The start of a new year is a great time to focus on your fitness goals — your financial fitness goals, that is.
Financial fitness is extremely important, just as physical fitness is. And like building your muscles in the gym, you need to work at building your financial strength.
These four money resolutions can get you on your way. Putting them into action could help you save more and spend smarter, pay down your debt, and work toward a bright financial future.
1. Track Your Spending
Understanding exactly how much you’re spending helps you appreciate how much you’re able to save. Your savings rate is the most important component for determining your ability to accomplish financial goals like homeownership, starting your own business, or being able to retire.
A savings account can help with this mission. It allows you to put the money you’re designating for future goals in a separate place from the money you use to pay your bills and for purchases. If you don’t have a savings account, you can open an online account with a high-yield APY, which could make your savings grow even faster.
Reviewing your spending can be one of the easiest ways to find opportunities to save money. For instance, you’ll see how certain everyday purchases add up, which can be eye-opening, and it can give you ideas and inspiration to trim some of those costs.
While it might sound time consuming to track what you spend, there are free online tools that make it easy. SoFi Insights allows you to connect all your financial accounts on one mobile dashboard so you have a bird’s eye view of your balances. It gives you an up-to-date, real-time snapshot of your finances.
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2. Create a Budget
Making a budget takes some time and effort, and it’s not always fun to face reality. But over time, a budget can help you feel calmer and more in control. The key is analyzing your “fixed” expenses (rent/mortgage, car payment, utilities, childcare) versus your “discretionary” expenses (restaurants, clothing, entertainment).
If you have more than 50% fixed expenses and less than 50% discretionary expenses, it can feel like you’re just working to pay bills. But when the proportion is more like 30% to 40% fixed expenses and 60% to 70% discretionary, you may have room to proactively reduce discretionary spending so you can save more toward your goals.”
To get there, first, see if you have any weaknesses in those discretionary areas. Did you go overboard on eating out last month? Consider giving yourself a spending limit in that category for next month.
Then look at your fixed expenses. Giving up a $5 latte now and then won’t make a major dent, so instead, hone in on the big-picture items that can make a real impact.
Can you live somewhere else to lower your rent or mortgage, for example? Can you cut back from two cars to one, buy a cheaper car, or combine car insurance with your partner? Can you walk or bike to work instead of taking a bus, subway, or train?
Recommended: 10 Most Common Budgeting Mistakes
3. Evaluate Your Debt
Let’s bust one of the common money myths right now. Is all debt bad? Nope!
The truth is, there’s good debt and bad debt. A mortgage is often good debt because the interest rate is generally low and a home is an investment that may, hopefully, earn you money over time. Similar principles apply to student loans.
Credit card debt, on the other hand, is often bad debt. It typically carries a high interest rate and having too much credit card debt, or failing to make payments, could negatively impact your credit score, which can make it harder to do things like buy a home.
Make a plan to deal with that bad debt, whether it’s paying it off ASAP or refinancing it. There are debt consolidation loans that can help with this. And if you’re aggressively trying to pay off your good debt, think about whether that’s really the best use of your funds, or if you might be better off saving or investing for some of your other financial goals, like retirement.
4. Set Yourself Up for Success
If you know that you should manage your money better and save more, but all you can think is, “I’m up to my eyeballs in student loans, I’m trying to buy a house, and my retirement portfolio is practically nonexistent,” we hear you.
Even if you’re not ready to save more right now, consider opening some savings or investment accounts anyway. It’s about having the infrastructure in place. This way, if you get a surprise gift, or a raise or bonus at work, you can put it into one of these accounts instead of your checking account.
Also, consider automating monthly payments—even if it’s just $20—to each account savings and/or investing account. You probably won’t notice a difference to your wallet, it’ll get you into the habit of stashing away cash, and you may feel motivated to increase the amounts once you see the money grow.
The Takeaway
Practicing smart financial habits can help you earn and save more for the things you really want, like a home of your own and a secure retirement. Getting started by tracking your spending, creating a budget, cutting back on key spending items, and dedicating money to savings can get you on your way. Once you start doing these things, they can become automatic.
If you’re ready to open a new savings account to help your money grow, a SoFi Checking and Savings account can help you earn a competitive APY, you’ll pay no account fees, and there’s no minimum balance.
Start saving for the future with SoFi Checking and Savings.
SoFi’s Insights tool offers users the ability to connect both in-house accounts and external accounts using Plaid, Inc’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score provided to you is a Vantage Score® based on TransUnion™ (the “Processing Agent”) data.
SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 8/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..
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SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 8/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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