SoFi

You may not think of saving money as being a creative pursuit, but with a little effort, you can find fresh (and even fun) ways to help you stash away some cash. This can make the process more engaging and motivating.

Whether your goal is to save for the down payment on a house, build up your kid’s college fund, or simply take a great vacation next year, these clever ways to save money can help you get there — without feeling bored or deprived. Get set to save more.

15 Creative Ideas to Save Money

You’re probably familiar with some of the usual strategies for saving money, such as comparison shopping and clipping coupons. If you’re ready to mix things up and try some less common tactics, consider the following 15 quirky but effective ideas.

1. Identify Your Saving Goals

Not sure how to make saving money fun or prioritize it? You could start by identifying your goals, a target savings amount, and a timeline for achieving them. For example, if you’re saving up to purchase a car in one year, determine how much you’ll need, then divide that amount by 12 to come up with a monthly savings goal. You might even open up a separate savings account earmarked for a new car. Seeing your “car” account grow over time can motivate you to keep going, even throw in some extra cash whenever you can.

2. Find a Saving Buddy

With the right company, even the most mundane tasks can be enjoyable. You might talk about your savings goals with your friends and family members to potentially identify a saving buddy with similar objectives.

An ideal saving buddy will be supportive of your financial goals, offer good advice, and have a positive money mindset.

Checking in with your buddy regularly could help keep you both stay on track and you can celebrate each other’s accomplishments. This person might also be able to talk you down if you’re on the verge of making a big impulse buy. If you’re stressed about how to make saving money fun, you could brainstorm creative tactics with your saving buddy and implement them together.

3. Seek Out Free Activities

Saving money does not have to be synonymous with missing out. There are likely a number of free activities offered in your area. Perhaps your local park offers free theater performances or concerts in the summer, or your area bookstore hosts interesting literary panels and author discussions with no attendance fee. This can be a great alternative to pricey movie or concert tickets.

Also think about the resources provided by your local library, such as book clubs, language exchange programs, craft nights, and movie screenings. You might also find a way to save money on streaming services: Many libraries offer services like Hoopla or Kanopy at no cost to card holders.

4. Get Creative and DIY

Another clever way to save money is to think about what you could create rather than buy new. For example, you may be able to make your own household cleaning products with items you already own (like vinegar and baking soda) or whip up a facial mask using fresh ingredients like avocado, tea, honey, and oatmeal. Out of wrapping paper? You don’t necessarily need to run to the store. Consider using old newspapers, maps, magazines, brown paper bags, or scraps of fabric. It’s free – and kinder to the earth.

5. Gamify Savings

To break up the monotony of saving, consider incorporating games and challenges into your overall savings plan. For example, you might try a “no-spend week,” where you refrain from spending money on anything other than necessities for seven days. If you succeed at that, you might want to ramp up to a 30-day no-spend challenge.

If a full no-spend challenge feels like too much, you could simply challenge yourself to not spend in a certain category for one month, like clothing, shoes, or take-out. You might choose something else the next month to keep the savings going.

6. Swap Goods and Trade Skills

Getting serious about money management doesn’t mean you need to give up on “luxuries” like exercise classes or new clothes. Rather than pay cash, you might explore trading skills or goods for pricey things or experiences on your wish list. For example, you could see if your favorite yoga studio offers a work-trade program where you can do administrative duties in exchange for classes. Or if your wardrobe needs a refresh, consider setting up a clothing swap with friends to score finds — and have fun — at no cost.

You might also consider an informal exchange with skilled friends. For example, if you’ve been eyeing an original painting from your artist pal but don’t have the funds to pay her, you could offer your website design services (or some other helpful skills) for the painting.

7. Increase Income

Sometimes, cutting down on expenses might not be the most effective way to reach a savings goal. It might be easier, in some cases, to look for ways to make more money rather than reduce costs.

If a salary raise isn’t in the offing, you might consider your particular skills and/or hobbies to see if there is a way to translate one of them into an income stream. For example, if you love to knit, you might start an online store for your yarn creations. Or if you’re a wordsmith, you could potentially offer your writing or editing services in a freelance capacity. A successful low-cost side hustle could help bring additional money into your bank account and even add more fun and enjoyment in your life.

8. Switch Your Bank

If your financial institution seems to be charging you endless fees and offers little interest on your savings account, consider switching banks.

You might shop around and see what online banks and local credit unions are offering. Online-only institutions don’t have brick-and-mortar locations to fund and can pass those savings along to customers in the form of lower or no fees and higher interest rates. Credit unions, on the other hand, are run as financial co-ops, meaning each member has a stake in business. As nonprofits, they are designed to serve their members, typically paying higher interest rates on deposits and charging lower fees.

9. Split Your Direct Deposit into Checking and Savings

If you have regular paychecks, one of the easiest ways to start saving more is to have some of each paycheck go directly into a savings account, where you’ll be less tempted to spend it. Many employers will allow you to do a split direct deposit, where some of your pay goes into your checking account and some goes into your savings account. Evening saving off 5% or 10% of your paycheck each pay period can add up to a serious sum over time. If you choose a high yield account, you can help your savings grow faster.

If you don’t have the option to split up your paycheck or would prefer not to, another way to automate savings is to set up a recurring monthly transfer from checking to savings for the same day each month, perhaps the day after you get paid. You won’t have to remember to make the transfer or give saving a second thought.

