5 Smart Spending Strategies

August 11, 2020 · 6 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

5 Smart Spending Strategies

When it comes to budgeting, some of us live by the saying, “Out of sight, out of mind.” If you can’t see those charges coming through on your credit card, did they ever really happen?

Only two in five Americans keep a budget or track expenses, but burying your head in the sand can only go on for so long.

At some point, bills will be due, and everything will need to be sorted out. Instead of letting your spending hit you like an avalanche, consider adopting some smart budgeting strategies that take the stress out of spending.

5 Spending Tactics

1. Track Your Spending

For many implementing smart spending strategies, the first instinct is to enact a strict budget. However, it’s hard to get a true sense of what your budget will look like if you’re not familiar with your spending habits.

You could start by excavating last month’s spending using the highlighter method. Print out statements from credit cards, bank accounts, and ATM cards. Armed with an assortment of fun highlighter colors, go through each statement, highlighting by spending category.

There’s no hard and fast rule regarding categories; you might highlight all food expenses one color, or perhaps you want to drill down and dedicate different colors for spending on meals out versus groceries. A simple category breakdown might look like this:

•   Household expenses (rent/mortgage, ultities, home insurance)
•   Food (groceries, dining out, coffee, etc.)
•   Transport (car payments, rideshares, gas, auto insurance, etc.)
•   Debt and Monthly Bills (student loans, credit cards, not including home utilities)

Once you’ve gone through and highlighted by category, you can add up the totals for each. While the numbers certainly matter, the visual can be just as helpful.

Are you highlighting credit card statements like crazy with transactions on food? Might be time to reconsider your eating out budget. Is there an Uber charge every other line? Maybe your spending weakness is your daily rideshare habit.

The one thing you shouldn’t feel from this exercise is shame or embarrassment. Most of us over-highlight in at least one category, or overspend when it comes to specific items. Pat yourself on the back for highlighting the issue, and addressing it.

Not one for paper and highlighter? Your bank might provide a similar budget tracking feature online. Or, if you’re looking to see big picture spending all in one place, SoFi Relay® can track all of your spending in one place.

2. Create a Budget

After you see where you typically spend, then you can start moving forward with a budget. Budgets can seem complicated and boring, but what it drills down to is spending less than you make each month—it’s as simple as that.

While tracking is about examining what you’ve already spent, budgeting is about looking forward to what you will spend. And just like no two people are the same, neither are budgets. Here are a couple of jumping-off points. Try one out, or mix and match a few to find the perfect fit for you.

50/30/20 Budget

The 50/30/20 rule breaks down your after-tax income into three buckets:

•   50% on needs
•   30% on wants
•   20% on savings

Needs are defined as things you must pay, as well as items necessary for survival, such as:

•   Rent or mortgage
•   Car payments
•   Healthcare
•   Groceries
•   Insurance

It also includes minimum debt payments.

Wants are things you spend money on that are nonessential like dining out or entertainment activities. This includes the “upgrade cost” of things.

For example, you might pay for super fast internet or more data on your phone plan. Beyond the bare minimum pricing, these charges fall into the wants category.

Finally comes savings. This 20% can be divided among a few different accounts, including retirement, emergency funds, and investing. While minimum debt repayments fall under needs, anything above and beyond that monthly charge can be taken from savings.

While it’s not for everyone, the 50/30/20 rule can be a good introduction to budgeting.

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning 1% APY on your cash!

Zero-Based Budget

Zero-based budgeting is less about percentages, and more about the big goose-egg: zero. Each month, you’ll want your expenses to match your income, essentially leaving nothing left over by the end of the month. Each dollar will be assigned a job as it comes in. Bottom line, if you make $4,000 a month, your expenses should add up to $4,000 a month.

Sounds simple, right? It can be, with a little practice. After tracking your monthly income, you’ll need to take note of your monthly, then seasonal or annual expenses.

Seasonal planning is essential in zero-based budgeting, you’ll want to plan ahead for these expenses and allocate a little to it every month. Once you have your income and costs down, you’ll subtract the later from the earlier.
If this doesn’t add up to zero right off the bat, you’ll need to balance your budget. That might mean taking a look at your expenses and cutting a few line items.

Now, a word of warning. Just because the concept is called zero-based budgeting doesn’t mean you’ll want to end each month with zero dollars in your bank account.

Instead, you should have zero left to budget—meaning if there’s a month sitting in your checking account, it has a job. That could mean it’ll be spent in a few months, or it’s simply getting transferred over to savings.

Budgeting Apps and Online Tools

For the tech savvy, pen, paper, and spreadsheets might not do the trick. If you’re looking for a way to passively track your dollars and have access to your budget at the swipe of a finger, you might want to use an app to track your budget.

With online tools like SoFi Relay, you can track all of your spending across accounts, as well as set goals for saving. Instead of logging into each account, you can see your charges and debts all in one place.

3. Find the Fun in Saving

Once you’ve started tracking your expenses and budgeting your income, staring at your monthly statements shouldn’t be scary. Instead, find enjoyable ways to maintain your budget and break bad habits around spending.

4. Turn it into a Game

Shoot for a no-spend day once a week, or see how far you can get in your day without spending anything. This doesn’t mean you can’t leave the house, but it will challenge you to find creative ways to enjoy yourself, without pulling out your wallet.

That might mean hosting a pantry leftovers potluck with friends, where everyone brings something from home. Or, it could mean turning to a local library to check out movies, games, or magazines for entertainment. No-spend days will make you reconsider each purchase you make which could help you save a little money.

5. Finding a Partner in Crime

While we tend to be hush-hush about spending habits, getting an accountability partner can help you spend smarter. Maybe it’s someone you check in with a few times a month, or maybe you share budgeting tips, but bringing your spending habits into the open can make it easier to stick to them.

Plus, cluing in a close pal on your smart saving can help reduce that dreaded sense of FOMO you might get when you miss out on spending opportunities.

Spend Smart, Save Smarter

Getting spending under control can bring peace of mind to your pocketbook, but it also makes it easier to save or pay down debt.

Looking for more ways to save smart? SoFi Checking and Savings® is a checking and savings account that has no account fees (subject to change). Plus, withdrawing cash is fee-free at 55,000+ ATMs worldwide to help make smart spending even easier.

Find out more about using SoFi Checking and Savings to save.

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.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member
SoFi Securities LLC is an affiliate of SoFi Bank, N.A. SoFi Money Debit Card issued by The Bancorp Bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 8/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.


All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store
SoFi Android App, Get it on Google Play

TLS 1.2 Encrypted
Equal Housing Lender