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Paying off debt vs. saving money is a tough financial choice. Prioritizing debt repayment can help you repay what you owe faster, freeing up more money in your budget for saving. It can also help you spend less on interest charges.

But paying off debt and delaying saving might backfire. If you don’t have savings and you get hit with an unplanned expense, you could end up with even more high-interest debt.

Whether it makes sense to pay off debt or save depends largely on your financial situation. The right decision might be to try to do both.

The First Priority for Everyone: Build a Starter Emergency Fund

Without an emergency fund, an unplanned expense or loss of income could result in racking up even more debt, putting you further in the hole.

Financial professionals generally recommend building an emergency fund of three to six months’ worth of expenses. If you’re self-employed or work seasonally, you may want to aim closer to eight or even 12 months’ worth of expenses. An emergency fund calculator can help you figure out how much to save.

You could stash your emergency savings in a high-yield savings account. These accounts are designed to earn more interest than traditional savings accounts, which could potentially help your savings earn even more.

To figure out how quickly the balance in your savings account might grow, you can look at how frequently the interest compounds. (Compounding is when the interest is added to the principal in the account and then the total amount earns interest.) By plugging your information into an APY calculator, you can see the power of compound interest at work.

💡 Quick Tip: Are you paying pointless bank fees? Open a checking account with no account fees and avoid monthly charges (and likely earn a higher rate, too).

How to Decide What Comes Next: Compare Interest Rates

Once you’ve got your emergency fund in shape, you can focus on your debt. What’s important here is the kind of interest your debt has. Analyze all the debt you have — car loans, student loans, credit cards, and so on — and determine whether it’s high-interest debt or low-interest debt.

When to Aggressively Pay Down Debt (High-Interest Debt)

High-interest debt, such as credit card debt, can quickly accumulate and become overwhelming. The longer it takes to pay off, the more interest you’ll accrue, making it harder to escape the debt cycle. When you have high-interest debt, it makes sense to focus on paying off your debt first.

When to Prioritize Saving and Investing (Low-Interest Debt)

On the other hand, if you have debts with relatively low annual percentage rates (APRs) and you don’t feel unduly burdened by them, you could prioritize saving, while paying off your loans and other debts according to their payment schedules.

Recommended: Why Your Debt to Income Ratio Matters

The Best of Both Worlds: How to Pay Off Debt and Save Simultaneously

If you have high-interest debt under control and you also have an emergency fund, consider saving and paying down debt at the same time. Here are some tips to help you manage both.

•   Create a budget: A budget can help you track your income, expenses, and savings. The key is to allocate specific amounts for debt repayment and savings to ensure both are addressed every month.

•   Cut unnecessary expenses: Review your expenses and identify areas where you can cut back. Redirect these funds toward debt repayment and saving.

•   Automate saving: Once you have target monthly savings amounts, it’s a good idea to set up automatic transfers to your savings accounts. This ensures consistent saving without the temptation to spend the money.

While you’re at it, make sure you’re happy with your banking experience. You can compare bank accounts to get the best interest rates and customer service, for example.

•   Take advantage of your employer’s 401(k) match: If your employer offers a 401(k) plan with a company match, it’s a good idea to try to contribute at least enough to get the maximum employer match. This is essentially free money and it could help add to your retirement savings.

•   Increase income: You might also want to explore ways to boost your income, such as taking on a side gig, freelancing, or asking for a raise. You can then use the additional income to pay down debt faster and boost your savings.

•   Use windfalls wisely: If you receive a bonus, tax refund, or any unexpected sum of money, consider using it to pay down debt or boost your savings rather than going on a shopping spree.

Strategies to Pay Down Debt

Once you commit to paying down your debt, you’ll want to come up with a plan for how to do it. Here are some strategies to consider.

The Debt Snowball Method

With the snowball method, you list your debts in order of size. You then funnel extra money towards the smallest debt, while paying the minimum on the rest. When the smallest balance is paid off, you move on the next-smallest debt, and so on. This can provide psychological benefits by giving you quick wins and motivating you to continue.

As you’re paying down debt, be sure to monitor your checking account regularly to make sure you have enough money in it to cover your bill payments.

