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Making it in life, in a financial sense, isn’t a matter of winning the lottery or saving pennies like a miser. Rather, like many goals, it can depend on developing good daily habits.

If you make small, incremental shifts in how you manage your money, you could grow your net worth significantly. These moves can be as simple as reviewing and trimming your recurring bills or bumping up your savings contributions a notch.

While you may not see your savings double overnight, you can get on a path to growing your wealth. Here are some ideas that can help put you on the road to a better financial life.

1. Reviewing Monthly Expenses

One of the simplest ways to improve your financial health is to take a closer look at how much is going in and coming out of your bank accounts each month and to then drill down into exactly where your money is going.

Make a list of how much you’re currently spending monthly on essential and nonessential items. You may want to list your nonessential expenses in order of priority, and then look for places where you could potentially pair back, or in some cases, completely eliminate the expense.

This might involve canceling inactive memberships and unused subscriptions, and/or re-evaluating your cell, cable and car insurance plans (do you have more bells and whistles than you need? Could you get a better deal elsewhere?). Or, you might decide to cook more (and get takeout less often) or make fewer trips to the mall.

Another way to knock down recurring bills is to do a little haggling. Sometimes all it takes is a phone call to get a provider to give you a better deal or to lower your rate. If you see a promotion going on from a competitor, for instance, you can always ask your company if they can apply that rate to your account.

2. Trying a 30-Day Spending Freeze

One quick way to change your spending habits is to put yourself on a one-month spending freeze, during which you stop spending money on anything that isn’t a must. When the 30-day freeze is over, you may realize that you didn’t miss some of the things you usually spend money on and find it easy to pare back.

If a full spending freeze seems too challenging, you might pick a single category (such as clothing or shoes) or a specific store to stay away from for 30 days.

To help stay motivated, keep track of the money you didn’t spend during your freeze and then put it to use paying down debt, starting an emergency fund, or saving for a downpayment on a home or other short-term financial goal.

3. Automating Every Bill

Automating your finances not only makes your life easier, it can also help boost your financial wellness.
Setting up automatic withdrawals from your bank account to pay all of your bills helps ensure those bills get paid on time. And, when it comes to improving your financial life, paying bills on time can have a pretty significant impact.

For one reason, it helps you avoid paying interest and late payment fees. It could also help you maintain good credit. That’s because a significant portion of your credit score is based on payment history. In fact, it’s weighted more than any other factor.

It could also help maintain your credit score. That’s because a significant portion of your credit score is based on payment history. In fact, it’s weighted more than any other factor.

Having a good credit score is important because it can help you qualify for the best interest rates on credit cards and loans, including a home mortgage.

4. Putting an Extra 1% Towards Retirement

Even if you think you can always plan for retirement later, the sooner you start, the easier it will be to reach your savings goal.

If you’re not yet maxing out your 401(k) contribution at work (which takes money out of your paycheck before taxes), you may want to increase it by just 1%.

You likely won’t notice the difference in your paycheck. But given the power of compound returns (when you earn returns not only on your initial investment but also on any accumulated returns), that small increase can net more significant gains over time. You might also set up a timeline for when you want to bump it up another percentage point after you’ve gotten used to the 1%.

You may want to set up a timeline for when you want to bump it up another percentage point after you’ve gotten used to the 1%.

If you don’t have a 401(k) at work, you may want to look into opening an individual retirement account (IRA), keeping in mind that there are limits on how much you can put into retirement savings each year.

5. Paying in Cash

What is it about plastic that can make your brain think you’re not really spending money?

One way to curb unnecessary or mindless spending is to leave your credit cards at home and only carry the amount of cash you have budgeted to spend that day, or week. When you can literally see your money going somewhere, you may find yourself becoming much more intentional in the way you spend it.

It can also be more difficult to get into debt when using cash, which could, in turn, pay off later by helping you avoid high-interest credit card payments.

Recommended: The Envelope Budgeting Method: What You Need to Know

6. Creating Multiple Income Streams

You may not be able to snap your fingers and get a raise at work, but it might be possible to increase your income in other ways. A low-cost side hustle could be the answer.

