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You’ve likely made some impulse purchases in your life and later regretted spending your hard-earned cash that way. One way to avoid making impulsive or bad buying decisions is to hit pause just before you make a purchase to ask yourself a series of simple questions.

This extra step forces you to step back and honestly consider how the potential purchase fits into your life. You might ultimately decide you don’t want the item after all. And, if you do decide to buy it, you can feel confident that you’re doing it for the right reasons.

9 Questions To Ask Yourself Before Buying Something

Knowing some key questions to ask yourself before you buy something can help ensure that you spend according to your values and cut down on purchases you’ll regret later. After all, the last thing you want is to spend money on things that don’t really enhance your life — and may add to your debt (especially if you’re already paying off some debt).

Here are some key pre-purchase questions to consider.

1. Is This a Want or a Need?

A great first question to ask is whether your prospective purchase fulfills a need or is just something you want, or a discretionary expense. If it’s an item you need — and you can afford it — then you might just go ahead and buy it. If, on the other hand, it only fills a want, it’s a good idea to continue vetting the purchase with the questions that follow.

2. What Do You Gain From Buying This?

Consider what you hope to gain from making the purchase. Is it the admiration or approval from other people? Does someone you know or follow on social media have it? Is this something that will genuinely improve your quality of life?

Research suggests that people feel more satisfied when they spend money on things or experiences that mean something to them and reflect their values.

Recommended: What Is FOMO Spending?

3. Is This Something That Will Actually Sell Out?

Though retailers will often make you think you need to act quickly (due to low stock), there’s a good chance that the items that you’re thinking of buying will still be available at a later date. If you’re feeling pressured to buy due to a limited-time sale, keep in mind that sales pop up all the time. Waiting for the next one could save you even more money, as you may decide you don’t really want it that much. This can help you avoid making an impulse buy.

4. Can You Get It Used or for a Better Price

If you’re thinking of pulling the trigger on a full-price item you don’t need right away, consider whether you may be able to find a better deal. For example, you might:

Buy Used

If you’re looking at a piece of equipment (like sports, exercise, or baby gear) or furniture, keep in mind that you may be able to find it in great condition on a second-hand marketplace online or even a yard sale.

Find Discounts

While buying used is not everyone’s cup of tea, buying on sale should be. These days, there are websites and apps that can help you do quick price comparisons to find the best deals. Some apps will even alert you when the price for a wanted item drops.

5. Do You Own Something Similar?

If you were to look at what you already own, you might be surprised to find how often you purchase nearly the same items over and over again. Buying similar items is totally understandable. We all know what makes us comfortable and what we tend to wear or like, so we gravitate to similar-looking clothes, shoes, home decor, and so on.

If you already have several coffee mugs, jean jackets, baskets, whatever that are similar to your prospective purchase, you may want to pass.

Recommended: How to Stop Spending Money

6. Why Do You Want to Buy This Now?

Sometimes there is a clearcut reason to make a purchase, even an impulse purchase. You might be at a store and remember you need hand soap or a certain tool to make a repair. But if there isn’t a clear reason for making this purchase right now, you may want to pass.

7. How Often Will You Use It, Really?

If you will only use or wear the item you’re thinking about buying once, or even a handful of times, you may want to rethink the purchase. It’s possible you can get by with something you have, can rent the item, or can borrow it from a friend or neighbor. This can end up saving you buyer’s remorse as well as money that you could stash in a high-yield savings account.

8. If the Item Was Full Price, Would You Still Buy It?

A sale price can make an item look particularly appealing. You might even think you’d be a fool to pass it by. But it’s important to put the price tag to the side for a moment and consider whether or not you really want and love the item. Would you even be considering it if it were full price? If the answer is no, it’s likely you can forgo it.

9. Would It Be Better To Put the Money Elsewhere?

If you can ask yourself this question, then you’ve arrived. You’re thinking of the big picture and wondering whether there may be other things that are more important than what’s in front of you. This involves delaying gratification and knowing how to spend money wisely.

You might decide that rather than buying that new pair of shoes, the money could better be put in, say, an online bank account where it can earn interest with lower or no fees.

The Psychology Behind Reflecting Before Purchasing

One common reason why people shop for new (and often similar) things is because they don’t fully appreciate the things they already possess. But there is a way you can turn this psychology around.

Before you make a purchase, consider whether or not you already own something that can fulfill the same purpose. If you do, next think about whether there is a reason you need something similar. If you can’t, you can probably easily pass on the purchase. The process of reflection not only avoids an unneeded expense but allows you to refocus on the item you already have and appreciate it more.

How Budgeting Can Curb Compulsive Spending

Creating a budget involves looking at where your money is currently going and making sure that your spending aligns with your priorities. There are many different kinds of budgets but one simple framework is the 50/30/20 rule.

The idea is to divide your monthly take-home income into three categories, spending 50% on needs, 30% on wants, and 20% on savings (and debt payments beyond the minimum). This set-up helps curb compulsive spending because you only have so much “fun” money to spend each month. It also allows you to spend money without feeling guilty, since it’s baked into the budget.