The Debt Avalanche Method

Another approach is the avalanche method. With this strategy, you list your debts in order of interest rate. You then direct any extra money toward the balance with the highest rate, while paying the minimums on the other debts. Once the highest-interest debt is paid off, you move to the next highest, and so on. The debt avalanche minimizes the amount of interest you pay over time.

Recommended: How to Set and Reach Your Savings Goals

The Takeaway

Saving and paying down debt is a balancing act. Which is more important? There’s no one-size-fits all answer. Generally speaking, you’ll want to fund your emergency savings account before you aggressively focus on debt payoff. After that, you can focus on saving and knocking down debt at the same 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.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What is considered high-interest debt?

While there is no one definition of high-interest debt, it is typically considered to be debt with a high interest rate, often in the double digits. For example, the average credit card interest rate as of August 2025 was 24.35%. Credit cards are considered high-interest debt, as are certain types of loans (such as personal loans) for borrowers whose credit is poor.

How much should I have in my emergency fund before aggressively paying down debt?

Before aggressively paying down debt, it’s a good idea to save three to six months’ worth of living expenses in an emergency fund. Otherwise, if you don’t have any savings to draw on to cover an unexpected expense or event, you might have to use high-interest credit cards to get by, which would compound your debt.

Should I use my savings to pay off my car loan or student loans early?

Whether you should use your savings to pay off your car loan or student loans early depends on your specific financial situation. Generally speaking, if you have additional savings beyond the recommended three to six months’ worth of money in an emergency savings fund, you might consider using some of that extra savings to pay off your car loan or student loans early. But it’s best not to use the money in your emergency fund for this, so that you’ll be covered if a surprise expense pops up.

Should I stop contributing to my 401(k) to pay off debt?

If your employer offers a 401(k) plan with matching employer funds, it’s wise to contribute at least enough to get the full employer match, if possible. This is essentially free money you would otherwise miss out on. Once you’ve received the 401(k) employer match, you could work on paying off your high-interest debt.

Does paying off debt or saving have a bigger impact on my credit score?

Paying off debt generally has a bigger impact on your credit score than saving does.That’s because paying off debt can reduce your credit utilization, which is the amount of credit you’re using compared to the amount of credit you have available. The lower your credit utilization, the better. A low credit utilization can have a significant positive impact on your credit score. In fact, credit utilization accounts for 30% of your FICO® Score.

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 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/.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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

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

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

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

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

Personal Finance Definition

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

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

Top 10 Basics of Personal Finance

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

1. Budgeting Is Your Friend

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

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

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

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

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

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

Recommended: 50/30/20 Monthly Budget Calculator

2. Building an Emergency Fund

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

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

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

3. Avoiding a Credit Card Balance

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

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

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

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

4. Paying Your Bills on Time

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

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

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

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

5. Starting Early to Save for Retirement

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

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

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

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

6. Investing

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

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

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

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

7. Getting Insured

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

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

8. Taking Advantage of Credit Card Rewards

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

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

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

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

9. Checking Your Credit Reports Regularly

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

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

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

10. Choosing Your Bank Wisely

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

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

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

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

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

3 Personal Finance Rules to Know

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

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

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

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

The Takeaway

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

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

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What are the basics of personal finance for beginners?

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

What are the five basics of personal finance?

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

What is the 50-30-20 budget rule?

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

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 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.

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

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

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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

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

Options trading online by SoFi Invest.

Monthly Budget Template

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

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

Key Components of the Template

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

•   Income

•   Essential expenses (the “needs” in life)

•   Discretionary expenses (the “wants” in life)

•   Savings and debt repayment

•   Monthly totals

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

How to Download and Access the Template

Here are steps for downloading the free monthly budget template:

•   You can download the Excel budget template here.

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

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

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

•   Download the Excel file

•   Open Google Sheets

•   Click “File,” then “Import”

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

•   Select the file and click “Open”

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

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

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

Recommended: 50/30/20 Budget Calculator

Using the Monthly Budget Template Effectively

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

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

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

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

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

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

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

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

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

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

Personalizing Your Budget

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

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

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

So your savings goals might include:

•   Emergency fund

•   Holiday fund

•   Vacation fund

•   New car fund

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

Tracking and Analyzing Your Spending

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

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

Some of the most helpful expenses to track may include:

•   Groceries

•   Gas

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

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

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

Budget Template vs App

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

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

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

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

Recommended: Ways to Earn Money From Home

The Takeaway

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

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

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

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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

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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.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Setting financial goals is one of the most important steps you can take toward building a secure and stress-free future. Without clear goals, it’s easy to spend impulsively, fall into debt, or miss out on opportunities to build wealth. Whether you’re saving for a vacation, trying to get ahead of debt, or preparing for retirement, a well-structured financial plan can help you stay focused and motivated.

