Review of Financial Plans

Regularly reviewing and updating your financial plans can serve as a preventative measure against unexpected expenses. Consider changes in income, expenses, and lifestyles, and adjust your savings and spending plans accordingly.

Tip #7 – Utilizing Digital Banking Features for Money Management

Digital banking tools have revolutionized financial management and can be part of a robust strategy to avoid unexpected expenses.

Features such as instant account balance checking, transaction alerts, set-and-forget savings transfers, budgeting tools, and proactive spending categorization help you grasp where your money is and how it’s being spent.

Tools to Ward Off Unexpected Expenses and Not Go into Debt

Unexpected expenses are inevitable, yet going into debt to cover these costs can lead to financial strain due to accumulated interest and fees.

Here are crucial steps in preventing unexpected expenses from turning into debt.

Dealing smartly with Credit Cards options

Credit cards can serve as a lifeline during a financial crunch but should be employed judiciously.

To smartly deal with unexpected expenses, consider options like 0% or low-interest credit card offers – these are particularly useful if you can pay off the balance during the introductory period. But tread with caution: high-interest rates can cause difficulties if you can’t pay off the balance in time.

Profit from Asking for a Paycheck Advance

In times when emergency expenses arise, asking for a paycheck advance can help. Some employers offer this as part of their policy to assist employees dealing with abrupt financial needs. A salary advance allows you to ‘borrow’ from your future earnings and repay the amount through future pay deductions.

Budgeting apps like Chime not only help in tracking expenses, but they also enable early access to your paycheck, up to two days before payday. This feature ensures you avoid running short of money at the end of the week or month, allotting you ample room to plan, track, and adjust your spending and savings.

Exploring Personal Loans for Emergency Situations

Personal loans are a convenient option during urgent monetary needs. They are unsecured loans and therefore don’t require collateral.

However, they’re typically accompanied by relatively high-interest rates. Consider using online prequalification tools for personal loans to determine if you’re eligible and view potential interest rates.

Explore different lenders, but be wary of the terms and conditions to make sure you don’t invite more financial trouble.

Which of the following is true regarding unexpected expenses?

• Unexpected expenses are costs that are not anticipated or planned for, such as sudden car repairs or medical emergencies.
• To efficiently manage unexpected expenses, it’s recommended to make them a part of the monthly budget. A suggested approach is to analyze past “unexpected expenses”, then estimate their costs and timing, which can provide an estimate of how much should be saved each month.
• While basing future expenses on past ones only furnishes savings guidelines, this method can prevent an unexpected expense from turning into a severe financial emergency.
• Planning for unexpected expenses by setting aside money from each paycheck can protect individuals from unforeseen financial difficulties.
• Understanding what types of unexpected expenses might occur can help in the development of strategies to handle them successfully, reducing the impact of any unpleasant financial surprises.

Yes, all of the statements above are true.

What is not true about unexpected expenses?

• Unexpected expenses are entirely out of our control.
• Unexpected expenses can be completely avoided.
• These unanticipated costs only occur irregularly or infrequently.
• You can’t prepare for unexpected expenses.

All of these statements are not true. While the occurrence of these expenses might be unexpected, they’re not entirely unpredictable. Many times, they are the result of poor financial planning or management as they are often unforeseen costs that were not anticipated or included in a budget.

Frequently Asked Questions (FAQ)

Plan Ahead to Avoid Unforeseen Expenses

While unexpected expenses are an inevitable part of life, their financial stress isn’t.

Through effective planning and budgeting, you can cushion their blow, ensuring they don’t throw you into financial turmoil. Around here at Money Bliss, we strive for our readers to have less stress with money.

No matter how well you plan, unexpected costs can still arise from time to time. They can happen quite regularly, which is why it’s crucial to include them in budget planning.

By setting aside a portion of each paycheck in a savings account, you can be better prepared for such costs when they arise.

Remember, every dollar saved is a step towards greater financial stability, helping you to navigate life’s uncertainties with confidence and peace of mind.

Now, make sure you are financially sound.

