People Say to Give Up These 4 Things and Retire Early — They’re Wrong

If you’re not already rich, the race to early retirement can feel like it’s marred by sacrifice. Give up this, give up that — like the only way to retire before 65 is if you suffer now.

Sure, you want to be able to enjoy early retirement, and that means having enough money saved to do so. But you also want to live your life now in a way that brings you joy.

A study from found that people would be willing to sacrifice several of life’s greatest conveniences to be able to achieve FIRE (financial independence, retire early):

The study shows that 20% of people would forgo having children, 27% would live without a pet and 28% would give up dining out just to have their retirement party a decade or two earlier. Some people would even move into a tiny home or sell their car!

But we know there are better ways. You don’t have to give up the things you love just to retire when you’d like to. Here are a few things people suggest giving up to accelerate their retirement timeline — and why we think you shouldn’t.

1. What They Say: ‘Give Up Your Vehicle’

Between car payments, insurance and repairs, having a car can be a big expense. And people eyeing early retirement do tend toward a minimalist lifestyle, so getting rid of your vehicle can be a tempting expense to cut.

But unless you live in a city that’s bikeable or has great public transportation, you’re going to need your own way to get from point A to point B. So instead of selling or letting your lease run out, here are a few tips to cut your car expenses down:

  • Buy a used car. Even though the average interest rate to finance a used car is higher than a new car or leasing one, financially you can save thousands of dollars over the course of a few years.
  • Cut your car insurance costs. By checking quotes every six months, you can save an average of $489 a year on your insurance payments. A website called makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

2. What They Say: ‘Give Up Online Shopping’

Online shopping can be an account drainer — it’s so easy to put things into your cart, click a few buttons and wait for your package to arrive a few days later. And if your aim is to save a lot of money over the next decade or two, online shopping can be a major roadblock.

But here’s the thing — you can still shop online. You just need to be smart about it: Never overpay, and get cash rewards.

That’s exactly what this free service does for you.

Just add it to your browser for free*, and before you check out, it’ll check other websites, including Walmart, eBay and others to see if your item is available for cheaper. Plus, you can get coupon codes, set up price-drop alerts and even see the item’s price history.

Let’s say you’re shopping for a new TV, and you assume you’ve found the best price. Here’s when you’ll get a pop-up letting you know if that exact TV is available elsewhere for cheaper. If there are any available coupon codes, they’ll also automatically be applied to your order.

In the last year, this has saved people $160 million.

You can get started in just a few clicks to see if you’re overpaying online.

3. What They Say: ‘Give Up Dining Out’

While the world was in quarantine, we learned to be more self-reliant in the kitchen, and many of us saw a significant drop in our dining-out expenditures (take-out, maybe not so much). So it’s understandable that 28% of people say they’d give it up entirely to reach their early retirement goals.

But for the other 72% who love going to restaurants and ordering delivery, financial independence isn’t off the table. There are just some strategic moves to make so you can keep supporting your favorite local spots and give your family a break from all the dishes.

First, look for discounts: You can find them on Groupon or with a AAA discount. You can even buy discounted gift cards on websites like If you have kids, check out restaurants that let them eat free on certain days of the week.

Next, make sure you’re getting cash back every time you go out to eat (or swipe your debit card in general).

If you’re not using Aspiration’s debit card, you’re missing out on extra cash. And who doesn’t want extra cash right now?

Yep. A debit card called Aspiration gives you up to a 5% back every time you swipe.

Need to buy groceries? Extra cash.

Need to fill up the tank? Bam. Even more extra cash.

You were going to buy these things anyway — why not get this extra money in the process?

Enter your email address here, and link your bank account to see how much extra cash you can get with your free Aspiration account. And don’t worry. Your money is FDIC insured and under a military-grade encryption. That’s nerd talk for “this is totally safe.”

4. What They Say: ‘Give Up More Living Space’

The tiny home — or small space — lifestyle has become increasingly popular among the retire-early crowd. It’s cheaper to own, likely includes no mortgage and is less expensive to upkeep, as well.

In fact, 17% of people surveyed said they would live in a space smaller than 700 square feet, if it meant they could retire early. For a single person that may be fine, but for couples or families — it might just not be enough.

Instead, you could keep the space you love and find ways to save money and make money with it:

Stop overpaying $690 on homeowners insurance

Luckily, an insurance company called Policygenius makes it easy to find out how much you’re overpaying. It finds you cheaper policies and special discounts in minutes.

In fact, it saves users an average of $690 a year — or $57.50 a month. It’ll even help you break up with your old insurance company. (You’re allowed to cancel your policy at any time, and your company should issue you a refund.)

And just because you’re saving money doesn’t mean you’re skimping on coverage. Policygenius will make sure you have what you need.

Just answer a few questions about your home to see how much money you’re wasting.

Make up to $300 a month from your empty garage

Extra rooms in your house don’t need to be left empty. You can rent out unused storage space — your shed, or your garage — to your neighbors who need it. A website and app called Neighbor can help you earn up to $300 a month, on your terms. Use this calculator to see how much your available storage space is worth.

Kari Faber is a staff writer at The Penny Hoarder.

*Capital One Shopping compensates us when you get the extension using the links provided.




3 Ways to Listen to Free Music Online – Downloads, Streaming & Radio

Back in the day, there were only two ways to listen to recorded music. You could tune your radio to a local station and hear whatever song happened to be playing, or you could go down to the record store and buy a copy of your favorite songs on a vinyl disc.

Today, that sounds quaint. According to The Guardian, digital music downloads overtook sales of physical recordings on CD or vinyl way back in 2012. More recently, even digital downloads have lost ground to music streaming services. In 2020, streaming accounted for 85% of all the music industry’s revenues, according to the Recording Industry Association of America.

All this technology has made listening to music significantly cheaper. According to a 2017 Nielsen report (via Digital Trends), the average consumer spends only $156 on music each year. Savvy consumers know there are several ways they can get most of their digital music for free — leaving more money in their budgets to enjoy a live concert or two.

How to Listen to Music for Free Online

There are three primary ways to get your favorite music for free online. Which one you choose depends on what you’re looking for.

1. Streaming Music Online

Today, streaming services are indisputably the most popular way to listen to music. With a streaming music service, you don’t own the songs you play, but on the plus side, you’re not limited to the number of tracks you can fit on your phone or MP3 player.

Streaming services can take several forms. Some are subscription services that play music selected for you, some are more like radio stations, and some simply play tunes on demand. However, many online music sources blur the boundaries between these categories.

Internet Radio

Internet radio stations work the same way as old-school radio: They select songs, and you listen to whatever pops up. But instead of being limited to the few stations in range, you can choose from a vast list of specialized stations that suit particular musical tastes. Also, if you hear a song you really can’t stand, you can just skip it — something you can’t do over the airwaves.

Some services take this personalization to its logical extreme by creating custom radio stations to suit a user’s tastes. Instead of a live DJ choosing which tune to play next, algorithms select songs for you based on which artists and music you say you like.

Advertising funds the majority of Internet radio stations. But some let you upgrade to an ad-free experience for a small monthly fee. Choosing a paid version also lets you skip songs more frequently. Most online radio stations limit users of free accounts to six skips per hour.

There are multiple internet radio stations to choose from.


Started in 2000, Pandora is one of the top streaming sites on the Internet. Its music-picking algorithm, known as the “Music Genome Project,” analyzes the songs you like best and then presents you with other songs that share similar qualities.

According to Digital Trends, Pandora’s music collection is pretty decent, with about 40 million tracks for its on-demand service. However, the main reason to listen is its “magic algorithms,” which do a fantastic job of picking out songs to match your tastes. You can listen on a range of devices, including computers, smartphones, TVs, and car audio systems.

Pandora’s basic service is free. However, you can pay to upgrade to ad-free listening with Pandora Plus for $4.99 per month. On-demand listening via Pandora Premium costs $9.99 per month for individuals, $14.99 for families with up to six members, $4.99 for students, and $7.99 for military members.


Formerly known as Slacker Radio, this service relaunched as LiveXLive in 2017. The new name reflects its focus on providing live music streams. The service earns an Editors’ Choice designation from PCMag, which praises its “curated stations” hosted by experienced and informative DJs.

Along with its extensive music collection, LiveXLive offers live news from ABC and pop culture tales called “Slacker Stories.” It also hosts videos featuring music news, interviews with artists, and even live performances. It’s easy to use on multiple platforms, with apps for Android, iOS, Amazon Fire TV, Apple TV, and Roku.

A free account comes with 128 kilobits per second audio and the ability to skip up to six songs per hour — and plenty of ads. You can remove these limitations and upgrade your speed by upgrading to Plus ($3.99 per month). Going up to Premium ($9.99 per month) gives you access to on-demand and offline listening.


At, you create a custom profile that’s continuously updated with info about what artists and genres you’re listening to. The site uses this feature, which it calls “scrobbling,” to make personalized recommendations for new music. It also has a social media component, introducing you to other music lovers who share your tastes.

A basic subscription to the site is free. An ad-free version with extra features costs just $3 per month. You can listen to on the Web or through its desktop and mobile apps. The apps can also track what music you listen to from other streaming music services and use that information to enhance your profile.


One of the newest players in the Internet radio field is Jango. Like Pandora, this service creates custom radio stations based on your musical tastes. You select your favorite artists, and Jango plays music from those artists and similar ones. You can fine-tune the playlist by rating songs you especially like or never want to hear again.

Jango also has hundreds of ready-made stations. Some are based on different genres, such as country, classical, or hip-hop. Others focus on more specific themes, such as today’s top 100 hits or Christmas songs.

You can listen to Jango over the Web or via an app for Android or iOS (iPhone, iPad, and iPod Touch). The service is 100% free and supported by ads. However, if you link Jango to your Facebook account, you will hear only one commercial per day. The mobile apps sometimes offer ad-free listening as well.

Subscription Services

A subscription streaming music service is like a library filled with songs users can check out but not keep permanently. Most subscription services make money by charging a fixed monthly rate in exchange for unlimited listening. But many also offer free accounts funded by advertising.