What follows is an essential guide to financial goals — from understanding their importance to setting achievable milestones and adjusting your plan when life changes.

What Are Financial Goals and Why Are They Important?

Financial goals are specific money-related targets you set to guide your financial decisions. They give you direction and help you align your daily spending habits with long-term priorities. Instead of letting money just come and go from month to month, you create a roadmap that leads you toward stability, independence, and growth.

Goals are also important because they provide:

•   Clarity: They help you understand what you’re working toward.

•   Motivation: Defined goals encourage you to save instead of overspend.

•   Control: They prevent financial stress by giving you a sense of purpose.

•   A way to track progress: Goals let you measure how far you’ve come.

Without goals, money has a tendency to slip through the cracks. With them, you can make strategic decisions that improve your financial health step by step.

💡 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.

Types of Financial Goals: Short-, Mid-, and Long-Term

Financial goals depend on timeframes and priorities. Generally, they fall into three categories — short-, mid- and long-term goals.

Examples of Short-Term Financial Goals (1-3 Years)

Short-term goals are immediate priorities. They include the things you want to buy or do within the next few months or years, and help build momentum for bigger challenges. Examples include:

•   Building an emergency fund

•   Paying off a credit card balance

•   Saving for a vacation or holiday gifts

•   Creating a monthly budget and sticking to it

•   Setting aside money for a new laptop or phone

Examples of Mid-Term Financial Goals (3-10 Years)

Mid-term goals take more time and planning and act as a bridge between short-term wins and long-term security.

They often involve saving or investing for significant life milestones and might include:

•   Paying off significant debt (such as student loans)

•   Saving for a wedding or dream vacation

•   Saving for a down payment on a house

•   Funding a large-scale renovation

•   Growing an investment portfolio

Examples of Long-Term Financial Goals (10+ Years)

Long-term goals shape your financial future and often require consistent commitment. These goals can seem intimidating, but breaking them into smaller steps makes them achievable. Common long-term goals include:

•   Saving for retirement through 401(k)s, IRAs, or pensions

•   Paying off a mortgage completely

•   Funding your children’s college education

•   Achieving financial independence or early retirement

•   Building generational wealth through investments

Recommended: Savings Goals by Age

How to Set Financial Goals in 5 Steps

Now that you understand the different types of goals, here’s how to set them effectively:

Step 1: Understand Your Current Financial Health

Before setting goals, it’s important to have a clear picture of where you currently stand. You can do this by gathering the last several months of financial statements and then using them to determine:

•   Your average monthly income

•   Your average monthly spending

•   Current debt balances

•   Status of your emergency savings and retirement accounts

This assessment forms the foundation for realistic goal setting.

Step 2: Define What You Want to Achieve

Once you have a snapshot of your overall financial situation, it’s worth spending some time reflecting on your money goals: what is really important to you.

While there are many things people commonly save for, like a down payment on a house or retirement fund, your financial goals might not be the same as your sibling’s or your coworker’s.

Think about what you would like to accomplish in the next few years, in five or so years, as well as decades from now, and simply jot them down. Keep in mind that these goals aren’t set in stone — they can and likely will change over time.

Step 3: Make Your Goals S.M.A.R.T.

A vague goal like “save money” is hard to stick to. Instead, consider using the S.M.A.R.T. framework:

•   S for Specific: Be clear  about what you want to achieve, such as exactly what you want to save or how much you’ll need to pay off a debt.

•   M for Measurable: Assign real numbers to your goals. Measurable goals allow you to track your progress and monitor your success.

•   A for Achievable: Setting unrealistic expectations can lead to frustration and disappointment. Ensure your goals are realistic for your income and expenses.

•   R for Relevant: Make sure your goals align with your overall financial plan and your life priorities.

•   T for Time-based: Set a deadline (e.g., within 10 months) for each goal.

SMART goals help keep you accountable and focused.