Recommended: Savings Calculator

The Takeaway

If you are considering making a discretionary purchase, you can ask yourself a few questions that can help you avoid buying something that you later regret. For instance, asking if you already have something similar or whether you’d buy it even if it wasn’t on sale can help you determine your motivations. By reconsidering the purchase, you might wind up saving money that could be better spent paying down debt or going into 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.

FAQ

How do you determine if you should buy something?

A good first step is to determine whether a prospective purchase fulfills a need or is simply something you want. If it fills a need, you can go ahead buy it, as long as you can afford it. If it’s a want, you might next consider why you want to buy it. Also think about whether you may already have something similar, and whether the money might be better spent on something else.

Should a budget include flexibility for impulse purchases?

Yes. A budget will typically allot a certain amount of money just for “fun” each month. This frees you up to make the occasional impulse purchase without feeling guilty or worrying that it will hurt your long-term financial health. In fact, building in flexibility to your spending plan can help you stick with it.

What questions should you ask yourself before buying something?

Some key questions to ask yourself before you make a purchase include:

•  Do I need it?

•  What do I gain from buying this?

•  Do I own something similar?

•  If the item was full price would I still buy it?

•  How often will I use it, really?

•  Could I get it used or for a better price elsewhere?

•  Is there a better way I could use this money?

How do you stop impulse buying psychology?

One effective strategy is to establish a waiting time before you make any discretionary purchases. If you see something you want to buy, put the purchase on pause for a week (or more). Tell yourself that if, at the end of the waiting period, you still want the item and can afford it, then you can go ahead and buy it. You may find, however, that by delaying gratification (and the purchase), you lose interest in the item and opt not to buy it after all.

Photo credit: iStock/Talaj

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 12/23/25. 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.

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-Q325-089

Consumerism is both an economic theory and cultural phenomenon that typically flourishes in a capitalist society. The theory of consumerism states that increased consumption of goods and services by the population will improve the economy. The people in this society, in turn, believe they must consume more goods and services to achieve happiness, fulfillment, and wellbeing.

In this article, you’ll learn more about the history of consumerism, its pros and cons, and how to manage it in your life.

Consumerism Definition

What is consumerism? Consumerism refers to the economic theory that consumer spending on goods and services is crucial to bolstering the economy. It also refers to the cultural phenomenon that has happened in capitalist societies as a result. Specifically, it describes individuals’ feeling that they must partake of goods and services to be happy, often spending more money than they can afford on things that they don’t really need.

History of Consumerism

While many point to the post-World War II era as the beginning of U.S. consumerism, historian William Leach believes it dates back a little further to the turn of the century. In his 1993 book, Land of Desire, Leach argues that this time period marked a surge in department stores, assembly lines, investment bankers, and mail-order catalogs — all of which were early hallmarks of a consumer society.

As businesses headed into the 1920s, their production prowess was unprecedentedly strong — but American consumers were not yet used to the idea of, well, consuming. Economists realized that they needed to persuade consumers (“through advertising and propaganda,” as author Edward Bernays once wrote) that they needed more.

In short, businesses could manufacture plenty of supplies; now they needed to manufacture demand for the items that were being pumped out.

While the Great Depression slowed down the progress of consumerism, the effects of World War II and the rise of mass media fueled consumerism in the decades that followed. By this time, economists agreed that excessive consumption was the best way to improve the economy.

This belief is evidenced by this telling quote from retail analyst Victor Lebow in 1955: “Our enormously productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption … We need things consumed, burned up, replaced, and discarded at an ever-accelerating rate.”

Examples of Consumerism

You can find many examples of consumerism in today’s society, including:

•   Huge shopping sales like Black Friday and Cyber Monday.

•   Ads on TV, websites, and social media that encourage you to buy a new product or subscribe to a new service.

•   Holidays built around gift-giving and consuming candy or food.

•   New cars, phones, and other innovative tech being released every year — sometimes with upgrades more than once a year.

•   Services, like streaming platforms and video game systems, built around a subscription model where you must pay every month to retain access to the service.

Recommended: How to Improve Your Money Mindset

Pros and Cons of Consumerism

Consumerism can offer both advantages and disadvantages to society:

Read on to consider these pros and cons of consumerism in more depth.

Consumerism Pros

Consumerism can bestow a number of benefits to a society, such as:

•   Improved economy: The primary tenet of consumerism is that individual spending will drive economic growth. While history has taught us that this is generally true, many opponents may ask, “At what cost?”

•   Job creation: The more that a society spends on goods and services, the more that businesses need to hire people to create those goods and services. And it’s not just a phenomenon that impacts the U.S. Because America relies on raw materials from other parts of the world, consumerism typically creates jobs around the globe.

•   Connected global society: Consumerism now happens on a global scale. America depends on other countries for products and services — and they in turn depend on us. While globalization is itself a nuanced topic, many believe that a more connected global society is a good thing.

