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Even the most money-savvy person may have some false beliefs about money. Maybe you were raised with misconceptions about finances, such as investing is only for the very rich, or were given off-target advice from well-intentioned friends (telling you to always aim to buy a house vs. renting), for instance.

Incorrect beliefs about money can have a negative impact on how you manage your finances, potentially hindering your path to achieving your goals.

Why Debunking Money Myths Is Key to Financial Success

Being realistic about money can help you set reasonable financial goals and reach them in the short- and long-term. Whether you are feeling financially secure or are looking to better manage your finances, practicing healthy financial habits will serve you well in the long run.

That’s why debunking money myths is important. If you believe, for instance, that carrying lots of credit card debt is “normal,” you may not eliminate that monthly balance that’s dragging down your budget.

Here are some common misconceptions about money to avoid if you want to be financially fit.

10 Common Misconceptions About Money

Here, learn about popular money misconceptions and why it may be time to bust some financial myths.

1. You Need a Lot of Money to Start Investing

You do not need to be rich in order to invest: You can start investing with just a few dollars. The average stock market return is about 10% a year, as measured by the S&P 500 index. The S&P 500 Index return does not include the reinvestment of dividends or account for investment fees, expenses, or taxes, which would reduce actual returns. Investing has risks, and you’ll want to be comfortable with that notion and find investments that suit your risk tolerance.

Whatever you decide to do, investigate fees before you begin investing so you are prepared for any costs you will need to cover.

2. Budgeting Is Too Restrictive and Complicated

Regardless of how little or how much money you have, a budget is helpful for organizing your finances. If you feel budgeting is too restrictive and/or complicated, you probably just haven’t found the right budgeting method yet.

Making a budget could help you achieve financial stability. You need to budget so you can keep track of your spending, your debt, and your savings for future goals.

There are various techniques and tools (spreadsheets, journals, apps) for budgeting. One strategy is the 50/30/20 budget rule, in which 50% of your post-tax money goes towards necessary expenses (housing, food, utilities, and the like), 30% goes towards wants, and 20% is used for saving.

3. All Debt Is Bad Debt

According to Debt.org, 90% of American households have some kind of consumer debt. But keep in mind, not all debt is created equal. Some debt is considered good debt. Think about a mortgage: Once you’ve saved for a down payment, this financial product is typically a fairly low-interest loan that may help build your credit history (if managed responsibly) and also allows you to accrue equity in the home.

Bad debt, on the other hand, is high-interest debt, such as credit card debt, where interest rates are high and you aren’t building equity. Just because a lot of people may have this kind of debt doesn’t mean you should. It can snowball and keep you spending a chunk of money monthly that could otherwise be saved or invested.

4. A High Salary Automatically Makes You Wealthy

A common money misconception is that earning a high salary makes you wealthy. That is not necessarily true. People who earn a lot of money can spend a lot of it too. The key to building wealth is saving and investing your money so it can potentially grow over time. Even if you simply stash money in a high-yield savings account, compounding interest can help grow your wealth.

To look at it from another angle, say one person earns $50,000 a year, lives within their means, and saves and invests wisely. Then there’s a person who earns $500,000 but they own multiple houses, spend freely on luxuries, and haven’t yet gotten their act together in terms of saving and investing. The person who has the lower salary might actually be the wealthier of the two.

5. Buying a Home Is Always Better Than Renting

Buying a home is the quintessential American dream, but it’s not necessarily the right move for everyone. Whether to rent or buy ultimately depends on your personal situation and your aspirations.

You may have heard that renting is a waste of money, but it can provide flexibility for those who are not ready to buy a home or not interested in doing so. For instance, perhaps your work requires you to relocate often, or you only want to buy a house when your baby is older and you can pick the right school district. Maybe you’d rather pay off debt vs. save for a down payment. Or you just might not want the major expense of a mortgage, taxes, and home maintenance in your life. Whatever your situation may be, it’s important not to feel pressured into buying unless it’s the right move for you.

6. You Should Avoid Credit Cards to Stay Out of Debt

Using credit cards as a form of payment doesn’t mean you’ll go into debt. Spending more than you can afford to pay off what you owe, however, may put you on that path. If you use a credit card wisely and typically pay off the debt every month, this can be a factor that helps you build credit. It also keeps you from paying high credit card interest, which averages 24.35% as of July 2025.

However, if you are a person who tends to spend impulsively and not pay your credit card bill on time, this could negatively affect your credit score. This is why it’s important to manage your purchases and pay your credit card bills on time.

7. Saving for Retirement Can Wait Until You’re Older

This can be a dangerous myth to believe. If you are young and are investing for your retirement, you have time on your side. Your invested money can grow over time thanks to compounding returns. Here’s an example: If a 25-year-old invests $200 a month and earns a 6% return, they’ll have $393,700 by age 65. But if that same person starts saving at age 35, that same money at the same rate nets them $201,100, or about half of what they’d have if they started sooner.

It may feel as if retirement is a long way away, but the sooner you begin funding it, the more you are likely to have. If your employer offers a 401(k) plan, take advantage of contributing to it. If this isn’t offered at your place of work, you can open an individual retirement account (IRA) or a Roth IRA.

8. Talking About Money Is Taboo

Talking about money issues may seem like taboo, but it shouldn’t be. It can be healthy to talk about money troubles to close family and friends, because they may have ideas about how to approach a solution. Perhaps they experienced a similar issue in the past and can offer advice on how they handled it.

If you find it uncomfortable to talk to family or friends about your money concerns, you might want to consider speaking to a professional. For instance, there are non-profit credit counseling organizations, like the National Foundation for Credit Counseling that could help you if you are burdened with debt and feel overwhelmed.

9. More Money Will Solve All Your Problems

Yes, money can help take care of bills, but the old adage, “More money, more problems” may well be true, too. The secret to being financially secure is not about how much money you make, it’s about how well you manage it.

For instance, say you take a new job that pays twice your current salary. If you turn around and buy a pricier home and car and book some luxury vacations, you might be in more debt and experience more stress than before. The way to prevent this is by not living beyond your means.

Healthy budgeting and saving habits (such as automating your savings) are what can help solve problems.

10. Financial Planning Is Only for the Rich

Financial planning isn’t only for those who have hefty savings accounts, net worth, or investment portfolios. Although it may not be taught in school, financial literacy is important for all, and setting money goals can help you achieve your dreams. Too many people just open a checking account and then ignore their money.

