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If you feel that, despite your best intentions, your hard-earned money gets frittered away, you may need to curb your spending.

Sure, shopping and dining out are part of life, but the convenience of tapping and swiping can make it easy to overdo it. And all the tempting things you see on social media can lead to less than mindful buying, not to mention credit card debt. In fact, the average American currently has $6,730 in high-interest credit card debt, according to Experian®’s latest research, and some of that could be due to overspending.

Read on to learn more about what can cause you to overspend, plus tactics that can help you better control your spending.

12 Ways to Stop Overspending

If you find yourself being a bit too freewheeling with your spending, try some tactics to help you cut back.

1. Mapping Out a Budget

Without a budget, you can spend money mindlessly, without thinking much about it. To create a budget and learn how to be better with money, check your income and track your current spending patterns from bank and credit card statements. You can also use a free tool to track your spending, which makes the process even easier. You can start by seeing what your financial institution offers.

Identify essential expenses vs. non-essential ones. Necessary spending includes such items as housing, groceries, utilities, health care costs, and transportation. Non-essential costs are things like eating out, leisure travel, and entertainment — and they can add up to a lot of money over a month.

Once you see how much you spend in each expense category, it may be easier to reduce spending. Experiment with different budget methods to find the right fit.

Recommended: 50/30/20 Budget Calculator

2. Calculating Hourly Earnings

A night out may not seem like a huge splurge in the moment — especially when compared to your total earnings for the month. But, that same expense can quickly appear more significant when you tabulate how many hours of work are needed to pay for it.

To try this approach, figure out your hourly pay: Divide your after-tax pay by the number of hours worked. If you get paid twice a month and work a 40-hour week, divide your total earnings by 80 (two weeks times 40 hours). Then use that insight:

•   For instance, a birthday dinner and drinks with friends that costs $200 would translate to four hours of work if you earn $50 per hour.

Whether that spend feels worth it is a personal decision, but this process can nudge you to consider carefully to make sure the expense feels worth it.

3. Understanding What Triggers Spending

Whether it’s the gourmet food section at the grocery store, the Instagram influencer with the covetable closet of clothes, or that friend who drops big bucks on concert tickets, for all of us, the urge to spend can be triggered by emotions and outside influences.

Even the physical shopping environment — in-store displays, prominent markdown messaging, and subtler cues like store layout — can trigger people to overspend. When figuring out how to stop spending money, it can be key to understand which emotional or psychological cues make you take out your wallet and short-circuit their impact on you.

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

4. Shopping with a Plan

Of course you can’t always avoid spending triggers. We all have to shop sometimes. But here’s how to stop overspending: Create a shopping list, and stick to it. That’s one way to spend wisely.

For example, going grocery shopping may be easiest to do right after work. But that time of day may also coincide with when you’re ravenous. Hungry shoppers, research shows, tend to buy more non-essential items.

5. Finding It Cheaper

There are times when you’ll choose to spend money on specific purchases. Comparison shopping may help you cut back on expenses since you may be able to find the item cheaper elsewhere. Try these tips, too:

•   Try couponing and discount codes. There are many sites that can help, such as Coupons.com and Retailmenot.com.

•   Join a warehouse or wholesale club. These stores can be cheaper than your local supermarket. Are the quantities too big for your household? Share them with friends and split the cost.

•   Shop where you get rewards that lower your costs. Loyalty can pay off.

6. The 30 Day Rule

Want another way to avoid overspending? Before you purchase something, take some time to think it over, rather than giving in to impulse buying.

Studies show that activities that provide instant gratification, such as impulse shopping, activate feel-good chemicals in the brain, according to the Cleveland Clinic. But that purchase could come at the expense of your financial standing. How to avoid that:

•   If you see an item of significant expense that triggers a “gotta have it” feeling, put a note in your calendar for 30 days later. Write down the item, the price, and where you saw it.

•   When that date rolls around, if you still feel you must have the object of your affection, you can decide to get it. But there’s a very good chance that your sense of urgency will have passed. That can be a way to stop spending money.

7. A No-Spend Challenge

You can gamify your spending to help you save. Try a no-spend challenge; you may want to have a friend or family member join you to make it more fun and help you stay accountable.

In a no-spend challenge, you typically pick a period of time during which you will only buy essentials. One popular option is a No-Spend September. Or you might declare that you won’t buy any fancy coffees for a week and put the money saved toward debt. Then, the next month, you could not buy any personal care items that are luxuries rather than necessities.

Recommended: 15 Creative Ways to Save Money

8. Using Cash Instead of Credit

When you swipe or tap a credit card, it can feel almost as if you aren’t spending money at all. But of course you are, and what you spend will accrue high interest if you don’t pay it off promptly and in full.