Amazon Music

There are two ways to listen to Amazon Music. If you have an Amazon Prime subscription, it comes with access to a limited catalog of 2 million songs. This basic, ad-supported service has thousands of stations and playlists, and you can listen offline with unlimited skips. You can also use Alexa, Amazon’s smart assistant, to control playback and discover new music.

If you want more music, you can upgrade to Amazon Music Unlimited. It gives you ad-free, on-demand access to 75 million songs in HD. Over 7 million songs are available in Ultra HD, and the service also includes access to exclusive Ultra HD remastered albums. Amazon Music Unlimited also gives you access to other audio, such as podcasts.

Your first 30 days of Amazon Music Online are free. After that, it costs $9.99 per month for Prime nonmembers or $7.99 per month if you have a Prime subscription.


Named the best all-around music streaming service by Digital Trends, Spotify is by far the most popular on-demand streaming service in the world today. There are several ways to use it:

  • Discover new music through the site’s curated playlists.
  • Create playlists from Spotify’s collection of more than 50 million tracks.
  • Browse playlists created by others, including friends, performers, and celebrities.

All music on Spotify is free, but upgrading to a Spotify Premium subscription for $9.99 per month gives you several extra perks. You get better audio quality, ad-free playback, and the ability to save songs for offline listening. You can also play songs on demand in the mobile app, a feature that’s unavailable with a free subscription.

You can listen to Spotify over the Web or via its iOS and Android apps. It also runs on certain gaming consoles, smart speakers, and car audio systems.

YouTube Music

The free version of YouTube Music is like a cross between a radio station and an on-demand streaming service. It invites you to name some of your favorite artists and uses that information to recommend albums, curated playlists, and custom playlists for you.

But unlike most online radio stations, YouTube Music lets you move around these lists at will, skipping forward or backward. Ads are relatively infrequent, according to Gizmodo, and it’s possible to skip some of them. You can also search for specific artists, albums, and tracks by name, save your favorites to your library, and create playlists.

YouTube Music also has some extra features most music services don’t provide. For instance, you can switch back and forth between audio tracks and music videos with the tap of a button. The service can also search for a song based on its lyrics.

All this is available free over the Web and on Android and iOS. However, upgrading to YouTube Music Premium for $9.99 per month lets you listen ad-free and stream in the background while your device is off. If you subscribe to YouTube Premium for streaming video, you get access to YouTube Music Premium for free.


Though it’s not as well known as other streaming services, Deezer is surprisingly full-featured. This service provides a blend of on-demand streaming, live radio, podcasts, videos, and exclusive content — all for free.

On the Web or your desktop, Deezer recommends playlists for you based on your favorite artists and genres. You can also search a library of 73 million for specific tracks to create your own playlists. Deezer also provides synchronized song lyrics. However, the free service is available only on desktops, mobile devices, and a few home devices. It also limits skips.

If you upgrade to Deezer Premium ($9.99 per month) or Deezer Family ($14.99 per month), you get ad-free streaming, an offline mode, and unlimited skips. You can also connect on up to three devices at once, including smart speakers, smart TVs, wearable devices, game consoles, and car audio systems. You can try Deezer Premium free for 90 days.

Free Trials

Some streaming music services don’t have free ad-sponsored versions, but they do offer free trials. These give you a chance to test the service and decide whether it’s worth coughing up the cash for a monthly subscription.

Apple Music

With a library of over 75 million songs, Apple Music is the ideal streaming service for anyone who relies on Apple devices. It’s the only service you can control with the Apple Watch or voice commands to Siri, Apple’s smart assistant. Windows users can also use Apple Music via iTunes on their computers, but it doesn’t work as smoothly, according to Digital Trends.

Apple Music allows you to store up to 100,000 songs in your personal streaming library. If you’re an iTunes user, you can find many of your songs already available in the streaming library when you first sign up. The service also includes Apple Music 1, a 24-hour radio service curated by noted DJs and musicians.

The free trial period is 90 days. But according to Insider, you can double this to six months by signing up through an account with Best Buy. After the trial, choose from three service tiers: student at $4.99 per month, individual at $9.99 per month, and family at $14.99 per month.


Both PCMag and Digital Trends agree that Tidal, a streaming service owned by top rap artist Jay-Z, has top-notch audio quality. It also offers exclusive content for hardcore music fans, such as timed releases from top artists like Beyoncé, live streams, concerts, and backstage footage. It even provides early access to certain concert and sports tickets.

Tidal offers a library of over 70 million songs and 250,000 music videos. However, as Digital Trends notes, it’s not easy to discover new music, and the interface can be buggy. Also, Tidal doesn’t provide lyrics, unlike many other services. You can listen on computers, mobile devices, smart TVs and streaming devices, smart speakers, and car audio systems.

The free trial period lasts 30 days. After that, Tidal Premium is $9.99 per month for individuals and $14.99 per month for families. Tidal HiFi, with lossless-quality sound, is $19.99 per month for individuals and $29.99 per month for families. But there are discounted subscriptions available for students, military members, and first responders.

SoundCloud Go

This service is the streaming counterpart to SoundCloud’s music download service. Digital Trends calls SoundCloud Go the best way to discover new indie music thanks to its vast library of 120 million user-created tracks. Its higher-tier SoundCloud Go+ adds another 30 million tracks from major labels and ad-free listening.

The service has nearly 200 million active users each month, and tons of lesser-known artists upload their newest songs regularly. However, unlike many other services, it doesn’t use algorithms to help you find music, so it can take some work to search through all the content to find your new favorites.

The free trial period is seven days for SoundCloud Go and 30 days for SoundCloud Go+. If you like it, you can pay $4.99 per month for SoundCloud Go or $9.99 per month for SoundCloud Go+.

Free Streaming on Demand

Some sites don’t require a subscription to stream music — you just go to the site, pick a track, and listen. For instance, on YouTube, you can type in the name of just about any song and find a video version of it.

The artists or their labels post some of these. But some are amateur videos created by fans, and some have just the music accompanied by a blank screen or lyrics. For example, a search for the popular song “All About That Bass” by Meghan Trainor turned up Trainor’s official video, a live performance of a jazz cover version, and numerous fan-created videos and parodies.

YouTube is an excellent place to find that obscure song you heard years ago, even if you’re unsure of the title or the artist. Just type in the most memorable line from the song, and let YouTube’s search engine do its thing. Using this method, I tracked down two old novelty songs: “Put the Lime in the Coconut” by Harry Nilsson and “Right Said Fred” by Bernard Cribbins.

2. Free Music Downloads

In the age of the Internet, it’s very easy to download music illegally. However, if you prefer to stay on the right side of the law — and support your favorite artists and the music labels that support them — you need to dig a little deeper to find free music downloads that are also legal.


In addition to its streaming service, Amazon has a massive catalog of digital music for download, including more than 5,000 free songs. Many of these are obscure tracks by relatively unknown artists. But there are also a few gems by better-known performers, such as the rock band Foo Fighters and the folk artist Carole King.

Finding free tracks on Amazon is a bit tricky since the site keeps trying to redirect you to Amazon Music. Your best bet is to search the Internet for “find free music downloads on Amazon” and follow the first non-sponsored link you find.


The primary SoundCloud service is sort of like YouTube for recording artists. Any user can upload music to the site, making it available for other users to download or stream.

Not all the music on SoundCloud is free, but you can find free tracks by both major and lesser-known artists. You can search the site for specific artists or genres or just browse the selections of trending music. SoundCloud’s services are also available through mobile apps for iOS and Android.


Much like SoundCloud, SoundClick provides a place for independent artists to make their music available directly to listeners. Founded in 1997, this site now offers millions of tracks spanning a variety of genres. You can find hip-hop, electronic, rock, alternative, acoustic, country, jazz, and even classical.

You can stream unlimited tracks via SoundClick or download them in both MP3 and lossless format. As a subscriber, you get your own profile page and custom playlists. You can follow your favorite artists, connect with other users, and support artists through tips.

Free Music Archive

Created by independent freeform radio station WFMU in New Jersey and now owned by the Dutch music collective Tribe of Noise, the Free Music Archive is a collection of free legal music tracks submitted by users and partner curators. All music on the site appears under Creative Commons licenses, which let artists make their work available for various uses without surrendering their rights.

Digital Trends calls the archive “a veritable treasure trove of free content” you can search by title, artist, genre, and length. The site also hosts a wealth of podcasts and some live radio performances from big-name artists.


Another site that distributes free music under Creative Commons licenses is Jamendo. Around 40,000 artists from more than 150 countries have contributed more than 500,000 tracks, available for streaming or download, to the site.

According to Digital Trends, this site offers a streamlined user interface that makes it easy to browse and find new musicians. Even though most artists featured here aren’t well known, it’s easy to find the most popular tracks based on their user ratings, so you don’t have to sift through countless songs to find the good stuff.

If you need music for commercial purposes — for instance, in a video you want to distribute for profit — Jamendo offers a licensing service. For a monthly fee of $49, you get an unlimited number of tracks for commercial online use.


NoiseTrade is a project of the award-winning lifestyle magazine Paste. The “trade” in the name means artists give you their music on the site in exchange for your email address and postal code. It’s a win-win for users, who get free tracks or entire albums, and for artists, who get to build their fan bases.

Digital Trends describes this site’s interface as simple and clean. You can easily search tracks, browse recommendations, promote your favorite artists via social media, and send them tips with a credit card.


Many well-known artists, including Imagine Dragons and Alabama Shakes, built their fan bases from scratch by sharing their music on ReverbNation. The site hosts over 3.5 million artists representing a mix of genres, like rock, R&B, indie, hip-hop, country, and folk. Its Discover feature can help you find up-and-coming artists in genres that interest you.


Hip-hop artists have long used mixtapes to spread their work. In that tradition, DatPiff offers access to a variety of new free music from both new rappers and mainstream artists like Drake and Future. According to Digital Trends, it’s the leading place to download new tapes, view release schedules, and listen to compilations created by fans.


A newer, up-and-coming player in the mixtape realm is Audiomack. It focuses on hip-hop, rap, and trap music from both newcomers and established artists like Kodak Black. Some artists on this site allow only online streaming of their songs, but there are still plenty of downloadable tracks.