For example, is there a way to turn one of your hobbies, skills, or interests into some extra funds? Maybe a favorite local business could use some help managing their social media account or designing or writing copy for their website. Babysitting a neighbor’s kids, cleaning houses, walking dogs, or running errands for an older person are also options.

Or, you might consider taking up a gig with flexible hours, such as driving for a rideshare company, delivering food, helping people with small tasks, or personal shopping through one of the many on-demand service apps.

7. Saying “No” to Monthly Fees

Unless you’re looking very closely at your bank statements each month, you might not even be aware of the fees your bank may be charging every month for your checking or savings accounts.

These could include service fees, maintenance fees, ATM fees (if you go outside their network), minimum balance fees, overdraft/non-sufficient funds fees, and transaction fees. Over time, those little dinks can make a major dent in your account.

“If you see that your bank is hitting you with one or more monthly fees, you may be able to cut your monthly spending by switching to a less expensive bank, or going with an online-only financial institution, which tend to offer low or no fees,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi

8. Making Savings Automatic

To start a savings routine, consider opening up a high-yield savings account, and then setting up automatic, monthly transfers from your checking account into this account. By having a set amount automatically transferred every month, you won’t have to think about (or remember to manually make) this transaction — it’ll just happen.

It’s perfectly okay to start small. Even small deposits of $20 or so will add up. Before long you may have enough for an emergency fund (i.e., three to six months’ worth of living expenses just-in-case), a down payment, or another savings goal.

9. Knocking Down Debt

Having too much debt can hurt your chances of achieving financial security. That’s because when you’re spending a lot of money on interest each month, it can be harder to pay all of your other expenses on time, not to mention grow your savings.

Getting rid of debt can have long-range consequences as well. If you can lower your credit utilization ratio, which shows the amount of available credit you are currently using, it could help you establish or maintain strong credit. And that, in turn, could make it easier to qualify for lower-interest loans and credit cards in the future.

While knocking down debt may seem like a mountain to climb, choosing a simple debt reduction strategy may help.

•   The avalanche method: Put extra cash toward the debt with the highest interest rate, while paying the minimum on all the rest. When the most expensive debt is paid off, put that extra cash to

•   The snowball method: Put extra cash toward the debt with the smallest balance, while paying the minimum on all the rest. When the smallest debt is paid off, put that extra cash toward the account with the next-smallest balance and so on, until you are done.

If you can qualify for a lower interest rate, another option might be to take out a personal loan that consolidates all those high-interest debts into one more manageable payment.

The Takeaway

Making it financially doesn’t necessarily mean bringing in a huge paycheck or coming into a windfall (although those things don’t hurt).

Financial wellness is more about being able to live within your means while saving. Making a few incremental changes, such as putting just 1% more of your paycheck into your 401(k) or siphoning off an extra $100 into a savings account each month, can slowly but surely help you build your net worth.

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 of money?

The 50-30-20 rule is a budgeting method that splits your income into three parts: 50% for necessities (such as rent and groceries), 30% for nonessential expenses (like dining out and entertainment), and 20% for savings and paying off debts. This approach helps you maintain a balanced budget, ensuring you cover your basic needs, enjoy your life, and save for the future.

What is the 70/20/10 money rule?

The 70/20/10 rule is a budgeting strategy that allocates your income as follows: 70% for monthly bills and daily spending, 20% for savings and investments, and 10% for additional debt payments or charitable donations. This approach helps you manage your finances responsibly, build wealth, and contribute to causes you care about, fostering a well-rounded financial life.

What is the 10-5-3 rule in finance?

The 10-5-3 rule in finance is a guideline for estimating returns on different types of investments. It suggests that stocks may average a 10% annual return, bonds around 5%, and cash or savings accounts about 3%. This rule helps investors set realistic expectations and plan their financial goals accordingly, though actual returns can vary based on market conditions and individual investment choices.

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

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

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

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

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

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

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

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

SOBNK-Q225-071

Supplemental income is money that is earned above and beyond a person’s “regular” income, which, for most people, is earned through working a job. Supplemental income could include income earned through a side hustle, or it could include money from a regular job that is extra: bonuses, overtime pay, tips, commissions, and so forth.