You might be more comfortable working with a financial professional, but you don’t need one to manage your money. It’s totally your choice. You might also see what tools and services your bank offers, and investigate third-party options.

Budgeting and Saving Myths Debunked

There are several myths about budgeting and saving that are worth debunking. For instance, many people believe living on a budget is hard, complicated, time-consuming, and all about deprivation.

Not true! The right budget can help you stay on track financially and achieve your goals. What’s important is to experiment with different budgets to find one that suits your needs. You might use technology, such as a savings calculator to help you along.

Also, it’s a financial myth that you need a lot of money to save effectively. Regardless of your income and expenses, budgeting well can allow you to start saving regularly. Small amounts of money can really add up over time.

Recommended: Savings Goal Calculator

Investing and Retirement Myths Debunked

Here’s what is a common misconception about finances: that you need a lot of money to invest. Anyone can invest well, even starting with a small amount, and robo-advisors can help automate the process for you. On the topic of investing, it’s also a misconception that you don’t have to think about retirement until later. You’re actually likely to save more effectively when you start early (again, even with small amounts) than if you put more money in for a shorter period of time.

Another myth is that you don’t need to save for retirement because you can live off Social Security payments. However, many people find that those payments are not enough when they reach retirement age, especially with rising healthcare costs.

Debt and Credit Card Myths Debunked

A debt myth is that all debt is bad. Some kinds of debt, such as mortgages, charge relatively low interest and allow you to build wealth. However, when it comes to credit cards, there are some myths to conquer. For example, some people may believe that they should only pay the minimum amount on their monthly bill. This amount is the bare minimum, and paying just that can wind up locking you into a debt trap, without building up funds in your bank account because you’re struggling to pay off your debt.

Mindset and Lifestyle Myths Debunked

A mindset and lifestyle myth about money to debunk is that making more money means you’re wealthy. It might be true, but if you allow your spending to rise with every raise at work or money windfall, you could wind up less wealthy than you were before.

This is considered lifestyle creep. An example is when you get a new job and earn more, you go out and, say, lease a luxury car rather than putting the extra money into savings or investing. You live more lavishly, but you could be shortchanging your future.

How to Develop a Health Money Mindset

To develop a healthy money mindset, it’s helpful to devote some time and energy to learning how to manage your money well. That could mean reading up on finances, listening to podcasts, or taking an online course.

Goal setting is important, too. By establishing your short-, medium, and long-term goals, you can begin working toward achieving them. Budgeting well and talking with trusted friends and relatives for advice can help you get on the right track. Automating your savings so money seamlessly gets transferred into a savings account can be a smart move, too. You might also work with a financial planner or a financial therapist to help you in your money journey.

The Takeaway

Myths about money can stand in the way of your making the most of your finances. By avoiding these misconceptions, you’ll be better able to take control of your cash, budget, save, and invest wisely. These moves can not only help you achieve your goals, they can enhance your peace of mind, too.

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 the biggest misconception people have about money?

There are many negative beliefs about money. Some include believing only rich people should invest their funds and that a person doesn’t need to think about retirement saving when they are young. These misconceptions can keep people from reaching their financial goals.

Is it true that you need money to make money?

While having money can help you make money, it’s not a requirement. By budgeting well and saving regularly (even small amounts), you can work toward generating wealth. A person who makes $50,000 could be wealthier than one who makes a multiple of that if they manage their money more wisely.

Why is it so hard to talk about personal finances?

It can be hard to talk about personal finances because many people are raised with the belief that one should never discuss money. It’s a myth about money that it’s a taboo topic. Unfortunately, this secrecy leads people not to share information that could help one another manage money better. Also, typically financial management skills aren’t taught in school, so many people clam up about the topic since they feel ignorant about it.

What’s a simple first step to fix my money mindset?

Often, the simple first step to fix your money mindset is to think about and recognize your attitudes. Do online research about money management and talk to friends whose money management you respect. Look at the interest rates on your credit card and student loans, try budgeting apps, and take other small steps that begin to put you in the driver’s seat financially rather than believing prevailing wisdom.

Maybe you think that there’s no point saving for retirement until you’re older or that investing is only for the rich. By being honest about your beliefs and then working to educate yourself and take steps toward financial management, you can fix your money mindset.

Is carrying a small credit card balance good for my score?

If you’ve wondered about what are some common money misconceptions, this is one! Carrying a balance doesn’t build your credit score. Among the habits that help maintain and build your credit score are always paying your card on time and keeping your credit utilization ratio (your balance vs. your credit limit) as low as possible. Under 30%, if not under 10%, is considered a good level.

Photo credit: iStock/baona

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.

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

SOBNK-Q325-104

Consumers lost more than $12.5 billion to fraud in 2024, a 25% increase over reported losses in 2023, according to the latest Federal Trade Commission data. Bank scams, from overpayment ruses to phishing schemes, are part o this problem. Scammers often use savvy tactics to commit fraud that make it hard to cancel or reverse the transaction.

For this reason, one of the best ways to protect your hard-earned cash is to be aware of what’s out there. Learn what the most common online banking scams are and how to spot and avoid them.

How to Recognize the Red Flags of a Scam

While today’s scammers are increasingly sophisticated, there are some red flags that can give them away. Be on alert for these clues that you may be dealing with a scammer.

•   You need to act urgently.

•   You’re threatened with law enforcement or a government agency action.

•   You’re told to purchase gift cards and provide codes as a form of payment.

•   You need to mobile deposit a check and then transfer cash from your account to the person or company that wrote the check.

Recommended: How to Verify a Check

Common Scams Involving Fake Payments and Checks

Knowing what online banking scams are currently circulating can help you avoid enduring losses. Consider these examples of popular ways scammers are operating using fake payments.

Overpayment Scams

If you sell products online, you could inadvertently be hoodwinked by this popular scam. Here, the fraudster will pose as a buyer and send you a check or money order for more than the purchase price. Then, they’ll ask you to refund the difference either through an online payment or wire transfer. But the original payment type was fraudulent, meaning you lose the refunded money. If you already sent the item you “sold” them, you’ll lose that too. But it doesn’t end there: You’ll likely also be on the hook for a returned item fee from the bank.

