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It’s a common (and frustrating) experience to have to pay a fee when you access your cash at an out-of-network ATM. Especially considering how much ATM fees are.

While there are different ATM fees for different banks, currently, an ATM withdrawal will cost you $4.77 on average. When you are just trying to take out $20, that can be a lot! But no matter how much cash you are withdrawing, ATM fees can be costly.

To better understand ATM fees and avoid paying them, read on. You’ll learn typical costs and smart ways to avert those ATM charges and keep more of your hard-earned cash.

What Are the Different Types of ATM Fees?

Bank account holders typically pay no fees for using in-network ATMs. However, these machines may not always be conveniently located.

Indeed, approximately 60% of ATMs today are owned and serviced by independent operators and their affiliates — not banks. If you use an out-of-network ATM, you could end up paying a fee to your bank, as well as a fee to the ATM operator.

How much ATMs charge depends on the type of fees your bank and the owner of the ATM impose. Here are some typical charges for using an ATM:

The “Out-of-Network” Fee (From Your Bank)

This fee can be charged by your bank for using a non-branded or non-partner ATM. It’s kind of like going to a doctor that’s not on your insurance plan — you might be able to do it, but it could be more expensive.

On average, this charge accounts for about $1.58 of the total fee, according to Bankrate. The fee can apply to any type of transaction performed at an ATM, including withdrawals, transfers, and even balance inquiries. Typically, you will be told about such a fee — with a message that pops up on the screen — before you finalize your ATM transaction.

The Surcharge Fee (From the ATM Owner)

This one comes from the ATM owner, and can be thought of as a convenience charge for using an out-of-network ATM. The average ATM surcharge in the U.S. currently runs $3.19, according to Bankrate. However, surcharges can vary by state and venue, and you may encounter higher amounts in places where ATMs are in greater demand.

If you’re at an entertainment venue or theme park in a popular tourist destination, for instance, you could pay considerably more.

When using an ATM that isn’t part of your bank’s network of machines, the machine should notify you about a fee charged by the bank or company that operates the ATM.

International and Foreign Transaction Fees

Traveling overseas can come with even more fees to watch out for, such as foreign transaction fees on both purchases and ATM withdrawals.

When using an ATM in a foreign country, you can incur a fee of around 1% to 3% of the transaction amount. Some financial institutions, however, have no foreign transaction fees, and can be worth looking at if you frequently travel overseas.

💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

How Much Are ATM Fees in 2025?

As mentioned above, ATM fees can take a bite out of your money. Here are specifics on how much ATMs charge, as of September 2025:

•  The average out-of-network fee that a bank charges its customers is $1.58.

•  The average surcharge by the ATM’s owner/operator when you use an out-of-network terminal is $3.19.

•  The total average out-of-network fee is approximately $4.77 per transaction.

Why Do Banks and ATM Owners Charge These Fees?

Banks and ATM owners typically charge these fees for several reasons, including to help cover the cost of operating ATMs and to process ATM transactions. For example, the surcharge fee charged by the ATM owner compensates them for the use of their machine. This fee typically goes for the operation and maintenance of the machines as well as to transaction processing costs. It also allows the ATM owner to make a profit.

If you use an out-of-network ATM, your bank may charge you for using an ATM that’s not in their network. This fee may also be a way to encourage you to use in-network ATMs.

💡 Quick Tip: The myth about online accounts is that it’s hard to access your cash. Not so! When you open the right online checking account, you’ll have ATM access at thousands of locations.

6 Smart Ways to Avoid or Minimize ATM Fees

If having to pay money to access your money frustrates you, there’s some good news — it is possible to avoid ATM fees or at least encounter them less frequently.

Here are some strategies to help you avoid these fees.

1. Use Your Own Bank’s Branded ATMs

Finding out where your financial institution’s ATMs are located in your area, or wherever you are traveling to, can save you money and hassle. These may be ATMs branded with the institution’s name and logo, or in a network of partner ATMs, such as Allpoint or Cirrus.

You can research this information on your bank’s website or app. For example, you can find fee-free ATMs via the SoFi app with just a few clicks on your phone.

Find a Bank With a Large Fee-Free ATM Network

When you’re choosing a bank, find out how big their ATM network is. The bigger the ATM network, the easier it should be to access an ATM, even when you’re traveling. For instance, SoFi makes it easy to find a fee-free ATM near you. When you open a SoFi checking account you have fee-free access to more than 55,000 ATMs worldwide.

3. Choose a Bank That Reimburses Out-of-Network Fees

Not all banks charge out-of-network ATM fees, so it can be in your best interest to shop around and compare ATM fees of different institutions. Look for a bank that doesn’t charge ATM fees, and/or a bank that refunds ATM fees charged by machine providers.

Online vs. traditional banks often have more lenient policies regarding ATM fees. They typically don’t have their own ATM networks, but will partner with large networks and may refund some fees charged by out-of-network ATM providers.

Another thing to consider as you’re choosing a bank is that some banks also charge fees for depositing cash at an ATM, especially out-of-network ATMs. Find out if any bank you’re considering does this, and search for an institution that doesn’t impose this fee. (While SoFi members are not able to deposit cash at ATMs, they can deposit money at participating retailers using the Green Dot Network. Just note that the retailers charge a small fee for this.)