Another genre-specific site is CCTrax. Although it hosts tunes from various genres, it has an unparalleled collection of electronic music, including dub, techno, house, downtempo, and ambient. Many of the singles and albums are licensed by Creative Commons and free for use in other works.


Classical music lovers can find lots of free recordings, sheet music, and even textbooks at Musopen. Most classical music pieces are in the public domain, so it’s perfectly legal to distribute them for free. The site has a vast library of royalty-free recordings you can search by composer, performer, form, instrument, or period.

Live Music Archive

For live concert recordings, Live Music Archive is the place to go. The site is a collaboration between the Internet Archive, a nonprofit repository of digital media, and, a community for sharing concert tapes. Recordings date back to 1959 and span a wide variety of genres, including rock, reggae, and jazz — and over 15,000 Grateful Dead shows.

According to Digital Trends, this site can be tricky to navigate. There’s no search function, but you can filter results by artist, title, or date. When you find what you want, you can stream it or download it in MP3 or FLAC (free lossless audio codec) form.

3. Broadcast Radio

Even in the brave new world of digital media, there’s still room for the old-fashioned kind. In fact, according to a 2019 Nielsen report, more Americans tune in each week to old-school radio — over the airwaves — than any other platform, including TV and all Internet-connected devices.

Far from killing off broadcast radio, the Internet has revitalized it. A couple of decades ago, you could only listen to your favorite radio station when you were in range of its antenna tower, which made it hard for smaller stations with less power to compete. Today, as long as you have an Internet connection, you can listen to any radio station that has a livestream.

For example, if I want to listen to my local NPR station, WNYC, I can just type “” into my web browser and click the Listen Live button. It’s a lot easier than fiddling with the radio knobs to hit the right frequency and allows you to listen to local radio, even when you’re traveling.


The Internet can help you discover new radio stations as well. At TuneIn, you can find and listen to Web streams from 100,000 radio stations around the world. Sports, news, podcasts, and talk radio are also available.

You can listen to any station on TuneIn with a free subscription. But your stream will include all the ads played on the radio station. With a premium subscription, which costs either $9.99 per month or $99.99 per year, you can listen to many stations ad-free and reduce the number of ads on others.

In addition to its website, TuneIn is available to download as an app for iOS or Android devices. You can also listen via car audio systems, smart speakers, game systems, smart TVs, streaming devices, and wearables.


Another site devoted to traditional radio is iHeartRadio. You don’t need a subscription to tune into radio stations or search for one by location. The site also gives you access to podcasts and playlists based on genres, decades, or moods.

With a free subscription to the site, you can build Pandora-style custom stations based on specific songs or artists you like. You also gain full access to IHeartRadio’s podcast collection as well as a custom library in which you can save your favorite stations, music, and podcasts.

For $4.99 per month, you can upgrade to a Plus subscription. It allows you to skip as many songs as you like, play songs and albums on demand, and save and replay songs you hear on the radio. With an All-Access subscription ($9.99 per month), you can also create unlimited playlists and download songs for offline listening.

Final Word

Despite all the Internet has to offer, digital music may never entirely take the place of physical recordings. There are even signs the old-fashioned record store is making a comeback. According to the Recording Industry Association of America, more than 40% of all profits for sales of physical recordings in 2018 came from vinyl LPs and EPs.

The world of modern music isn’t so much about digital versus analog, recorded music versus streaming, or custom radio versus curated stations. Rather, it’s all about choice. Music lovers today have more options than ever for listening to music exactly the way they want. And thanks to the Internet, they also have plenty of options for how much they spend on it.


Varo vs. Chime: Which Online Bank Is Best?

Tired of looking for a branch or navigating a clunky app when you need to manage your bank account?

For anyone who’s ready to walk away from traditional branch banks, an industry of online challenger banks has blown up over the past decade. Technology companies have swooped in to respond to the need for more mobility, better apps and lower fees.

Varo and Chime, two of the top players in the online banking space, compete for customers with no-fee bank accounts and high-yield savings you can set up and manage from your smartphone.

Which is a better fit for you? See how they compare:

Varo vs. Chime Comparison

Varo (previously Varo Money) and Chime each offer checking and savings accounts through user-friendly mobile apps and online banking. Here’s how we rated each company.

Chime and Varo offer most of the same account options aimed at simplifying banking and savings for anyone who’s ready to say goodbye to traditional banks.

  Varo Chime
Checking Account A A-
Savings Account A+ B
Convenience B+ A-
Mobile Banking A B
Small Business Banking n/a n/a
Fees $2.50 + third-party fees for out-of-network ATMs; up to $5.95 retailer fee for over-the-counter deposit or withdrawal $2.50 + third-party fees for out-of-network ATMs; up to $5.95 retailer fee for over-the-counter deposit; $2.50 + up to $5.95 retailer fee for over-the-counter withdrawal
Average Grade A B+
Full Review Varo Bank Review Chime Bank Review

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Chime Overview

Chime is the leader in online banking, offering a no-frills account with features meant to simplify your money management and help you reach savings goals.

Chime Features and Fees

Chime offers fee-free online spending and saving accounts. It includes built-in automatic saving features, SpotMe fee-free overdraft protection, access to two fee-free ATM networks and more.

Chime is known for fee-free services, so you won’t pay for much. You’ll just pay a $2.50 out-of-network ATM fee, plus any fee charged by the ATM operator. And you could pay up to $4.95 to withdraw or deposit cash through your debit card at a Green Dot retail location.

Chime Bank Review

Is Chime right for you? Read our full Chime review to learn more about its features and see what it has to offer.

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Varo Overview

As of July 2020, Varo is the first banking app to gain approval for a full bank charter in the U.S. That means it’s its own bank, unlike other banking apps, which provide technology and work with national banks to provide the financial services and accounts behind the scenes.

It hasn’t yet taken full advantage of its status to offer a full suite of financial services, but it does offer services beyond its original stripped-down checking and savings account, including a forthcoming credit builder program and small cash advance loans.

Is Varo a good bank? Read our full review to learn more about its features and decide whether it’s a good fit for you.

Varo Features and Fees

Varo offers an online, app-based checking and savings account with built-in automatic savings tools, optional overdraft protection called Varo Advance, access to a network of fee-free ATMs and more. It also offers cash advance loans and is developing a credit builder program called Varo Believe for qualifying customers.

Nearly all Varo features are fee free. You’ll just pay $2.50 to Varo to use an out-of-network ATM, plus third-party ATM fees. And you could pay a third-party fee up to $4.95 to the retailer if you deposit or withdraw cash over-the-counter at a Green Dot location. If you use Varo Advance, you’ll pay a fee between $0 and $5, depending on how much cash you draw.

Varo Bank Review

Is Varo a good bank? Read our full Varo review to learn more about its features and decide whether it’s a good fit for you.

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More Details: Chime and Varo Bank Account Features

Both accounts offer these features:

Fee-Free Checking and Savings Accounts

Both Chime and Varo include a debit account (a.k.a. checking) and optional savings account, both with no monthly fees.

Automatic Savings Tools

Both accounts include simple ways to automatically build your savings account by setting rules to move money from checking to savings when you get paid and when you shop.

High-Yield Savings

Both savings accounts offer higher-than-average APY on your savings account balance.

Chime offers 0.50% APY on savings with no minimum balance requirement.

Varo offers 0.20% APY on savings to any customers, and you can earn 3.00% APY in a given month if you receive at least $1,000 in direct deposits, maintain a minimum balance of $5,000 and keep both of your accounts above a $0 balance during that month.

Early Direct Deposit

As with many online banks, both accounts make your paycheck available up to two days early if you get paid through direct deposit. The money is available in your account as soon as your employer processes payroll, which could be up to two days before the scheduled payday.

Overdraft Protection

Through Chime’s SpotMe overdraft protection program, the company will spot you up to $20 with no fee as long as your account has at least $500 per month in direct deposits. That limit can go up to $200 based on your account activity.

Through Varo Advance, you can add instant overdraft protection through the app with a small cash advance loan of $20, $50, $75 or $100, for a fee of $0, $3, $4 or $5, respectively.

Cash Deposits

With both Varo and Chime, you can deposit money into your bank account at more than 60,000 retail locations with Green Dot, which is a function many online banks don’t allow.

Bill Pay

With either account, you can pay bills through ACH transfer by giving companies your bank account and routing numbers, or mail a paper check.

Secure Deposits

Both companies provide FDIC-insured accounts up to $250,000 (the typical amount for any bank account). Chime partners with The Bancorp Bank and Stride Bank, N.A., and Varo Money is backed by its own Varo Bank.

Instant Money Transfer

With both Chime and Varo, you can send money instantly with no fees to others who use the same app. Varo Bank also works with Zelle for money transfers to folks who use other banks, though it admits the connection isn’t always reliable (and is working to fix that).

Second-Chance Banking

Neither company uses ChexSystems, which many traditional financial institutions use to determine your eligibility for a bank account, so a bad banking history won’t necessarily disqualify you for these accounts. Neither company checks your credit report for a banking account or credit builder card, either.

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Free ATM Withdrawals

A Chime account gives you access to 38,000 fee-free ATMs in the United States through the MoneyPass and Visa Plus Alliance networks. Varo’s account connects you to more than 55,000 fee-free Allpoint ATMs in the U.S.

Live Customer Support

Talk to a real person from either company via chat in the app, email or on the phone seven days a week.

Reach Chime customer service via email at [email protected], or by phone at 844-244-6363 during business hours: Monday through Friday 6 a.m. to 10 p.m. Central, and Saturday and Sunday 7 a.m. to 9 p.m.

Reach Varo customer service via email at [email protected], or by phone at 800-827-6526 during call center hours: Monday through Friday 8 a.m. to 9 p.m. Eastern, and Saturday and Sunday 11 a.m. to 7 p.m.

Push Notifications

Stay on top of your Varo account balance with optional notifications anytime money moves in or out of your account. Chime gives you the option to receive  a push notification when a direct deposit hits.

Credit Building Programs

Both companies offer a new, secure way to build credit.

Chime’s Credit Builder Visa credit card is a secured credit card with no annual fee, no credit check to apply and no minimum required deposit (an unusual feature for a secured card). It works like a debit card that lets you build credit.