Unsolicited Check Fraud

This banking scam involves a check you get in the mail. It might be described as a “rebate check,” a refund on an overpayment, or prize money for a contest you’ve won, even though you don’t remember entering one. You deposit it into the bank — why not?

Here’s why: There may be some (very) fine print on the front or back of the check stating that by cashing the check you are entering into a legally binding contract — one you likely don’t want to enter. It might be a membership with monthly fees, a loan, or other long-term commitment that ends up costing you far more than the “free” check you deposited.

Fake Employment Offers

A job scammer posts an enticing ad on a job board. The job they’re offering sounds too tempting to pass up. It might be a work-from-home set-up, the chance to be a mystery shopper, or a job that pays a full-time salary for part-time work. Before the employer can onboard you, however, you’ll need to pay a fee or supply your bank account information and other personal details so they can pay you. It’s all a front to get you to part with your money.

Recommended: Different Types of Bank Account Fraud to Look Out For

Common Scams Involving Impersonation and Deception

Also be aware of scams that aim to trick you into parting with money by using fake identities and other ruses.

Phishing, Smishing, and Vishing Scams

Phishing scams are particularly tricky because they come dressed as emails or texts from trusted companies you already know. The message may even mention suspicious activity on your bank account.

Typically, you need to click on a link in the email or text, and then complete an action like confirming personal information. When you click through, it usually looks like the website from your bank or the company in question. So you tap in the required information (which may be a password, account numbers, or some other type of personal information). The scammers now have your sensitive data and your account security is at risk.

In addition to bank phishing scams in general, there are smishing and vishing. These are specific kinds of phishing: Smishing using fake text messages to trick consumers into revealing financial details, and vishing using deceptive voicemails or phone calls to commit a scam.

Bank and Government Imposter Scams

A fraudster will contact you by phone, email, or text posing as a representative from a government or law enforcement agency (like the IRS, Medicare, or the FBI). They may ask you to provide personal information needed to issue a payment (like for a tax refund) or tell you that you owe money and need to make a payment immediately. The imposter could even threaten to put you in jail if you don’t reveal your personal information or send payment. It’s worth noting that scam texts during tax season, claiming to be from the IRS, are quite prevalent.

Charity Scams

Sadly, many scammers play on people’s compassion, kindness, and generosity to line their own pockets. A charity scammer might contact you by phone, email, or ringing your doorbell. They claim to represent a real (or real-sounding organization) and tell you in detail about an urgent need or crisis. They often flash legit-looking IDs.

You want to help, so you give them cash, a check, or, perhaps, your credit card or bank account information for a recurring donation. Unfortunately, they aren’t connected to any type of nonprofit organization and you’ve given funds or sensitive financial information to a scammer.

Recommended: Wire Transfer Scams

Common Scams Targeting Your Account Access

There are also scams that attempt to deceive you into revealing your confidential information so the scammer can steal your money or commit identity theft.

Unauthorized Withdrawal Scams

Also known as automatic debit scams, these involve unauthorized withdrawals from your bank account — typically checking accounts. Scammers get access to your bank account numbers through fraudulent telemarketer calls or by stealing them from unsecured websites when you sign up for a free trial.

Once a scammer has access to your account information, they set up an automatic withdrawal. When your bank receives the draft, they transfer money from your checking account to pay the scammer. Unless you pay close attention to your daily bank transactions, you may not notice the scam until much later.

Tech Support and Remote Access Scams

In tech support and remote access scams, an individual may contact you from “your computer support team,” “your online bank,” or other phony identity. They claim that there’s an urgent problem with your computer or your online banking account and then con you into either revealing your sensitive information or else paying them (perhaps by a wire transfer) for “saving” you by fixing your technology or account.

What to Do Immediately If You Think You’ve Been Scammed

If you believe a scammer made an unauthorized transfer from your checking or savings account, contact your bank as soon as possible. Let them know it was an unauthorized debit or withdrawal and request that they freeze and reverse the transaction and give you your money back. It isn’t guaranteed that this will work; if the transfer has been completed, it can be hard or even impossible to get the funds back.

If you gave a scammer your username and password, you’ll want to create a new, strong password. If you use the same password anywhere else, change it there, too.

If you gave a scammer your Social Security number, you can go to IdentityTheft.gov to see what steps to take, including how to monitor your credit.

Will My Bank Refund Scammed Money?

As noted above, banks may not always refund scammed money. If someone stole your cash by making an unauthorized payment, your bank, credit union, or payment app may have to reimburse you. (Say the scammer emptied out your checking account; you might be able to get that money paid back.) That could make recovering from a scam somewhat easier.

But if you are deceived into sending money to someone (maybe to pay them for “fixing” your computer or to refund them for an alleged overpayment), financial institutions are not generally required to reimburse victims. However, it can still be wise to report identity theft or fraud so authorities can take action and possibly spare others.

Understanding Authorized vs Unauthorized Transactions

The example above illustrates the difference between unauthorized and authorized transactions. When money is siphoned away without your permission, it is considered unauthorized and refundable.

If, however, you willingly provide payment or access to your accounts because you have been duped by a savvy scammer, then it is considered an authorized transaction. In this case, you may not be reimbursed.

How Regulation E Offers Protection

Regulation E, which is a federal regulation, protects consumers from fraudulent and incorrect electronic fund transfers (EFTs) to or from their bank accounts. More specifically, it provides a process for disputing unauthorized or erroneous electronic transactions (perhaps an unapproved debit card withdrawal). It also limits a consumer’s liability for a lost or stolen debit card.

The Takeaway

Scammers cheated consumers of $12.5 billion in the most recent year studied. That figure reflects how skillful scammers can be and how believable their ruses are. Fortunately, by knowing the red flags and all the latest scams for stealing your hard-earned cash, you can protect yourself and your bank account.

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

FAQ

How can I tell if a website is a scam?

When trying to determine if a website is a scam, check for “https” or a lock symbol at the start of the url, which indicates it’s secure. Also look for misspellings in the URL, like “g00gle.com” vs. “google.com.” Also look for websites that end with an unexpected extension, such as “citi.net” vs. “citi.com.”

What is the difference between fraud and a scam?

While the terms “fraud” and “scam” are often used interchangeably. Fraud is a broad term that describes any deliberate deception, such as online bank fraud, that is implemented to achieve financial or personal gain. A scam is a subset of this, and involves a fraudster using manipulative schemes for financial gain.