4. Get Cash Back at the Point of Sale

Many retailers and convenience stores offer cash back when you make a purchase using a debit card. This can be a convenient way to get cash without paying an ATM fee. It can be a good idea, however, to make sure that neither the retailer, nor your bank, charges a cash-back fee.

That’s one difference between an ATM card vs. a debit card — with an ATM card you can only make ATM transactions, while a debit card allows you to make purchases at retailers and withdraw money at an ATM. However, you may still be charged ATM fees for withdrawing money with a debit card.

5. Use Peer-to-Peer Payment Apps to Pay People Directly

With a peer-to-peer (P2P) payment app like Venmo, PayPal, or Cash App — or a similar service offered by your financial institution — you can easily pay your friends via P2P transfers with just a few taps on your phone. That way you can avoid a trip to the ATM entirely.

Not only is sending money to friends online generally more convenient than having to go to the ATM, it also means you won’t have to carry sums of cash around.

6. Plan Ahead and Withdraw Larger Amounts Less Often

Fees are typically charged per transaction, so one way to avoid charges is to withdraw more cash than you need, whether you’re using your card or making a cardless withdrawal, whenever you go to the ATM. This can also yield significant savings when you are traveling overseas, where surcharges can be much higher than domestic ATM fees.

You may want to keep in mind, however, that there are usually some ATM withdrawal limits.

The Takeaway

ATM fees can be expensive and they can add up over time. Fortunately, there are ways to avoid these fees. Choose a bank with a large ATM network and use those in-network ATMs whenever you can. If your current bank charges ATM fees, consider switching to one that doesn’t, or look for a bank that reimburses you for these fees. A few simple steps like this can help you keep more of your cash.

FAQ

Do ATMs charge a fee just to check your balance?

ATMs may charge a fee to check your balance, especially if you use an out-of-network ATM. Before you check your balance at an ATM, find out if you will be charged for the service before proceeding.

Are ATM fees higher at airports?

ATM fees are often higher at busy locations like airports that get a lot of foot traffic. Since not all banks or ATM networks are located at airports, the ATMs that are there may charge higher fees for the convenience of using them.

Why do some ATMs have higher fees than others?

ATMs in popular areas that get a lot of traffic, such as airports or bars, for instance, may charge higher fees for the convenience and easy access they provide. Fees may also vary based on different operational costs ATMs or their networks might have.

How do I find in-network ATMs for my bank?

To find in-network ATMs for your bank, check your bank’s website or mobile app.Typically, there will be an ATM locator on the app or website where you can plug in your location and find in-network ATMs near you.

What Is the difference between a surcharge and an out-of-network fee?

A surcharge is a fee charged by an ATM owner when non-customers use their machines for transactions. An out-of-network fee is charged by banks when you use an ATM that’s not in their network.

Essentially, both fees are related to using an ATM out of your bank’s network. That’s why it’s a good idea to use in-network ATMs whenever you can.

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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.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

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.
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/.
*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.

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®

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Setting up an emergency fund is an important step for financial security, but finding the cash can be tricky. Much as you might want to have a bundle of money waiting if you had a major medical bill due or endured a job loss, actually accruing an emergency fund may sometimes seem almost impossible. Monthly bills and expenses can siphon off your income, making it tough to save.

While it can be challenging, building an emergency fund can be done. It may take some time, but what’s important is to start saving and then keep it up, even in small amounts, to help protect your financial future.

What Is an Emergency Fund and Why Is It Important?

An emergency fund is a savings fund earmarked specifically for unanticipated expenses or financial emergencies that might crop up — such as job loss, major home repairs, or a medical procedure that results in a hefty bill. Financial professionals typically suggest having three to six month’s worth of income in an emergency fund.

An emergency fund is important because without this financial safety net, an individual might have to use high-interest credit cards or take out a loan to cover the emergency expense, which could result in having to pay down a significant amount of debt.

6 Steps to Building an Emergency Fund

Step 1. Set a Clear and Achievable Savings Goal

When it comes to the emergency fund amount you should have, most financial professionals recommend that you save three to six months’ worth of living expenses. Some people, however, may want to aim higher. If you are the sole provider for a family, have significant medical expenses, or are self-employed, you may want to allocate a higher amount, for example.

You can use an emergency fund calculator to help determine your savings target. Once you calculate that sum, you can divide it by 12 or 24 to get a one- or two-year savings plan for meeting the target.

The goal amount of your emergency fund may seem intimidating, but don’t let that discourage you. Even if you can only take a small amount ($25, say) from each paycheck as you save money from your salary, it will help make a difference.

Having some money in your bank account for emergencies is what matters.

Step 2. Choose the Right Account for Your Emergency Fund

The next important step is to get your emergency fund account set up. When choosing an account type, these are some considerations to keep in mind:

•  Because an emergency fund is like a rainy day fund — you spend it only when a specific unexpected event warrants it, such as a costly medical procedure — putting it in a separate dedicated account can be helpful. Otherwise, if you leave the funds in your regular savings account, you might be tempted to spend the money.