•   More creativity and innovation: Advocates of consumerism argue that it encourages and rewards creativity. When consumers vote with their dollars, companies are more likely to push the boundaries to deliver newer, better, safer products and services — and at lower prices. This can be especially important for medical advances.

•   Entrepreneurship: In a consumerism-driven society, if you have an idea for a product or service that others want, you are free to pursue it. Launching your own business or working as a freelancer may mean that you can make money and take care of your family using your creativity and business acumen, as well as doing what you love to do.

Consumerism Cons

Outside of an improved economy, however, critics argue that consumerism can be bad for mental and physical health, as well as the environment. Downsides to consumerism may include:

•   Anxiety and unhappiness: When people feel they always need newer, better things, they may never be satisfied. The pressure to have a new phone or car may lead them to work extra hours, unfairly compare themselves to others, and feel bad about themselves when they can’t afford the next best thing.

•   Debt: Consumerism can motivate individuals to overspend on new things in an effort to achieve happiness. Unfortunately, many consumers spend more than they should on everything from cars and vacations to clothing and jewelry — and take on debt in the process. The average American household had approximately $10,767 in credit card debt as of July 2025, according to one study. This can also make it hard to save and build wealth.

Unmanageable debt can leave people without money in their bank accounts, it can destroy families, and it can also be detrimental to the entire economy, as the subprime mortgage crisis of 2008 demonstrated.

•   Environmental impact: Producing, using, and throwing away goods can be harmful to the environment, with studies indicating that consumerism has a large part to play in global greenhouse gas emissions. Not only that, but as the human race grows and likely demands more and more things, the nonstop manufacturing of consumer goods could possibly harm or even destroy animal habitats.

•   Poor physical health: Buying and consuming unhealthy foods, alcohol, and cigarettes can be detrimental to one’s health. But it’s not just what is consumed; as innovators introduce more technologies that make life easier — like robotic vacuums, gutter guards, and apps for grocery delivery — it’s easier for consumers to do less, leading to a more sedentary lifestyle.

•   Spiritual and religious issues: Those whose spiritual or religious beliefs promote minimalism and charitable giving may find those beliefs at odds with the spirit of consumerism, which is about increasing your own wellbeing through the consumption of more goods.

Tips to Combat Consumerism

Consumerism can be a good thing: It creates jobs and bolsters the economy, and it allows opportunities for individuals to create new things. But when consumerism becomes excessive, it can damage an individual’s finances and possibly be harmful to their emotional and physical health.

Here are some ways you can be a more responsible consumer:

Creating a Budget

By creating a line-item budget that prioritizes the things you need, it’s easier to see how much money you can spend on the things you want. It’s unrealistic to think that you’ll completely stop buying goods and services that you enjoy.

Instead, through budgeting, you might gain a better understanding of how much you can afford to splurge without taking on debt or adding anxiety to your life. You’ll be better in touch with the money cycling through your checking account and landing in your savings.

By experimenting with different budget techniques, you can likely find one that suits you and helps you spend wisely and save for the future.

Recommended: 10 Most Common Budgeting Mistakes

Giving Things Away (or Selling Them!)

If your home currently has too much stuff, you might have been a victim to excess consumerism (including impulse buying) at some point.

Some people find it helpful to embrace minimalism. Try giving things away to those less fortunate, or have a garage sale to make some extra cash. Doing so may show you that you can be happy with less.

Thinking About What Really Makes You Happy

It’s easy to see what others have and think you need to buy it too. But is a new phone really going to make you happier? What’s wrong with the one you have? Understanding factors like lifestyle creep and FOMO spending, which can both be about keeping up with a lifestyle you see around you but is too expensive, can be worthwhile.

If you challenge yourself to define what happiness is for you, you may find that having new things isn’t a large part of the equation. In keeping this realization with you at all times, you can cut back on spending money on things you don’t need — and instead focus on the people, places, and hobbies that bring you happiness.

The Takeaway

Consumerism can be good for the economy: It’s probably created more jobs and opportunities for self-employment, and led to better-quality, safer products for a larger number of people. However, consumerism may also be responsible for negative impacts on our environment, physical health, and mental health. Consumerism is a nuanced topic with implications in nearly every aspect of life; it’s wise to be aware of how consumerism can affect you so that you can make smarter financial decisions.

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.

FAQ

What is a consumerism example?

There are several examples of consumerism in everyday life, including the seemingly constant release of new smartphone models, yearly mega sales on Black Friday and Cyber Monday, and the constant ads we’re exposed to on TV and the internet.

Is consumerism positive or negative?

Consumerism has pros and cons for society. While consumerism creates jobs, boosts the economy, and leads to better-quality goods and services, it can also lead to debt, anxiety, and even physical health issues. In addition, consumerism can help create a more connected world, but it can also have negative environmental impacts.

What is the simple definition of consumerism?

Consumerism is the economic theory that consumer spending on goods and services is key to driving the economy. To that end, businesses create new products and services to market to individuals. Individual consumers may feel like they need those new products and services to improve their wellbeing and happiness. While consumerism creates new jobs and bolsters the economy, critics believe that it can be harmful to our physical and mental health.