However, if you instead commit to using cash or a debit card to pay for purchases as often as possible, you can only really spend what you have. This can help you be more in touch with your money and avoid splashing out on random unplanned purchases, whether that’s a daily fancy iced coffee or a new wristwatch you stumble upon at the mall. (Of course, sometimes life happens, you make an error, and spend more than you have. That’s where overdraft protection can come in handy.)

9. Setting Up Automatic Savings Transfers

Many people overspend because they see money in their checking account, feel flush, and go shopping. But then, when it’s time to fund your savings (whether for summer vacation or the down payment on the house), you don’t have enough cash.

That’s why the habit of paying yourself first is a good one, and automating savings by setting up recurring transfers from your checking account to savings can be valuable. It can be wise to have an amount (20% of your paycheck is recommended by many financial experts, but even $25 is a start) whisked out right after your paycheck hits.

This can help you save regularly and fund your financial goals; you can even set up separate savings vaults for different goals.

10. Focus on Value vs Price

Here’s a smart way to think about your spending: Price is what you pay, and value is what you get. So if you spend $300 on a pair of shoes but you don’t wear them often or they fall apart quickly, you haven’t gotten good value for the price.

This is not to say that higher-priced items are never worth the cost. If you pay $300 for a pair of shoes that are top quality, last for years, and can be worn often, you’ve gotten great value. By thinking of value instead of price, you can avoid overspending, whether that means paying too much for an item that isn’t worth it or else buying a bargain-priced product that doesn’t deliver.

11. Reduce Dining Out

Dining out can be a fun way to socialize and enjoy food you couldn’t (or wouldn’t) make at home. But the cost can really add up and empty out your checking account. The average monthly spend dining at restaurants in 2024 was $191 vs. $166 in 2023, according to data from US Foods.

To save some cash, consider meeting friends for, say, a walk in the park or a free day at a local museum instead of a pricey brunch out. Or you might create a recipe club with friends in which you try cooking new dishes together. To save money when dining out, try tricks like skipping high-priced cocktails or splitting a few appetizers instead of ordering main courses.

12. Cancel Unnecessary Subscriptions

Comb through your credit card charges carefully, and you may discover that you are paying every month for subscriptions that you’ve forgotten about or aren’t getting good value from. That language app you signed up for before last year’s trip to Spain may still be charging you even though you haven’t opened it in months. You could live without it and keep that money. Or you might save on streaming services because you realize you actually aren’t watching one or two and can cancel them.

Recommended: How to Make Money Fast

5 Factors That Contribute to Your Spending Problem

As you work to stop overspending money, you may want to consider and avoid some of the things that can trigger you to dole out too much cash.

1. Social Media

As you scroll on Instagram, TikTok, and other platforms, you are likely to be exposed to dozens of influencers and offers that can encourage you to buy things you never previously knew about or wanted. Recognize that social media can encourage you to buy items (from kitchen gadgets to gummy candy) that you would never otherwise buy just because you’re a captive audience for clever marketing.

One way to fight back? It may be helpful not to link your credit card to your social media accounts to minimize the possibility of overspending.

2. Emails and Text Messages

Here’s another way your digital life can contribute to overspending: If you get emails or text messages heralding new products, sales, and other offers, it can trigger you to buy.

For example, if your favorite home design retailer sends you a message saying their most popular throw pillows are almost sold out, that may get you to buy. Unsubscribing from these marketing messages can be a budget-wise move.

3. Retail Therapy

Many of us shop as a pick-me-up. If you’re having a bad day at work, had a fight with your significant other, or are stressed about almost anything, hitting some stores can be a welcome distraction. However, this can also lead you to buy things that you neither need nor craved before you set foot inside the shop.

Recognizing what triggers retail therapy can help you break a bad spending habit. Or you can try the tactic of leaving your credit cards at home when you go browsing at boutiques.

4. FOMO

FOMO stands for “fear of missing out,” and it can drive a lot of impulse purchases. If your friend says you must try a pricey new restaurant in your neighborhood or your coworker suggests a life-changing hairstylist, you might feel as if, yes, you must spend money on these things. It can make you feel as if you are part of the in-crowd or “keeping up with the Joneses.”

Understanding this FOMO spending dynamic can be a major step toward stopping this kind of overspending.

5. Lifestyle Creep

Lifestyle creep occurs when, as you earn more, you spend more. Many people think that getting, say, a 10% raise is license to go spend 10% more. However, this can just keep your finances at a baseline level rather than helping you build wealth and reach longer-term goals.

As your income climbs, it can be wiser to raise your debt payments or put more in a high-yield online savings account rather than heading to the mall to celebrate.

The Takeaway

While it’s not possible to stop spending money altogether, adopting a few smart habits — such as budgeting, understanding your spending triggers, and shopping with a list — could help you take control of your money and spend less.