•  A savings account that could help your money make more money, such as a high-yield savings account, is one option to explore.These accounts can offer interest rates that are higher than those of standard savings accounts. And thanks to the power of compounding interest, your money may grow faster.

•  Consider using savings vaults. These are essentially extensions of your savings account that let you organize your money into “buckets” and earmark it for specific goals, without having to set up a new account. That way, if you have a high-yield account, you can still earn the same competitive interest rate on your money and save for multiple goals at once, including an emergency fund.

Step 3. Find Room in Your Budget to Start Saving

If even a two-year timeframe for building your emergency fund amount feels intimidating, don’t worry. The important thing in terms of how to build an emergency fund is to begin saving and stick with it. If you only have a little bit of money to add per month, save that much. Good start!

Also, consider growing your savings by depositing windfall money in your emergency fund. Perhaps you’ll receive a tax refund, a bonus at work, a rebate, or other unexpected source of funds. Put that into your emergency account to help it grow.

Step 4. Automate Your Savings With Direct Deposit

Depositing money into your emergency savings consistently can help your fund grow. And letting technology do the work for you can make it practically effortless. You could set up automatic savings transfers into your emergency fund just after you get paid, for instance. Or, if you have a side hustle, you might decide to automatically deposit 10% or 20% of those earnings into your emergency fund.

Not only will you reap the satisfaction of saving, if the money isn’t sitting in your checking account, you won’t be tempted to spend it.

Step 5. Start Tracking Your Expenses and Spending

If it feels like you just don’t have any cash available to put toward an emergency fund, consider ways to manage your money better and cut your budget a bit.

Perhaps you could eat out a bit less often, save on streaming services, shop for basics at warehouse clubs, or find other ways to trim back. Once you lower or eliminate some costs, you can put that extra money toward your emergency fund.

One thing to be alert for is “lifestyle creep.” This happens when, as you begin to earn more, you also spend more. In other words, as your income grows, so do your expenses, meaning you don’t build wealth. If you get a raise at work and then lease an expensive car, you may struggle to increase your savings.

However, if your spending stays in check, you can put a portion of your increased earnings toward your emergency savings account.

Step 6. Know When to Use Your Fund and How to Replenish It

Of course, you only want to tap your emergency savings account for a necessary and urgent expense.

An example of a financial emergency is a major home repair such as a roof that suddenly starts leaking. It could also be a car repair, like a blown tire that needs to be fixed so you can drive to work, a medical emergency that results in a hefty bill, or a job loss.

After you use your savings to help pay for an emergency, remember to replenish your emergency fund. That can ensure that you are prepared for the next unexpected expense that might pop up, which could help you achieve financial security. Otherwise, you could wind up drawing down your savings and have nothing left when needed.

To replenish your account, determine your new savings goal and start setting aside funds to help you reach it. Deposit any windfalls into your account, cut back on whatever expenses you can and put the resulting savings into your fund, or take on a weekend job to earn some extra income to replenish your emergency stash.

How Long Does It Take to Grow an Emergency Fund?

Emergency funds don’t necessarily come together overnight. Saving after-tax dollars to equal six months’ worth of typical living expenses can take some work and time. Here’s an example to consider: If your monthly costs are $3,000, you would want to have between $9,000 and $18,000 set aside for an emergency, such as being laid-off.

•   If your goal is $9,000 and you can set aside $200 per month, that would take you 45 months, or almost four years, to accumulate the funds.

•   If you can put aside $300 a month, you’d hit your goal in 30 months, or two and a half years.

•   If you can stash $500 a month, you’d have $9,000 saved in one and a half years.

A terrific way to grow your emergency fund is to set up automatic transfers from your checking account into your rainy-day savings. That way, you won’t see the money sitting in your checking and feel as if it’s available to be spent.

Next, we’ll take a look at how to accelerate saving for an emergency fund.

How Can You Grow It Faster?

You’ve just seen how gradually saving can build a cash cushion should an emergency hit. Here are some ways to save even faster:

•   Put a windfall into your emergency fund. This could be a tax refund, a bonus at work, or gift money from a relative perhaps.

•   Sell items you don’t need or use. If you have gently used clothing, electronics, jewelry, or furniture, you might sell it on a local site, such a Facebook group or Craigslist, or, if small in size, on eBay or Etsy.

•   Start a side hustle. One of the benefits of a side hustle is bringing in extra cash; it can also be a fun way to explore new directions, build your skills, and fill free time.

These techniques can help you ramp up your savings even faster and be prepared for an emergency that much sooner.

How to Start an Emergency Fund on a Low Income

Even when money is tight, you can still build an emergency fund. It may require some extra time and dedication, but every small step you take to grow your emergency fund amount can make a difference. Consider these tips to help reach your goal:

•   Go over your budget carefully. Look for any expenses you could reduce and direct that money toward your emergency fund instead. For example, pack lunch for work and bring it with you every day. Then use your “lunch money” to help bolster your emergency savings.

•   Get on a regular saving schedule. For example, you could automate the transfer of a small amount of money (say, $20) every payday into your emergency fund.