Photo credit: iStock/Dimensions

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 12/23/25. 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.

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-Q325-090

Most teens don’t get a formal education in topics like budgeting, investing, and choosing the right financial institution for their money. That’s why it can be especially important for young people to take steps to build their financial insights and skills. That can mean understanding the right amount to save and spend when earning a salary; what the challenges of managing credit can be; and how to invest money wisely.

This guide covers these aspects of financial literacy and more that can help a team understand and manage their money through the years.

Why Is Financial Literacy Important for Teens?

Sad but true: Most people are launched into adulthood without being educated on personal finance. What’s more, in many households, money isn’t a topic that’s freely discussed, so kids don’t grow up hearing about how much their parents earn, spend, or save.

These are factors that can make it a challenge to gain financial knowledge and money management skills. However, learning about how to budget, save, invest, and spend wisely when young can set you up on the path to achieve your short- and long-term goals. That’s why you’ll learn some financial tips for teenagers right here.

The sooner you understand your way around money, the earlier you can get on the path to, say, travel around Europe for a summer, manage student loan debt, or even start saving for your dream house.

5 Key Financial Tips for Teens

Making the most of your money as you start on the path to your independent life doesn’t need to be complicated. Here are five important financial literacy concepts for teens.

1. Opening a Bank Account

Financial planning for teens often starts with having a bank account. Not only will a bank account make it easier to cash those birthday checks from Grandma, it also provides a place to monitor money and start saving.

Most bank accounts billed as “teen accounts” are really just joint bank accounts, because teenagers under 18 typically need a parent or guardian to also be an account holder. This makes it possible to open a bank account for a minor.

Although it’s sometimes easier for teens to open an account at the same place their parents bank, it may be worth researching which traditional and online banks in the area have the best benefits for teenagers specifically. Some points to know:

•   The age for opening up an account varies from bank to bank, so make sure to check specifications on the bank’s website beforehand.

•   Valid identification like a student ID, driver’s license, passport, birth certificate, and/or social security card is also required for account owners when opening a teen checking account.

•   In some cases, a parent or guardian must be present to open the account, but some banks do offer the opportunity to open an account online. This will often require uploading the same documents to prove your identity.

•   Some banks also offer parental controls, setting withdrawal and debit card limits, or even text alerts about account activity. Before opening an account, it may be worth considering what is most important and beneficial — definitely talk it over with a parent or legal guardian.

•   Learning about any fees or minimum balances from the bank is also an important step in personal finance for teens. Make sure to ask the right questions in person or check out the bank’s fee structure on their website. Ideally, you might want an account with no fees and the ability to earn a bit of interest (many checking accounts pay no interest). These offers are typically found at online vs. traditional banks.

•   Having a bank account means access to making deposits and withdrawals, plus online banking tools that can help with money management.

A word about debit cards: A teen checking account typically offers access to a debit card, which allows account holders to take out cash from ATMs and use the card for purchases in stores or online.

A teen bank account is a great first step in learning money management, whether it’s using a debit card, checking balances, transferring money, or setting up a direct deposit for paychecks. And, at many banks, once someone does turn 18, the account can turn into a standard checking account, which they can either choose to keep or leave for a new banking institution. (Important note: There may be new fees, so it’s important to keep an eye on what those might be.)

2. Budgeting For Teens

Another financial tip for teenagers involves learning how to balance income and expenses. Making a simple budget can help keep things on track. Whether it’s keeping tabs on a monthly allowance or income from a part-time job, knowing how much money is spent versus how much money gets made is a key part of money management. Plus, a budget can show how much money is available to save every month.

Many banks with mobile or online banking offer simple budgeting tools, such as categorizing money into simple buckets like “spendable” or “set aside.” One pretty practical budget suggestion is the 50/30/20 method. This helps to simplify spending categories: rather than trying to decipher every transaction and having hundreds of small budgets for individual items, the 50/30/20 method just divides monthly income into thirds.

•   50% of income would be put toward necessities, such as bills and other regular spending that’s hard to do without. For teens, this might mean car-related expenses, like insurance and gas, or a monthly cellphone bill. If 50% seems like a lot — especially if parents are still paying for big expenses like groceries and housing — consider putting an extra 10% into savings or other financial goals for now.

•   30% would be allocated for day-to-day spending, like going out to eat with friends, entertainment, shopping, and other fun activities.

•   The remaining 20% would be allocated for financial goals, usually savings or debt payoff. Maybe this can be the start of a college fund, or saving up for a big purchase in the future?

3. Smart Savings

In tandem with having a budget, learning how to save money is an important part of financial planning. Opening both a checking and savings account may make it simpler to put money away. Or a person can create multiple savings accounts to reflect different goals; say, one to accrue an emergency fund and one to save for a car. Understanding that saving now can make it easier to buy and achieve lifestyle goals later is an important concept for teens.

Since a debit card is only tied to a checking account and not to savings, that can be an added buffer from the money in a savings account. Plus, learning to regularly transfer money into a savings account can help create healthy money habits.