The right banking partner can help with budgeting, tracking your spending, and putting your money to work for you.

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 it called when you can’t stop spending money?

There are various terms used to describe the issue of spending too much, such as compulsive shopping, impulsive shopping, shopping addiction, and pathological buying.

Is overspending a mental disorder?

Sometimes called money dysmorphia or money disorder, overspending may be considered a psychological disorder. It involves a person being preoccupied with money, spending it, and financial status. It can trigger feelings of anxiety and inadequacy. In addition, compulsive shopping can be considered a form of obsessive-compulsive or impulse-control disorder. Working with a qualified therapist can be helpful in managing the psychological reasons for overspending.

How much is too much spending?

There is no set amount that equals too much spending. Rather, it occurs when spending negatively impacts your financial and personal life. If you can’t stick to a budget, are burdened by debt, or find that your preoccupation with shopping interferes with your work or relationships, then your spending could be excessive.

How do I stop the cycle of overspending?

You can stop the cycle of overspending in a variety of ways, including creating and sticking to a budget, planning your purchases (whether a big-ticket item or just weekly groceries), using cash, and going on a spending freeze.

What is the root cause of overspending?

Overspending has various causes. It could be due to boredom, lifestyle creep, FOMO (fear of missing out), and wanting to reward oneself or boost one’s mood, among other reasons.

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.
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SOBNK-Q225-109

Financial discipline means making wise, consistent decisions about how to manage your money and achieve your goals. It may come naturally to some people, but many others need to learn and then practice it. Doing so can help you better understand and track your earnings, spending, and savings and make your money work harder for you. Financial discipline can help you on the path to buying a home, saving for your child’s education, or retiring early. And it can pay off by minimizing your money stress and enhancing your confidence.

This guide shares 10 essential ways to achieve financial discipline and enjoy its rewards.

What Does Financial Discipline Mean?

Financial discipline is the act of making smart decisions about your money so that you can achieve your financial goals and a sense of well-being. This can involve setting specific monetary (spending and saving) goals and tracking your progress.

Some aspects of financial discipline include:

•   Budgeting

•   Managing debt responsibly

•   Saving and investing

•   Setting and achieving financial goals

10 Steps For Achieving Financial Discipline

There are many paths to financial discipline, but these 10 steps can help you take control of your money and your financial destiny.

1. Getting Clear About Financial Goals

A vital step toward getting disciplined about money is setting financial goals. Writing down specific short-term, mid-term, and long-term financial goals can help illuminate a plan for how to proceed.

Here are some common examples of financial goals. They range from short-term money goals to longer-term ones:

Short-term Financial Goals

These are typically goals that you hope to achieve within a year or less.

•   Paying off credit cards and charge cards

•   Saving money for summer vacation

•   Setting and sticking to a spending limit for the month

•   Establishing an emergency fund

•   Saving a certain amount each month

Mid-term Financial Goals

Mid-term goals tend to have a longer horizon. Perhaps you work to achieve them in one to five years.

•   Paying off student loan debt

•   Setting aside funds for a wedding

•   Putting away money to buy a big-ticket item like a car

•   Saving up for an important home renovation

Long-term Financial Goals

These are aspirations that will likely take longer than five years to accomplish.

•   Saving for your child’s future college tuition

•   Putting away money for a down payment on a house

•   Investing in stocks and bonds for future returns

•   Setting aside money for retirement

2. Creating a Convenient Budget

Building a monthly budget isn’t necessarily at the top of everyone’s bucket list, but analyzing and tracking your expenses, spending habits, and savings can make it easier to get a handle on overall finances. Whether you use a cool journal, an online spreadsheet, or an app, there are many ways to manage a budget.

It can be worthwhile to try different types of budgets until you find one that is a good fit. Many people like the 50/30/20 budget rule, which says to dedicate 50% of your take-home pay to necessities, 30% to wants, and 20% to savings and/or additional debt payments above required minimums. Creating a budget can be a key aspect of becoming financially disciplined.

Recommended: 50/30/20 Budget Calculator

3. Paying Down Existing Debt

Debt comes in many forms — from student loan debt to car loans, medical bills to mortgages, and of course credit card debt. By getting rid of debt, you can save on interest and might positively impact your credit score by lowering your credit utilization ratio.

Paying down debt can be a critical facet of financial discipline, making it easier to save money, invest, and plan for a brighter financial future. Adding the debt paydown amount to your budget ensures it’s covered each month.

4. Opening a High-Yield Savings Account

There’s no specific answer to how much money you should have in savings. However, it is important to get started and contribute regularly. Even if it’s as little as $20 a month, setting something aside for savings ensures that funds will start to add up. By opening up a savings account and setting up a recurring deposit, you’ll be putting a pivotal piece of financial discipline on autopilot.