•   Take advantage of “found” money. Use any windfall, such as a tax refund, a rebate, or a birthday gift, to help build your account.

How to Build an Emergency Fund in College

Creating an emergency fund as a college student gives you a cushion to deal with unexpected expenses you might face while in school, such as your laptop dying or your car breaking down. Methods to build up your emergency savings as a student can include:

•  Use student discounts. Taking advantage of the deals you get as a student can help you maximize your savings at stores, restaurants, and other retailers. Put the money you save into your emergency account.

•  Start a side hustle. You could get a weekend gig walking dogs, for instance. Or if you knit or make ceramics, try selling your creations on Etsy. There is no limit to what you can try. The benefit of a side hustle is that you’ll make some extra cash that you can put towards your emergency fund.

•  Gamify your savings. You can give yourself fun challenges that help you save cash. For example, you might challenge yourself not to buy any fancy takeout coffee for a month and put the amount saved in your emergency fund account. The next month, you might skip yoga classes and instead practice at home. Again, deposit the extra cash into your emergency account.

How to Stay Motivated While Saving

Now that you know how to start an emergency fund, the next step is to stick with your savings goals. These tips for staying motivated could help.

•  Find a buddy. Pair up with a friend or relative who is also trying to save, and support one another through the ups and downs of the process.

•  Give yourself a pat on the back. Recognize that saving can be hard and that you may not hit your goal every month. But every time you put money in your emergency fund, you are doing something positive for your financial health. Be proud of yourself, and give yourself a little treat now and then to celebrate your accomplishment.

•  Use available tools. Many financial institutions, as well as other companies, offer ways to automate, track, and build your savings. See what is offered that could help you save more easily.

The Takeaway

Starting and keeping an emergency fund can be an important step in achieving financial security. By keeping at least three to six months’ worth of living expenses in an interest-bearing account, you will have a cash cushion if you should hit one of life’s unexpected speedbumps. Automating the process, directing any windfalls to the account, and replenishing it after withdrawing funds are all important steps in the process.

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

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

FAQ

What expenses qualify as an actual emergency?

Expenses that qualify as actual emergencies that you could use your emergency fund savings to pay for include a major home repair, such as a damaged or leaking roof; a large medical bill as the result of a sudden medical procedure; car repairs necessary for your vehicle to operate properly; and daily living expenses you have to cover after a job loss, such as rent, utility bills, insurance, groceries, and so on.

Where is the best place to keep my emergency fund money?

Where you choose to keep your emergency fund money is up to you, but one option is a high-yield savings account that offers rates higher than the rate of a standard savings account. This could potentially help your money earn more money. Plus keeping your emergency fund in a bank account keeps it liquid so that it’s easier to access when you need it.

Should I invest my emergency fund in the stock market?

Where you decide to put your emergency fund is a personal decision, however, many financial professionals advise against investing it in the stock market. That’s because the market can be volatile and there is the risk of losing money. Also, when an emergency strikes, you often need money quickly. Money that’s invested in the stock market is typically not liquid and may take time to access. For instance, you might need to sell stocks in order to get your cash.

How is an emergency fund different from regular savings?

An emergency fund is different from regular savings because the money is earmarked specifically for an emergency that might arise, such as an unexpected medical bill. Ideally, emergency fund savings aren’t used for anything other than emergencies, while regular savings may be used for a variety of other purposes, such as a down payment on a house, purchasing a car, or taking a vacation.

You may want to keep your emergency fund in a separate savings account so that you aren’t tempted to spend it on non-emergencies.

More from the emergency fund series:

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Photo credit: iStock/SergeyChayko

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.
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/.
*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.

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

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOBNK-Q325-097

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Though money is a very important aspect of life, the topic of personal finance (or financial literacy) isn’t part of most people’s education, neither in school nor at home.

Not knowing financial basics can leave you to wing it when it comes to your money management, meaning you might wind up living paycheck to paycheck, having too much debt, or not saving enough for retirement.

To help you avoid those situations, read up on personal finance basics — the smart and simple steps to budgeting wisely, saving well, and spending sensibly.

Personal Finance Definition

Personal finance is a term that involves managing your money and planning for your future. It encompasses spending, saving, investing, insurance, mortgages, banking, taxes, and retirement planning.

Personal finance is also about reaching personal financial goals, whether that’s having enough for short-term wants like going on a vacation or buying a car, or for the longer term, like saving enough for your child’s college education and retirement.

Top 10 Basics of Personal Finance

Here, learn about 10 of the most important foundations of mastering personal finance.

1. Budgeting Is Your Friend

Budgeting and learning how to balance your bank account can be key to making sure what’s going out of your account each month isn’t exceeding what’s coming in. Winging it — and simply hoping it all works out at the end of the month — can lead to bank fees and credit card debt, and keep you from achieving your savings goals.

You can get a quick handle on your finances by going through your statements for the past several months and making a list of your average monthly income (after taxes), as well as your average monthly spending.

It can be helpful to break spending down into categories that include basic needs (e.g., rent, utilities, groceries) and discretionary spending (e.g., shopping, travel, Netflix). To get a real handle on where your money is going every day, you may want to track your spending for a month or so, either with a diary or an app on your phone.