When a teen eventually has a regular paycheck, one of the simplest ways to save more is to set up direct deposit to divide the funds between a checking and savings account. If 20% automatically goes directly into savings, it requires little extra thought each pay period.

Automating savings in this way takes away the need to manually transfer money. This can help eliminate any mental gymnastics surrounding the desire to spend money in a checking account immediately — it’s like it was never there in the first place.

Plus, in an emergency, a connected savings account can help prevent overdraft fees. If college is in the plans, saving now could mean taking out fewer loans in the future.

It’s wise to help a teen learn about how savings accounts can differ. A high-yield savings account can help earn a favorable rate of interest, so money can grow faster.

4. Being Cautious With Credit

Financial tips for teens are full of dire warnings about the perils of credit cards. But learning early on how credit cards work and how to manage credit is also part of mastering money management. Building credit now may open more doors in the long run.

For example, establishing a positive credit history can help make it more likely to successfully secure a loan for a car or rent an apartment down the road.

One way for teens to start is to get added as an authorized user on a parent’s credit card. The authorized user gets the benefits of the credit card and building credit history without the responsibility of being the primary cardholder and making payments.

However, since late payments may impact both credit scores, teens can also set up an arrangement to pay off any debt incurred using the card each month.

Eventually opening an individual credit card without a cosigner, of course, means a lot more financial responsibility. Paying a credit card in full each month, as opposed to carrying a balance, is an important financial habit. It means the cardholder won’t pay interest on a balance, and it can help build credit score.

And, as credit builds, it’s smart to monitor credit reports and scores for errors or fraud. It might be a good idea to start monitoring credit through a free site like AnnualCreditReport.com.

5. Setting Up a Side Hustle

If a part-time job or summer gig isn’t an option just yet, whether due to age, school work, or other restrictions, there are other options for earning extra cash. One of the benefits of a side hustle is being able to bring in income. And any income, however small, could help build good personal finance habits like budgeting and saving.

For ideas, look to needs in the community, such as assisting older adults with technology, babysitting, tutoring, or lawn care. Helping on a moving day, walking dogs, or washing cars are also great ways to step up from a beginner’s lemonade stand.

You might also consider hobbies: Painting landscapes or making jewelry could lead to sales that bring in some cash.

For those nearing college and looking for a part-time or entry-level job, it may be worth considering a company that offers tuition support or reimbursement for their employees.

Can You Invest as a Teenager?

Many teenagers are curious about investing and how they might build wealth that way. Here are a few things to know if you’re wondering how to invest as a teenager:

•   If you are under age 18, you cannot be the sole owner of a standard brokerage account.

•   With adult supervision, you may open what is known as a custodial account. This means that the adult oversees the account while you are under 18. When you turn 18, you can likely take over control of the account with the adult’s approval.

By collaborating with an adult in this way on investments, a teen can learn the basics and begin to experiment. It’s important to remember that investing does have inherent risk, as a portfolio isn’t insured the same way money in the bank typically is.

Once You Are Old Enough to Invest, Where Do You Start?

If you are old enough, here’s how to invest as a teenager. Keep these tips in mind:

•  Do your research. There is plenty of information about investing available online, via apps and classes, in books, on podcasts, and beyond. Find reputable resources and educate yourself on how to invest money as a teen. This can include both principles of investing as well as different kinds of investments to consider.

•  Set goals. When you begin investing, it’s wise to figure out your goals, and you may indeed have more than one. Perhaps you want to invest in the short-term to help generate money to pay back student loans. And maybe you also want to begin saving to start a business when you are 35. Those different goals and timeframes can influence how you invest.

•  Opening a brokerage account. Once you are old enough, you will have a choice about the sort of account you open and how it is managed. Whether you want to work with a financial professional or try robo advising, spend time understanding the pros and cons of your options.

When you make a decision, you’ll be ready to invest money as a teenager, but it doesn’t have to be set in stone. You can shift gears and try other methods as well.

The Takeaway

Teens can gain financial skills that help them manage their money throughout their life. These include starting and sticking to a budget, saving wisely, and using credit responsibly.

While SoFi doesn’t offer bank accounts for minors, take a look at what we offer for when you are of legal age to open an account. Or, if you are age 15 or older, see if you might be added as an authorized user to an adult’s 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.

FAQ

What should high school students know about financial literacy?

It is important for high school students to learn about opening bank accounts, budgeting, saving, managing credit wisely, and bringing in income.

How can a 16-year-old invest money?

A 16-year-old typically cannot open their own brokerage account. However, they can open a custodial account with a trusted adult.

How would you invest $1,000 as a teenager?

A teenager typically cannot invest money on their own; they would have to open a custodial account with a trusted adult. Then, they would have to identify a goal for the funds (such as generating income ASAP or growing their funds slowly for use later in life) and select the right kind of investments.

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 12/23/25. 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.

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

SOBNK-Q325-088

A key part of wrangling your personal finances can be building personal wealth and preparing for the future. There are various ways you can accumulate funds, such as putting your cash in a savings account or investing in the market. If you’re not sure which option is right for you (or are wondering if you should have both), then consider this deep dive into saving vs. investing accounts.