10. Change Your Due Dates for Bills

If you frequently overdraft your checking account or have to pull money from savings to cover bills, consider this unique way to save money: Changing some of your billing due dates.

Moving due dates for large payments — like credit card bills or student loans — away from the due date for your rent or mortgage, could help you avoid getting hit with overdraft or non-sufficient fund (NSF) fees. It can also keep you from transferring money from savings to checking to cover a temporary shortfall, and then never transferring it back.

11. Save Every $5 Bill

This is a classic adult remix of the piggy bank you had as a kid. Only this time, instead of squirreling away pocket change, you take every $5 you get and put it in an envelope tucked into the back of a drawer.

Once you get into the habit of identifying $5’s as “no spend” bills, you’ll find it can really be a creative way to save money. You likely won’t miss the money (it’s just $5) but at the end of the year, it could easily add up to enough cash to help with holiday shopping, a loan payment, or even a nice charity donation, without having to touch your savings in the bank.

Recommended: 39 Passive Income Ideas to Build Wealth

12. Take Advantage of Cash Back Credit Cards

Need another clever way to save money? Look for a credit card that offers a good rewards program like SoFi Plus. Depending on the card, you may be able to redeem cash back rewards as statement credits, checks, or direct deposits. Just keep in mind that a cash back credit card isn’t a good saving solution if you tend to carry a balance — the money you’ll pay in interest is likely to be significantly higher than your rewards rate.

13. Round Up Your Purchases Automatically

There are plenty of apps available that will round up your purchase to the nearest dollar and then save the change for you. Your bank may offer this kind of savings tool, which can be an easy way to save money automatically.

The amount these apps save for you is small, so you aren’t likely to notice 25 or 80 cents here and there when the round-up transfers, but it can potentially add up to hundreds saved per year.

14. Consolidate Credit Card Debt with a Personal Loan

If credit card debt is preventing you from saving as much as you would like, you might use a personal loan as a creative way to save some extra money every month.

If you can qualify for a personal loan with a significantly lower interest rate than you’re paying on your credit card balances, you could use it to pay off your credit cards. While you’ll still be paying off the personal loan, you could save on interest. You might also be able to pay off your debt faster. Once your loan is paid off, you can redirect those monthly payments to your savings account.

15. Take Advantage of an Employer’s 401(k) Match

If your employer offers a match on your 401(k) savings, it’s wise to take full advantage — this is essentially free money. For example, if your employer matches 50% of employee contributions up to 5% of your salary, consider putting at least 5% of your paycheck into your retirement account each month. Otherwise you’ll be leaving money on the table.

Creative Savings Challenges to Try

Saving money can feel like a chore, but making it a fun challenge can turn it into an exciting goal. Here are some ways to keep things interesting.

•   52-Week Savings Challenge: This challenge encourages you to save a small, increasing amount each week. Start with $1 in the first week, $2 in the second, and so on until you reach $52 in the final week. By the end of the year, you’ll have saved $1,378.

•   Receipt Challenge: Love to shop sales or use coupons? Collect your receipts that show your purchase savings in a drawer. Once a month, add up your savings, then transfer that amount into your savings account.

•   100 Envelope Challenge: Label 100 envelopes with numbers from 1 to 100. Each day (or week), pick an envelope randomly and place the corresponding amount inside. If you complete all envelopes, you’ll save $5,050!

•   Vacation Savings Challenge: A year before you want to go away, set a savings goal that will cover all of your vacation costs (including airfare, lodging, and spending money). Divide that total by 12, and transfer that amount into a savings account each month.

How To Stay Motivated to Save Money

Staying motivated to save money requires setting clear goals and making saving a rewarding habit. A good place to start is by defining a specific reason for saving, whether it’s for an emergency fund, a vacation, or a major purchase. Next, break your savings into small, manageable milestones to make it feel achievable.

Tracking your progress with a savings app or chart, and sprinkling in fun challenges (like a $5 or no-spend challenge), can also help you stay motivated. In addition, you might reward yourself for reaching savings milestones with a low-cost treat, like going out for ice cream or a fancy coffee.

Why Is Making Saving Money Fun Important?

Trying tactics like the ones above can help make saving money feel less like deprivation and more like fun. That’s important for a couple of reasons. Shaking up your savings routine can make socking away cash seem fresh and more engaging, meaning you are more likely to get the job done. Basically, it can rev up your motivation to save money.

Also, when you find a technique that is fun, such as a spending challenge, it can help encode the new savings behavior in your routine. If it’s enjoyable, you are more likely to keep up the good work.

How Can You Make the Most of the Money You Save?

When you save money, you likely want it to grow over time, not just sit there. One good way to do that is to stash your money in an interest-earning account. This can be especially effective if the financial institution charges low or no banking fees.

You might look for a high-interest or high-yield savings account. These can pay a significantly higher rate than standard savings accounts, and your money will be accessible and likely insured (up to certain limits) by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA).

Optimizing Your Savings

Beyond the creative ways listed above, there are other important ways to optimize your savings.

•   Assess your cash flow. Coming up with a basic monthly budget can help you better understand your personal finances and get a grip on your earnings, spending, and savings. When you see where your money goes, you can tweak your spending to help funnel more towards savings.

•   Negotiate your bills. You may be able to reduce some of your recurring bills (such as cable, car insurance, and cell phone) by negotiating a lower rate or switching to another service provider. Even a small reduction in a monthly bill can save significant cash by the end of the year.