Once you know everything that typically comes in and goes each month, you can see if you’re going backward, staying even, or ideally, getting ahead by putting money into savings each month.

If you aren’t living within your means, or you’d like to free up more cash for saving, a good first step is to go through your budget and look for ways to cut back discretionary spending. Can you cook more instead of going out? Buy less clothing? Cut out cable? Quit the gym and work out at home?

You can also consider ways to bring in more income, such as asking for a raise or starting a side hustle from home.

Recommended: 50/30/20 Monthly Budget Calculator

2. Building an Emergency Fund

You can’t predict when your car will break down or when you’ll have to make an emergency trip to the dentist. If you don’t have money saved up for what life throws at you, you can risk racking up high-interest credit card debt or defaulting on your bills.

To avoid this, you may want to start putting some money aside every month to build an emergency fund. A common rule of thumb is to keep three to six months of basic living expenses set aside in a separate savings account.

It can be a good idea to choose an account where the money can earn interest, but you can easily access it if you need it. Good options include: a high-yield savings account, online savings account, or a no-fee bank account. Using an online emergency fund calculator can help you do the math on reaching your goals.

3. Avoiding a Credit Card Balance

When you have a credit card at your disposal, it can be tempting to charge more than you can afford. But carrying a balance from month to month makes those purchases considerably more expensive than they started.

The reason is that credit cards have some of the highest interest rates out there, often over 20%. That means a small charge carried over several months can quickly balloon into a much larger sum. The same is true for other high interest debt, such as some private or payday loans.

If you already have high-interest debt, however, you don’t need to panic. There are ways to pay off that debt.

The avalanche method, for example, requires paying the minimums to all your creditors and putting any extra money toward the debt with the highest interest rate first. Once that’s paid off, the borrower puts their extra cash toward the debt with the next highest rate, and so on.

4. Paying Your Bills on Time

If you miss bill payments or make late payments, your creditors might impose late payment penalties. If you delay payment for a prolonged period, your account could go into delinquency or be sent to collections.

Late payments can also affect your credit score — the number lenders use to help judge whether to give you loans and credit.

Your payment history accounts for 35% of your credit score, so a history of late and missed bill payments can be a major strike against your score. A poor credit score can make it difficult for you to get loans, and the loans you do get are likely to have higher interest rates.

To make sure you never miss a due date, it can be helpful to make a list of your bills and their due dates, set up auto payments when possible, and sign up for reminders.

5. Starting Early to Save for Retirement

When you’re young, retirement can feel far away. But putting money away as early as possible means you’ll have more years to save, spreading the savings across your life rather than racing to catch up.

Perhaps the biggest reason to start as early as you can, however, is the power of compound interest.

Because you earn interest not only on your contributions but also on accumulated interest, small amounts can grow over time. If you have an employer-sponsored plan, such as a 401(k), you may want to consider contributing, especially if your employer offers to match your contributions.

Depending on your situation, you may be able to open a traditional IRA, Roth IRA, or SEP IRA, as well.

6. Investing

Saving for retirement may not be enough for you to have what you need to live comfortably after you stop working. Plus, there may be things you want to be able to afford later in life but before you reach retirement age.

If you have children, for example, you may want to start a 529 plan to help you invest for their college educations.

For other long-term savings goals, you may want to invest additional money, keeping in mind that all investments have some level of risk and the market is volatile, meaning it moves up and down over time.

To get started with investing, you can choose a financial firm you want to work with and then open a standard brokerage account. From there, you can put your money in a mutual fund or an exchange-traded fund or ETF (which bundle different types of investments together), or, if you’re prepared to do a fair amount of research, pick and choose your own stocks and bonds.

7. Getting Insured

When it comes to insurance, sometimes it’s best to prepare for the worst. That means making sure you have health insurance and car insurance (which is typically required by law). You also may want to consider renters or homeowners insurance to protect your home and belongings.

If you have children or other people who are dependent on you financially, it can be a good idea to get long-term disability insurance and term life insurance. Many people can purchase health and disability insurance through their employers. If you don’t have that option, it’s possible to go through an insurance agent, broker, or the insurance company directly.

8. Taking Advantage of Credit Card Rewards

If you have a decent credit score, you can look into getting a credit card with rewards that may give you travel miles or cash back on your purchases. If travel is your priority, you may want to look for a flexible travel rewards credit card, meaning their rewards can be applied to many different airlines and hotels.

You may want to look for a card that not only offers rewards but also offers a nice signup bonus for spending a certain amount within the first few months. One with no annual fee would be ideal, too.

Whichever card you pick, it’s a good idea to familiarize yourself with its rewards program: the value of its rewards units (points, miles or cash back), how to redeem them, whether your rewards expire, and any minimum redemption amounts.

You may also want to keep in mind that credit card interest rates are typically a lot higher than credit card rewards rates. So, to avoid seeing your earnings swallowed up by finance charges, it can be wise to make sure to pay your full statement balance by the due date every month.

9. Checking Your Credit Reports Regularly

You can request a credit report for free from the three main credit reporting agencies — Equifax®, Experian®, and TransUnion® — at AnnualCreditReport.com.