Step 4: Create a Budget That Includes Your Goals

Your budget is the tool that makes your goals achievable. And thanks to Step 1, you already know your average monthly income and expenses. The next step is to decide if your current spending aligns with your goals, or if you need to rejigger your spending to free up more funds for saving.

There are many different types of budgets, but one popular framework is the 50/30/20 rule. This divides your take-home income into three categories:

•   50% for needs (housing, food, utilities)

•   30% for wants (entertainment, travel)

•   20% for savings and debt repayment

“Thinking about where to put your 20% savings each month can help you reach your goals,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “High-yield savings accounts, money market accounts, certificates of deposit, and cash management accounts are all vehicles that may pay more interest than a traditional savings account, helping your savings grow.”

Step 5: Track Your Progress and Stay Flexible

Once you’ve set some goals and established a budget, it’s a good idea to track your spending for a few months to make sure you are sticking to the plan.

You can track your spending with plain old pen and paper or a computer spreadsheet, but a simpler option is to put a budgeting app on your phone. Your bank may even offer a free tool that automatically tracks and categorizes your spending in real time.

If you find that your budget isn’t realistic, or your financial situation changes at some point, you may need to make some adjustments to your budget. That’s why it’s important to check in with your money regularly.

Common Financial Goal Examples

Here are some six popular financial goals you might include on your list:

1. Build an Emergency Fund

Whether you’re easily covering your monthly expenses or grabbing change from the bottom of your bag to buy a coffee, many people are living paycheck to paycheck. But what if that paycheck disappeared or if you had a large, unexpected expense? Enter the emergency fund.

Having an emergency fund can help you comfortably manage an unexpected medical bill, major car or home repair, or a sudden loss of income with having to run up high-interest debt.

A general rule of thumb is to have three to six months’ worth of living expenses set aside for emergencies. While that can be a sizable sum, keep in mind that you don’t have to build your back-up fund overnight. You might first set a short-term goal of saving a small cushion of $1,000, then build from there.

Recommended: Emergency Fund Calculator

2. Pay Down High-Interest Debt

High-interest credit card debt can feel like a treadmill: Despite constant effort, you never seem to get any closer to the finish line. By prioritizing repayment, however, you can make real progress. This will free up cash flow you can then redirect towards savings and investments.

Two popular payoff approaches are the debt avalanche (paying off the highest-interset debt first) and the debt snowball (paying off the smallest balance first to build momentum). Whichever you choose, the key is to consistently make extra payments and avoid new debt along the way.

3. Start Saving for Retirement

Most of us know we should be saving for retirement, but making it happen can be challenging when there are so many competing places to put our money. The good news is that even small contributions to a retirement account can grow to significant savings over time. This is largely due to the magic of compounding returns — when the returns you earn start earning returns on their own.

One rule of thumb is to save at least 15% of your pre-tax income each year, including any employer match. If that’s not feasible right now, try to contribute at least up to any employer match (otherwise you’re leaving free money on the table).

4. Save for a Down Payment on a House

For many people, owning a home is a major milestone and a symbol of financial stability. But buying a home often requires a significant down payment, typically ranging from 3% to 20% of the purchase price. Saving for this can feel overwhelming, but breaking it into smaller milestones makes the goal achievable.

Consider opening a dedicated high-yield savings account for your down payment fund so it remains separate from everyday spending. Or, if your bank offers savings vaults, you might create a sub-savings account within your main one earmarked for your down payment. Then automate contributions to this account or vault so it grows over time.

💡 Quick Tip: Most savings accounts only earn a fraction of a percentage in interest. Not at SoFi. Our high-yield savings account can help you make meaningful progress towards your financial goals.

5. Invest for the First Time

Investing allows your money to work for you, building wealth beyond what traditional savings accounts can provide. While investing might seem intimidating at first, starting small is often the best approach. Low-cost options like index funds, exchange-traded funds (EFTs), or robo-advisors make it easier than ever to get started without needing extensive financial knowledge. As your income grows, you can increase contributions and diversify your portfolio.

6. Pay Off Student Loans

Student loans are a reality for millions of people, and paying them off can take years. Carrying this debt affects your ability to save, invest, and even qualify for other financial opportunities like a mortgage. That’s why making a structured repayment plan is so important.