•   Lower your living costs. If you’re living well beyond your means, one dramatic shift that can help you save more is to move to an area that has a lower cost of living. Whether that means moving across town or across the country, it could make a major difference in your finances.

The Takeaway

Putting away money for your short- and long-term goals doesn’t have to be a boring task — there are countless fun ways to save money that can be customized to your specific financial needs and wants. From finding a savings buddy to gamifying the saving process, creative tactics can help enhance your motivation and your ability to put away cash.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.60% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What is a clever way to save money?

There are several clever ways to save money. Automating savings so you don’t have to remember to transfer funds is one good tactic; so is giving yourself a “no-spend” challenge, finding free activities, and doing a skills swap (i.e., bartering your expertise/skills to receive a service or product in return for free).

How can you save $1000 in 30 days?

To save $1,000 in 30 days, you might try a “no spend” challenge. This involves putting a freeze on all non-essential spending for a full month. You might also try selling items you no longer want online, taking on a side gig or freelance project, cancelling unnecessary subscriptions (like streaming channels you rarely watch or a gym membership you don’t use), and meal-prepping to save money on food.

What is the 50-30-20 rule?

The 50-30-20 rule is a budgeting method that divides your income into three categories: 50% for needs (rent, utilities, groceries, minimum debt payments), 30% for wants (entertainment, dining out, hobbies), and 20% for savings and extra debt payments. This structure can provide a starting framework for money management, but you may need to adjust the formula based on your monthly living expenses and savings goals.

How can I use automated tools to help save money?

One of the easiest ways to automate saving is to set up a recurring monthly transfer from your checking account to your savings account on the day after you get paid. Or, if your employer offers split direct deposit, you could have most of your paycheck go into checking, and a small portion go directly into savings.

You might also try a “round-up” app: Each time you make a purchase, the app will automatically round it up to the nearest dollar and deposit the difference into savings.

What is the best method to start a savings habit?

One of the best ways to start a savings habit is by making it automatic. You can do this by setting up a recurring transfer from your checking to your savings account for a set amount on the same day each month, perhaps the day after you get paid. It’s fine to start small, even just $5 a week, and gradually increase the amount over time.

---

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q125-087

Read more

Lifestyle creep is defined as spending more as you earn more. Perhaps you’ve noticed that as your income rises, you may not grow your wealth, including your retirement account or that fund for the down payment on a house.

It may well be human nature that, when you get a salary hike, you decide to splash out on a fancier car lease, a bigger home, or a luxurious vacation. However, your spending may actually be outpacing your salary and even ringing up more credit card debt.

That’s lifestyle creep in action: Spending on “fun” non-essentials instead of putting that money to work for a more stable financial future. Learn more about it and how to rein it in while still enjoying the things money can buy.

What Is Lifestyle Creep?

Lifestyle creep can be a common phenomenon experienced as one progresses through their career. The meaning of lifestyle creep, sometimes known as lifestyle inflation, is the process by which discretionary expenses increase as disposable income increases.

Disposable income is income that isn’t already budgeted for necessities like housing, transportation, and food.
It could include anything from concert tickets to morning lattes to a second home— basically anything that is likely to fall more into a “want” category rather than something strictly “needed.”

Lifestyle creep can put you squarely behind the 8-ball when it comes to getting out of debt, saving for retirement, or meeting other big financial goals. And it’s one reason people can’t escape the vortex of living paycheck-to-paycheck.

Signs of Lifestyle Creep

Here are some specific signals that you may be experiencing lifestyle creep:

•   Despite earning more, you are not saving more.

•   You have stopped following your budget because you assume you’re earning enough not to have to worry about spending.

•   You feel as if you can afford to buy whatever you want and no longer stick to previous limits (such as, say, not spending more than a certain amount on an item of clothing or a piece of furniture).

•   While your salary has increased, your credit card debt has risen vs. been paid down.

What Causes Lifestyle Creep?

Graduating from the penny-pinching college life to your first full-time job is only one instance that can trigger lifestyle creep. It also can happen with any type of bump in cash flow that’s not part of your monthly budget, such as a raise, bonus, tax refund, gift, or winning a scratch-off ticket.

There are also psychological factors at play here, including the sometimes compulsive urge to keep up with the Joneses.

And before you blow it off as just envy with a lack of willpower, consider this: One landmark examination of a lottery winner’s effect on the neighborhood found that the larger reward the lucky gambler collected, the more likely their neighbors were to incur more debt and even file for bankruptcy.

The social pressure to keep up with the consumption habits of family and friends, even when it’s conspicuous, can cause real and serious financial stress.

Social media can make matters even worse, with studies showing that post envy could be causing people to live beyond their means just so their feeds can reflect their acquaintances’.

But how do you resist the urge to upgrade your 2015-era sedan when your neighbor rolls up in a shiny new SUV? The answers might be simple on paper, but switching your mindset from “Should I spend this on a shopping spree or a vacation?” to “Should I put this money into savings or invest it?” can be easier said than done.

Discerning Needs Versus Wants

First, a quick refresher on needs vs. wants: A need is something vital to survival, while a want is something that’s nice to have but strictly speaking not critical.

It’s normal to want to celebrate a new raise, but to avoid lifestyle creep, it can be important to make sure not to celebrate with something that will increase costs to the point of making the raise irrelevant.

Examples of Needs vs Wants

Here are a couple of examples of how needs and wants can compare:

•   A need is clothing to wear to work, to keep you warm in cold weather, and to enable you to go about your daily life.