Will a bank ask for my password or 2FA code?

Simply put, a bank will very, very rarely ask for your password, a multifactor authentication code, PIN, or other financial credentials. Being asked for that is a red flag that you may be dealing with a scammer.

How can I report a scam?

To report a scam, you should let any financial institution involved know ASAP, as well as let the local authorities, FTC (Federal Trade Commission), and FBI’s Internet Crime Complaint Center know. Doing so can help you as you seek restitution and also help others by potentially catching the scammer.

Besides my bank, who else should I report the scam to?

In addition to letting your bank know that you have encountered a scam, you can also report it to local authorities (the police, your state attorney general) as well as federal authorities such as the FTC and the FBI’s Internet Crime Complaint Center.

Photo credit: iStock/eggeeggjiew

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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

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

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

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

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

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

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

SOBNK-Q325-102

Online bill pay can automate payments of one-time and recurring bills, allowing you to seamlessly transfer funds from your bank account to a payee. Using technology in this way can not only be convenient, it may reduce the odds that you’ll forget to pay a bill and end up getting hit with a late fee.

If you’re curious to know more about what online bill pay is, how it works and how to set it up, read on.

What Is Online Bill Pay?

Bill pay is a way of paying your bills online and automating your finances. It allows you to use your mobile device, laptop, or tablet to send money from your account to that of another person or business. No check writing or manual transfers are required.

You specify the funds and provide details on the recipient, and the amount is automatically taken from your account and sent to the payee.

While you can do this in real time, you can also determine the “when.” That means you can schedule bills for payment in advance whenever you have time free, which can be a huge life hack. You can also typically set up recurring payments, which can make paying bills seamless and can help you avoid late fees, too.

How Does the Bill Pay Process Actually Work?

Online bill pay involves a few steps, such as logging into your bank account, accessing the bill pay feature, providing information on where the money should go and the amount, and when you would like it sent.

Then, the banks involved handle the rest, with the funds being electronically debited from your account as indicated and sent to your credit. Often, online bill pay uses the Automated Clearing House, or ACH, system to move the money between financial institutions.

With this process, you can avoid writing and mailing checks or using high-interest credit cards to make payments. In this way, bill pay can be a useful feature of online banking.

Here are some of the ways you might use online bill pay services:

For Electronic Payments to Major Companies

You can use bill pay for automated payments to such major companies as:

•  Your mortgage lender

•  Utilities

•  Your car loan lender

•  Your credit card issuer

•  Your student loan provider

•  Subscription services, like streaming platforms

For Paper Checks to Small Businesses or Individuals

You can also likely use bill pay instead of writing checks for such things as:

•  Gym memberships

•  Individuals, such as a dog walker or landscaper

•  Charities you donate to

Not only can this save you the time it takes to write a check, but it can also avoid any worry of the check being stolen or lost.

Bill Pay vs Autopay: What’s the Difference?

You may be tempted to use the terms bill pay and autopay interchangeably, but they are actually two different processes.

•   With bill pay, you are set up one or more payments; you are establishing when and how much money will be taken out of your bank account and transferred to the payee.

•   With autopay, however, you are authorizing a creditor to take money out of your account (which can make some people feel as if they are sacrificing control) or to use your bank’s bill payment system to do so.

Recommended: Paying Bills From a Savings Account

How to Set Up Online Bill Pay in 5 Steps

While bill pay can help make managing finances simpler, it does require some initial manual set-up. But, once you’ve learned how bill pay works, this automatic feature can make keeping track of and paying bills less cumbersome. Here’s how to set up bill pay:

Step 1: Choose a Bank or Credit Unions That Offers Bill Pay

While many financial institutions offer digital payment tools, like online bill pay, it’s worth investigating the features that are included at each before opening up an account. Online billing is free with some accounts, while some providers may charge for each transaction — either per bill or on a repeating monthly basis. You can likely set it up on your financial institution’s website or your banking app.

Step 2: Gather Your Bill Information

Next, think about which ongoing bills you want to automate.

•   Predictable expenses (or fixed vs. variable expenses) that don’t fluctuate from month to month, such as loan and mortgage payments or the internet bill, are solid candidates for recurring automated payments. You may want to schedule payment for a time each month when you know there’ll be sufficient funds in your account to cover what’s come due. Some service providers may even allow you to change the due date on certain bills.

•   Bills that change every month may be more challenging to automate. For instance, if your credit card bill might be $300 one month and $1,300 the next, it can be hard to be certain you’ll have enough money in your checking account to cover the cost.

When you know which bills you want to pay, you’ll sign onto your bank’s website or app and search for the “Pay a Bill” or “Online Bill Pay” function.

Worth noting: Some financial institutions place a cap on the amount of money that can be transferred electronically through bill pay. If an automatic payment exceeds that designated transaction limit, users may then need to pay via a physical method, such as a personal or cashier’s check.

Step 3: Add Your Payees in Your Banking App

The bank’s portal or app will then typically guide you to add details so your funds can be transferred from your checking account to your payee.

You’ll enter the details of each biller you want to pay, including their name, address, and your account number. Or you may be able to search for your biller or choose from a list provided by the bank.

Step 4: Schedule Your First Payment (One-Time or Recurring)

In this step, you can either schedule a one-time payment (to happen ASAP or at a later date), or you might set up a recurring payment at a given frequency (say, on the first of every month).

Step 5: Confirm the Payment and Set Up Alerts

Now, you’re ready to submit your payment. Before authorizing the transfer, double-check the payment details. When you’re ready to finish your transaction, you may be required to submit a security or multi-factor authentication code.

Some financial institutions place a cap on the amount of money that can be transferred electronically through bill pay. If an automatic payment exceeds that designated transaction limit, users may then need to pay via a physical method, such as a personal or cashier’s check.

What Are the Benefits and Risks of Using Bill Pay?

Here are details about some of the consequences of not paying bills on time.

Benefit: Helps Avoid Late Fees and Protects Your Credit

One of the ways companies or service providers enforce on-time payments is by penalizing people for paying late. Whether it’s a credit card, utility bill or simply missing a payment date by a single day, submitting a late payment can result in late fees, higher interest rates, or other charges.

On top of late penalties, some providers may also charge interest on the balance owed, essentially creating a double wallop of fees if you’re late paying a bill.