Start by reviewing your repayment options — federal loans may offer an income-driven repayment plan or refinancing opportunities. Making extra payments towards the principal when possible can reduce the overall interest you pay and shorten the repayment timeline.

Financial Goal Examples for Students

Students often juggle limited income with rising expenses, making financial goals essential. Here are some practical ones to consider:

•  Creating and sticking to a monthly budget

•  Building a small emergency fund (even $500 helps)

•  Paying off credit card balances in full each month

•  Saving for textbooks or tuition payments

•  Beginning to invest through a low-cost brokerage app

•  Applying for scholarships or part-time jobs to reduce student loan reliance

Setting goals early can help students avoid financial pitfalls and build healthy habits for adulthood.

How to Adjust Your Financial Goals if Your Circumstances Change

Life rarely goes exactly as planned. You might face job loss, medical expenses, or unexpected windfalls like a bonus or inheritance. When your circumstances shift, it’s important to:

•  Reevaluate your priorities: Decide which goals still matter most.

•  Adjust timelines: You may be able to shorten a deadline or you might need to extend one or more of your timelines.

•  Reallocate resources: If money is tight or your priorities change, you may want to shift money from one goal to another.

•  Stay flexible: Remember, goals are not fixed — they evolve with your life.

The Takeaway

Setting financial goals isn’t about perfection — it’s about progress. By understanding your current financial health, defining clear objectives, and using the SMART framework, you can create a roadmap toward stability and success.

Whether you’re saving for your first emergency fund, tackling debt, or planning for retirement, goals can give you the motivation and direction you need to take control of your financial future. The key is consistency. Start small, stay flexible, and remember that every step forward brings you closer to your near- and long-term aspirations.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

Is it wise to invest your emergency fund?

Generally, it’s not wise to invest your emergency fund in risky assets like stocks or mutual funds. An emergency fund should remain easily accessible and safe, since its purpose is to cover unexpected expenses or a sudden loss of income. Keeping it in a high-yield savings account or money market account balances safety with some interest growth. Once your emergency fund is secure, you can focus on investing other money for long-term goals.

What is the most important financial goal?

For many people, the most important financial goal is to build a strong foundation of financial security. This typically means creating a healthy emergency fund and paying down high-interest debt. Without stability, it’s difficult to make progress toward other goals like saving for retirement, buying a home, or investing.

Once your essential safety net is in place, you can prioritize goals that align with your lifestyle and values, such as long-term wealth building, financial independence, or providing for your family’s future.

How many financial goals should you have at once?

It’s often best to focus on a manageable number of goals (such as two or three) at one time. Trying to juggle too many can spread your money and attention too thin, making it harder to make meaningful progress. A practical approach is to prioritize one short-term goal (like building an emergency fund), one medium-term goal (such as saving for a car or vacation), and one long-term goal (like retirement savings). This balance helps you stay focused while still moving forward in multiple areas.

What is a good financial goal for a beginner?

A great financial goal for beginners is starting an emergency fund. Even saving a small amount, such as $500, can provide a cushion against unexpected expenses and reduce the need to rely on credit cards or loans. Once that’s established, beginners can aim to save three to six months of living expenses. Other beginner-friendly goals include paying off small debts, creating a realistic budget, or setting up automatic savings. These goals build confidence and establish strong money habits for future success.

How can I set financial goals with a partner or family?

Setting financial goals with a partner or family starts with open communication about values, priorities, and long-term dreams. Begin by discussing shared goals, such as buying a home, paying off debt, or saving for children’s education. Next, agree on a budget and assign responsibilities for managing finances to ensure accountability. Regular check-ins help you stay on track, celebrate progress, and adjust goals as life circumstances change.

What tools can help me track my financial goals?

Several tools can make tracking financial goals easier and more organized. Budgeting apps like YNAB, GoodBudget, or PocketGuard allow you to set savings targets and monitor spending. Spreadsheets are another customizable option for tracking progress. Many banks also offer built-in goal-tracking features through their mobile apps.

For long-term goals, investment platforms often provide dashboards showing growth toward retirement or wealth-building objectives. The key is choosing a tool you’ll use consistently, helping you stay motivated and accountable.

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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

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College life is about getting a great education, exploring interests and activities, and forging your own adult identity. It’s also a perfect time to establish some good money habits that will set the scene for financial success today and tomorrow.