•   A want would be those two pairs of shoes you bought not because you needed them but because they were cute and on sale.

•   A need is groceries to feed your household.

•   A want would be buying a pricey salad for lunch every day vs. bringing food from home or going out for a deluxe sushi dinner every Friday night to celebrate the end of the work week.

•   A need is basic health care expenses and new running shoes when your old ones wear out.

•   A want would be getting massages and hiring a personal trainer.

As you see, lifestyle creep could entice you to spend significant amounts on the “wants” in life because they are fun and you feel you can afford them. But allowing those purchases to increase instead of putting money toward debt reduction and longer-term aspirations can be problematic. After all, part of financial wellness is prioritizing goals such as being able to contribute to your child’s education and having a healthy retirement savings account.

Tips for Avoiding Lifestyle Creep

Giving every extra penny of a cash windfall to a credit-card company doesn’t sound like much fun. But just knowing that lifestyle creep exists, and recognizing it in your own life, can put you ahead of the game when it comes to making better decisions with your money.

Here are a few possible ways you can avoid lifestyle creep while still enjoying the good things in life.

Celebrating Small

If you earn a raise, you should absolutely celebrate — especially if it’s higher than the average 3.7% forecast for 2025. But to outsmart lifestyle creep, you may want to take a deep breath and resist the urge to run to the store for that expensive thing you’ve had your eye on. Instead, consider a small way to congratulate yourself, like a dinner with friends.

Creating a Budget

One way to avoid lifestyle creep may be to give all income a job to do. That extra $200 a month shouldn’t just be chilling in a checking account with no purpose, like a freeloading cousin camping out on the couch.

Letting that extra money hang out in the checking account too long with nothing to do might lead to unplanned spending. If you see the money sitting idle, you might splurge on a weekend trip or that budget-busting espresso maker. Putting that money to work (earning interest in a high-yield savings account or paying down debt) could be a wise move. And if you have a solid budget in place, using money that way can be effortless.

Building a Budget to Control Lifestyle Inflation

With the advent of online banking, most people are likely equipped with everything needed to make a budget right on your phone or computer. Many financial institutions offer tools that can help with tracking of your money as it flows in and out of your accounts.

Don’t have a basic budget already? Getting a raise can be a great time to crunch the numbers and be financially stable and responsible with that money. There are many different budget techniques you can experiment with, such as the envelope system or the 50/30/20 budget rule. If there’s already a budget in place, a new raise is a great time to reconfigure the budget to make sure it still ticks all the financial boxes.

Avoiding Mindless Spending

Mindless or pointless spending might happen when there is unexpected extra cash sitting in the bank account. Much like the itch to spend that crisp, new $20 bill included in a childhood birthday card, there may be psychological and emotional temptation to spend money in the bank account without considering whether or not a new, say, brand gaming system is really needed.

Casually buying unnecessary items could indicate compulsive or impulsive spending. This in turn could mean missing an opportunity to put money to work for the future, sustainably upgrading a lifestyle by planning ahead for financial growth.

Tracking Your Spending

When it comes to managing money, losing track of expenses could not only lead to a blown budget, but also overdraft fees, returned checks, or other unnecessary fees that could put you even further behind.

Tools to Track Spending

If you really struggle with this one, there’s an app for that. As mentioned above, many financial institutions offer tools for budgeting and tracking exactly where your money is going. Start there, and see if what is available works well for you. If not, there are various third-party apps that you can explore.

Turn on the Auto-Pilot

One of the easiest ways to ensure that you’re only spending what’s in the budget is to automate as many payments and contributions as possible. After all, money you don’t have is a lot easier to not spend.

This strategy can start at work. If you get a raise, you might elect to increase your 401(k) contribution (or start one if you haven’t yet). And while it means that your take-home pay may not change, your money transferred into a retirement account can painlessly grow.

You also can automate online bill payments and savings and investment contributions, all with the intention of getting the money out of your tempted hands ASAP.

Outlining Clear Goals

What’s your endgame? Do you want to retire early with a million dollars or more in the bank? Is owning a home a part of your plan? One key to avoiding lifestyle creep is to set long-term financial goals and keep your eye on the prize.

Two financial goals that can be beneficial to almost everyone include growing a short-term emergency fund and longer-term savings plan. But from there, the sky’s the limit and your goals are entirely up to you.

You can use an online emergency fund calculator to simplify the math while accruing cash. Financial experts suggest having at least three to six months’ worth of living expenses in the account.

Avoiding New Debt

This might seem like a no-brainer, but you aren’t likely to get out of debt if you keep adding new debt to the pile. One key way to avoid debt is to use credit cards responsibly.

Minimizing your debt (and the important credit utilization ratio, which compares what you owe to your credit limit) can be a smart step when avoiding lifestyle creep.

Recommended: Money Management Guide

Getting Your Head in the Game

Lifestyle creep likely isn’t impossible to reverse, but one could argue that the further you’ve allowed yourself to fall into the luxury lifestyle, the harder it could be to pull yourself out.

One way to get your head in the game is to make lists, starting with your needs (electricity) vs. wants (electric car.) From there, you could prioritize your “wants” and start to cut from the bottom.

Are there things in your life that just exist because they can? Consider eliminating them completely or finding clever ways to save money, such as shopping consignment vs. retail or eating lunch out one day a week vs. all five.