It can be a good idea to periodically order a copy of your report and then scan it for any errors or signs of fraudulent activity. If you see anything that isn’t right, it’s wise to contact the credit reporting agency or the account provider as soon as possible and file a formal dispute if needed.

Checking your report can help you spot — and quickly address — identify theft. It can also help you make sure there aren’t any errors on the report that could negatively affect your credit score. If you ever want to obtain a lease, mortgage, or any other type of financing, then you’ll likely need a solid credit report.

10. Choosing Your Bank Wisely

There are lots of financial institutions out there, so it can be a good idea to shop around and make sure you find a place that really suits your financial needs. Choices include:

•  A traditional bank. These typically have physical locations throughout the country and offer a wide range of financial products and services. If you want to know you can have an in-person chat about your money, this option might work well for you.

•  Credit union. These are nonprofit organizations owned by the members of the union. They’re similar to a traditional bank, but membership is required to join, and they’re often smaller in scale and have fewer in-person locations. However, they may have lower fees and higher interest rates than a traditional bank.

•  Online bank. These institutions don’t usually have any in-person locations — everything happens online. Because of this, they often have very competitive fees and interest rates on checking and savings accounts. If you don’t necessarily need in-person money talk and would prefer to handle your money at home (or on the go), an online bank could be a great option.

When making a bank choice, it can be a good idea to make sure the bank you choose has a user-friendly website and app, as well as conveniently located ATMs that won’t charge you a fee for accessing your money.

3 Personal Finance Rules to Know

Once you’ve established some fundamental procedures, you can start thinking about some overarching rules that can help you make better money decisions. Three rules you may want to keep in mind include:

•   Keep your goals in mind. Without a clear set of goals, it can be difficult to do the hard work of budgeting and saving. Defining a few specific goals — whether it’s buying a home in five years or being able to retire at 50 — gives you a picture of what personal financial success looks like to you, and can keep you motivated.

•   Learn to distinguish wants from needs. Merging these two concepts can wreak havoc on your personal finances. Needs generally include food, clothing, shelter, healthcare, reliable transportation, and minimum debt payments. Everything else is likely a want. This doesn’t mean you can’t have wants, but it can be important not to trade financial security in pursuit of these things.

•   Always pay yourself first. This means taking some money out of each paycheck right off the bat and putting it towards your future goals. Setting aside money in a savings account, IRA, or 401K plan via automatic payroll deductions helps reduce the temptation to spend first and save later.

The Takeaway

Being good with your money requires a set of basic skills that many of were never actually taught in school. Learning personal finance basics like how to choose a bank, set up a budget, save for retirement, monitor your credit, manage high-interest debt, and invest your money can be key to reaching your goals and building wealth over time.

One simple way to become more organized with your money can be to open the right bank account.

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

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

FAQ

What are the basics of personal finance for beginners?

Personal finance basics typically include budgeting, saving, investing, managing debt, and understanding credit. These principles can help you manage your money well and reach your financial and personal goals, whether short- or long-term.

What are the five basics of personal finance?

To manage your money well, it’s typically important to have a comprehensive understanding of the five key areas of personal finance: income, spending, saving, investing, and protection.

What is the 50-30-20 budget rule?

The popular 50/30/20 budget technique says to divide up your take-home pay into three categories: 50% toward needs, 30% toward wants, and 20% toward savings or additional debt payments.

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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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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

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Budgets can help you take control of your money and make it work harder for you. A monthly budget template can help you stay organized as you track your income, expenses, savings, and debt repayment. There are different ways to make a budget template, but if you don’t have time to do it yourself, it’s easy to find one online.

If you’re specifically looking for an Excel budget template then you’re in the right place. You’ll find a free budget Excel template you can download to help you better manage your money.

Options trading online by SoFi Invest.

Monthly Budget Template

There are different types of budgeting methods to choose from, such as the envelope system or the 50/30/20 budget rule. This free budget template can likely work well with many of them. The template allows you to enter your income, expenses, savings, and debt payments to create a comprehensive snapshot of your finances from month to month.

Here’s what you can expect when using this monthly budget template.

Key Components of the Template

When making a financial plan, it’s important to include the most important components of a budget. This simple budget template is divided into five sections:

•   Income

•   Essential expenses (the “needs” in life)

•   Discretionary expenses (the “wants” in life)

•   Savings and debt repayment

•   Monthly totals

You’ll be able to enter projected and actual amounts for each section. You can add or remove lines as needed or edit the descriptions for expenses, savings, and debt payments. Totals are calculated for you automatically.

How to Download and Access the Template

Here are steps for downloading the free monthly budget template:

•   You can download the Excel budget template here.

•   Once you download the file, you’ll open it and then click “Enable editing.”

•   You can then save the file to your preferred location on your device, and start using it to make a budget.