What’s the Difference Between Saving and Investing?

Savings accounts and investments can both help you get your finances on track for your future, but they can be used to meet very different goals. A big difference between savings vs. investing is risk.

When to Save

Think of savings as a nice safe place to park your cash and earn some interest.

You probably want lower risk on money you’ll need sooner, say for a fabulous vacation in two years. A savings account will fit the bill nicely for that goal because you want to be able to get to the money quickly, and savings accounts are highly liquid (they can be tapped on short notice).

When to Invest

With investing, you take on risk when you buy securities, but there’s also the potential for a return on investment.

For goals that are 10, 20, or even 40 years away, it might make sense to invest to meet those goals. Investments can make money in various ways, but when you invest, you are essentially buying assets on the open market; however, some investment vehicles are riskier than others.

Ways to Get Started Saving and Investing

So, what are some smart ways to start your savings and investment plan?

•   First, if you’re not already saving, start today. Time works against savers and investors, so write out some of your goals and attach reasonable time frames to them. Saving for a really great vacation may take a year or two. Saving for the down payment of a house may take years, depending on your circumstances.

•   One of the first goals to consider is an emergency fund. This money would ideally bail you out of an emergency, like having to pay a hefty medical bill or buying a last-minute plane ticket to see a sick loved one. Or paying your bills if you lost your job. You should save the equivalent of three to six months’ worth of expenses and debt payments available. You can use an online emergency fund calculator to help you do the math.

•   When it comes to saving vs investing, investing shines in reaching long-term goals. Many Americans invest to provide for themselves in retirement, for example. They use a company-sponsored 401(k) or self-directed IRA to build a portfolio over several decades.

•   Many retirement plans invest in mutual funds. Mutual funds are bundles of individual stocks or other securities, professionally managed. Because they have multiple stocks within, the account achieves diversification, which can help reduce some (but not all) investment risk.

💡 Quick Tip: Banish bank fees. Open a new bank account with SoFi and you’ll pay no overdraft, minimum balance, or any monthly fees.

Do Investments Count as Savings?

While there are similarities between saving and investing, there are also very important distinctions.

•   When you save, you are putting your money in a secure place. A bank account that offers Federal Deposit Insurance Corporation, or FDIC, or NCUA (National Credit Union Administration) insurance is a great example of this. You will be insured for up to $250,000 per account holder, per account ownership category, per insured institution in the very rare instance of a bank failure. And in many cases, you will be earning some interest.

•   With investments, you have the opportunity to grow your money significantly over time. For almost 100 years, the average return on the stock market has averaged 10%. However, it could be higher or it could be lower. And your funds are not insured, so you might wind up withdrawing funds at a moment where the economy is in a downturn and you experience a loss.

Because of this element of uncertainty, it’s wise to understand the distinction between saving and investing.

What Are the Different Bank Accounts I Should Own?

While some first-time savers think it’s either/or, savings account vs. investing, both have their role. Savings accounts can help you get to a spot in life where you can begin investing consistently.

There are two rules of thumb when it comes to savings and checking accounts.

•   On the one hand, you should own as few as you need. That reduces the strain of keeping up with multiple accounts and all those login passwords (and possibly fees).

•   On the other hand, don’t neglect the benefits of having an additional savings account that you set aside for a certain purpose, like a house down payment.

You might even want to have additional different kinds of savings accounts. One could be for your emergency fund, kept at the same bank as your checking account. Another might be a high-interest one for that big vacation you’re planning. And the third might come with a cash bonus when you open it and be used to salt away money for that down payment on a home.

Having Multiple Bank Accounts

It can be a good idea to have at least one savings and one checking account. If you’re married, consider owning a joint checking account for paying family bills like the rent, mortgage, groceries, and other monthly expenses. You may also want separate accounts for you and your spouse to allow for some privacy. Decide what is the right path for your family.

There are many good reasons to open a checking account. It can be the hub for your personal finances. Money rushes in from your paycheck, and then it is sent off to pay some bills. Savings accounts are more like long-term car storage, letting you stow away money for longer periods.

Both can be interest-bearing accounts, but don’t simply look for the highest rates. Shop around for low or no fees, too. You may find the right combination of these factors at online banks, which don’t have the overhead of brick-and-mortar branches and can pass the savings along to you.

Any income for regular expenses can be placed in a checking account. If you have a business or do freelance work, maybe create a completely different checking account for it.

A savings account can be a secure, liquid spot to stash an emergency fund. You might look for a high-yield savings account to earn a higher rate of interest. These are typically found at online banks and may charge lower or no fees.

A money-market account could also be good for an emergency fund since it’s an interest-bearing account. Unlike savings accounts, however, money-market accounts often have minimum deposit requirements. Keep an eye out for the lowest limits that suit your situation. The nice thing about money-market accounts is that they also offer such features as a debit card and checks. And typically, money market accounts are insured by the FDIC for up to $250,000.

What Is an Investment Portfolio?