Of the different types of savings accounts, the specific kind you choose can make a big difference. According to the FDIC, the national average interest rate on savings accounts was 0.42% APY as of December 16, 2024.

By choosing a high-yield savings account (typically found at online banks), however, interest rates can reach 3.00% APY. This can help you build your financial position.

5. Establishing an Emergency Fund

Approximately 42% of Americans have no emergency savings, according to recent surveys. That means these individuals would likely have to take on credit card debt, secure a personal loan, or ask family or friends for financial help if they, say, lost their job or had unexpected bills to pay.

Establishing an emergency fund is an important step in gaining financial discipline. Most money experts advise socking away enough over time to cover three to six months’ worth of living expenses.

6. Cutting Back on Spending

Despite the best of intentions, overspending happens. Whether it’s a pileup of holiday gift purchases or too much shopping on social media, spending more than what you earn is bound to occur from time to time. Making sure it’s not a regular occurrence is a sign of good financial discipline.

Cutting down on spending can be guided by a good budget. Habits like shopping with a list to avoid impulse purchases, hunting for bargains, and using promo codes can help you make sure that you don’t overdo it with your credit and debit cards.

7. Seeking Sound Investment Strategies

Familiarizing yourself with a wide variety of investment accounts and strategies can help educate you and enhance your financial discipline. By weighing the risks and benefits of certain account types, penalties, fees, and the ability to access funds, you can select the right investment strategy. This in turn may help you achieve some of your longer-term money goals.

8. Automating Savings and Payments

A solid tool for achieving financial discipline can be to tap tech and automate your savings and payments. If you set up recurring transfers from your checking account to your savings right around payday, you can seamlessly build your savings instead of spending that cash.

By automating payments (say, to your utility companies or car loan lender), you help ensure that your bills get paid on time. This helps you avoid late fees and maintain your credit score.

9. Tracking Expenses Regularly

Tracking your expenses is something typically done when setting up a budget, but to achieve financial discipline, it’s important to check in regularly with your money. For example, inflation can take a toll on your expenses. Insurance premiums, rent, heating costs, and other regular payments can creep up and threaten your financial stability.

It’s wise to take a closer look if not monthly, then every few months. There are tools that can help you with this, too. See what your financial institution offers. They may offer a good money tracker to make this task extra easy. If not, third-party products are available.

10. Be Flexible and Patient

Last but not least is the fact that cultivating financial discipline is a process. Sometimes it will be harder than others. Perhaps you have a period in which you’re out of work and your credit card balance creeps up. Or maybe you have a baby or buy a home and are having trouble contributing to your retirement account. These curves along the road to financial discipline are part of life. Roll with them and adjust your plans, seeking help from a qualified financial planner if you like.

Don’t feel that just because you’re not where you want to be means all is lost. Financial discipline is a long haul, so go easy on yourself and keep pushing ahead, one step at a time.

Focusing on Financial Planning

The term “financial planning” might feel more like a unicorn you only get to meet when you’re floating high on a cloud of financial independence, but it’s actually another sound step along the way. These days, financial planning isn’t designated for the already wealthy, it’s becoming accessible and essential for people at every stage of life. In fact, in the age of digital transformation, financial planning can even be automated. This can be another way to optimize the long-term view of your money and your goals.

The Takeaway

Financial discipline revolves around setting specific financial goals and adopting habits that help you achieve them. By practicing financial discipline, you can create a budget, build up savings and an emergency fund, hit your money goals, and make progress toward a more stable financial future.

Finding the right financial institution to suit your needs can be another important step. Doing so can help you manage your money more easily, minimize fees, and earn interest on the money you stash away.

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 long does it take to develop financial discipline?

Financial discipline is at its best when it’s a lifelong habit that provides money guidance and guardrails. That said, the habits that create financial discipline can be adopted in minutes. Establishing recurring transfers from your checking account into an emergency fund, for instance, is a “set it and forget” move that can be quickly accomplished.

What are the most common financial mistakes people make?

Common financial mistakes include not budgeting, not automating finances, and not prioritizing saving. Other issues can be overspending, relying too heavily on credit cards, and not setting short- through long-term goals.

How does financial discipline impact long-term wealth building?

Financial discipline can help you build long-term wealth. It’s a path to funding your financial aspirations, such as automating deposits into a savings account that’s earmarked for the down payment on a house. Also, by adopting and following a budget, you can keep your spending and saving in line with your earnings throughout your life.

What are some tools that can help with budgeting and saving?

There are many tools available to help with budgeting and saving. A good place to start can be with your financial institution. They likely have tools for automating transfers from checking into savings, tracking your spending, and budgeting wisely. If what they offer isn’t what you’re looking for, there are an array of third-party apps, both free and paid, that can help you.