Choosing Your Friends Wisely

Peer pressure is a powerful motivator, but the perceived wealth of your friends, neighbors, and acquaintances can be a far cry from the actual state of their finances.

If you seem to find yourself in situations where there’s pressure to overspend, including family Disney holidays with all the bells and whistles, nights out on the town, or an invite to a destination wedding, you may want to consider finding a circle of friends who share the same financial goals and lifestyle as you.

After all, it’s a lot easier to say “Let’s just cook at home to save money” to a friend who won’t pressure you to try the trendy new restaurant in town.

Spending a Raise

So what exactly should someone do with extra money after a raise? Paying more into a retirement account, paying off debts, or just putting some extra dollars towards a specific savings goal are some approaches to take. This can allow you to boost your financial wellness and meet your long-term goals vs. getting caught up in impulse buying.

Recommended: Mobile Banking Tools

The Takeaway

Lifestyle creep is defined as spending more as you progressively earn more. By spending, you miss out on the opportunity to pay down debt and save for future financial goals, such as buying a home or eliminating student loans. By being aware of lifestyle creep and minimizing it, you can stay on budget and manage your money better. Having the right banking partner can also help with that.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.60% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

How does lifestyle creep impact long-term financial goals?

Lifestyle creep can make it challenging to achieve long-term financial goals. For example, if you get a raise and spend it on fun purchases, you may struggle to accrue enough money to meet long-term goals, such as saving for retirement.

How can I spend mindfully while still enjoying life?

One way to spend mindfully while still enjoying life is to have a budget that includes a small fund for “fun” spending. If you know you have some cash allocated for enjoyable activities or purchases, you may not feel deprived. You might, say, choose not to spend your “fun money” one month and then have twice as much the next month to use.

How do I recover financially after falling victim to lifestyle creep?

A budget can help you stay on track vs. falling victim to lifestyle creep. By carefully tracking your spending, you can avoid overdoing it. Also, you might consider whether social media is triggering you to overspend, or if your current group of friends typically value spending over saving and you therefore follow suit. Minimizing those influences could have a positive effect on your finances.

Can lifestyle creep impact my retirement goals?

Lifestyle creep can impact your retirement goals. If you receive raises but spend the increase in your paycheck on dining out or vacations, you may then be unable to meet your retirement goals and other long-term financial aspirations.

Are there tools to help combat lifestyle creep?

One good tool to help combat lifestyle creep is to have a budget that you can stick with. It can be worthwhile to experiment with different methods to find one that suits you. Also, using tech tools, such as spending trackers, can help you avoid lifestyle creep. They can help you keep tabs on where your money goes. Also, some financial experts advise unsubscribing from marketing emails that advertise sales and can encourage unplanned spending. Similarly, disabling one-click shopping on social media could help combat lifestyle creep.

---

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q125-073

Read more

Impulse buying is defined as purchasing something on a whim, without having planned to do so. Most people are familiar with the feeling of impulse buying. Perhaps you go to the supermarket just to pick up some oat milk and wind up purchasing an array of pricey juices, crackers, and cheese as well, because everything looked so good. Or you walk through a favorite store on your way home from work and snap up a couple of pairs of shoes because there was a major sale going on.

Spending money is not only part of life, but it can also be a fun way to reward oneself from time to time. But those unexpected, “can’t resist” purchases can add up, make you feel out of control, and lead to blowing your budget. Read on to learn more about impulse buying and how to take control of it.

What Is an Impulse Buy?

Impulsive shopping tends to happen when a person gets caught up in the moment and spontaneously buys something. It’s a purchase without any forethought or planning, and it’s often not within a person’s budget.

People who impulse-shop are usually influenced by external triggers, such as seeing an item on sale or positively responding to a store’s atmosphere. Everyone indulges in some impulse-fueled retail therapy now and then. You might be just starting college and over-use your student checking account as you decorate your dorm room. Or you could be approaching retirement and think you deserve a new car as a reward for all your years of hard work.

However, when these immediate gratification purchases become habitual, the behavior can morph into something uncontrollable and financially damaging. Taken to an extreme, potentially dire financial issues could result, such as credit card debt, foreclosure, and bankruptcy.

When it has this kind of negative impact, it could keep you from achieving your long-term goals and be considered a disorder.

What Causes Impulse Shopping?

Buying something spontaneously can trigger a rush of dopamine, the body’s feel-good hormone. That’s why it feels so rewarding.

A variety of factors can trigger impulsive shopping. Your triggers are likely different from those that get your best friend to splurge. Some common causes include:

•   Feelings of loneliness and depression. Buying items can be an exciting mood-lifter; a kind of high.

•   Boredom. Just as mentioned above, buying things can spark joy and add interest to a blah day.

•   Stress relief. The idea of retail therapy can be real. Sometimes, if a person is having issues (a family argument, a rough day at work), and making an unplanned buy is both a distraction and a mood boost.

•   FOMO (Fear of missing out). Feeling as if you don’t want to miss out or as if we want to “keep up with the Joneses” can result in unexpected purchases. For instance, if a favorite influencer touts a new product on social media and says it’s almost sold out, you might click to buy it and be part of the “in crowd.” That’s FOMO spending in action.

•   Personal history. If you were raised in a family which often engaged in impulsive spending, they modeled that behavior for you and you may consider it normal.