The difference between saving and investing can be summed up with two words: safety and risk. A collection of bank accounts suggests liquidity. It’s where you keep cash so you can get hold of it in a hurry. A collection of investment assets doesn’t have as much liquidity, because you may not want to pull your money out at a particular moment, which could be due to the funds thriving or falling, depending on your scenario. It’s riskier, but also has the potential for long-term gains.

An investment portfolio can hold all manner of investments, including bonds, stocks, mutual funds, real estate, and even hard assets like gold bars. A mix can be a good way to diversify investments and help mitigate some market risk.

When you start building your savings and investment, it’s a good idea to learn all you can and start slow. Figure how much risk you can live with. That will dictate the kind of portfolio you own.

What Is a Savings Portfolio?

A savings portfolio can mean a couple of different things:

•   A savings portfolio can refer to the different ways you hold money for the future, possibly a combination of savings accounts and/or investments.

•   There are also savings portfolios which are investment vehicles for saving for college.

How Should I Start a Savings and Investment Plan?

A good way to start your savings and investment strategy could be to look into an investment account. These accounts offer services such as financial advice, retirement planning, and some combination of savings and investment vehicles, usually for one set fee, which may be discounted or waived in some situations.

In addition, you’ll likely want to make sure you have money in savings. A bank account can be a secure place for your funds, thanks to their being insured. Plus, they are liquid, meaning easily accessed, and may well earn you some interest as well.

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.

FAQ

Is it better to have a savings account or invest?

Whether a savings or investing account is better depends on your specific needs and situation. You may want both. Investing can hold the promise of high returns, but it involves risk. A savings account can grow your money steadily and securely.

How much can investing $1,000 a month give me?

The amount you make from investing $1,000 a month will vary tremendously depending on your rate of return and fees involved. It’s wise to consider the risk involved in investing, historic returns, and how much of any growth will go to paying fees.

What is the 50/30/20 rule?

The 50/30/20 budget rule is a popular way of allocating your take-home pay. It says that 50% of your fund should go to necessities, 30% to discretionary (or “fun”) spending, and 20% to savings or additional debt payments.

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 12/23/25. 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.

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-Q325-092

You may have heard the term “slush fund” used to refer to a business setting aside money for miscellaneous and sometimes shadowy expenses.

However, a personal slush fund can be something quite purposeful and useful. It can serve as a pool of money that you can use for discretionary expenses. It can be an asset to your budget and might keep you from being tempted to dip into your emergency fund when you really shouldn’t.

Including Slush Money in the Budget

A slush fund typically describes money set aside for miscellaneous purposes, often fun, discretionary expenses.

The word “slush” was created in the 17th century to describe half-melted snow. By the following century, “slush” was also used to describe the fat from meat that was boiled on a ship for sailors to eat. When any leftover fat was sold at ports, the proceeds became the crew’s “slush fund.” When a military publication suggested that the money be used to buy books of the men’s choice, the phrase began to take on one of today’s meanings: as extra cash to spend on wants, rather than needs.

In modern business accounting, a slush fund is an account on a general ledger that doesn’t have a designated purpose and so is treated as a reserve of funds.

In its most negative meaning in the business world, a slush fund is kept off a company’s books for nefarious purposes. In the political arena, the term can be used to describe money, perhaps raised secretly, to be used for illegal activities.

When talking about personal finances, however, a slush fund is usually considered fun money: an account with some easily accessible cash you can use versus using your credit card or dipping into other funds. It can be part of your checking account or a separate account.

Budgeting With Slush Money

So do you need a slush fund? It may make sense to have one. First, it can help people to not overspend on wants. If someone uses (or has at least heard of) the 50/30/20 rule of budgeting, the slush money can be what goes into the 30% category.

Here’s how this budget technique works (you can use a 50/30/20 calculator to help you implement it):

•   50% to needs: This comprises rent or mortgage payments, car payments, groceries, insurance, student loan payments, minimum credit card payments, and so forth.

•   30% to wants: From eating out to buying a piece of jewelry or tickets to a game or concert, this is the discretionary spending category.

•   20% to savings: From emergency savings account to retirement account contributions, this money is for future spending, including but also going beyond rainy-day needs.

Here’s another reason why some people may want a slush fund: They are part of a couple and have a joint account for bill-paying and other practical purposes. Each partner may also want to have a slush account of their own, though. Those individual accounts can be used for your own personal spending (yoga classes, iced lattes, clothing, etc.) without your partner being privy to your purchases.

Tip: If you do have multiple bank accounts, it can be wise to consider online banks, where you’re likely to earn a favorable interest rate and pay low or no fees.

Pros and Cons of Slush Funds

Slush funds have their pros and cons. First, consider the upsides:

•   Easily accessible

•   Allows for discretionary spending

•   Helps you avoid using high-interest credit cards

•   May help reduce money stress.

As for downsides, consider:

•   Could encourage you to overspend

•   Could incur banking fees on an additional account

•   Funds might be better used to pay down debt or to save

•   Money might grow more or faster if saved or invested.