If you don’t have Excel, you can open the file in Google Sheets. You’ll need to:

•   Download the Excel file

•   Open Google Sheets

•   Click “File,” then “Import”

•   Click “Upload” and “Browse,” then find the Excel file

•   Select the file and click “Open”

•   In Google Sheets, select “Create new spreadsheet” from the dropdown menu (or this may automatically populate on a pop-up screen), and click “Import data”

•   Click the blue “Open now” link to start using the spreadsheet

If you’re opening the file in Google Sheets, you may need to make adjustments to the font or spacing if you have a default font that you use.

Recommended: 50/30/20 Budget Calculator

Using the Monthly Budget Template Effectively

Every monthly budget template is different, and you may need to do some customizing to make it your own. Here are some tips for living on a budget and tracking all of the numbers.

•   Review each section one by one to determine whether you’ll need to add or remove lines or make changes to descriptions.

•   Start by reviewing your monthly income and adding the projected amount for each income stream that you have.

•   Enter “Essential expenses” next, using the projected amount for each budget category. Again, you may need to add or remove expenses or adjust the descriptions to match your needs.

•   Enter “Discretionary expenses,” using the projected amount for each budget category. There’s plenty of room in the budget template to add additional expense categories if you have them.

•   Enter projected amounts for each of your monthly savings goals and debt repayment goals.

•   As you pay your essential expenses, add the actual amount spent for each one to your budget template.

•   Use the “Expense tracker” tab included in the budget template to record expenses for things like groceries and gas throughout the month. You can then add up the amounts for each category and enter them in the relevant box on the “Monthly budget” tab.

•   Enter savings contributions and debt payments in the “Actual” column as you make them.

Once you’ve added your income, expenses, savings, and debt payments and calculated the projected and actual amounts for each category, you can enter those numbers into the “Monthly totals” section. You can then subtract your actual expenses, savings, and debt payments from your actual income to calculate the difference. Managing your budget in this way adds an extra level of insight onto and control of what’s going on in your bank account.

Personalizing Your Budget

The monthly budget template is customizable so you can add or remove items as needed.

For example in the “Income section,” you’ll see room to enter amounts for two paychecks, two side hustles, and an ‘Other’ category. If you only get paid monthly, you can delete one of the paycheck lines. Or if you get paid biweekly and have a three-paycheck month coming up, you can add a line to account for that.

You can do the same with all of the other sections so that your budget template reflects your monthly expenses and savings goals. For example, say that you use sinking funds — money set aside for specific goals — to save money for one-time expenses. You could add individual lines for each one in the “Savings” and “Debt” section.

So your savings goals might include:

•   Emergency fund

•   Holiday fund

•   Vacation fund

•   New car fund

Likewise, you might have multiple student loans you’re repaying that you’d like to list separately. Having a projected column and an actual column can be a huge asset. This can help you see how well you’re doing with your spending, savings, and debt repayment goals month to month. That, in turn, can help you manage your money better.

Tracking and Analyzing Your Spending

Failing to track variable or discretionary expenses is one of the most common budgeting mistakes. It’s easy to go over budget if you don’t know what you’re spending.

This budget template includes an “Expense Tracker” sheet that you can use to record spending, outside of what you pay toward the bills. Tracking expenses monthly is a great way to see how your expenses are trending, where your money goes, and what you might want or need to cut back on.

Some of the most helpful expenses to track may include:

•   Groceries

•   Gas

•   Anything that’s in your “Discretionary expenses” category on the template, such as entertainment and dining out

These are the areas of your budget where spending may not be the same month to month. You can look at each expense category and ask yourself what you could do to reduce spending or even eliminate it altogether if you’re trying to free up funds to save or pay down debt.

It’s also helpful to look back each month to see how your essential expenses have changed. Some costs, like your mortgage or rent payments, may always be the same but you might spend more on utilities during certain times of the year than others. Getting to know these patterns can help you adjust your budget accordingly so you’re not surprised by a higher-than-usual electric bill.

Budget Template vs App

Using a budget template is a hands-on way to track your income and spending because you have to enter amounts in the sheet manually. If you don’t have time to do that or you’re worried about getting the numbers wrong, you might use a free budget app instead.

These can let you link your bank account, including checking and savings accounts, in one place so you can see what you’re spending. You can also add investment accounts, retirement accounts, credit cards, student loans, and other loans to track your net worth. Many financial institutions offer these tools, so it can be worthwhile to check with yours, or many third-party apps are available as well, some for free and others with associated costs.

You might also find that a budgeting app can help you move towards your short- and longer-term money goals, as you see where your cash goes and how you can lower debt and build savings over time.

In addition, credit score monitoring may be included so you can see how paying down debt or taking out a new loan affects your credit rating.

Recommended: Ways to Earn Money From Home

The Takeaway

If you’re ready to make budgeting part of your money routine or looking to fine-tune how you track your finances, a monthly budget template can help you do it. This Excel budget template is designed to be user-friendly.

As you work on tracking your money, it’s wise to have a banking partner that helps you manage and grow your wealth.

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

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

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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.

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*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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.

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

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Even if college is several months or a few years away, high school can be a great time to start saving for future college expenses. This is especially true as the cost of higher education continues to climb.

Just making a few simple moves, like picking up a part-time or summer job and signing up for AP classes (which may allow you to skip some college classes and save on tuition), can go a long way once you get to campus.