Is it ever too late to start practicing financial discipline?

It’s never too late to start practicing financial discipline. Whether you’re just starting your independent financial life or are much further along, there’s likely a way to make managing your money more effective and easier. That could mean building a better budget, paying down debt, earmarking more funds for retirement, or figuring out the best way to start saving for your child’s education.

Photo credit: iStock/shih-wei

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.
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.

SOBNK-Q225-110

While both business and personal checking accounts allow you to safely store money and utilize those funds to pay bills and expenses, a business checking account can be a good idea for most folks who work for themselves or for other enterprises. In fact, depending on the structure of your business, you may be legally obligated to open a business bank account vs. a personal checking account, which is geared for an individual’s daily financial needs.

What Is a Business Checking Account?

A business checking account is a checking account specifically designed for business owners. As such, they often include business-specific features, such as payroll or bookkeeping integrations, the ability to assign debit cards to employees, or simplified credit card payment processing.

In many other ways, however, a business checking account is similar to the personal checking account you likely already have. It’s a safe place to stash cash and use it for regular, day-to-day expenses by way of writing checks, using a debit card, or initiating transfers. For example, it can allow you to:

•  Pay suppliers

•  Deposit payments from customers

•  Pay employees

But it’s only to be used for business-related expenses.

How Does a Business Checking Account Work?

When thinking about a business checking account vs. a personal checking account, you’ll find many similarities. You open the account, fund it with some money, and, hopefully, go on to deposit more cash as profits from your business roll in.

You’ll likely have access to the account via a debit card and/or a checkbook, and will likely also be able to log into the account and manage it online. (Both brick-and-mortar and online banks may offer business bank accounts these days, and most feature some kind of virtual account management option.) Business banking products often bundle both a checking and savings account, so you can start creating a cushion for a rainy day.

However, as mentioned above, a business bank account may come with some additional, business-specific features. It may also come with higher fees and minimum account balance requirements than a personal checking account, not to mention requiring documentation to prove you do, in fact, have a business.

Recommended: Guide to Business Checks vs Personal Checks

What Is a Personal Checking Account?

A personal checking account is a checking account used for personal expenses. Just like a business checking account, it’s a place where you can stash your cash with relatively few worries and use it to pay bills and expenses using a debit card, checkbook, or transfer services. Many banks also make it easy to bundle a personal checking account with a personal savings account, which is a great place to stash your emergency fund.

Unlike business checking accounts, though, a personal account won’t include business features. On the bright side, though, it’s very possible to find free personal checking accounts, which can help you save cash on those pesky monthly maintenance fees.

What Are Personal Checking Accounts Used For?

Personal checking accounts are commonly used for:

•  Storing money earned through employment or other income streams

•  Paying bills using transfer services or paper checks

•  Making transfers to friends, family, and businesses

•  Making point-of-sale purchases using a debit card

As their name suggests, personal checking accounts are designed to help you manage personal expenses and attend to your everyday money needs. Typically, a personal checking account is the hub of someone’s daily financial life. (It’s often paired with a savings account, which can allow you to earn interest and grow your money.)

Recommended: Guide to Budgeting Living Expenses

What’s the Difference Between Business and Personal Checking?

Here’s a recap of the differences between business and personal checking accounts:

Are Business Checking Accounts FDIC-Insured?

Business checking accounts should be insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). The FDIC is a government agency that protects deposit accounts, such as checking accounts, and reimburses lost funds up to the $250,000 standard insurance amount in the event your bank fails. (Some banks participate in programs that extend the FDIC insurance to cover millions.) The NCUA is a similar agency, but specifically geared toward credit unions.

The FDIC and NCUA insure business and personal accounts alike, but it’s always important to double-check and make sure the bank or financial institution you’re hoping to open an account with explicitly states that deposits are insured.

When Does Someone Need a Business Checking Account?

If you’re a small business owner — or even a freelancer — a business checking account might be a good idea, even if it’s not technically required. Keeping your business and personal expenses separate can help make accounting easier, simplify your tax reporting process, and help make your business look more legitimate to the IRS.

In addition, if you’re incorporating (i.e., operating as LLC, S corp, or other type of business entity), separating your business expenses from your personal expenses can help protect your assets in the event you get sued. Even if it’s not legally required, many accountants and law professionals recommend their clients open a business bank account for this reason.

A business bank account can help you:

•  Separate your business and personal expenses, which can both protect your assets and make bookkeeping easier

•  Help make your tax reporting easier, as all of your deductible expenses will be in one place

•  Make it easier to see your business’s cash flow and make adjustments to your business model as needed, or value the business for other purposes

•  Make your business look more legitimate to both the IRS and potential customers, vendors, and other parties you interact with professionally

Establishing a relationship with a bank could also allow you to more easily take out a small business loan or business line of credit in the future.