•   In some cases, the interest may be charged starting the day an account becomes overdue. In others, it may accrue going back to the purchase date or transaction day.

•   Depending on the interest rate charged and how frequently that interest compounds, this fee could quickly balloon to more than the initial fee assessed.

In addition, late payments are typically reported to the credit bureaus when a payment goes past 30 days unpaid. This in turn can negatively affect your credit score.

Benefit: Simplifies Your Financial Life

Another benefit of using online bill pay can make managing your money easier. There’s no check writing required, and you can make payments anytime, from anywhere you have a wifi connection. So if you need to pay a bill while you are on vacation or you want to set up monthly payments to your power company, it’s easy to do.

As noted above, being able to manage your bill paying with this electronic service can also help you avoid late payments, which can help maintain or build your credit score.

You can also schedule payments for those moments you know there’s enough money in your account to cover debits (say, right after payday), which can help you avoid overdraft fees.

Risk: Payments Aren’t Instant and Require Buffer Time

When using bill pay, it’s wise to keep in mind that it is not an instant payment. Processing times can vary on such factors as time of day and day of the work, as well as individual financial institutions’ policies. Typically, it can take a couple of days for an online bill pay to be completed, so it can be smart to schedule the payment for a few days ahead of the due date. Otherwise, you risk a late payment and possible fees.

Risk: Requires Sufficient Funds to Avoid Issues

Automating your finances doesn’t mean you don’t have to monitor your finances. If you don’t keep very careful tabs on your money, you could risk overdraft if you don’t have overdraft protection. Say you have unusually high expenses one month; your bank balance might be lower than needed to cover your automated bill payments. This could lead to fees and headaches.

Recommended: How to Pay Bills After Job Loss

How Long Does Bill Pay Usually Take?

Bill pay processing times can vary, but electronic payments usually take 2-5 business days. This can offer an advantage over mailing a paper check which requires time in transit as well as up to several days to process.

Keep in mind that scheduling a bill pay at 7pm on a Friday is likely to require more time to arrive at its destination than one that you schedule at 9am on a Monday. Timing and day of the week will impact your payments, so factor this in when scheduling. It’s often best to schedule payments a few days in advance to make sure they reach the creditor by the due date.

The Takeaway

Bill paying is a fact of life, but there are tools that can make it quicker and more convenient. Signing up for automated online bill pay can put you in control. It can ensure that bills get paid on time, reducing the likelihood of late-payment or overdraft fees. It can be a smart move to see what your bank offers in terms of this service and whether it can simplify your financial life.

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 online bill pay safe to use?

Online bill pay is typically very safe. While no financial or digital process is entirely risk-free, a reputable bank or credit union usually uses state-of-the-art security measures, such as encryption and multi-factor authentication.

Can I stop a bill payment after I’ve scheduled it?

If a payment hasn’t yet been processed, you can likely cancel it. You may be able to stop a payment via your bank’s app or website or by contacting customer service. A fee may be involved. If the payment is already being sent, however, you may be out of luck in terms of stopping payment.

Can I use bill pay to pay an individual or a landlord?

While many people may think of bill pay as being used to send funds to, say, a utility or other company, you can often use bill pay to send funds to an individual (say, your landscaper or babysitter). You will need their banking details to set this up.

What happens if I schedule a payment but don’t have enough money in my account?

If you schedule an online bill pay but don’t have enough cash in your bank account, the payment will likely be declined. This means your payee doesn’t receive the funds, and you may be hit with late fees and/or overdraft fees. Typically, your bank will notify you that the funds didn’t transfer, and you will need to take action to remedy the situation.

Is there a fee to use online bill pay?

There typically isn’t a fee charged by your bank to use online bill pay. However, some financial institutions may charge a fee to expedite an online bill payment. Also, third-party bill pay services may sometimes charge a fee to use their services.

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

SOBNK-Q325-101

Your financial wellness has a significant impact on your daily life, as well as your future. It reflects how well you are managing your money, working toward short- and long-term goals, and avoiding pitfalls, such as taking on too much debt. What’s more, having poor financial health can lead to money stress, which can in turn affect your physical and mental health.

Read on to learn more about assessing your financial health and techniques that can enhance it.

What Does It Mean to Be Financially Healthy?

Financial health is defined as the current state of your monetary situation, such as your credit, debt, savings, investments, and income. Being financially healthy means you are managing your money well.

You can meet your monthly financial obligations, are on track to achieve your financial goals, and have enough cash in the bank to be able to absorb a financial setback.

Signs that your finances are in good health include:

•  You make enough money to cover your monthly expenses

•  You pay all of your bills on time

•  You have no debt or have debt that is manageable and being repaid on schedule

•  You’re saving enough to meet your short- and long-term goals

•  Your credit score is strong enough to help you qualify for whatever loans you might need at low rates

•  You feel comfortable with your financial situation

How to Check Your Financial Health: 4 Key Areas

Here are four key ways to check on your financial health and how it’s tracking.

Your Savings Rate

Your savings rate is calculated by dividing your monthly savings amount by your monthly gross income, and then multiplying that decimal by 100 to get a percentage. Currently, the average savings rate in the U.S. is around 4.50%, with a rate over 8.00% for long-term savings.

Many people focus on their retirement savings when thinking about savings rates. Because there are so many variables, it’s hard to know exactly how much you need to save for retirement. One rule of thumb is to aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. Check how your savings compares to ideal retirement savings by age to know if you’re on track or if you need to catch up

Your Debt-to-Income Ratio

Carrying too much debt can be harmful to your financial health. Lenders use a calculation called debt-to-income ratio (DTI) that compares a person’s monthly debt payments to their monthly gross income to determine how manageable someone’s debt load is. Lower is generally better. Lenders often like to see DTI ratios of 36% or less.

Your Net Worth Trajectory

Your net worth equals your assets minus your liabilities. You can think about how your net worth will evolve as you consider such factors as earning power, growth of savings over time, and building equity, such as owning your own home. Charting this trajectory regularly can help you evaluate financial progress and devise strategies to increase wealth.

Your Credit Score

Having a strong credit score is an indicator of good financial health. Factors that impact your score include amounts you owe on your debt accounts, repayment history, your credit mix, and the length of credit history. FICO® Scores range from 300 to 850. Having a score above 700 is generally considered good credit, while above 800 is considered excellent.