From developing a budget to opening bank accounts, there are ways you can make your money work harder for you over time so you can achieve your goals.

Read on to learn the 10 best strategies for good money management for college students.

Why Learning to Manage Your Money in College Is a Superpower

As a student, you’re at a key point in your life where you’re taking charge of your finances, perhaps for the first time ever. Learning the skills and knowledge you need to make informed decisions about your money — something known as financial literacy — is important now and in the future. It can help you save more, spend wisely, and avoid too much debt. Being financially savvy can also help manage your student loans and choose the bank accounts and credit cards that make the most sense for you.

The financial moves you make as a college student can set you up to build wealth and reach your financial goals in your twenties, thirties, and beyond. This includes buying a car, renting an apartment, putting a down payment on a house someday, and saving for retirement.

10 Essential Money Management Tips for College

Here are 10 financial tips for college students that can help you spend less and save more during and after school.

1. Create a Simple College Budget That Actually Works

Budgeting may sound complicated, but making a budget is simply a matter of figuring how much is coming into your bank account each month and how much is going out, and then making sure the latter doesn’t exceed the former.

To get started, list all of your sources of income, such as from a part-time job or family contributions.

If you are living off a fixed amount of money for each semester, say from summer earnings, you may want to divide this lump sum by the number of months you need to make the money last.

Once you know how much you have to live on monthly, make a list of regular expenses that you will be responsible for paying, such as your cell phone or a car payment, or maybe rent if you live off campus.

Next, you’ll want to subtract your fixed expenses from your monthly income. This will give you the amount you have left over to cover variable and discretionary expenses, such as eating out, buying clothes, and entertainment. You can then come up with target spending amounts for each category.

Doing your best to stay within these spending limits can help ensure that your money lasts until the end of the semester, and help you avoid running up costly credit card debt.

2. Open a Student-Friendly Bank Account (like SoFi)

You might feel like you don’t have enough income to start saving money yet, but even just putting a small amount in the bank regularly can add up over time.

You can open a checking account as a place to start saving. If you’re able to set aside $50 a month, you could soon have a decent sum. And if you have a part-time job, your paycheck can be directly deposited into your account. That way you won’t be tempted to spend it.

Being diligent about saving money each month can help cultivate a habit that will serve you later when you can afford to save more for your future goals, including retirement.

As you’re choosing a bank, you may want to look for one with an ATM near you for convenience and to avoid out-of-network fees. For example, with a SoFi checking account, you’ll have fee-free access to more than 55,000 ATMs worldwide.

3. Build Your Credit Score Responsibly With a Credit Card

When you open a bank account, you’ll likely also apply for a debit card to make managing your financial transactions easier. But don’t forget about a credit card for convenience, as a backup for emergencies and to start building a credit history.

But don’t overdo it. To manage finances in college, use your credit card only when you need it. Pay off your debt in full each month, otherwise you could end up paying a high-interest rate on the balance, which can make it even harder to pay off.

Using your credit card responsibly by making small purchases and paying off the balance in full can help you build your credit.

4. Start a Small Emergency Fund for Unexpected Costs

Life can be unpredictable and having a financial safety net can help protect you from costs that pop up — if your car breaks down or you’re facing a sudden (and costly) medical procedure, for example. That’s why it’s important to start an emergency fund or back-up savings fund as a critical part of your long-term financial health.

Having an emergency fund can help keep you from having to rely on credit cards to get through a financial challenge.

How much you should put aside for emergencies each month is up to you and your financial situation. Many financial professionals recommend saving at least three to six months’ worth of expenses. But it’s better to have a small fund than not to have a fund at all. The key is to start saving something each month, no matter how small the amount may seem.

When building your emergency fund, it’s a good idea to fund the account regularly if you can. Consider setting up an automatic transfer to your savings so you don’t have to think about it.

Ideally, your emergency fund should be in a separate savings account so you won’t be tempted to spend the money on something else.

5. Understand How Your Student Loans Work

A crucial part of money management for college students is understanding how your student loans work and what’s required to repay them. Familiarize yourself with the types of loans you have (federal and/or private), and then take a look at how the interest on each loan is handled. For example, if you have federal Direct Subsidized Loans, the interest is covered for you while you’re in school. With federal Direct Unsubsidized Loans, however, you are responsible for all the interest that accrues — even while you’re in school — and it accrues daily, meaning it can build up significantly over time. For this reason, you may want to make interest-only payments on your loans while you’re in school, if possible.