Source

1. NOAA.gov. “Costliest U.S. Tropical Cyclones.” https://www.ncei.noaa.gov/access/billions/dcmi.pdf. Accessed December 1, 2023.
2. Colorado Public Radio. “Most people who lost homes in the Marshall Fire were underinsured, Colorado insurance regulators say.” https://www.cpr.org/2022/05/02/most-people-who-lost-homes-in-the-marshall-fire-were-underinsured-colorado-insurance-regulators-say/. Accessed December 1, 2023.
3. U.S. Energy Information Association. “U.S. residential electricity bills increased 5% in 2022, after adjusting for inflation.” https://www.eia.gov/todayinenergy/detail.php?id=56660. Accessed December 1, 2023.
4. BetterPet. “Average emergency vet costs: what to expect.” https://betterpet.com/emergency-vet-costs/. Accessed December 1, 2023.
5. Mastercard. “Your real-time guide to real-time payments.” https://www.mastercard.com/news/perspectives/2023/real-time-payments-what-is-rtp-and-why-do-we-need-instant-payments/. Accessed December 1, 2023.

Source: moneybliss.org

Have you ever noticed that certain people take up a new hobby, and suddenly that’s all they’ll talk about? It’s not that their personalities are actually changing, but they’re certainly adapting to the situation at hand, and maybe getting a little hyper-focused or narrow-minded about it. We’ve asked our friends on Reddit to chime in on the most common hobbies or life-changes that people adopt, and then won’t shut up about.

1. Being a Military Wife

One user shared, “Wives of military men.”

Another user added, “You know they post about how brave their ‘hubby’ is daily.”

One commenter replied, “I hate the word ‘hubby’.”

Another Redditor commented, “Can confirm. Have a cousin like this. The husband is nowhere near seeing any kind of combat. She was stationed overseas in Germany for a couple of years, and she would never leave base to do anything but loved to complain about how bored she was. [She] had zero interest in taking in anything related to German culture, food, sightseeing, etc. She was also pregnant at one point. They were stationed there and insisted US hospitals were superior to German ones. She Said she was scared to have the baby in a German hospital because the US ones were better. You would’ve thought she was in a third-world country the way she went on about Germany and how scared she was to be there. Apparently, her friends on base were also all just like this.”

2. Obsessing Over Great Britain

“My Texas high school had a British club. I’m actually a British citizen, so I tried to join. Those people were nuts. They made Doctor Who and Sherlock their whole personalities,” one user posted.

Another user commented, “This is just the BBC version of the anime club.”

One commenter replied, “On Tumblr, they were called Teaboos sometimes.”

Another Redditor posted, “When I watched the BBC version of Sherlock for the first time as a teenager, I realized with horror that my brother had based his entire personality on it. He had the same coat, the same condescending and sardonic manner, everything. The only thing he couldn’t get right was the actual genius part, so he’d mutter very intensely about subjects not deserving of that intensity and confuse everyone. He’s actually still quite difficult to have a conversation with because he has no idea how to learn things from other people—it always has to be him explaining things to you and not the other way around. Otherwise, he’ll just walk away.”

3. Being in a Relationship

One Redditor shared, “Relationships. I have friends who legit have no clue who they are without a man by their side. Their self-worth is measured strictly by the ‘quality’ of the guy willing to stand beside them.”

One user replied, “This is painfully accurate. My sister graduated med school, but my mom didn’t tell her she was proud until she brought home a bf.”

One added, “My mom was the same. It didn’t matter what I did. She only ‘stopped worrying’ when I got engaged (to a complete bad person who I would never have looked twice at if he hadn’t swooped in during a very low point, including my mother’s terminal illness). God, I’d love to go back in time for a do-over on all of that.”

4. Refusing to Change

“Being a bad person. You meet a lot of people who are like, ‘Sorry, I’m an a-. It’s just who I am’,” one user posted.

Another added, “‘I tell it like it is.’ No, you’re just tactless and have no awareness.”

However, one user replied, “As someone who was like this who did a lot of self-reflection about why I was popular and when you’re popular, people laugh at you for being a bad person sometimes, and it feels good, if enough people validate it growing up without any social consequences, you learn to think it’s fine. At most, someone will go, ‘Haha, omg, you’re such an a-‘ and roll their eyes. Eventually, you get away from the group of people who accepted your a–h-lery and made you believe it was funny and go out in the world. Being a grown a- isn’t cute, so you either lean in and think everyone is just getting too sensitive, or you realize that you have to do more than just be a bad person to get people to laugh and like you.”