Can I Use the Same Bank for Personal and Business Banking?

In most cases, you are prohibited from using personal bank accounts for business purposes. This is typically noted in the account agreement. If it’s not prohibited, it’s still risky to mix account uses this way.

Case in point, the IRS explicitly recommends keeping separate business and personal bank accounts for record-keeping purposes. It’s easy to let it go by the wayside if you’re just starting up as a small business owner or entrepreneur, but consider whatever expenses the account incurs as part of your business start-up costs. It’s worth it in the long run.

Choosing the Right Business Checking Account

When you are shopping for a small business checking account, there are a few features that should be considered to help ensure that you find the right match. These include:

•  Fees. Many business accounts have fees associated with them, and if you are able to get them waivered, the financial requirements (say, the amount you have held in the account) tend to be higher than for personal accounts.

•  Cash deposit limits. Your bank may set a limit in terms of the amount of money you can put in the account per billing cycle. If you hit that amount, you may accrue a cash-handling fee.

•  Transaction limits. Your business checking account may have a limit on the number of transactions they will handle for free per billing cycle. Go over that amount, and you may be charged.

•  Interest. There are business accounts that offer interest on your balance. Do the math though to see if this should be a deciding factor in your choice of a bank. If fees are higher at the bank offering interest, you might wind up losing money in the long run.

•  Bundled services. Your bank might offer some free features, like a business credit card or merchant services, along with your checking account.

Depending on the nature of your business and how you handle your banking, some of these factors may matter more than others. Find the bank that gives you the most features and perks you are seeking with the lowest fees possible.

Find a Business Checking Account That Fits Your Needs

To find a small business checking account that fits your needs, you’ll want to compare accounts from different institutions to find the one that best aligns with your business’s financial needs and goals.

Consider factors such as monthly fees, transaction limits, and interest rates. Look for accounts that offer robust online banking features, mobile apps, and customer support. Finally, evaluate any additional services that may be important to you, like free wire transfers, business debit cards, or access to small business loans and business lines of credit.

The Takeaway

If you own your own business or earn freelance income, keeping your business expenses separate from your personal expenses can help simplify your life in many ways. A business bank account will help keep these finances differentiated, streamlining accounting and tax preparation, and protect you if you were to ever face business liability.

While SoFi doesn’t currently offer business accounts, see what we offer for personal accounts.

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 documents are required to open a business checking account?

In order to open a business checking account, you’ll need your regular, basic documents — like your government-issued picture ID — as well as business-specific documents such as your EIN and business license. Check with the bank you’re considering directly for full details on which documents are required.

Can I open a business checking account without an LLC?

It depends on the financial institution, but yes, business accounts are available that don’t require the business owner to be incorporated in any way.

Can I use a personal checking account for business?

Account holders are typically prohibited from using a personal checking account for business purposes. Check your account agreement for details. Even if this wasn’t explicitly prohibited, it can cause confusion and issues, especially in terms of paying your taxes. What’s more, there are special business banking features you might get if you opt for a business-specific account, simplifying your life.

Are business checking accounts subject to different fees?

Yes, business checking accounts often have different fees compared to personal accounts. These can include monthly maintenance fees, transaction fees, wire transfer fees, and charges for additional services like business debit cards. It’s important to review the fee structure to find an account that aligns with your business’s financial activities and budget.

Why separate business banking from personal?

Separating business banking from personal accounts helps maintain clear financial records, simplifies tax filing, and protects personal assets from business liabilities. It also enhances professional credibility and makes it easier to manage cash flow, track expenses, and secure business loans or credit.

Photo credit: iStock/mapodile

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.

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.

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.
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/.

¹SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.

^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.

*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.

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-Q225-118

Financial experts typically advise people to save at least 10% to 20% of their salary, but recent GOBankingRates research reveals that 34% of Americans aren’t putting a cent of their paycheck into savings. Almost the same percentage saves less than 10% of their earnings.

Whether you are on track with your savings plans or struggling to get started, this guide can help. You’ll learn more about how much of your paycheck you should stash away and toward which goals, plus tactics for prioritizing savings.

What Percentage of Your Paycheck Should You Save?

When it comes to what percentage of income to save for future expenses, financial advice can vary depending on where you look. Some experts suggest saving as little as 10% of each paycheck, while others might suggest 30% or more.

For some people who are living paycheck to paycheck, the amount may be lower still. It may be wiser to simply come up with a set amount (say, $25 to $50) to deposit into savings in your bank account.