You can find information about your loans by logging into your account at StudentAid.gov. There, you’ll see the different loans you have, how much you owe, the interest rate of each, and who your loan servicer is.

While you’re at it, start exploring the different options for repayment, so you can get started without a hitch when the time comes. Many changes are coming to student loans as part of the big domestic policy bill that was signed into law in July 2025, so it’s a good idea to study up on the options now.

6. Find Ways to Earn Extra Income On Campus or Online

There are a number of side hustles for college students that can help you earn some extra cash. For instance, you could become a tutor and help other college students learn a subject in which you excel. Or you could pet-sit on evenings and weekends or do lunchtime dog walking (as long as you don’t have class). Other potentially lucrative side hustles include becoming a ride share driver or delivering food and groceries for a company like DoorDash or Instacart.

A side hustle can be flexible so you can fit it around your class schedule. You can also set your own hours for the most part, unlike a more traditional job. You can use some of the money you earn to cover your daily expenses and then put the rest into the bank to build your savings.

7. Master the Art of Saving on Everyday Expenses

Financial tips for college students include saving money on the daily expenses that can add up over time. Take eating out. You may get tired of cafeteria fare. At the same time, you don’t want to blow your budget on eating in restaurants every weekend. If you have access to a kitchen, consider purchasing ingredients from your local supermarket and putting together some simple, tasty meals, instead of eating out. This can be a good way to save money on food.

Another idea to stretch your money is to find freebies. Facebook has groups where people can post items they no longer want. You might be able to score free clothes, furniture, or room decor. Freecycle and NextDoor also have listings for things that people are giving away.

Finally, rethink some of your major expenses, like textbooks. Buying them new can be costly. Fortunately, there are a number of ways to save on college costs like this. One option is to buy up-to-date versions of used textbooks whenever you can. Getting the digital version of a book can also yield savings. You could also rent what you need from a third-party bookseller, such as Amazon or Chegg.

Sell any books that you’ve purchased (new or used) that you won’t need again in the future to recoup some of the expense.

8. Use Your Student ID for All It’s Worth

You may think of your ID card only as a form of identification and a way to get into college sporting events. But there are actually additional benefits that come with a student ID, and many can help you save money.

Some businesses, especially those near universities, offer students discounts when they show a student ID card.

Next time you go to the movies, shop for school supplies, go out to eat, or get a haircut, it’s a good idea to ask if they offer any discounts for local college students.

In addition, many national and online retailers, including major clothing, sneaker, and computer brands, offer discounts to college students.

You may also be able to use your student ID to get a better deal on your cell phone plan and streaming services. Make sure to maximize this valuable resource.

9. Protect Yourself From Financial Scams Targeting Students

College students who are on their own for the first time and learning how to manage their money can be prime targets for scammers. In fact, young adults ages 18 to 24 report the second median highest dollar loss to scams after adults 65+), according to the Better Business Bureau’s 2024 BBB Scam Tracker Risk Report.

Some common scams that target college students include:

•   Fake employment offers — students are asked to pay a fee or provide personal and financial information to fill out an “application”.

•   Student loan debt-relief scams — students are contacted by representatives who claim to be from debt relief companies and offer to reduce or eliminate their college debt for a fee.

•   Fake scholarships or grant offers — students receive notice that they’ve been awarded a grant or scholarship they never applied for and are asked to supply their Social Security number or other personal information in order to receive it.

To avoid becoming a victim of a scam, never give out personal information to anyone you don’t know. If you are contacted unsolicited by a person asking for information or a fee or a supposed service they can provide for you, hang up or don’t respond to their text or email. And beware offers that seem too good to be true. Always err on the side of caution.

10. Dip Your Toes Into Investing (Even With Small Amounts)

Investing when you’re young can potentially be one of the best ways to help your money grow over time.

That’s thanks to compound returns, which is when any returns you earn are reinvested to earn additional returns. The earlier you start investing, the more benefit you may gain from compounding.

It’s important to keep in mind, however, that all investments involve some level of risk because the market fluctuates over time.