Through the program, Chime members can move money into their Credit Builder account to back the card, make purchases with the card and have the balance automatically paid off from their Credit Builder account. Chime reports activity to credit bureaus, so the card is a less risky way to build or rebuild your credit.

Varo’s forthcoming Varo Believe program is nearly identical, backing a secured credit card with a dedicated amount of your choice from your Varo Bank account.

What They Don’t Offer

Neither platform offers these features:

  • Joint accounts or additional authorized debit card users.
  • Other financial products, like personal loans, auto loans and mortgages.
  • Refinancing.
  • Small business banking services.
  • Paper checks (though you can use bill pay to have the banks send checks for you,

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Which Is Better: Varo or Chime?

Chime and Varo bank account features are nearly identical, with details that could sway you one way or the other.


Varo Bank Account: A

Chime Spending Account: A-

Both banks offer a fee-free checking account for deposits and spending. In both cases, you’ll automatically apply for this account when you set up your account in the app (or online). You can fund it through direct deposit or transferring money from an external bank account.

Both Chime and Varo eschew traditional banking fees, including monthly maintenance fees, minimum balance fees and overdraft fees.

Both accounts let you get your paycheck up to two days early compared with a traditional bank, because they release the funds as soon as your employer initiates the deposit.

Both accounts come with a Visa debit card you can use for transactions anywhere Visa is accepted, and for ATM withdrawals. Both are also connected to the Green Dot network, so you can deposit or withdraw cash at retail locations around the U.S.

Overdraft Protection

Both Chime and Varo charge no overdraft fees and offer optional overdraft protection — but eligibility and details vary.

  • Chime SpotMe: Chime will spot you for an overdraft up to $200 and take it out of your next deposit. To be eligible, you just have to receive $500 in direct deposits every month.
  • Varo Advance: You can opt into overdraft protection as you need it with Varo Advance, a small paycheck advance you select instantly through the app. Choose an advance of $20, $50, $75 or $100, and pay a fee of $0, $3, $4 or $5, respectively. You’ll choose an automatic repayment date anytime between 15 and 30 days of the advance. To qualify, you have to have at least $1,000 in direct deposits within the past 31 days.


Varo Savings Account: A+

Chime Savings Account: B

Both Varo and Chime offer optional savings accounts that facilitate automatic savings and yield competitive interest rates.

Funding the Account

You can only fund a Chime Savings account by transferring money from your Chime Spending account — not through direct deposit or an external bank account. To add money from another source, you must first deposit it into your Spending account, then make an instant transfer.

You can deposit money into a Varo Savings account from your Varo Bank account in the app or directly from an external account through ACH transfer.

Savings Account Interest Rates

Both Chime and Varo savings yield interest at an annual percentage yield (APY) above the 0.06% national average for savings accounts reported by the FDIC.

Chime Savings offers a 0.50%% APY with no additional requirements.

Varo Savings offers a 0.20% APY with no requirements. You can earn up to 3.00% APY on balances up to $10,000 by receiving at least direct deposits of at least $1,000, maintaining a minimum $5,000 balance and keeping both your Bank and Savings accounts above $0 for the month.

Automatic Savings

Chime and Varo each let you select one or both of two savings “rules” that automatically move money into your savings account. Varo’s options are slightly broader than Chime’s.

  • Chime: Save when you get paid by transferring 10% of any direct deposit of $500 or more into savings. Save when you spend by rounding up Chime debit card transactions to the nearest dollar and depositing the digital change into savings.
  • Varo: Save Your Pay lets you set a percentage of your direct deposits to automatically transfer to savings. Save Your Change rounds up every transaction from your Varo Bank account — including debit card purchases, bill payments and transfers — to the next dollar and deposits the difference into your savings account.


Varo: B+

Chime: A-

All online-only banks are convenient relative to traditional branch banks, unless you prefer face-to-face service from bank tellers at a brick-and-mortar bank.

Each bank’s mobile app lets you manage your account 24/7, including mobile check deposit and money transfers, and live customer service agents are available if you need questions answered.

Varo and Chime accounts offer features many online banks don’t, including cash deposits via Green Dot, early paycheck access and flexible overdraft protection.

Mobile Banking

Varo App: A

Chime App: B

Chime and Varo both offer mobile banking apps that are more user-friendly and easier to navigate than what you’ll get for most traditional bank accounts. However, both are pretty simplistic, lacking the budgeting tools you’d find in a lot of mobile apps.

In both apps, you can:

  • View and manage your accounts.
  • Transfer money between savings and checking, to and from external accounts, and to other customers of the same bank.
  • Deposit checks using your smartphone camera.
  • Locate in-network ATMS.
  • Freeze your debit cards.
  • Manage overdraft protection.
  • Contact customer support (via chat or email).

Push Notifications

Both apps give you the option to stay on top of your bank account balance by receiving a push notification every time money moves in or out of your account — via deposit or withdrawal, debit card purchase, or over-the-counter or ATM cash withdrawal. Chime also sends daily account balance alerts.

Small Business Banking

Neither Varo nor Chime offer small business banking accounts or products and services.

Account Fees

Both companies tout fee-free banking that eliminates many of the costs associated with traditional banks — largely because they don’t bear the expense of running brick-and-mortar locations.

You’ll pay no maintenance fees, overdraft fees or foreign transaction fees, and you can avoid ATM fees by using in-network ATMs.

With both banks, you’ll just pay for:

Out-of-network ATM: $2.50 for using an out-of-network ATM, plus any fee the ATM owner charges.

Cash deposit: You’ll pay a retailer fee up to $5.95 to deposit cash via Green Dot.

OTC cash withdrawal: You’ll pay a retailer fee up to $5.95 for a cash withdrawal via Green Dot. Chime also charges a $2.50 fee for over-the-counter withdrawal, while Varo does not.

Varo Advance: You’ll pay between $0 and $5 to use overdraft protection with Varo, while Chime’s SpotMe overdraft protection is free.

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How They Differ: Choosing the Right Bank for You

Overall, Chime and Varo offer similar banking products that will likely appeal to the same types of banking customers — but each has slight differences that might appeal to certain customers.

Who Should Join Either Bank?

You might prefer either account over traditional banks if:

  • You prefer the easy access and mobility of online banking.
  • You regularly run your account balance close to $0 or live paycheck to paycheck.
  • You’re often paid through direct deposit — you could benefit from an early payday!
  • You’re often paid in cash but want an online bank account.
  • You want an easy way to save money automatically.
  • You want a flexible and secure way to build credit without the risk of accruing debt.

A traditional bank or credit union is probably a better fit if you want to manage your checking, savings, loans, credit cards and investment accounts all in one place.

Who Should Join Varo?

Varo is better than Chime if:

  • You want to build an emergency fund. Varo’s Save Your Pay rule lets you set aside any percentage of your paychecks you want, so you can set it above Chime’s 10% Save When You Get Paid rule to help you reach your savings goals faster.
  • You want to make the most of your savings. Varo offers six times Chime’s interest rate on savings for qualifying account holders, though the rate comes with balance requirements.
  • You live in the Mountain states. Although services in general tend to be limited in this region, Allpoint’s ATM network has a little more coverage than both MoneyPass and Visa Plus Alliance in Montana, Idaho, Wyoming, Colorado, Utah and Nevada.

Who Should Join Chime?

Chime is better than Varo if:

  • You run on a tight budget. Chime provides overdraft protection with just $500 in monthly direct deposits compared to Varo’s $1,000-deposit requirement. It covers you up to $200 compared to Varo’s $100 and doesn’t charge a fee for the service.

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Are Chime and Varo the same?

Chime and Varo are distinct companies operating online banking apps, but they each offer similar services.

Is Varo Bank a good bank?

Varo Money is a reputable and popular banking app backed by FDIC-insured accounts through Varo Bank. The mobile bank is a good option for anyone who likes online banking and has simple banking needs that don’t require all financial services to live under one roof.

Is Varo an actual bank?

Yes, Varo Bank, N.A. received approval for a U.S. bank charter in July 2020 and is an FDIC member. Varo Bank is a wholly-owned subsidiary of the financial technology company Varo Money, Inc., which operates the Varo Money banking app.

Which bank is better: Current or Chime?

Current is an online bank account that offers many of the same features as Chime and other neo bank competitors. Current stands out for offering “savings pods,” which help you save toward specific goals, and separate accounts for teens; but it charges fees to access those unique features.

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Bottom Line

You can sign up for either Varo or Chime by downloading their mobile apps or visiting their websites.

Neither account requires a minimum opening deposit, but you can connect an external bank account to transfer money in right away or set up direct deposit to fund your account when you get paid.

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Our Bank Review Methodology

The Penny Hoarder’s editorial team considers more than 25 factors in its bank account reviews, including fees, minimum daily balance requirements, APYs, overdraft charges, ATM access, number of physical locations, customer service support access and mobile features.

To determine how we weigh each factor, The Penny Hoarder surveyed 1,500 people to find out what banking features matter most to you.

For example, we give top grades to banks that have low fees because our survey showed that this is the No. 1 thing you look for in a bank. Because more than 70% of you said you visited a physical bank branch last year, we consider the number of brick-and-mortar locations. But more than one-third of you use mobile apps for more than 75% of your banking, so digital features are also considered carefully.

Ratings are assigned across the following categories:

  • Personal checking accounts
  • Personal savings accounts
  • Small-business banking
  • Convenience
  • Mobile banking

Credit card and loan products are not currently considered.

Dana Sitar (@danasitar) has been writing and editing since 2011, covering personal finance, careers and digital media.




How to Survive the Rent When Your Roommate Moves Out

Even if you intend to stay, your landlord could annul the lease entirely if your roommate decides to unceremoniously break the lease. However, a good landlord will likely let you attempt to survive paying the lease on your own or give you time to secure rental assistance. Even if your credit score needs work first, there’s no better time than the present to start improving your score. And you’ll find that the measures you take to improve your credit are good for your finances in general. If you’re looking for a flexible side hustle that could turn into your primary source of income, look into bookkeeping. It’s the No. 1 most profitable business, according to an article in Inc. And you can earn up to an hour, reports Intuit, the creator of QuickBooks. Thankfully, a free website called Credit Sesame will take a look at your credit report and let you know exactly what you need to do to improve your score.