5. Watching Anime

One online user shared, “Anime. I like it, but many people take it to a new level.”

Another user commented, “I knew a woman like that. She lives in cosplay, and her kids are named after anime characters. Edit: Forgot to add that she says ‘Hello, minna-san!’ all the time.”

One Redditor added, “Yeah, tbh. I’m a mega-fan, but there’s a fine line where sharing what you love drifts into projecting it everywhere. The opposite is true where your passion is censored because it’s not ‘in vogue’ or breaks normalcy, so it’s a very fine line. Don’t name your kids ‘Gendo Ikari’.”

6. Smoking

“Smoking weed,” one user shared.

Another confirmed, “Hear hear. I smoke quite a lot myself, but I absolutely can’t stand stereotypical potheads.”

One commenter added, “Same. I’m the biggest stoner I know and people are always shocked to find out even after knowing me for months.”

Another user replied, “Most of my friends smoke. I’m down to one oddball that still wants to talk about terpenes, and how well this batch was cured or not, and the subtle hints of flavor that always make him assume the strain is something different than advertised. At least that only lasts 20 mins, and then we can talk about all the movies/music/shows that were so much better in our day (we’re 40).”

7. Loving Astrology

One user posted, “Zodiac signs.”

Another replied, “‘I’m a Virgo.’ ‘No, Kelly, you are just a [terrible person]’.”

8. Acting

“Theater,” one user posted.

Another user replied, “As somebody who does his theatre, I can confirm it’s frustrating and annoying.”

9. Being a Writer

One user shared, “Being a writer—even if they barely ever write.”

Another user replied, “‘I’m working on some plot holes, okay? So what if I haven’t touched my book in, like, three weeks?’… shut up…”

“I mean, three weeks can just be a healthy break from an activity!” one Redditor added.

One commenter added, “‘Oh, I know it hurts now, but look at the bright side: You have some new material for that novel you’ve been writing. You know…the novel you’ve been workin’ on? You know the one, uh, you’ve been workin’ on for three years? You know, the novel. You got somethin’ new to write about now. You know? Maybe a main character gets into a relationship and suffers a little heartbreak? Somethin’ like what… what you’ve just been through? Draw from the real-life experience? Little, little heartbreak? You know? Work it into the story? Make the characters a little more three-dimensional. Little, uh, richer experience for the reader? Do those two hundred pages really keep the reader guessing what will happen? Some twists and turns? A little epilogue? Everybody learns that the hero’s journey isn’t always a happy one. Oh, I look forward to reading it.’—Stewie Griffin.”

10. Using Propane

One user commented, “Propane and propane accessories.”

A user added, “I tell you what.”

11. Doing Crossfit

“CrossFit,” one user shared.

Another added, “The first rule of CrossFit is, you must always talk about CrossFit…”

One commenter replied, “I know a couple that loves CrossFit. They’ve never done it personally, but they are physical therapists, and the injuries from people emphasizing rep numbers over form has been great for their bottom line.”

12. Being a Hipster

“You’ll never meet a group of more infuriating w-nkers than when you meet the people who are really into the local indie music scene…” one user posted.

Another user replied, “Amen. However, as a reformed local indie rocker, I can confidently say that the worst offenders in this category were rarely the musicians themselves. I, for one, always forgot everyone’s names and proudly told them it was because I was just terrible at being a hipster…….. OH S- F-. IM RELAPSING. HELP!”

13. Loving the Office

One user commented, “The Office!”

Another Redditor added, “Also friends.”

One commenter replied, “Which friend character are you? Which friend’s character are you? Which friend’s character are you?”

14. Owning a Tesla

“Owning a Tesla,” one user shared.

Another added, “The only thing worse than a Tesla owner is a Jeep owner.”

One Redditor said, “Some Jeep owners, yeah. I’m on my fourth one. And I have loved them all. They’ve all been stock Cherokees except my current one. An 06 GRAND Cherokee. Oh yeah, baby. It’s got a headphone jack in the dash so I can plug my phone in, f—ing plush up in that b–ch. Got four cup holders, too. And keep your underwear on. It’s got a coolant leak as well.”

15. Declaring Your Sexuality

One user commented, “I’m sure I’m gonna get a lot of hate but sexuality. Being straight or being gay is not a personality trait. It’s just one aspect of who you are.”