For many people, supplemental income can amount to “extra” money beyond what’s needed to cover their regular expenses. And there are some smart ways to handle that extra income, which may help people reach their financial goals sooner.

What Is Supplemental Income

As noted, supplemental income is money that is earned or otherwise accumulated beyond a typical income stream, like a paycheck. That can include bonuses or tips earned while working a job, too.

Supplemental income can also be earned in the form of a commission, by accumulating dividends on investments, or even by working a second job or side hustle.

There are numerous ways to tap into supplemental income streams, though that doesn’t mean that it’s necessarily easy. You should also know that there are generally two types of supplemental income: Active, and passive.

•   Active income: This is often defined as trading time for money. The person puts in time, whether that’s through taking photographs for websites or walking dogs, and is paid for their services in exchange. It’s a typical job, in other words.

•   Passive income: This kind of work involves little to no active investment in time once the gig is established. It could involve selling an uploaded ebook or affiliate marketing, as two examples.

For many people, a side hustle or second job is likely the quickest route to earning supplemental income. But there are government programs out there, too, that can help those in need, like the Supplemental Security Income program (SSI).

A Note About Supplemental Security Income

Supplemental Security Income (SSI) is a program administered by the Social Security Administration. SSI provides payments to people over the age of 65 who have a disability, including being blind or deaf. To qualify for Supplemental Security Income, people must also have limited financial resources, in addition to meeting the age and disability requirements. The purpose of the program is to help people meet their basic needs.

As the program is designed to help people meet their basic needs, some of the suggestions for handling supplemental income may not be applicable to those earning SSI benefits.That’s because those who do receive those benefits likely won’t have much room in their budget for additional spending, or the need to find ways to deploy that additional income — they may need it to cover their basic expenses.

Launching a Side Hustle

When choosing a side hustle or second job, it makes sense to pick one of interest to you; or, even better, one that inspires passion. This can help to prevent boredom and make it more likely that time and energy will continue to be invested in this income-generating activity. What hobbies, for example, can be monetized? Blogging? Making crafts or designing websites?

Ask yourself further questions: How much time can be invested in this side hustle? Can the required time ebb and flow as demands at the main job fluctuate? What resources are available to get started? And, perhaps most importantly, what’s the estimated earning potential?

Having a second job or side hustle isn’t terribly uncommon these days, as many people either need the extra money to make ends meet, or are looking for ways to pad their earnings to add to their savings or investment accounts.

One benefit of side hustles that are based on passive income is that, although work typically needs done up front to establish the side hustle, it shouldn’t need ongoing active involvement. And whether you’re renting out a room in your house, monetizing a blog, or writing ebooks to earn supplemental income, it’s important to keep some things in mind as you start to see that income roll in.

Tips for Using Your Extra Income

Here are some tips for putting your extra income to use.

1. First, Manage Your Income Taxes

When working for an employer, relevant income taxes are typically withdrawn from each paycheck but, with a side hustle (one that doesn’t involve working for an employer and receiving a paycheck, that is), the worker is responsible for paying federal taxes, FICA, Medicare tax, and any state and local taxes on net income.

That’s because a “hustle” or “gig” is typically a form of self-employment. To help, the IRS has created a Gig Economy Tax Center with plenty of resources and pieces of important information, including that income taxes must be paid on side gig income of $400 or more annually.

Those earning money from a side gig may also need to pay estimated quarterly taxes. The deadline for these payments are:

•   April 15 for payment period January 1–March 31

•   June 15 for payment period April 1–May 31

•   September 15 for payment period June 1–August 31

•   January 15 for payment period September 1–December 31

At the tax-filing deadline, (typically mid-April), a Schedule C usually needs to be filed for people earning money in a self-employed side gig. And, when earning supplemental income, it’s important to deposit enough in a bank account so that funds don’t fall short when tax returns need to be filed. What’s left over after taxes are planned for can be spent in a variety of ways, some ideas might include:

•   Paying off “bad” debt.

•   Establishing an emergency savings fund.

•   Saving and investing.

•   Enjoying some discretionary spending.