1. Find Someone New

Like dating, finding someone new can do wonders for getting you back on your feet after a roommate breaks the lease. You’d probably still have a bit of a rough patch during the transition, but looking for a roommate to sublet the apartment from your previous roommate can completely resolve the problem. Ready to stop worrying about money? AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.

2. Get a Side Hustle Earning up to $69/Hour

You don’t have to be married to face some of the drama that comes with a messy divorce. Whether you have a roommate who’s been casually dropping hints that you should be looking for a new roommate or they’re downright spelling it out, the prospect of that person leaving can feel like you’re about to lose everything the two of you worked so hard to maintain. The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month. Ready to get to work? Without a roommate and the rent savings that person provided, you might lose interest in paying anything more than the monthly minimum on your credit cards. But if those credit cards bear gaudy interest rates, you might not be making the best use of your dollars.

3. Stop Paying Your Credit Card Company

You don’t have to be an accountant or good at calculus to start your own bookkeeping business, either. As long as you’re motivated, a company called will teach you everything you need to know. It’s one of the leading training courses in the field, and it’ll even give you the first three classes for free. Along with looking for a roommate, make things easier on yourself by searching for a side hustle before your roommate makes their departure official. Even if you manage to convince them to stay, whatever factors urging them to bail in the first place could suddenly re-emerge — embarrassment could inspire them to slip away without warning. Source: Check out these tips for giving yourself a fighting chance of surviving a lease when a roommate gets cold feet and abandons the lease. Get the Penny Hoarder Daily

4. Have a Safety Net

Be sure to ask some critical questions. Can they reliably pay the rent? Do they smoke or drink? How do they feel about guests? Make sure you’ll be compatible as roommates. It takes two minutes to see if you qualify for up to ,000 online. Your credit score is like your financial fingerprint. Everyone’s is different — and for different reasons. That means everyone’s strategy to improve their credit score will look different… but how in the world are you supposed to know where to start? Privacy Policy <!–


Remember: Sharing a space with a roommate isn’t about being best friends, though it’s nice when your best friend happens to be a great person to split living costs with. It’s more important to live with someone you can coexist with and rely on. If you’ve just learned this the hard way, we apologize for any salt that accidentally dusted that wound.

Know When to Sell Stocks and When to Hold On

Your stock is up by 20 percent, maybe even 50 or 100 percent. Should you take the money and run? What about if your stock is down? Should you ride it out and hope for the best, or is it time to take a loss and avoid it getting even worse?

All these questions are running through your mind, and rightly so. You’re in the stock game to make money so making good decisions about when to sell stocks is important. In this story, we’ll run through three reasons to sell and three reasons to ride it out longer.

First Off, Sell Reluctantly

Some investment writers and TV pundits say you should sell at any hint of trouble. They may use a chart pattern, a declining rate of growth or maybe one disappointing quarter as a reason to get out.

Good ideas are hard to find, so stick with them until there’s powerful reasons to sell. Just because a stock is down doesn’t mean it’s out. A panicked move might leave you worse off than simply waiting out a short term problem, like a computer chip shortage or a blocked shipping route because of, let’s say, a global pandemic.

Conversely, a stock jumping over the moon doesn’t necessarily mean it’s time to put in that sell order. A stock can continue to go up well past your original target price. Stocks don’t have a maximum. They have (theoretically) unlimited upside potential.

You put in the time to research a company and maybe even read through its financial statements. Perhaps you’ve used the company’s products and think they’re the bee’s knees.  You took the plunge and bought at what you hope will be the right price. Save yourself from more investment decisions than necessary by being very slow to sell.

Still a little unclear on what all the information on the stock quote means? Learning how to read a stock quote will put you in a better position to know if you should buy, sell or hold. 

Stock sales may also trigger tax consequences. Consult with a tax advisor before you sell shares, at least until you are familiar with capital gains tax rules.

3 Good Reasons to Sell

Here are three signals that you should consider selling your shares.

1. You Need the Money

You put aside money for a reason, whether it’s to build a rainy day fund, save toward retirement or maybe that mansion with a view. If your investment portfolio did its job and you have enough money to achieve the original goal you set, sell.

Here’s why: There’s always a risk the market can back off. That could delay or even prevent you from realizing all those hard-won gains.

2. Something About the Stock Changed

If Apple decided to sell apples instead of selling a gazillion iPhones every year, that would be a good reason to sell. You didn’t intend to buy a food stock when you originally bought Apple. It’s possible the company could have an army of employees with untapped gifts for farming, but that’s much less likely than their proven success with whiz bang phones and computers.

The same is true of major mergers and acquisitions. Once a company makes a major acquisition or merges with another company, you own a different stock than before.

Most mergers and acquisitions don’t work out as well as promised, even more so if the newly purchased company is in a different business.

When a profitable company starts losing money, it’s concerning but not automatically a reason to sell. Automotive and other companies that sell big ticket items will see their profits go up and down along with the economy.

If coffee growers have bad harvests, Starbucks’ profits might decline. Those are temporary issues. Don’t be too quick to sell a good stock going through a rough patch. If the company is having trouble selling its products, look for the reasons why that’s the case before deciding to sell.

3. The Stock Didn’t Follow Expectations

If you bought stock thinking the company was going to introduce a hot new product and that product turns out to be a dud, sell. If the company commits a fraud, sell.

Dividend cuts are bad news for income investors. If you bought a company’s stock because it can pay dividends and it’s forced to cut them or even stop paying any at all, it’s broken faith with you. It’s time to enter that sell order.

It’s tough to admit we’re wrong. It’s even worse when we sell and the stock’s price recovers or even goes higher. That will happen. But all you need to do is be more right than wrong. Don’t reevaluate stocks that failed expectations. Sell and move on.

3 Not-So-Good Reasons to Sell

Here are the three reasons you might want to tell your inner trader to hush up, and hold on to that stock.

1. It Feels Good to Take a Stock Market Profit

This goes back to good ideas being hard to find. As much as we love booking a profit and seeing some extra cash, then what will you do next? Spending the profit means you’ll have less money to invest. Your next investment might not turn out as well. If your stock reaches your target price, that’s great! Perhaps it can go up even more.

2. You Have a Hunch

Experienced investors are disciplined and do everything in their power to avoid being swayed by emotion. Human nature makes investing tricky. We hate losing money. We can also get jumpy when we feel as if we’re missing out.

A hunch is usually an impulse, and it’s rare to see a hunch trader make money for an extended time. Work on using rational judgment.

3. Online (or Somewhere Else) Buzz

There are some smart people offering great advice for free on bulletin boards and Reddit, but they are far outnumbered by people who only know how to sound smart. It’s often impossible to tell the difference until the money is lost. How often do you see anyone say “I don’t know” on the internet?

Internet groups are susceptible to what psychologists call “feedback loops.” That’s when enough people share a belief that others join the bandwagon. Their reasoning goes along the lines of, “If that many people believe (something), it must be true.” Then when facts prove otherwise, it becomes a race to the exits and the stock is kicked to the curb.

Consistent Investors are Winning Investors

The list shared here is only a start. Over time, every investor learns their own investment philosophy. Some investors look to buy shares of companies that are priced below what they may be worth. Others focus on companies that are growing rapidly. Those two groups will have different ideas when to sell a stock.

As you continue to invest in the stock market, you’ll develop your own buy and sell signals. One way to make consistent gains is systematic investing, something that people do when they contribute to a retirement account such as a 401(k).

Once you do, it’s important to stay consistent. Markets go through periods (sometimes years) when even the best value stocks will underperform. Other times growth stocks will be in the doghouse.

If you keep changing your strategy, you could find yourself continually on the wrong side. Professionals accept that sometimes the market is with you and other times it’s not. If you’re patient and know how to reduce risks when you can, the odds will be on your side.

Contributor Sam Levine holds Chartered Financial Analyst® and Chartered Market Technician® designations and has written on finance topics since 2003. He is an adjunct professor of finance at Wayne State University in Michigan.




Ibotta Review – Redeem Offers and Earn Cash Back

Groceries are one of the most significant expenses in many people’s budgets. According to the Bureau of Labor Statistics, the average American family spent over $8,169 ($680.75 per month) on food in 2019, including eating at home and at restaurants.

It’s no wonder that many households search for ways to save on this expense, including using coupons and shopping apps. One such shopping app is Ibotta, which can help you earn cash back on your groceries and other in-store and online purchases as well as eating out at restaurants.

How Ibotta Works

Ibotta is a smartphone app and browser extension that lets you earn cash back on products and services you use every day. It works a bit like clipping coupons, but instead of money off the top, you get rebates on preselected goods you buy during shopping trips, either in-store or online.

It partners with over 300 retail stores, restaurants, movie theaters, convenience stores, home improvement centers, pet stores, and pharmacies as well as brands to encourage shoppers to check out their new stuff and reward shoppers for purchases they make every day.

So while apps like Ibotta are typically associated with grocery shopping, you can earn cash back on other purchases as well, including at major retailers like Amazon, Walmart, and Target. You can check the full list of supported retailers on Ibotta’s website.

Although Ibotta is currently only available for use in the United States and Puerto Rico, you can use it on military bases worldwide.

Ibotta is reasonably straightforward to use.

1. Find Offers

Before you shop, open your Ibotta app or browser extension and select a retailer. That takes you to a page where you can browse offers for products that store carries.

If you find any offers for products you plan to buy, select the offer, and Ibotta adds it to your grocery list. Sometimes, you must watch a short video or answer a survey question before it adds the offer. For others, you just have to select it.

Many offers overlap with other retailers. For example, if you select an offer for a $1 rebate on apples at Walmart and it’s something supported by Whole Foods or Aldi, the offer will automatically apply to your shopping trips at those stores too. But check the offer details, as the offers don’t always apply to all stores, even if it’s a brand another store carries.

2. Go Shopping

You can buy the products you selected from any supported retailer, bearing in mind that some offers are retailer-exclusive.