Recommended: Banking 101

7 Ways to Improve Your Financial Health

Implementing just a few good financial habits — such as tracking your spending and saving at least something each month -– can improve your financial health right away, and even more so over time.

Below are seven practical tips to help you move forward.

1. Create and Follow a Realistic Budget

When it comes to money in and money out each month, many of us leave it to chance — and hope that the numbers work out. Taking some time to actually crunch the numbers and set up a monthly budget, however, can help ensure that you are living within your means, spending in line with your priorities, and working towards your future goals.

A simple way to get started on making a budget is to collect the last few months of financial statements and calculate the average amount coming in (after taxes) each month, and average amount going out each month. Subtract the latter from the former and see what you get. If you’re spending more than you are bringing in, or it’s so close there is little left over for saving, you may want to take a closer look at your spending.

There are many different types of budget but one simple guideline you might consider is the 50/30/20 budget. With the approach, you divide your monthly take-home income into three categories: 50% goes to needs (essentials), 30% goes to wants (nonessentials), and 20% to savings and debt repayment (beyond the minimum payment).

2. Track Your Spending, Net Worth, and Credit Score

Keeping tabs on how much you are spending each month, and on what, is crucial to financial wellness. Indeed, tracking spending can be both eye-opening and motivating. You might notice, for example, that you’re spending more than you think for certain things, or that your spending is out of line with your priorities. You might also spot some immediate areas for improvement.

One easy way to track expenses and spending is to put a budgeting app on your phone (many are free for the basic service). Budgeting apps typically connect with your financial accounts (including bank accounts, credit cards, and investment accounts), track spending, and categorize expenses so you can pinpoint exactly where your money is going.

Also regularly check in on your net worth and credit score, as detailed above. Checking your credit score is typically free at AnnualCreditReport.com.

3. Create a Plan to Pay Down High-Interest Debt

Credit cards and similar high-interest consumer loans can drag down your financial health by making it harder to meet your monthly expenses — and even harder to save for future goals. Paying off high-interest debt is an important investment in your financial future.

If you have multiple balances racking up high interest charges, here are two popular strategies that can help you whittle them down to zero.

The snowball method: With the snowball method, you list your debts by size then put an extra monthly payment towards the loan with the smallest balance, while continuing to pay the minimum on the others. Once the smallest debt is paid, you put your extra payment towards the next smallest balance, and so on.

The avalanche method: Using the avalanche method, you list your debts in order of interest rate then focus extra payments towards the debt with the highest interest rate, while continuing to pay the minimum on the others. Once that debt is paid off, you put your extra payments to the debt with the next-highest interest rate, and so on.

4. Build and Maintain an Emergency Fund

Without an emergency cash cushion, an unexpected expense (like a car repair or large medical bill) or loss of income can quickly derail your finances. You may be forced to rack up expensive credit card debt. This can put you in a debt spiral that can be difficult to get out of, and take a long-term toll on your financial health.

Even if you do have an emergency fund, it’s wise to periodically check in to make sure it’s sufficient. A good rule of thumb is to keep at least three- to six-months’ worth of living expenses in the bank. (If you’re self-employed or work seasonally, you may want to aim for six- to 12-months worth of expenses.) Ideally you want to keep this money in a savings account that earns a competitive rate but allows you to easily access your money when you need it.

5. Automate Your Savings and Investments

Tackling financial health can feel overwhelming, and it’s not likely something you want to be thinking about all the time. Fortunately, it’s easy to automate saving at least a little money every month, which is one of the best financial health-boosters

There are two ways to do this: One is to have a portion of your direct deposit go right into a savings account. The other is to set up a recurring transfer from your checking to your savings on the same day each month ( ideally, right after you get paid). You can’t spend what you don’t see. And, chances are, you won’t even miss it.

To help your savings grow faster, consider putting this money in an online bank. Since online institutions generally have lower overhead than traditional brick-and-mortar banks, they tend to offer better rates and low (or no) fees.

6. Regularly Review Your Insurance Coverage

Another financial health tip is to review your insurance coverage. This kind of coverage can play a vital part in improving and maintaining your financial health. Check in regularly to make sure your insurance is keeping pace with your needs, taking inflation and life events into account.

For instance, you may not have thought life insurance was necessary a couple of years ago, but if you have gotten married or had a child, it’s important to revisit that. The same holds true for checking your other types of insurance, such as homeowners’ insurance.

7. Set Clear and Motivating Financial Goals

When you are setting financial goals, it’s wise to think in terms of short-term (one year or less), medium-term (those that will take a couple to several years to achieve), and long-term (ones that take, say, seven or eight years or longer) to achieve.

Then, you can use the acronym S.M.A.R.T. as a guideline to help you finetune your money aspirations. Here’s what it stands for:

•   S for Specific: Instead of saying your goal is “to be rich,” maybe it’s to have no credit card debt within two years.

•   M for Measurable: Assign specific figures to your goals. For instance, saving for college isn’t a measurable goal, but saving $200K for your children’s college funds is.

•   A for Achievable: Set realistic expectations in terms of amounts and timelines so you don’t wind up feeling disappointed or frustrated.

•   R for Realistic: Similarly, don’t expect to cut your spending by, say, 75% to achieve a goal. And don’t forget to factor in the impact of inflation as you consider longer-term goals.

•   T for Time-based: Give yourself due dates, such as “Save $400 a month until I have $5,000 in my emergency fund in about a year.”

Recommended: When Should You Start Saving for Retirement?

Tools That Can Help You Manage Your Financial Health

There are a number of tools that can help you manage your financial health. Automating your finances can play a key role in success. You might use one, some, or all of these methods.

•   Spending trackers, which may be available from your financial institution or from a third-party

•   Round-up apps, which can round up purchases to the next nearest dollar and put the difference vs. actual purchase price into savings or investments

•   Different budget techniques, which can help you allocate the right amounts to different needs and manage spending.

•   Savings calculators, which can include digital tools like an emergency fund calculator, can offer guidance on how much of your earnings to put towards savings goals.

•   Debt management techniques, which can help you pay off high-interest debt via guidelines like the debt avalanche or snowball method.

•   Robo-advisors to help make the investing process more efficient.