2. Paying Off “Bad” Debt

Bad debt can be defined, in general, as debt you acquire that results in a net loss. For example, going into debt for a vacation, a big party, clothes and/or gadgets doesn’t add to your net worth. Going into debt for your education or home may gradually add to your net worth in the future.

Bad debt can also refer to loans or lines of credit with higher interest rates, and which are harder to pay off as a result. Supplemental income can be used to pay this debt down or off.

Debt management plans to pay off debt include the snowball or avalanche methods — and a combo of the two, the fireball method. Different strategies work better for different people, so it can be worth experimenting with them to make the best choice.

With the snowball method, list bad debts by the amount owed, from the smallest to the highest. Include credit card debts, personal loans, and so forth. Then, make the minimum payment on each but put extra funds on the one with the smallest balance to get it paid off. Once that balance is zero, home in on the debt with the second smallest balance and keep using this strategy until all bad debt is paid off. Avoid using credit cards during this time.

With the avalanche method, list bad debt in order of its interest rate, from highest to lowest. Make minimum payments on all of them and put extra funds on the one with the highest rate. Pay it off and then move to the next highest rate, and so forth.

With the fireball method, take “bad” debt with interest rates of 7% or more and then list them from smallest to largest. Make the minimum payment on all and then put excess on the smallest of the “bad” debts. Rinse and repeat.

3. Establishing an Emergency Savings Account

Another smart idea is to put supplemental income into an emergency savings account. This can be accomplished in conjunction with a debt payment plan (put half of the excess funds into an emergency account and use the other half to pay down bad debt, for example) or as a single focused goal.

Funds in this account are intended for use if a financial emergency occurs. This can be a leaky roof that requires immediate attention, a significant car repair, or unexpected medical bills. Having a robust emergency fund can help to prevent the need to rely on credit cards to address unanticipated expenses.

It is commonly suggested that emergency savings accounts should contain three to six months’ worth of expenses. So, add those monthly bills up and multiply by three — and also by four, five, and six. This gives a range of the rainy-day fund’s goal.

Recommended: Planning your emergency fund? Our emergency savings calculator can assist you in setting the right target.

4. Saving and Investing

You could save or invest your extra money! This can include saving for personal goals, from a down payment on a house to a vacation fund, and or for retirement. What’s important is to prioritize how it makes sense to use extra money being earned and then save and invest to help meet those goals. How you save or invest that money would be up to you, but you could look at some common investment choices including stocks, bonds, mutual funds, and alternative investments, and more.

5. Enjoy Some Discretionary Spending

Once the financial “need-to” items are checked off the list, it can be okay to use some supplemental income to have fun. You could update your wardrobe, buy a new video game, take in a movie, or even go out to a nice dinner. If it’s within your budget parameters, treating yourself every now and then can be a nice thing to do.

Plus, getting a taste of the finer things may help keep you motivated to make sure your spending stays in check and that you stick to your budget going forward.

The Takeaway

Supplemental income is extra income earned beyond your primary income stream, and finding ways to drive supplemental or secondary income can help you reach your financial goals sooner. It can also help you free up some room in your budget to potentially treat yourself every now and then.

You can also put that extra money to work, by saving it and earning interest, or investing it for the future.

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 supplemental income?

Supplemental income refers to income derived outside of a primary income stream, such as a wage-paying job. Supplemental income can include bonuses, tips, commissions, or money earned through side hustles.

What is the difference between active and passive income?

Active income often or generally involves trading time for money, such as at a job or through employment. Passive income is money earned through little or not time investment, such as returns generated by investments.

Do I owe taxes on my side hustle income?

Yes, income taxes are owed on income earned of more than $400 annually, per IRS rules.

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

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

*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.

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

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/.

SOBNK-Q225-054

Are you ready to take your professional growth to the next level in 2024?

Whether you’re hoping to get a raise, clinch that promotion, or switch careers, the beginning of a new calendar year can be a great time to sit down and reflect on where you’ve been, where you want to go, and how you’re going to get there.

Why bother setting professional development goals? Without a specific direction in mind, it can be easy to fall back on what you’ve always done, or just take any opportunity that comes your way without thinking critically about what you want. This can leave you feeling unsatisfied and rudderless in your professional life.