Examples of Impulse Buying

You may be curious about how people typically engage in impulse buying. According to a recent survey by Slickdeals conducted One Poll, spontaneous purchases totaled $151 per month on average among respondents.

Impulse Purchases in Everyday Scenarios

Are you curious about what constitutes an impulse purchase? Here are some common examples:

•   While waiting to purchase a new lipstick at a beauty retailer, you’re surrounded by sample sizes for sale so you scoop up several. When you reach the register and tap your debit card to pay, an extra $50 is whisked out of your checking account to cover the cost of your extras.

•   You head to the store to buy a new white shirt for work. When you get there, you notice there’s a “buy three, get one free” sale underway, so you decide to take advantage of it and leave the shop with four shirts vs. the one you intended to buy.

•   After coffee with a friend at a local bakery, you notice all the delicious breads behind the counter. Before leaving, you purchase a couple of pricey loaves, plus a scone and a cinnamon bun, because it all looks so good.

Recommended: Savings Account Calculator

If you’re curious about impulse shopping tends to stack up by category, here are details of the ways in which most people spend:

Percentage of People Who Bought the Item on Impulse	Item Bought on Impulse
55%	Clothing
50%	Groceries
42%	Household items
32%	Shoes
23%	Takeout
21%	Books
20%	Toys
19%	Technology
18%	Coffee

What Is the Difference Between Impulsive and Compulsive Shopping?

Impulse buying is somewhat different from compulsive shopping, though some mental-health professionals consider them to be aspects of the same issue.

As mentioned above, impulse shopping tends to be spontaneous. It “just happens” in the moment: You’re grocery-shopping and wind up buying some pricey ice cream and gourmet coffee beans.

With compulsive shopping, however, the person usually plans and invests time on their purchases, perhaps spending more energy and money than is desirable. This chart shows some key differences:

Compulsive	Impulsive
Resembles addictive behavior	Can develop into addictive-like behavior if left unchecked
Buying things regularly	Buying is more occasional and situational
Shopping is planned and premeditated	Shopping is unplanned and spontaneous
More internally motivated by uncomfortable emotions	More externally motivated and influenced by shopping environments and marketing

How to Avoid Impulse Purchases

If impulse purchases are tipping into the danger zone and ruining your budget and financial fitness, take action. There is help. Consider these suggestions on how to get started if you wonder if you’re a shopaholic:

Paying Close Attention to Spending Habits

Figuring out your particular shopping triggers can help you avoid or eliminate them. For instance, when buying, do you use credit cards instead of paying with cash or a debit card? Make shopping a priority over paying bills? Grocery shop without making a list?

Being honest about how and why you may engage in certain overspending behaviors is vital to understanding the issue. Changing spending habits can then help you manage your finances better.

Setting a Budget

Creating and sticking to a budget allows you to gain control over your spending. A well-thought out budget will help with personal accountability and achieving financial discipline. Try to set yourself up with the flexibility to splurge sometimes. This will help keep you from feeling completely deprived.

One suggestion is to consider incorporating the 50/30/20 budget rule. This guideline recommends spending up to 50% of your after-tax income on must-haves (say, housing, car payments, utilities, healthcare, and groceries). Then, take 30% of your money and reserve it for wants such as dinners out, vacations, concert tickets, electronics, and clothing. The remaining 20% should be allocated for investments, an emergency fund, debt repayment, or savings.

The Role of Mindfulness in Reducing Impulse Purchases

Practicing mindfulness can also help reduce impulse buying. Several studies have shown that this practice can lessen the urge to act on what are deemed “consumerist impulses” and thereby help an individual be less prone to impulsive shopping.

To practice mindfulness, which is a kind of meditation, a person focuses on being present in the moment without judgment.

Recommended: 10 Personal Finance Basics

Minimizing Temptation

Here are some ways not to put yourself in situations that can trigger impulse buying:

•   Many stores are carefully designed to get you to shop and spend, perhaps to an extreme. If a store’s atmosphere — the design, the scents, the music — tends to get you impulse buying, avoid it. Don’t walk down the streets filled with your favorite shops; try to escape the triggers that make you shop too much.

•   If you often spend free time at the mall or online shopping, sign yourself up for a class, take up a new sport, volunteer, or find other ways to fill the hours.

•   Curbing social media exposure can help, too. Research suggests ads and posts from social media influencers and seeing purchases from people in your social networks may encourage a “keeping up with the Joneses” mentality, often leading to impulsive buying.

•   Also consider the way technology could be enabling impulse buys. In some ways, tech can be terrific; think of the way online banking has made handling your finances easier, whenever and wherever you are. But it can play a role in impulse buying: If you have your credit card saved on your mobile phone, that could enable one-click shopping on Instagram and other platforms, and that can lead to mindless spending.

Starting a No-Spend or 30-Day Savings Rule

A quick way to stop spending money is to freeze any non-essential spending for an entire month. Commit to a 30-day shopping ban on impulse buys such as clothing, make-up, tech gadgets, or take-out, and see how much extra money you have at the end of the month. The difference may be eye-opening and help you break the cycle.

Successfully controlling your spending can provide a feeling of accomplishment and a confidence boost and offset feelings of being bad with money. Participating in a no-spend challenge can even become a fun game; you can involve other budget-conscious friends and know you’re all in it together.

Joining a Support Group

Here’s another way to stop impulse buying for some people: National 12-step program support groups such as Debtors Anonymous (especially if you’ve racked up credit card debt) and Spenders Anonymous are also an option. They can connect you with others who are dealing with similar issues.