If you’re interested in investing, you could start small by opening a traditional or Roth IRA and putting a little money from a part-time job into it, or you could opt for an online brokerage account. Either way, even if you invest just $50 a month, you’ll be saving for your future.

A Deeper Dive: How to Build Your Credit in College

Building your credit now as a college student can help you once you graduate. Without a credit history, it can be challenging to take out a loan or get a credit card, among other things. If you’ve already established credit, you’ll likely be able to get your post-college life started more easily.

To help build your credit, get a credit card while you’re in college. Use it judiciously for small purchases and then consistently pay your bill on time and in full each month. This kind of responsible credit card use can help you build your credit history. You’ll need a strong credit history if you want to get the best terms on a car loan, a mortgage, or a student loan for grad school. Your credit can even affect your job prospects and your ability to rent an apartment.

It’s also a good idea to monitor your credit report regularly to make sure it’s accurate. You can get a free credit report annually from the three major credit bureaus. If you spot any errors, be sure to report them right away.

And finally, once it’s time to start making your student loan payments, be sure to make each monthly payment on time and in full. This can help you establish a positive payment history, which can also strengthen your credit.

A Deeper Dive: Making Sense of Your Student Loans

As noted earlier, understanding your student loans and how they work is extremely important. A student loan is a legal obligation and you are responsible for paying what you borrow, plus interest. Staying on top of your loans now, while you’re still in college, can make it easier to manage them.

First, make sure you know what kind of student loans you have. There are federal and private student loans, and they each work differently. Find out the interest rate for each loan and how the interest is handled.

Keep track of how much you’re borrowing with student loans and try not to borrow more than you need. Read the terms and conditions of your loans and make sure you understand them. Keep all your loan documents so you can refer to them when you have questions. Know who your loan servicer is and contact them if you have questions.

And log into your account on StudentAid.gov to make sure all the information on your federal loans is correct and up to date.

Finally, make your monthly student loan payments in full and on time. If you are struggling to repay your loans, contact your loan servicer to see what your options are. For instance, with federal student loans, you may be able to switch to a repayment plan that bases your monthly payments on your discretionary income and family size.

The Takeaway

College can provide a great opportunity to develop the money skills you’ll need after you graduate. By learning basic money management techniques now, you can gain confidence in your ability to handle your finances well after graduation.

In 10 years, you’ll likely thank yourself for putting in the effort to learn how to set and stick to a monthly budget, use credit cards wisely, save and invest money, manage your student loans, and build your credit score.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

How much money should a college student have in savings?

College students should have an emergency savings fund to help cover any unexpected expenses. While financial professionals often recommend having three to six months’ worth of living expenses in an emergency fund, that amount might be difficult for a college student with a limited income. Instead, some financial pros suggest aiming to have $500 or $1,000 in the bank as a college student. To help get there, save regularly. Even if you deposit just $20 in your emergency fund each week, it will continue to grow steadily.

How can I start a budget in college?

One method for starting a budget in college is to use the 50/30/20 rule. Here’s how it works: You allocate 50% of your income to needs (such as bills, rent, and other fixed monthly expenses), 30% to wants (such as eating out or going to the movies), and 20% to saving for your financial goals (such as a down payment on a car or a house, or for retirement). Because the formula is simple, it can be an easy way to manage your money as a college student and after graduation.

Is it a good idea to get a job during my freshman year?

Whether or not it’s a good idea to get a job during your freshman year depends on your unique circumstances and financial situation. A job can help you cover some of the costs of college, but you’ll want to make sure that it doesn’t interfere with your classwork or studies. If you need the income, you may want to consider a flexible part-time job that you can do after classes or on weekends as your schedule allows, such as pet-sitting or tutoring.

What are the most common financial mistakes students make?

Some of the most common financial mistakes students make include overspending, charging too much on credit cards, failing to put money into savings, and mismanaging student loans, including borrowing more than needed. To avoid these mistakes, make a budget so that you don’t spend too much. Also, use credit cards only for small purchases and pay your bill in full each month to avoid accumulating credit card debt. Put money into a savings account regularly. And finally, make sure you know exactly how much you need to pay for college, and don’t borrow more than that in student loans.

What percent of college students drop out because of money?

According to the most recent statistics from the Education Data Initiative, approximately 23% of college students leave school every year, and 41% of college dropouts say they left for financial reasons.

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