Check the offer details and exclusions to ensure you buy the correct product, or you won’t get your cash back. Sometimes, you have to purchase a specific variety of item — for example, Cool Ranch Doritos rather than just any Doritos — to qualify. You may also be required to buy a particular size or quantity. The Ibotta app allows you to scan a product’s bar code in-store before purchasing it to check.

And if you’re shopping online, the Ibotta browser extension works as a pop-up sidebar. The sidebar works differently with each retailer.

For example, if you’re shopping Walmart’s grocery pickup and delivery service, the sidebar takes you directly to the products that qualify for the rebate when you push the Shop button next to each item in the List tab of the sidebar. It also highlights the correct products on the retailer’s website with either a green or pink box. A green box means you already clipped the rebate. A pink box means the product qualifies for a rebate, but you didn’t clip it yet. That makes it incredibly easy to know if you’re buying the right product.

Other retailers, such as Target, aren’t as straightforward. While you can still shop with the handy sidebar, you don’t benefit from the pink and green boxes surrounding qualifying products.

Also, you can only use some rebates once, such as a single container of Yoplait yogurt, no matter how many units you purchase. You can use other rebates multiple times, such as $0.25 cash back on each of up to 10 Yoplait yogurts. Additionally, some rebates require you to buy multiple items or units to qualify for the offer.

3. Redeem

Once you’ve purchased your selected goods, there are several ways you can send Ibotta proof of purchase to qualify for your rebates and get your payout.

Send a Receipt

If you shopped in-store, open your Ibotta app, select the Redeem icon and then select your store. The app then prompts you to either scan the bar code or QR code at the bottom of the receipt or snap a photo of the entire receipt, depending on the retailer’s preference. Ibotta then automatically matches your receipt to your selected offers.

If it doesn’t match a selected offer, you can add it before sending your receipt. Simply select theAdd Offers button that appears after you scan your receipt. Scroll through your list, and tap the one that’s missing. The app might then require you to scan the product’s bar code to prove your purchase. Sometimes, retailers require you to scan item bar codes regardless of whether they’re matched on the receipt. It all depends on the retailer’s preference.

Once everything is correct and all your rebates are accounted for, tap the Send Receipt button. You can expect to see your rebates in your Ibotta account within 48 hours. You must submit all receipts within seven days of purchase to qualify.

Link a Loyalty Account

You can also use your store’s loyalty account to prove your purchases. If a retailer is set up to use loyalty cards with Ibotta, input your card’s membership number directly into the app. Then, when you purchase products that match your selected offers, Ibotta automatically matches them, saving you the step of having to scan or take a picture of your receipt.

Link an Online Account

If you’re using the Ibotta browser extension to shop grocery pickup or delivery services, you need to link your shopping account. That could be different from a loyalty account since not all online grocery services have them. For example, Walmart has no loyalty program, but you still need to register for a account online to use their grocery pickup and delivery service.

For Ibotta to track your rebates, link your store account with the Ibotta browser extension. The process varies by retailer but could include entering the email address and password or phone number you signed up with.

Make Mobile In-App Purchases

In addition to in-store shopping, you can use Ibotta to make online purchases using your smartphone at any of its partner retailers. Simply open your Ibotta app, scroll down to where it says, “Shop by category,” and select “Online shopping.” That takes you to a page listing stores where your purchases can earn you cash back. These include mega-retailers like Amazon, Groupon, Kohl’s, and Bed Bath & Beyond.

The Ibotta app allows only for in-app and app-to-app purchases, so always start in the Ibotta app instead of going directly to a shopping website. If you don’t start from the app, it will have no way to track your purchases.

Although you won’t need to send Ibotta a receipt if you shop through the app, it encourages shoppers to hang onto their receipts until it credits the offer in case something goes wrong during the purchase process.

Activate Cash-Back Offers

If you’re not shopping for groceries, Ibotta’s offers typically include a percentage of cash back on your purchases, just like other popular browser extensions, such as Rakuten, Honey, or Capital One Shopping.

To get credit for your purchase, activate the cash-back offer in the sidebar. Then just shop as usual.

4. Get Cash Back

After you’ve completed your shopping and submitted your proof of purchase, Ibotta deposits cash in your Ibotta account within 48 hours. Once you reach a threshold of $20 in your account, you can opt to cash out. Ibotta sends your funds to your PayPal account, or you can opt to have them sent directly to your bank account. Alternatively, you can purchase a gift card from one of their supported retailers.

Key Features

In-store and online cashback offers are the primary ways to save money with Ibotta. But this shopping platform offers even more features that make it a convenient tool for scoring extra cash.

Product Search

If you’re in-store or have a short list, you can use the search bar in the mobile app to look for an offer on the products you’re there to buy.

Likewise, the browser extension includes a search tab, so you can look to see if there’s an offer on the product you want without having to search through hundreds of irrelevant offers.

If you have a longer list, Ibotta organizes grocery offers by common categories like produce, dairy and eggs, snacks, and meat and seafood, allowing you to zero in on what you need. It also learns your preferences and opens with offers specially selected for you. Or scroll through all the offers to discover everything available.

Non-Grocery Rebates

Ibotta supports a wide variety of online retailers in non-grocery categories like clothing, sporting goods, hardware, entertainment, and travel. Before you do any online shopping, check out Ibotta’s list of retailers and compare their current cash-back offers to those from other online shopping tools you use, such as Rakuten, Honey, or Capital One Shopping.

Customer Support

Ibotta’s customer support features individual teams that can help with specific questions, such as an online shopping team dedicated to answering questions about online shopping. It allows customers to get the right support people quickly and efficiently deal with queries and problems.


There’s a lot to like about Ibotta. These advantages make Ibotta one of the most popular cash-back apps.

1. It’s Easy to Check Products Against Offers

If you’re shopping in-store, you can easily use your smartphone to scan the product’s bar code to find out if it matches the offer. And while shopping online can be a bit trickier, if you shop a pickup and delivery service like Walmart, the color-coded boxes surrounding the products with available rebates ensure you buy the correct goods.

2. You Can Score Cash Back for Products You Regularly Purchase

Keep Ibotta in your cash-back arsenal for saving money on regular, everyday purchases. It helps you save on your grocery purchases and supports a wide variety of online shopping. And anything that can help you save money is a plus.

3. Some Offers Aren’t Brand-Specific

Although the vast majority of Ibotta’s rebates are for brand-name products, it offers the occasional “any-brand” offer. With any-brand rebates, you can earn cash back on pantry staples you regularly purchase, such as milk, eggs, bread, cereal, and fresh produce, regardless of the brand. So even if you regularly buy store brands to save money, you can still use Ibotta.

4. You Can Boost Your Savings by Combining Rebates and Coupons

Perhaps one of the best benefits of using Ibotta is that you can stack your savings with coupons. Even if your store has rules against coupon stacking (using multiple coupons on the same product), Ibotta isn’t a coupon, so it gets around these rules.

In addition to earning cash back on your purchases, many Ibotta users have been able to make money by combining Ibotta rebates and coupons. For example, if you want to purchase something that costs $1, and you have a $0.50-off coupon plus an Ibotta rebate for $0.75, you could actually earn $0.25 by buying it.

5. It Partners With Numerous Retailers

Ibotta partners with over 300 different retailers, including physical stores and online retailers. Ibotta’s partner retailers include retail chains, movie theaters, restaurants, pharmacies, pet stores, hardware stores, travel sites, and flower shops. If you’re doing any kind of shopping, whether in-store or online, it’s worth it to check your Ibotta app first to see if the retailer is connected with Ibotta.

Plus, even if Ibotta doesn’t support your preferred retailer, sometimes there are workarounds. For example, if you want to buy groceries at Costco, you can’t currently shop there and get per-item rebates. But if you use Instacart, which partners with both Costco and Ibotta, you can get rebates that way.

Alternatively, if Ibotta doesn’t currently partner with your preferred shop, you can encourage them to join. Ibotta serves both customers and businesses by helping customers save while increasing traffic to businesses by luring customers with rebate offers.

6. You Can Use It for More Than Just Groceries

Although Ibotta’s original purpose was grocery savings, the app is continually expanding to include other kinds of shopping. In addition to groceries, you can use Ibotta to purchase everything from clothing and cosmetics to music and travel.

You can also use it to save at restaurants, including earning cash back on your overall meal, cash back on gift cards, or cash back for certain purchases (like beer, wine, and liquor). And you can even earn cash back on restaurant food delivery and takeout services.

You can find the full range of rebates Ibotta is currently offering on its website.

7. You Get Real Cash

Unlike some rebate apps, such as Capital One Shopping, where you can only redeem the points you earn for gift cards, Ibotta’s cash back is real cash. Although you can use your cash to purchase a gift card from any of Ibotta’s supported retailers, you can also opt to have cash directly deposited into your PayPal or bank account.

8. You Can Earn More Through Teamwork, Bonuses, and Invite Offers

In addition to its typical rebate offers, Ibotta allows you to earn even more by building shopping teams, participating in seasonal bonuses, and taking advantage of invite offers.


When you create a team with your friends, your collective shopping and selected rebate offers can earn you cash back beyond what you can earn alone. There are a couple of ways you can build a team with Ibotta.

You can build your shopping team by linking your Facebook account to your Ibotta account and adding friends from Facebook. You can also invite new users, called “savers,” to join Ibotta. When they join with your unique referral code, the app automatically adds them to your team.

You can then pool your shopping efforts to qualify for Teamwork bonuses every month. When your team collectively redeems a certain number of offers, all team members receive a cash-back bonus on top of your rebates. And the more offers you redeem, the better the bonuses get. So the bigger your team, the faster you can earn.


Ibotta also runs seasonal bonus opportunities. These allow you to earn additional cash back by buying a certain quantity of specific merchandise. For example, in one opportunity, shoppers who redeemed 10 offers during a two-week period at the start of June were eligible to receive an additional $10 cash back.

Sometimes, bonus events allow you to redeem any offers to qualify, while others require you to buy specific featured products or redeem offers with particular retailers.

Invite Offers

Ibotta also rewards shoppers who invite their friends to join and use the app. If you have a lot of friends, that can add up to significant cash. For example, one month-long invite offer paid shoppers $3 for each referral who downloaded the app and redeemed at least one offer. After their third qualifying referral, referrers were entered into a pool where they had a chance to split $100,000 with other qualifying referrers.