Seeking Some Professional Help

Individual counseling with a mental health professional can help you get to the emotional root of your buying issues. Psychotherapy, such as cognitive behavioral therapy (CBT), can effectively treat impulse shopping behaviors.

If you are getting into debt, losing sleep over your shopping habit, or often transferring funds because you’re teetering on the edge of overdrafting, it may be time to work with a qualified professional.

Recommended: Using a Personal Loan to Pay Off Credit Card Debt

The Takeaway

Impulsive buying can be a fun treat sometimes…or it can seriously affect your financial life. Taking positive, concrete steps is likely to help conquer the problem. Getting past this spending issue, whether by shifting your behaviors or seeking professional help, can be a positive move, both for you personally and for your bank account.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.60% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

Is breaking a budget a sign of impulse shopping?

Breaking your budget is not necessarily a sign of impulse shopping. However, if you regularly deviate from your budget, spend money allocated for needs on wants or unplanned purchases, and find yourself saddled with credit card debt, you may need to rein in your impulse spending. Analyze your shopping habits and budget to understand your behavior better.

Is making an impulse purchase a bad thing?

The reality is, most of us make occasional impulse buys, and they are not always such a bad thing. However, if this kind of shopping becomes habitual and leaves you with debt, pay attention and take steps to improve the situation.

How do I limit impulse purchases?

One way to limit impulse purchases is to avoid stores or websites where you know you tend to overspend. Also, ask yourself, “Do I need this or do I just want it?” when tempted to make a purchase. If the answer is the latter, wait 24 hours, and see if you still really want it. Your desire may dwindle during that cooling-off period.

What Is impulse buying behavior?

Impulse buying involves making unplanned purchases, say, while heading home from work, at the supermarket to pick up necessities, or while spending a weekend afternoon downtown. Doing this occasionally isn’t a problem, but if you overdo it and are having trouble managing your budget and debt, it’s worth trying to minimize the habit.

Is impulse buying problematic?

Impulse buying in and of itself isn’t problematic; it’s okay to treat yourself to unplanned purchases now and then. However, if impulsive purchases are wreaking havoc with your budget, causing you stress, and accruing credit card debt, then it’s an issue to be managed.

Is there a connection between impulse buying and ADHD?

Some experts believe that people with ADHD are more prone to impulsive behavior, which can include spontaneous purchases. Impulse shopping can trigger a rush of the feel-good hormone dopamine, which those with ADHD may crave.

---

Photo credit: iStock/jacoblund

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q125-072

Read more

An automatic investment plan (or AIP) can refer to various options: an automatic investment plan might be part of a retirement account, or it could be an investing platform, like a robo advisor, that enables you to make regular investments, automatically.

Automatic investment plans can help you save and invest steadily over time. You can set up your plan in advance, and then leave it more or less to run on its own — until your needs or goals require a change.

What Is an Automatic Investment Plan?

An automatic investment plan might include making regular deposits into a retirement plan like an IRA or 401(k), using a robo advisor (or automated portfolio), participating in a dividend reinvestment plan, as well as other options.

What these programs have in common is they give investors the ability to choose an amount they want deposited, the timing of the deposits (e.g. weekly, quarterly), and in many cases which types of investments to fund.

The rise of sophisticated technology and algorithms have helped make automatic investment plans more accessible and secure, as well as more customizable, especially when investing online. Investors can direct money to be withdrawn from their paycheck or from a personal account on a biweekly basis, for example, and invested in a retirement portfolio.

It’s all part of the growing trend around automating your personal finances.

Types of Automatic Investment Plans

While using automatic investment plans for retirement is a common scenario, there are others — including the option to choose more- or less-automated types of investment products or preset portfolios.

Among the different types of automatic investment accounts, or accounts that can be funded automatically:

•   Automatic transfers to a 401(k), 403(b), or personal IRA accounts

•   Automatic transfers to a 529 college savings plan

•   Micro-investing platforms (or spare-change savings accounts). These use very small amounts of cash, typically rounded up from purchase amounts, to make deposits in an investment portfolio that may grow over time.

•   A dividend-reinvestment plan (DRIP) which helps investors reinvest their cash dividends automatically

Types of Automated Investment Products

There are also different types of mutual funds as well as automated portfolios (sometimes called robo advisors) which investors can use as part of an automatic investment plan.

•   Target date funds can provide investors with a long-term retirement or college savings portfolio. These funds are typically based on an allocation of different asset classes that adjust automatically to become more conservative over time, until the person needs to withdraw the funds.

•   A robo advisor, or automated portfolio, is a preset portfolio typically of low-cost exchange-traded funds (ETFs). Investors use an online platform to fill out a questionnaire about their preferences, goals, risk tolerance, and time horizon.

The securities and the allocation in each portfolio are generally fixed, but investors can typically choose from different portfolios that match their preferences.

Recommended: Automated Investing 101

How Does an Automatic Investment Plan Work?

The “automatic” part of an automatic investment plan can refer to the automated deposit of funds, usually on a regular schedule. But it’s not just a way to automate your savings. It can also refer to stock dividends being reinvested automatically, or automated mutual funds (like target-date funds), or robo portfolios, as noted above.

The foundation of almost all automatic investment plans is the use of sophisticated technology to ensure the allocation of funds in a portfolio reflects an investor’s needs and goals. While some people might view these options as “hands-off” or “set it and forget it” — and they can simplify a number of investment choices for investors — using an AIP doesn’t mean your money is on autopilot.