Another replied, “Imma upvote you now before the haters show up.”

One user added, “I hard agree, but I also try to understand that some people have been denied what they are for so long that when given the chance, they’ll go all out. Like, I’m gay and dating a trans dude. But I’ve never felt persecuted for my sexuality. He has. I’d never tell him to stop waving his flags because I know he’s been in a place where he wasn’t allowed to. *Oh. They got gold for this take. Well, that’s… Worrying”

16. Being Sarcastic

One Redditor posted, “Sarcasm.”

Another added, “I hate this. People think ‘sarcasm’ makes them come off as interesting and intelligent, but a lot of it is just low-hanging fruit jabs or just being d–chy.”

17. Loving Disney

One user commented, “Disney.”

Another added, “I’m a physician. I had a senior while doing a year of general surgery training. My senior wanted to do trauma surgery. He was petty, mean, brilliantly smart, and a complete a-h- to anybody as or less intelligent:

“The precise moment that he would show a half second of relaxation: DISNEY TO THE TENTH EXPONENT. Writing notes: Disney theme park background music. Packed Lunch: Disney-themed pasta/sandwich combos. Going out for social hour: Disney watch/scarf.

“I always wondered how this dude could look at me so vehemently and still have such a cotton Candy, whimsical core. Great doctor and surgeon, though.”

One commenter replied, “Disney adults are strange people, man. My wife is a physician, and her other physician friend is getting married this spring. She’s a bit younger than us (4-5 years) and has had the luxury of making a physician’s salary while having very little in the way of actual life expenses due to having parents who continue to pay her bills for her.

“Anyway, she tells my wife and their friend group that she’s engaged and the wedding will be in Iceland. We’re pumped because we’ve always wanted to go to Iceland, and we’re fortunate enough to be able to afford to go to the wedding if we save up. It’s a year from now, so we have time to save up and also make it like a mini vacation. So a few weeks later, she texts her friend group that Iceland is off, and they’re getting married at Disney World.

“I’ll be honest: that was a head-scratcher for my wife because none of her friends knew she was that into Disney. We think it will be at one of the resort hotels around Disney World, with some pretty cool/nice hotels. Oh no, no, no. They are getting married in front of the castle in Magic Kingdom—and here’s the best part—it can’t be during park hours, so they were given the option of it happening at 8 am or 10 pm. They chose 8 am. Might I mention they are also paying $60,000 just for the ceremony?

“I get that having a destination wedding in another country is cost-prohibitive if you want a lot of friends and family there. Iceland would have been very cool, and, for admittedly selfish reasons, we were a little bummed about it not being there. But it’s understandable.

“However, with every new detail my wife gets from the bride-to-be, it seems like it will be a pretty terrible experience. Having to pay for an overpriced hotel and getting up at the crack of dawn to get dressed up and stand in the swampy humidity of Florida so two grown adults can be married by Mickey Mouse sounds like it’s going to be a total bad show. So yeah, Disney adults are strange.”

18. Breaking Up

One user posted, “One bad breakup…”

Another user replied, “This is true. I had a friend who would not care about a girl she dated back before COVID (f—ing 2020) who did some a- [things] to her up until a few months ago. At least now she’s dating again, so we constantly hear about her new partner most of the time…”

19. Working

“Their occupation,” one user shared.

Another user replied, “‘I’m a nurse. What’s your superpower…’ merch. yuck. Sincerely, a nurse.”

One Redditor said, “This was my first thought. I hate those ridiculous things! I work with a nurse with multiple nursing-related tattoos, coffee cups, handbags, and a license plate frame. So cringe.”

20. Owning Guns

One Redditor shared, “Guns.”

Another user replied, “As a gun owner, I can’t tell you how cringeworthy this is. I own firearms myself, but it is just a hobby, and that’s it. Most of the other time, I read books, work, be a dad, or play Diablo 4. I barely bring it up unless I am around others who happen to bring it up or discuss their experiences shooting firearms or what firearms they’re going to purchase. The minute I see gun owners rocking punisher skull s- or other tacticool stuff, I play dumb and just act as if I’ve never held a gun. Those people are annoying.”

Do you agree with the things listed above? Share your thoughts below.

Source: Reddit.

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Source: financequickfix.com