The Takeaway

Some habits that can significantly boost financial wellness include setting up a simple budget, tracking spending, automating savings, building an emergency cash reserve, paying down expensive debt, and investing more of your earnings.
No matter what your income or current state of financial health, putting some smart money habits into place now can go a long way toward boosting your financial security, reducing stress, and building wealth 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

What is the first step to improving financial health?

The first step in improving financial health is often creating and following a solid budget. This can allow you to dig into your income, your spending, and your savings, and manage this balance more effectively. Following a budget and tweaking it regularly can help you reach your short- and long-term financial goals.

How often should I do a financial health check?

It’s wise to check in with your finances at least once a year. However, whenever you have a major life change (say, starting a new job, getting married or divorced, having a child, buying a house), it can be a good idea to revisit your money and how you’re managing it.

Can you be financially healthy even with debt?

It is possible to be financially healthy with debt. It’s important to consider how much debt you have and whether it’s considered good (low-interest) or bad (high-interest) debt. For instance, if you have a 30-year $100,000 mortgage as your debt, you are likely in a better situation than someone who has $100,000 in credit card debt.

What is more important, saving or paying off debt?

Both saving and paying off debt are important, and whether one is more important than the other will depend on unique aspects of a given situation. If someone has high-interest debt, it may be wise to focus on paying that off vs. saving. However, if you have low-interest debt (perhaps a mortgage), you might continue to make payments on that while saving for your kids’ college education.

What is a good financial health score?

Financial health scores are sometimes used by financial institutions to measure an individual’s or a business’s financial standing. This score is based on such factors as income, expenses, credit score, debt, and savings/investments. A score between 71 and 100 is considered good.

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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

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

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

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

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

Third-Party 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.

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 .

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

SOBNK-Q325-105

Saving money is a common goal. Who doesn’t want more cash available to cushion their budget, pay off debt, or save for a future dream like a trip to Italy or an early retirement?

Saving money is important for many reasons. It can allow you to pay for things outright rather than running up high-interest credit card debt. It can offer peace of mind, when you know you have enough put away to navigate rough times. And having more money can give you more options.

Saving money doesn’t have to mean living so frugally that there’s never a fancy coffee or weekend getaway in your foreseeable future. In truth, saving money can be fairly painless if you’re smart about it.

Read on to learn some clever, simple strategies for how to save money each month.

1. Tracking Your Weekly Spending

Looking at your spending on a weekly basis can feel more manageable than trying to keep track of a month’s worth of spending at a time.

That’s not to say that you shouldn’t budget on a monthly basis, but breaking your timeline into smaller segments can simplify the process.

You can track spending (including every cash/debit/credit card transaction and every bill you pay) by using an app, jotting down every purchase, or collecting all of your receipts and writing it all down later.

You might then set a certain day to look over the week’s spending. This can be an enlightening exercise. Because spending can be so frictionless these days, many of us don’t have a real sense of how much we are actually shelling out on a day-to-day basis.

Just seeing it all laid out in black and white can immediately make you think twice before you buy something nonessential and inspire you to become more intentional with every dollar.

💡 Quick Tip: Tired of paying pointless bank fees? When you open a bank account online you often avoid excess charges.

2. Creating a Simple Budget

Once you’ve mastered tracking your cash flow, and have a good idea as to your spending habits, you may want to take it one step further and set up a simple budget.

A budget is nothing more than setting limits for spending in different categories. To get started, you’ll want to list all of your monthly expenses, grouping them into categories, such as groceries, rent, utilities, clothing, etc.

If your goal is to save some money every month, you’re going to want to set a budget for yourself that includes an allocation to saving.

Next, tally up all of the income you’re taking home each month (after taxes), and see how your monthly spending and monthly income compare.

If spending (including putting some money towards savings) exceeds income, the next step is to look at all your expenses, find places where you can cut back on spending, and then give yourself some spending parameters to stick to each week.

3. Automating Savings

If you do nothing else to get yourself on the savings path, consider doing this.

Automating savings is a great way to remove a huge barrier to saving — forgetting to put that money aside, then ultimately spending it.

The reality is, we all live busy lives, and while we may have every intention of stashing away cash, there are many reasons why it’s hard to save money. Saving often doesn’t happen without a plan.

Automating is an easy way to save money without ever having to think about it.

The idea is to have money moved from a checking account and into a savings account on the same day each month, perhaps soon after your paycheck is deposited.

This way, the money is whisked from the checking account before it can be spent elsewhere.

If you are new to automating or have an irregular income, it’s okay to start with smaller dollar amounts. Likely, you won’t even notice that the money is gone from your account, and you’ll be able to increase the amount of money over time.

You can set up automatic transfers to your savings, retirement, and other investing accounts.

4. Planning Your Groceries

Here’s another easy way to save money: Spend less on groceries by making a meal plan and a shopping list before you go to the store.

Without a list, you may be tempted to buy things that look good but that you don’t need or can’t use. Plus, you may end up having to go back to the store later, where you may be tempted to buy more things.

You don’t have to be a pro at meal-planning. It can be as simple as picking a few recipes that you want to make throughout the week (making large enough portions to provide for leftovers is another way to save).

You can then write a list of the ingredients that you’ll need, making sure to check your cabinets and use what you have first. Doing so is a life skill that can save you money.

You may also want to list exactly what snacks and/or desserts you plan to buy, so you’re not overly tempted once you get to the chips or cookies aisle.

Another way to save money on groceries is to cut back on pricier items, such as meat and alcohol, and to go with store or generic brands whenever possible. With tactics like these, you could be saving money daily.

5. Negotiating Your Bills

Some of those recurring bills (such as cable, car insurance, and cell phone) aren’t carved in stone.

Sometimes you can get a lower rate just by calling up and asking, particularly if the provider is in a competitive market.

Before calling, you may want to do a little research and know exactly what you are getting, how much you are paying, and what the competition is charging. You may also want to get competing quotes.

Even a small reduction in a monthly bill can save significant cash by the end of the year.

If you are experiencing hardship, you may also be able to negotiate down your electric and/or other utility bills by calling and explaining your circumstances. It never hurts to ask. The same holds true with doctor’s charges: You may be able to negotiate medical bills as well.

6. Actively Paying Down Credit Cards

This might sound more like spending than saving, but if you’re currently only paying the minimum on your credit cards, a big chunk of your payment is likely going towards interest. Chipping away at the principal can feel like a tall mountain to climb.