Investors will always need to pay some attention to any kind of investment plan, but that said many AIPs do offer investors some advantages.

Benefits of an Automatic Investment Plan

Most brokerages and workplace plans offer some kind of automated options for investors these days. The reason being that behavioral research has repeatedly shown that investors are prone to make emotional choices under certain circumstances (for example, when the market is volatile).

Automated plans provide basic guardrails that can help keep investors on track, investing steadily over time, rather than reacting impulsively to trends or headlines and trying to time the market.

Dollar Cost Averaging

Another benefit of automated plans is that they are designed so that you invest the same amount at regular intervals. This strategy, known as dollar cost averaging, is important for a couple of reasons:

•   Automating deposits may help build savings over time, because you’re less likely to spend that money once it’s invested.

•   Dollar cost averaging is the practice of investing consistently over time, whether the market is up or down, which can lower the average cost of your investments.

Time Savings

Another advantage of using an AIP is that it can save you time and energy, especially if researching or managing investments is not your strong suit.

Types of Investments to Automate

These days automatic investment plans are available for a range of goals. As discussed earlier, you can choose to automate your retirement savings, your personal investment portfolio in a taxable account, a 529 plan, stock dividends, and other options such as micro-investment accounts as well.

These kinds of AIPs can compliment other aspects of financial automation that you may already be using: from budgeting and saving to paying bills.

💡 Quick Tip: Can you save for retirement with an automated investment portfolio? Yes. In fact, automated portfolios, or robo advisors, can be used within taxable accounts as well as tax-advantaged retirement accounts.

Is Automated Financial Planning Right for You?

In general, automatic investment plans may work for people who want to be on top of their finances, but may not have the time or the inclination for detailed investment management.

In that way, the convenience and lower cost of many automated investment plans and robo platforms can help newer investors (or less involved investors) get started.

Investors who aren’t comfortable with relying on technology may not want to invest using automated systems.

Human Advice and Automation

That said, automated investing isn’t a strategy for avoiding money management or financial planning completely. Most investors’ portfolios and financial plans include details or circumstances that require human insight or input. Estate planning, owning a small business, or prioritizing among multiple goals, for example, can be complicated.

Although it can be simpler to automate some parts of the investing or financial planning process, a human advisor can help ensure that you aren’t missing anything. Also, investors who use automated portfolios typically have less control over their investments.

Fortunately, automation here can also work in your favor: You can set alerts to remind you when certain withdrawals are being made.

Recommended: Robo Advisor vs. Financial Advisor: Which Should You Choose?

Starting an Automatic Investment Plan

Starting an automatic investment plan is pretty straightforward. Start by identifying the primary goal for using an automated platform.

•   Do you want to save for retirement at work, or is this a personal retirement account?

•   Do you want an automated investment portfolio that’s preset, like a robo advisor? Or do you want to set up your own portfolio?

•   Do you own dividend stocks, and does it make sense to set up a dividend reinvestment plan?

•   Are you setting up a college-savings plan for a student?

Then, as you explore a few different options, you want to consider the following:

•   Is it a reputable platform, account, or app? Hint: Most online brokerages and financial firms offer a few automated options, so it may be possible to stay with your current provider.

•   Is the platform easy to use? Can you easily make adjustments to your deposits, as needed?

•   What are the fees?

What are the requirements?

•   Is there a minimum amount required to open the account, or for each deposit?

•   How much flexibility do you have when choosing investments (and is that important to you)?

Using an Automatic Investing Plan

Using an AIP is generally self-explanatory because generally these programs were created for investors who want a streamlined experience. Once your account is open, you typically set up a direct deposit of funds, and select the investments you want in your plan.

If you’re working with a financial advisor, they can help insure that the platform you choose will support the rest of your financial plan. If you’re flying solo, you can begin to do research into how your automatic investment plan works together with other goals.

The Takeaway

One of the best things about automated financial planning is that in most cases you can be as hands-off (or hands-on) as you choose. Using an automatic investment plan these days provides a number of options, including active investing, retirement, and robo advisor options. Automated doesn’t mean you can literally “set it and forget it”; it always pays to track your investment portfolio, and think about your long-term plans.

Ready to start investing for your goals, but want some help? You might want to consider opening an automated investing account with SoFi. With SoFi Invest® automated investing, we provide a short questionnaire to learn about your goals and risk tolerance. Based on your replies, we then suggest a couple of portfolio options with a different mix of ETFs that might suit you.

Open an automated investing account and start investing for your future with as little as $50.

FAQ

How do you automate an investment strategy?

You can find an automatic investment plan (AIP) that will match your goals and help you set up or fund a portfolio. That said, you can’t automate your entire investment strategy: Ideally, an AIP would be a tactical piece that fits into your overall strategy.

How often should I auto-invest?

You want to keep up a steady cadence of deposits to make progress toward your goals, and to reap the benefits of dollar cost averaging. You might consider auto investing once a month to start and see how it goes.

What are the benefits of starting an automatic investment plan?

There are a number of advantages to using an automatic investment plan, including the fact that it can help keep your investment plan on track, even if you’re tempted to make changes when markets fluctuate. In addition, an AIP can save time and may help lessen the impact of market volatility.

---

Photo credit: iStock/GarryKillian

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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.

SOIN-Q125-048

Read more