Here is this information in chart form:

Slush Funds vs. Emergency Funds

You may wonder how a slush fund and emergency funds differ, as both are pools of money kept in reserve.

Consider this typical distinction:

•   A slush fund is usually a smaller amount of excess cash, perhaps similar to a cash cushion, that’s kept for discretionary spending, such as concert tickets, a last-minute weekend getaway, or other purchases.

•   An emergency fund is typically an account with three to six months’ worth of basic living expenses. It’s meant to be tapped when a true emergency crops up, such as paying bills during a period of job loss or covering an unexpected medical, dental, or car repair bill. You can use an online emergency fund calculator to help guide how much you stash away.

Prioritizing What Matters

The way people organize how their money is spent is at the heart of budgeting (whether using the 50/30/20 or other budgeting method).

When their savings and spending are understood and tracked, people can adjust their budgets for even more effective prioritization.

How to set money goals? A review of your budget might indicate, for instance, that paying down high-interest credit card debt (and then paying it off) can free up money for more enjoyable pursuits.

Some people may focus on paying off student loan debt more quickly, again to free up cash in the monthly budget, while still others may prioritize building up their emergency savings account.

Each situation is unique. This trifecta might be a good place to start: a budget that meets your needs, helps you reach financial goals, and includes some room for discretionary spending.

Reaching Savings Goals

If you want to create a slush fund just for fun, good for you. Enjoying hard-earned money may be a nice counterbalance to responsible bill-paying. To help you manage your money better and reach your goals, here is a six-step process to consider:

1.    Identify goals: In this case, the goal is to set aside slush money, but priorities come into play. If, for example, an emergency fund is at the ready and retirement contributions are regularly being made, it may be time to focus on the slush fund. If one or both still need some attention, the slush fund may be third on the list for savings. Again, each situation is unique.

2.    Select a monthly deposit amount for the account: Perhaps there’s a specific goal (like creating a travel fund) or an amount can comfortably be budgeted. For a specific goal, such as a trip, it can help to figure out the time frame available to save and then divide the cost of a trip by the number of months available to save for it. That’s the monthly deposit amount required to reach the goal. For the second, saving as much as is reasonable to enjoy in the future can be key.

3.    Write down goals: Writing down what you want to achieve can boost the chances of reaching those goals. These jottings can be an ongoing reminder of what you want to achieve, keeping it front of mind. And because slush money is used for pleasurable purposes, it can be fun to write about plans.

4.    Monitor progress: By tracking daily spending habits and long-term savings habits, the process can be further refined. Some people like to use an Excel spreadsheet or Google Docs. Others use an app to track spending and set monthly budget targets. At the risk of sounding like a broken record (do people use that phrase anymore?), do what works best.

5.    Celebrate successes: For longer-term goals, savings fatigue can set it. To combat that, celebrate even the smallest of successes. Able to save $50 more this week than expected? Buy yourself a little treat (a quick massage or perhaps a bubble tea) to reward yourself for a job well done.

6.    Automate the process: Make the savings process easier by automating your finances. A certain dollar amount out of each paycheck can automatically be deposited into the savings account, or an automatic transfer can be set up from a checking account.

Recommended: How to Save Money From Your Salary

4 Tips to Help You Manage Your Slush Fund(s)

Here are a few ideas for accruing a slush fund:

1.    Be consistent. If you make a plan to save $10 or $25 or more per paycheck for a slush fund, keep up with it.

2.    Stash extra cash. If a financial windfall comes your way — a bonus, a tax refund — you may want to see how much can be earmarked as slush money.

3.    Bring in more money. Consider the benefits of a side hustle. Think of what hobbies can be turned into income earners and consider putting those extra dollars into the fund.

4.    Earn interest. Think about the best place to keep your slush account. You might choose to keep it in your usual checking account, a separate checking account, or a savings account. Shop around for the best interest rate so your money can earn money. Online banks vs. traditional banks tend to offer higher rates.

The Takeaway

A slush fund is money typically set aside for discretionary spending, meaning paying for things that are not necessities but are the fun wants in life, such as new clothes, a gym membership, or a long weekend away. This money can be kept where it’s liquid, earning some interest, and fee-free for maximum benefit.

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.

FAQ

What is a slush fund used for?

Typically, a slush fund is used for discretionary spending on fun purchases. It is used for the wants, not the needs, in life.

How much should you have in a slush fund?

There is not a set amount you should have in a slush fund, unlike the case with an emergency fund. Rather, you should have enough to cover unplanned purchases or expenses, such as joining a yoga studio, buying a new suitcase, or going away for the weekend, instead of charging those costs.

What are the differences between a slush fund and a petty cash fund?

In the business world, a petty cash fund is kept for incidentals, such as catering a breakfast for a client, running out to get an office supply you ran out of, and the like. A slush fund is for other miscellaneous expenses that can crop up. Perhaps you’re an entrepreneur and have to hop on a plane to pitch a new client: The price of the ticket might come out of your slush fund.

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 12/23/25. 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.

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-Q325-093