If possible, consider putting more than the minimum payment towards your bill each month. The faster those credit cards are paid off, the faster you can reallocate money that was going to interest into savings.

Can’t seem to make a dent in your credit card debt? You might want to look into a zero-interest balance transfer offer, using a lower-interest personal loan to pay off the debt, or finding a debt reduction plan.

7. Canceling Subscriptions

It can be all-too easy for money to leak out of your account due to sneaky subscriptions.

From unused gym memberships to shopping subscription programs, subscription bills (even small ones) can rack up quickly because they come every single month without fail.

The first step is to cancel any subscriptions that no longer serve you. Try to be honest with yourself: Are you likely to start going to the gym? Could you work out at home instead?

If you’re looking to save money faster, you might consider making a sacrifice on a subscription that you do enjoy. For example, maybe you pay for Netflix, Hulu, and Disney+. Is it possible to use just one or two, instead of three? That could be a good way to save on streaming services.

8. Renewing Your Library Card

If you’re a reader and love books, one creative way to save money is to dig out your library card, or if you don’t have one, stop in to apply for a card.

The library can be a great resource for more than books. For example, you can often access magazines, newspapers, DVDs, music, as well as free passes to local museums.

These days, you can typically get many of the benefits of being a cardholder without ever actually going to a branch. You can often get audio books and e-books, as well as access to online publications and online entertainment all from your computer or phone. Cost: Zero.

9. Shopping for Quality

Buying well-made, durable items instead of cheap, trendy, or single-use items may mean spending a little more up front.

But this can be a shrewd money move that can save you a bundle over the long run because you won’t have to repeatedly make the same purchases.

Buying a few classic, well-made pieces of clothing you will wear for a few years, for example, can end up costing less than picking up eight or 10 cheaper, trendier items that you’ll end up replacing next year.

It may also pay off to spend a little more for appliances that are known for being reliable and lasting a long time and have great customer reviews, than buying the cheapest option.

Shopping for quality takes some education and practice, but it can be a worthwhile skill that your wallet will appreciate.

10. Pressing Pause on Big Purchases

Making impulse purchases can wreck a budget. That’s why if you’re tempted to buy an expensive item that is more of a “want” than a “need,” you may want to give yourself some breathing room, and allow the initial rush to wear off.

For example, you might tell yourself that you’ll wait 30 days and if, after the waiting period is over, you still want the item, you can get it then.

During that time you may lose interest in the item. If, however, you still want it in a month, that’s a good sign that this purchase will add substantial value to your life, and isn’t just a fleeting desire. If you can make room for purchase in your budget, then go for it.

This helps you make spending decisions from a slower, more thoughtful place, and can be a huge help in learning to budget and save money.

11. Round up Purchases

A painless and fun way to save money can be by rounding up purchases. You can do this in one of two ways.

•   The old-fashioned way is to pay for things with cash and keep the change in a jar. Then, at the end of a week or a month, deposit that change into your savings account.

•   Today, there are a variety of apps that allow you to round up purchases. That extra money can then be put into savings or invested. Check with your bank; they may offer a program like this making for a seamless experience.

12. Look into Refinancing Your Loans

Interest rates go up and down, and there may be an advantage to refinancing your loans if you can find a lower rate and/or a shorter term. Doing so could save you considerable money in interest over the life of the loan, whether that’s a mortgage, car payment, or student loan.

13. Bundle Your Insurance Policies

You may be able to whittle down your bills by combining your insurance policies (typically home and auto) with one company. Generally, when you do so, you can reap a solid amount of savings.

14. Gamify Savings

Many people find it helpful to give themselves monthly challenges to save money. It can make the pursuit of spending less more fun and can get your competitive spirit going.

For example, one month, you could vow not to get any takeout coffee and put the savings in the bank. The next month, you could vow to not use any rideshares and instead walk or take public transportation. Again, you’d put the cash saved in the bank.

15. Go Fee-Free

It can be wise to take a look at your financial institution and see how much you are paying in bank fees. There can be everything from overdraft charges to out-of-network fees to foreign transaction costs. In addition, your account might be hit with monthly maintenance or minimum balance fees. All of that can add up.

You might want to shop around for a new banking partner if you’re getting assessed a number of these charges.

Why Saving Money Is Important

Why go to the trouble of pinching pennies like this? Saving money is important for several reasons.

•   It can help you build wealth.

•   It can give you security.

•   It can reduce money stress.

•   It can help you achieve short- and long-term financial goals.

•   It can allow you to navigate bumpy times (such as job loss).

•   It can give you breathing room to splurge at times on the fun stuff of life.

Finding a Good Place to Grow Your Savings

Even if you’re only putting a small amount of money into savings each month, over time, that account will grow.
One way to help it grow faster is to park the money in a place where you won’t accidentally spend it and where it can earn more interest than a typical savings account.

You might consider opening up a high-yield savings account, money market account, online savings account, or a cash management account.

You may find that separating your savings, and watching it grow, keeps you motivated to save.
In some cases, you may be able to create “buckets” within your account, and even give them fun names, such as “Sushi Tour in Japan” or “My Dream House” that can help keep you motivated.

The Takeaway

Saving may not seem nearly as fun as spending, but it can give you the things you ultimately want, whether that’s a posh vacation, a down payment on a new home, or a comfortable retirement.

And, there are plenty of ways to save money that don’t require sacrifice. You can use a mix of short-term strategies (like spending less every time you go to the supermarket) and long-term moves (like paying down debt and buying higher quality goods) to achieve your goals.

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 the 50/30/20 rule?

The 50/30/20 budget rule says that, of your take-home pay, 50% should be allocated to needs, or basic living expenses and minimum debt payment; 30% should be for wants, or discretionary spending; and 20% should go into savings.

What is the 30 day rule?

The 30-day rule is a way of avoiding impulse purchases and helping you take control of your money. If you find yourself about to make a significant impulse purchase, agree to wait 30 days. Write down the item, its cost, and where you saw it in your calendar for 30 days in the future. If that date rolls around and you still feel you must have it, you can reevaluate buying it, but there is a good chance the sense of “gotta have it” will have passed.

How much should you save a month?

Many financial professionals advise saving 20% of your take-home pay, but of course the exact amount will vary depending on such factors as your income, your debt, your household (how many dependents, for instance), and your cost of living.

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/.

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.

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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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