Rules of Thumb

According to the popular 50/30/20 rule of budgeting, 50% of your take-home income should go to essentials (or needs), 30% to nonessentials (or wants), and 20% to saving for future goals (including debt repayment beyond the minimum).

The right amount for you to save from each paycheck will depend on your income, your fixed expenses, as well as your short- and long-term financial goals.

If, for instance, you are a recent grad living at home for a while and your living expenses are very low, you may be able to save a much higher percentage for the time being.

Or, if you have a sizable credit card balance, you might pump money toward paying that off. In this situation, you might minimize or even pause the amount saved while getting that debt eliminated.

Calculating Percentages From Your Paycheck

To figure out how much to save from each paycheck, you’ll need to consider a few factors. The right amount will depend on your income, your fixed expenses, as well as your short- and long-term financial goals.

•   For example, if the cost of living is high in your state or local area, you may need to spend more than half of your take-home pay on living expenses, making it hard to put 20% of each paycheck into savings.

•   On the other hand, if your goal is to buy a home in two years, you may need to put more than 20% percent of your paycheck into savings in order to have your down payment in that timeline. (Keep reading for tips on how to save more.)

•   If you want to retire early, you may need to put more of your income toward retirement every month than the average worker.

Recommended: 50/30/20 budget calculator

4 Important Savings Goals to Work Toward

Having a few specific goals in mind can help you determine how much to save from each paycheck as well as motivate you.

Here are some common savings goals that can help you build financial wellness.

1. Emergency Fund

Yes, it can be hard to save money, but one of the most important priorities is to sock away money (even if just a little) regularly into an emergency fund. In SoFi’s April 2024 Banking Survey of 500 U.S. adults, 77% of respondents with a savings account said they use the account to save for emergencies.

Source: SoFi’s April 2024 Banking Survey

An emergency fund is a bundle of easily accessible cash that could help you handle a financial curveball, such as a job loss, medical emergency, or big ticket car or home repair. Ideally, an emergency fund will contain enough money to cover your living expenses for three to six months, so you don’t wind up with credit card debt.

•   If you are married with an employed spouse and with no children, for example, you may only need to cover three months’ worth of expenses.

•   If you have kids or you’re single, you may want to have an emergency fund that could cover more than six months’ worth of expenses.

Recommended: Emergency Fund Calculator

2. Paying Off High-Interest Debt

Another important thing you could consider doing with your savings is paying off any high-interest debt (or “bad” debt) you may have. Typically, this is credit card debt, which currently has an average rate of well over 20%.

•   One debt payoff strategy is the debt snowball method. You start by paying off the debt with the smallest balance and put all your extra payments toward that until it’s paid off (while continuing to pay the minimum on your other debts).

You then put extra payments toward the debt with the next highest balance, and so on. This can give you a sense of accomplishment which can help motivate you to continue your aggressive repayment.

•   Another approach is the debt avalanche method, putting all your extra payments toward the debt with the highest interest rate, while paying the minimum on the others.

When that debt is paid off, you then focus on the debt with the next-highest interest rate. This strategy can be the most cost-effective method.

3. Saving for Retirement

Another reason why saving money is important: It can secure your future by providing for your retirement. Exactly how much of your paycheck should go to retirement savings will depend on your age and when you want to retire. Some pointers:

•   If your company offers a 401(k) with matching contributions, it can make sense to put aside at least as much of your paycheck as your company will match (since this is essentially free money).

•   If you don’t have access to a 401(k) or want to contribute beyond that fund, you may want to open a Roth or Traditional IRA. Both types of IRAs have different tax benefits.

•   When you invest in a Roth IRA, the money is taxed at the time of contribution but then in retirement, you can withdraw it tax-free. Contributions made to a traditional IRA might not be taxed at the time they are made but are taxed when they are withdrawn in retirement.

When choosing how much of your paycheck to put into retirement savings, you may want to keep in mind that the IRS sets restrictions on how much you can contribute to your retirement funds each year. IRS retirement guidelines are published and updated regularly.

4. Saving for Other Goals

After establishing plans for debt repayment, an emergency fund, and retirement savings, you may also want to consider working toward your other financial goals, like buying a house, saving for your kids’ future education, or affording a great vacation.

When you’re saving for a big purchase, you can start by determining how much money you’ll need and when you want to have the money. You can then break that dollar amount down into the amount you need to save each year and each month.

Strategies for Increasing Your Savings Rate

If you want to ramp up your savings, here are a couple of strategies that can pay off.

Automating Your Savings

Also known as paying yourself first, automating your savings involves setting up recurring payments or transfers into an account where the money won’t be spent and can earn interest. You might have a portion of your direct-deposit paycheck go straight into savings, or you could have a set amount whisked from checking into savings every pay day.

Read on for ideas about which kind of account is best for your savings.