Read on for more tips on how to start saving up money for college while you are still in high school.

Advancing Yourself With AP Classes

Achieving an AP Exam score of 3 or higher may allow incoming freshmen to skip introductory college courses or gain credit toward graduation. The College Board reports that nearly all colleges and universities in the U.S. offer credit, advanced placement, or both based on your AP scores.

Most colleges have a policy outlining the minimum scores needed to earn credit for specific AP Exams, plus how much credit will be awarded and how it applies to your degree or graduation requirements. The College Board offers an AP credit policy search online, but it’s wise to double check with your individual school.

Earning college credit before you even step foot on campus freshman year can be a great way to save money on future college classes in the long run. You might even be able to graduate early, which could mean thousands of dollars in savings depending on which university you attend. Of course, there are fees to take the AP Exams, but that amount may be offset by the amount of credit hours you’re able to gain if you score well.

Picking Up a Part-Time or Summer Job

Working in high school and setting aside at least a portion of your earnings in a savings account earmarked for college can definitely come in handy when it comes time to cover expenses like books, meals, entertainment, or off-campus rent.

Recently, some companies with part-time and entry-level jobs — perfect for high school students — have started offering tuition support or reimbursement for eligible employees. At Starbucks, for instance, part- and full-time employees are able to get 100% of their tuition reimbursed for a first-time bachelor’s degree through Arizona State University’s online program. Working at Chipotle, you may also be able to receive some tuition assistance every year.

Managing Expenses by Budgeting

It’s never too early to start good money habits, such as maintaining a balanced budget. You might start with a simple spreadsheet that tracks your monthly income (like allowance or any paychecks you earn) as well as your monthly spending, separating your expenses into essential and nonessential. You may be able to free up more money for college savings by cutting back on nonessential expenses. The popular 50/30/20 budget rule suggests putting 20% of your income toward savings for long-term money goals, like saving for school.

Starting to save in high school could potentially help minimize the financial burdens you face during college. Maintaining a budget in high school could also help prepare you for keeping your expenses in line as a college student.

When making a college budget, make sure you research what things like books, transportation, rent, and groceries are going to cost in the area. You can then look at what you might be able to cut in order to save more, like smaller meal plans, off-campus housing, renting used textbooks, or taking the bus rather than bringing your car.

Recommended: 33 Ideas for Saving Money While Dorm Shopping

Switching Up Your Savings Account

A high-yield checking or savings account could earn you significantly more money by paying a higher-than-average interest rate. This could help your college savings fund grow more quickly.

If you earn a regular paycheck, one easy way to save is to split up your direct deposit between your checking and savings account. This way, you guarantee some money automatically ends up in savings, making it a little harder to spend. You could also set up an automatic transfer within your account so that you don’t have to constantly remind yourself to save.

Researching Scholarships and Grants

Scholarships and grants are both forms of aid that don’t need to be repaid, essentially making them free money. Getting a scholarship, or a few, can go a long way in lessening the financial burden you face in college. Some scholarships are awarded to incoming freshmen so spending some time researching scholarships and grants could pay off in the long run.

There are online databases, like FastWeb or Scholarships.com, that aggregate information about different scholarships and what their application process looks like. Each scholarship is likely to have their own eligibility criteria and application requirements so pay attention to the details when you are applying.

Different Ways to Pay for College

The U.S. government offers aid in the form of federal student loans, but also grants and some scholarships, which can significantly reduce the cost of college. It’s important when applying to schools to consider all of the costs involved. You can estimate your financial aid online ahead of time, so you can make an educated decision about where to attend school.

Filling out the FAFSA form every year is an important step toward securing federal aid, including merit-based scholarships and federal student loans.

If savings, financial aid, and federal student loans aren’t enough to pay for college, private student loans are another option to consider. These loans are made by private lenders and aren’t required to follow the same regulations as federal student loans. Because of this, they lack the borrower protections afforded to federal student loans and are generally considered an option only after all other sources of funding have been reviewed.

The Takeaway

High school is the perfect time to start preparing for college and how you’ll pay for it. Taking on a summer or part-time job can boost your income and allow you to start socking away money for future college expenses. Other ways to make the cost of college more manageable include taking AP classes, researching scholarship options, applying for federal financial aid, and taking out federal or private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

How much should a high school student save for college?

There is no one set amount that a high school student should save for college. Much depends upon individual circumstances. However, the rule of thumb is that it can be wise for families (parents, relatives, and the student) to save up one-third of the costs and finance the rest. College tours are a good way to gain insights into a campus and how it operates. You can also hear from a student guide about important insider topics and ask questions from a current student.

What are good ways for a student to save for college?

Getting a job, whether part-time or full-time over the summer, is one good way for a student to accumulate funds for college. Taking AP classes can also be helpful, as a good score on the AP Exam can help a student place out of introductory courses and potentially graduate early. This can result in significant tuition savings.

What if I don’t use up 529 funds for tuition?

If 529 funds aren’t used by a student, they can likely be transferred for use by another family member on qualifying expenses, used to pay down student loans, or withdrawn for nonqualifying expenses (which can trigger taxes and penalties), among other options.

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