Although Ibotta is a versatile, easy-to-use shopping platform with tons of fantastic features, there are a few drawbacks.

1. It May Not Have Offers for the Products You Normally Buy

Ibotta adds new rebate offers all the time. But they may not be for products you usually buy. To earn cash-back rebates for your shopping, you must purchase the specific product in the offer. Although the app occasionally offers any-item rebates, these are typically for small amounts, such as $0.25. If you can’t find any offers for the things on your family’s shopping list, Ibotta is unlikely to save you much money.

Also, because the app’s primary purpose is to serve retailers by getting customers to buy new products and brands, it may lead you to buy goods you might not have purchased otherwise. If you do that, Ibotta is more likely to cost you money than help you save it.

2. Some Rebates Are for Specific Product Varieties

I’ve gone to the store on more than one occasion, purchased a product I thought had a rebate, and then uploaded my receipt only to discover I’d bought the wrong variety, flavor, or size. More than once, the app even insisted the product was “wrong” when it appeared to be precisely the item in the offer.

To keep that from happening to you, always check the specific offer details and exclusions to ensure you’re purchasing the right flavor, size, or quantity to qualify for the rebate.

You can also use the app to scan the bar code before you buy. Just open your Ibotta app, click on the selected offer, and verify you have the correct product by using your smartphone’s camera to scan the bar code. It takes some extra time, but it beats finding out you have the wrong product after you’ve already bought it.

3. It Doesn’t Work With Some Retailers

Although Ibotta supports over 300 retailers and adds more all the time, it may not currently support your favorite store. Even if you buy the right product, you won’t qualify for the rebate if you don’t buy it at a supported retailer.

Moreover, some rebates are specific to certain stores, so even if Ibotta supports your store, it may not support a particular rebate at that store. Always check the offer details and exclusions before shopping.

4. It Requires a Time Investment

Just as with couponing, scrolling through Ibotta’s list of offers can take time. You may invest that time and find only one or two offers you can use, and they may be for nominal cash-back amounts. Although Ibotta often has cash-back offers of $1 or more, it’s more common to find rebates worth $0.25 or even $0.10.

So as with any money-saving tool, consider whether the time investment is worth it to you. For example, if you only come across one nominal offer, ask yourself if 30 minutes of your time is worth $0.25, especially since you have to get up to $20 to cash out.

5. Account Maintenance Fees Can Reduce Your Payout

If you actively use Ibotta, you don’t need to worry about account maintenance fees eating into your earnings. But if you go for six months or longer without using the app, Ibotta charges an account maintenance fee of $3.99 per month. It deducts this fee from your rebate earnings until your account reaches zero.

So while you never have to pay Ibotta directly, if you don’t use the app or cash out your balance, you will lose your earnings.

Final Word

Cash-back apps can help put some money back in your pocket, which is why many users love Ibotta. But it may not be as much as you were hoping for if you can’t take advantage of many of the available offers or use the app at your favorite stores.

Fortunately, the app is adding more retailers and more ways to shop every day. Plus, it’s easy to use, especially when it’s connected to a loyalty card. And if you’re someone whose shopping habits fit well with Ibotta’s requirements, there’s little reason not to use it.

Fortunately, Ibotta is only one tool in your larger toolkit for saving money on groceries and online shopping. Buying groceries in bulk, shopping at lower-cost stores, keeping an eye out for sales, and shopping with a detailed meal plan can also help you dramatically reduce your grocery bill.


McCormick’s Director of Taco Relations is a Dream Job for Taco Lovers

There’s a new job out there paying $100,000 to taste tacos, research tacos, film tacos, celebrate tacos, Tweet tacos and talk tacos. And not just on Taco Tuesday. Every day for four months.

Yeah, this sounds like a classic Homer Simpson dream bubble, but it’s actually legit. McCormick, the spice company, is hiring its first Director of Taco Relations. The gig pays $25,000 a month for up to 20 hours of work a week during September, October, November and December. That figures out to $312.50 an hour. (Picture the dollar signs in Homer’s glazed eyes.)

No previous taco experience required, but you must be passionate about that fabulous folded food group. Expertise in producing social media content is also a plus. You must apply by 11:59 p.m. July 20 and submit a video no more than two minutes long.

McCormick suggests including some of the following info in your video:

  • Your go-to and out-of-the-box taco recipes, taco tips and tricks, and insights gleaned as a taco connoisseur
  • Your favorite taco-themed trivia and fun facts
  • Are you team hard shell or team soft shell and why?
  • Your applicable taco experiences, qualifications and skill sets
  • Your feelings on the perfect taco toppings
  • Most importantly, you should be able to answer the question: Why is being McCormick’s Director of Taco Relations your dream gig?

The Tasks of Director of Taco Relations

If your typical day includes eating a taco with one hand while trolling TikTok with the other, then you’ve already been training for this dream job. Spotting taco trends and posting content other taco devotees will appreciate are key tasks. Other duties include:

  • Working with the McCormick kitchens team to develop innovative taco recipes
  • Sharing easy taco recipes for breakfast, lunch and dinner
  • Helping taco fans and followers execute these recipes at home
  • Collaborating with McCormick’s creative and social teams for celebrating National Taco Day, National Margarita Day and Taco Tuesday
  • Making taco lovers aware of ways to use McCormick’s taco seasoning beyond the traditional taco
  • Minimal travel to McCormick’s headquarters in Hunt Valley, Md., and other taco travel required

Click here for more specifics on the job and video format.

Katherine Snow Smith is a senior writer for The Penny Hoarder. 




Catering Side Gigs May Be the Best Hustle of 2021

“Catering is an extremely fun job as every event is different, and you can see a lot of really cool venues and be a part of some amazing events,” says Daniel Wolfe, owner of Wolfe and Wine Catering in Houston.
There are positions for people of all skill levels. For example:
There are perks. You’ll be a fly on the wall at events held in beautiful locations. If you’re the sort who gets bored easily, you’ll appreciate having different work environments, since  many caterers travel to several event venues in the region.
Ready to stop worrying about money?
Plus, the jobs are often on Friday nights or weekends anytime, a bonus for a Monday-through-Friday worker looking to bring in more money.

How to Find Local Catering Jobs

This is great news for catering companies, whose income evaporated during 2020, and it can be great news for your wallet if you explore this lucrative yet under-appreciated side hustle.
LaSonya Holmes-Boulware, who owns My Girls Catering and Food Truck in Greensboro, North Carolina, starts catering servers at per hour and cooks at per hour. Experienced workers can be paid more for working elite events.
Spigener says she currently starts catering staff at per hour.
I’ve worked in restaurants and for caterers. Catering has always paid me more per hour, in every market I’ve worked. The seasonal nature of the job makes it an ideal side gig. If you can get in with a top-notch caterer now, when the need is high, you can secure a lucrative side hustle for as long as you need or want one.
Restaurant workers in most American markets receive a well-below-minimum-wage shift payment and make most of their money in tips. Catering workers tend to be paid competitive hourly wages, plus tips.
While it helps if you have previous experience, this is absolutely not necessary.
When hiring, Spigener looks for personality (“courteous and mannered well”) and a willingness to pitch in. Wolfe values punctuality (because “an upset client is a lost client”) and flexibility, since it’s difficult to predict when shifts will end.

server holding champagne glasses at outdoor wedding
Getty Images

Jobs in Catering

Depending on how big the event is, the caterer could need dozens of people. Some will need high-level culinary skills but that’s not what you will probably be doing. Think of your as the muscle and if you’re dealing with guests, a server with a good attitude. Event caterers are everywhere: big cities, college towns, and rural areas cashing in on the rustic wedding trend. Wherever you go, you’ll find a local catering company. If you find yourself in between jobs, catering income can give you a buffer until you land something else.
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Private party shifts tend to be shorter — a skeleton crew will be working in (or outside) someone’s home for a dinner service or cocktail party — but the odds of a direct cash tip at the end of the night increase significantly.

Eating on the Job

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The Penny Hoarder contributor Lindsey Danis is a Hudson Valley-based writer who specializes in food, freelancing advice, and personal finance. Her work has appeared in Business Insider, NextAdvisor, Greatist, and more. 
A typical catering shift lasts anywhere from 7 to 10 hours and you may need to travel to the location (I’ve gone as far as two hours, but been paid for travel time). The work is physical, the hours are long, and you’ll be on your feet the entire time.

Catering Side Gig Jobs

I first discovered catering in graduate school, when a friend who worked for a catering staffing company offered me a job. I had an hour-long training from the staffing company. On my first shift, a wedding at a historic estate with ocean views, I dropped a tray of champagne flutes.
Catering jobs include bartender, server, and cook. Bartender and cook jobs tend to go to people with previous experience in that role.

Jobs for New Hires

  • Refill water glasses
  • Clean up during cocktail hour
  • Clean up after event

Jobs for Experienced Workers

  • Pass appetizers
  • Tend the bar
  • Serve people sitting at head table

Despite my non-illustrious start, I stuck with catering. The money is consistent and the perks, if you work for the right caterer, add up. As I write this, I’ve been eating catering leftovers all week.
The agency agreement prohibited temps from being hired on by any caterer we’d temped for, which kept us corralled in lower-wage, disposable work.
In many markets, the catering season extends beyond summer weddings. University towns have receptions, graduations, and college reunions. Individuals have private parties for milestone events.
If you know someone who works for a restaurant or hotel that has a banquet facility, they may be able to refer you.

server setting the table at formal event
Getty Images

How Much Money Can You Make Catering?

Given the part-time, seasonal nature of the industry, workers tend to come and go. As a result, catering companies are often hiring. Many caterers love working with college students who are home for the summer or teachers looking for extra money on their summers off.
“All of the catering/food serving skills can be trained if the work ethic and personality for customer/guest service is there,” says Spigener.