Adjusting Your Budget

If you need to save more, take a closer look at your budget. Checking in with your budget is an important way to stay in control of your money. You may see patterns that you can address to maximize your savings. For example, did your wifi provider raise costs or have your property taxes increased year over year?

Once you size up your situation, you can take the right next steps, such as reducing costs (see below), finding a budget that works better for you, or using tech tools, such as money trackers, to manage your money more effectively.

Recommended: How to Make Money From Home

Reducing Your Costs to Save More

You can help ramp up your savings by cutting your spending. Here are some ideas:

•   Review your monthly bills and see if there’s anything you can cut. You might have signed up for a couple of subscriptions and then forgotten about them, or you might see that your restaurant spending is surging lately.

•   Learn how to save on food. You might try planning your meals weekly, so nothing goes to waste; joining a warehouse or wholesale club to lower your grocery bill; and using coupons and discount codes to downsize your food costs.

•   Bundle up: If you get your auto and home (or renters) insurance from one provider, you may save on your premiums.

•   Fight off FOMO spending (fear of missing out). Just because your friends are upgrading to a luxury car or a social media influencer is frolicking on the French Riviera, that doesn’t mean you have to too.

•   Pause, for a day or a month, before making pricey impulse buys to make sure you really and truly want or need them. Try a 30-day spending rule to eliminate impulse buys. It involves waiting 30 days to make an unplanned purchase; the urge to buy may vanish in that time period.

•   Pay in cash. Plastic, whether a credit or debit card, can make it easy to overspend. If you take out the cash you need for the week ahead and use only that to pay for purchases, you may be able to rein in your purchasing.

•   Use budgeting tools to help stay on track. Twenty-three percent of people in SoFi’s survey use budgeting tools offered by their bank, and 20% have knowingly used AI to manage their budget or finances.

Where to Put Your Savings

Once you’ve committed to saving money, you’ll have some options about where to keep it.

High-Yield Savings Account

A high-yield savings account pays a significantly higher interest rate than a standard account. As of mid-2025, the average savings account earned 0.38% interest while some high-yield savings accounts were paying 4.00% or more.

These accounts are often found at online banks vs. traditional ones. Just be sure to read the fine print and make sure you are aware of and comfortable with any account fees or minimums that might be involved. These accounts allow for easy access to your money when needed.

Certificate of Deposit (CD)

A certificate of deposit (CD) is an account in which you commit to keeping your money at the bank for a specific term and you know what rate you will earn. Typically, there is a penalty for early withdrawal. The terms for CDs can range from a few months to several years, so you can pick what works best for you. Longer terms will often have higher interest rates.

Investment Options for Long-Term Savings

Longer-term savings goals, meaning five or 10 years or longer (such as your retirement savings) can involve investing, since you’ll likely have more time to ride out the ups and downs of the markets.

For college savings, you may want to consider opening a 529 savings plan.

The Takeaway

Many financial experts and budgeting methods recommend putting 20% or more of your salary into savings, but that may not fit your needs. Consider your savings goals, your financial situation, and other factors to find the right figure and the right tactics to help you stash the right amount of cash. Also consider where to keep your savings: A higher rate of interest can help your money grow and work harder for you over time.

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 saving 10% of my paycheck enough?

Most financial experts advise saving between 10% and 30% of your salary, with 20% being a common figure. Based on this, 10% is an adequate amount for some, but if you can ramp that up in the future, so much the better.

Is 20% of your salary enough to save?

According to the 50/30/20 budget rule, saving 20% of your salary is a good goal to have; that’s the 20 in the name of the guideline. This amount can then be divided to address different needs, such as saving for the down payment on a house, for your child’s college education, and for retirement. However, for some people, 20% won’t be enough if, say, you have a large family to support.

How much of a $1,000 paycheck should I save?

Typically, financial experts recommend saving between 10% and 30% of your paycheck, with 20% being a good figure to aim for. For $1,000, that would mean between $100 and $300, with $200 being the 20% figure. However, if you are earning a lower salary and money is tight, it would be understandable if you save less until your salary increases.

How much should you save if you don’t have a regular paycheck?

If you don’t have a regular paycheck, it can be especially important during high-earning periods to save at least 20% of your pay. Also aim for at least six to 12 months’ worth of living expenses in your emergency fund. This can be a good cushion during the off-season (if you have a seasonal business) or you lose a steady gig.

How can I save money if I live paycheck to paycheck?

If you’re living paycheck to paycheck, saving is still important. Review your fixed expenses and see what cuts you can make to free up funds for your emergency savings account and other goals. Put in the time to find a budget that works for you, and stash any money windfalls (such as a tax refund or unexpected gift of cash) into your savings. You might also sell your unwanted but still useful items to raise some cash for your savings.

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.

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/.