The Hourly Wage

While I started with a catering staffing company, I wouldn’t recommend doing this. I was basically a temp sent to bolster catering agency staff, who earned more than I did.
The 2021 wedding season is projected to be among the busiest in a decade with an estimated 2.77 million weddings, which is over half a million more than usual.
Companies host holiday parties, summer picnics, and other employee engagement events, although Jackie Spigener, who owns Silver Sycamore Events Resort, a wedding and event venue in Pasadena, Texas, says corporate events haven’t yet returned fully.
You’ll be fed on your shift; this might be the same food guests are eating or a separate, simple meal. Food that was not served to the guests and would otherwise be wasted is typically up for grabs at the end of the night. I’ve also taken home wedding decor, bouquets, and opened bottles of wine.

What the Bosses are looking For

Wolfe currently pays – per hour for servers and per hour for cooks. Bartenders earn per hour with a tip jar visible or per hour with no tip jar. Wolfe says he pays based on the cost of living and would probably pay 20 to 30 percent more if he were located in a market like California or New York.
Thanks to the hospitality industry labor shortage, it’s a worker’s market. Employers all need to staff up at the same time, so companies have to compete on wages. Reach out to several companies at the same time, then take your pick of one or more that pay the most.
Attention to detail, a good work ethic, and a positive attitude are his top desired skills. Holmes-Boulware seeks out people who are willing to work flexible schedules, like Wolfe, and prefers those who have prior experience with events.
Source: <!–


During the wedding season, the best catering companies will have two to three weddings on the same day and you’ll be able to work every weekend if you want. 

Dear Penny: My Mom Agreed to Pay for My Wedding, Then Got Cold Feet

Dear Penny,

I got engaged in January 2021 and was very excited to start wedding planning right away. My mom and I were both extremely excited and went straight away to setting a budget and getting into the planning process. 

She originally agreed to pay for the reception and some of the ceremony. We now have pretty much everything sorted, but as we get closer and closer to the wedding date she is getting more stressed about the money. I am, of course, happy, but every time I turn around, my mom is asking me to contribute more and more toward her part of what she agreed to pay for. 

I have already paid for one or two things because I feel obligated to help my mom with as much as possible, but I have not had as long to establish myself financially as she has. My budget is somewhat limited, while hers is let’s say flexible. 

I recently have begun to draw the line with her, but that just makes her upset. I don’t want to go broke in the process trying to make everyone happy, but I also feel like a terrible daughter. 


Dear A.,

Some people reading this will no doubt cast you off as an ungrateful daughter. I don’t think this is the case here. It’s tough when someone tells you they’ll pay for something, then backs out. If your wedding day is close, you probably don’t have a ton of options for cutting costs that you would have had if your mom had spoken up sooner.

You say you’ve tried to “draw the line” with your mom. But have you tried talking to her from a place of concern about the panic she feels?

Yes, your mom has had more time to make money than you have. But she also has less time to earn back whatever money she’s spending. Archaic rules about who pays for what in a wedding put a ton of pressure on parents to agree to a wedding budget that’s often more than they can afford.

Wedding budgets are notorious for spiraling out of hand. It’s not surprising that your mom is feeling some sticker shock, particularly if she agreed to pay for certain expenses without setting a dollar limit on her contribution. Even if you’ve stayed within budget, understand where your mom is coming from. No matter how prepared you are for a big expense, paying for it can be painful.

Try talking to your mom when she’s not in panic mode. There’s only one way to start this conversation — and that’s by expressing gratitude.

Tell your mom that it’s clear how much stress your wedding costs are causing her. Ask her what her specific concerns are. Is the wedding costing her more than she expected? Has her financial situation changed since you got engaged? Did she overcommit in her excitement?

You may find that she’s worried about whether she has enough money saved. Or if you have siblings, she may be worried that they’ll expect the same contribution if they get married. It’s easy to look at a parent who’s always been a good provider and assume they have plenty of resources. But often, their finances aren’t quite as solid as you’d expect.

Perhaps this conversation will give your mom clarity about whether she really can afford all these costs. If you’ve kept costs reasonable and she’s not worried about her savings, maybe this conversation will reinforce the facts. But if you find that your wedding expenses are causing her serious anxiety, I think you should do whatever you can to lift some of that burden off of her.

I’m assuming it’s too late to take major cost-cutting measures, like reducing the headcount or changing venues. But you still have other options. Could you and your fiance offer to pay her back for part of her costs over time? Could you earn extra income between now and the wedding to shoulder a bit more of the costs? Or perhaps, your fiance’s parents help out with a few more expenses.

I get that your mom’s change of heart is frustrating. But lots of couples pay for a significant part of their wedding, if not the entire event, even when they’re just starting out. You’ll enjoy your wedding a lot more knowing your mom isn’t having a panic attack as you exchange your vows.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].

Related Posts




What Is the Bitcoin Lightning Network? How Does It Work?

The Lightning Network, or “Lightning” for short, provides a way for Bitcoin users to make small transactions without hefty fees or long confirmation times. While it’s not yet available to the average Bitcoin user, this innovation could one day solve Bitcoin’s biggest problems—high transaction fees and long confirmation times—both of which make smaller everyday payments unfeasible.

On the list of things to know before investing in crypto, Lightning doesn’t even crack the top five. But it may be an interesting topic for those interested in the technical side of blockchain technology, and for those who want to use Bitcoin as a means of payment.

What Is the Lightning Network?

Lightning is a decentralized network that uses smart contract functionality in the Bitcoin blockchain to facilitate instant payments across a network of users. It’s considered an off-chain or layer-2 solution because it involves activity that doesn’t occur directly on the blockchain.

Why Does Bitcoin Need Lightning?

Due to its decentralized nature, which requires consensus across a broad range of different computers, the Bitcoin network can only process about 7 transactions per second on average. Compare this to 24,000 transactions per second on average for a traditional credit card company like Visa.

Bitcoin forks since 2017.

Lightning provides a creative solution for these problems.

How Does the Bitcoin Lightning Network Work?

First, users must establish their own multi-signature Lightning wallet, and the two parties involved exchange a single key to validate their spending transactions. In this way, the transactions are kept from being broadcast on the main Bitcoin blockchain while also being verifiably accurate and real.

These off-chain (layer 2) transactions occur independently of on-chain (layer 1) transactions and don’t have to be updated on the main blockchain unless the two parties open or close a channel. Many Lightning Network transactions can occur before their record is broadcast to the blockchain. In this way, fees and confirmation times are greatly reduced.

Lightning uses multi-signature scripts and smart contracts to achieve its goals. When two parties initially fund a channel, this is called a “funding transaction.”

In effect, people are creating their own mini lightning networks when they open a Lightning wallet. Sometimes these multi-signature lightning wallets are referred to as “payment channels” or simply “channels.”

Example of How Bitcoin Lightning Network Works

As more and more people connect to Lightning, they don’t always have to create their own multi-signature wallet for each and every person they want to transact with. As the network grows, so do connections between wallets, and so long as there is a wallet with sufficient funds that the transaction can be routed through, then new users may be able to make use of existing wallets.

For example, imagine that James opens a channel with his local hardware store and deposits $50 of Bitcoin. His transactions with the hardware store can now be facilitated using the Lightning Network instantly.

Heather, who has a different channel open with her local smoothie shop, buys hardware from the same store as James. The connection between James, the grocery store, and Heather makes it possible for James to buy smoothies from the smoothie shop using the Lightning balance he has with the hardware store. Heather can also use her smoothie shop balance to facilitate transactions with other businesses within James’ network.

If Heather were to close her channel with the smoothie shop, then James would have to open a new channel with the smoothie shop to make Lightning purchases there, assuming there are no other available channels open. But as the Lightning Network grows, the idea is that in time, many different customers will have channels with many different merchants, and there will eventually be enough channels for everyone.

Lightning Network Developers

Who is developing the lightning network? There are a number of startups working on different implementations of lightning Bitcoin. The three main developers are listed below, each of them using a different programming language. Input is given from other members of the bitcoin community as well.

Lightning Labs

Lightning Labs focuses its efforts on creating a working model of the Lightning Network. The company is currently developing a Lightning Network Daemon written in the Golang programming language.


Blockstream is known for the creation of satellites that serve as backups for the Bitcoin blockchain in the event of anything catastrophic happening to miners or the electrical grid on Earth.

When it comes to Lightning, the company is working on a version written in the C programming language.


The company is developing Lightning using the Scala programming language.

It’s worth noting that while these versions are written in different languages, tests have shown that the three primary implementations could be interoperable, meaning they could all work together.

Pros and Cons of the Lightning Network

Perhaps the most important benefit of the Lightning Network is that it will allow Bitcoin to scale. Users will be able to make instant micropayments using Bitcoin without paying high fees. The famous example is buying a cup of coffee with Bitcoin, which is all but impossible at present due to high network fees and slow confirmation times.

One con includes the fact that as of the time of this writing, Lightning is not quite available for practical use. Because the project is still under development, it hasn’t yet been universally applied to real-world applications.

The average user will have difficulty making transactions using the Lightning network. Unless someone runs their own Lightning Bitcoin node, they won’t be able to receive payments while offline, and may or may not be able to open a channel with another person or merchant (who must also be using Lightning).

Can You Make Money Running a Lightning Node?

mining bitcoin does. There are several reasons someone might want to run a Lightning node, such as helping the Bitcoin network scale, increased privacy for personal transactions, and bypassing censorship in areas where governments have heavily regulated crypto and crypto exchanges.

Making money is not an incentive for running a Lightning node, however, as it typically doesn’t pay more than a few pennies per month at most. The hardware required to run a node will cost about $200-400 on average.

The simplest of tips for investing in Bitcoin might be to not run a full node unless you have a good reason or want to support the growth of the technology.

The Takeaway

The Lightning Network is a layer-2 solution that provides a way for Bitcoin to scale. It is still in the early experimental development phase, but once it becomes fully developed and widely adopted, it could help make Bitcoin more widely used as a digital medium of exchange.

While the Lightning Network will primarily benefit users interested in Bitcoin as a form of payment, there are other users who consider Bitcoin to be more of an investment. For those interested in investing in cryptocurrency like Bitcoin, Ethereum, and others, SoFi Invest® offers a secure platform that keeps assets protected from fraud, and the convenience of 24-hour trading through the SoFi app.

Find out how to get started with SoFi Invest.

Photo credit: iStock/MicroStockHub

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