Even if you’re just starting out, you have more agency over your work life than you might think. Setting clear and specific goals can set you on the right path, help you take control of your career, and lead you to the job you’ve always dreamed of.

To help unleash your full potential, here’s a look at four examples of career goals to consider for this year.

Get That Raise

When was the last time you got a pay increase? If it’s been longer than a year, it may be time to speak up. To build a case for a bump up in pay, consider doing some research into the going rates for your job in your area. If your compensation is below par, you can use this information as leverage for requesting an increase.

You can also increase your odds of getting a raise if you can effectively communicate your value to management. Rather than say you need more money, you might point out the hours and dollars you’ve saved the company, how you’ve improved productivity, or the additional responsibilities you’ve taken on since your last pay increase.

Asking for a raise isn’t easy, but you can do it. Even if the answer is no, you’ve started the conversation. This gives you the opportunity to ask what specific actions would be needed to merit a raise. If tight budgets are the issue, you might ask about a one-time bonus, either now or after a set time period.

Recommended: Guide on What to Do When You Get a Pay Raise: 12 Tips

Build Your Professional Network

The saying “it’s not what you know but who you know” has some truth to it. So in addition to polishing your professional skills, consider making 2024 the year you focus on expanding your professional community. You can build your network by attending networking events and connecting with other like-minded professionals via social media. You might also ask colleagues, friends, and family members to introduce you to contacts that may be a good professional fit.

Meeting professionals and keeping in contact with them can help you learn more about the industry, including job opportunities down the line. Individuals in your network may also be willing to serve as mentors and help you develop important career skills.

Climb the Ladder

Earning a promotion enables you to assume a more important role in your company, earn a higher salary, and gain a heightened sense of accomplishment. If your goal is to land one, start taking extra measures to become a prime candidate for your desired position. That might mean going above and beyond in your role, seeking out opportunities to get noticed, and demonstrating your leadership skills.

If you haven’t recently had a performance review with your manager, the new year is a great time to set one up. Let them know that you would like to discuss your career path, and come prepared with data on what you’ve accomplished and a clear ask on where you’d like to go next.

Recognize that while you may not get what you’re asking for tomorrow, you’re taking an important first step in the process. This meeting will allow you to get clear on what you’d need to do to earn a promotion, and discuss a timeline for next steps.

Recommended: Working Remotely Could Hurt Your Chances to Get Promoted

Move On

Not getting any traction on a pay bump or promotion? This might be the year to pursue a more challenging role at a different company. If you’re ready to move on (and, ideally, up), start scoping LinkedIn and networking with recruiters or HR representatives in your field.

Not happy with your current career? Pursuing an entirely different career path might be your main professional goal. You could find greater satisfaction and happiness in a new career, as well as a higher salary and more opportunities. Consider what your ideal career is and how you can reach it from your current job. What challenges seem exciting to you? What are you well-prepared to do, and what would you rather avoid? What other experiences can you draw on as examples of your skill set — for example, previous jobs, volunteer work, side hustles? Reach out to professional connections you have in other industries to determine whether they might be a good fit for you.

Recommended: New Year, New Goals: Set and Achieve Your Career Resolutions

Tips to Achieve Your Career Goals

Whatever your professional objective for the coming year, here are some steps that can help you get there.

•   Write down your goal and steps involved. It’s important to get your goal out of your head and down on paper. In addition, think through and list out the steps you’ll need to achieve it. This will help you remember and accomplish each step. Post your list where you will see it often.

•   Set deadlines. Turn “some day” into a specific day by setting deadlines for each step in your plan. Deadlines will keep you on your toes, and give you a sense of accomplishment as you meet your targets.

•   Reward yourself. Taking steps toward your career goals requires hard work and commitment. Think of small rewards to give yourself when you complete any step to help you stay motivated and on task.

•   Have a goal partner. Consider recruiting a friend or coworker to help you stick to your plan. Discuss your goals, and check in with them when you complete steps. If possible, do the same for your partner.

•   Connect with a coach. If you’re feeling unsure about your career direction, a professional coach can be a big help. Coaches are skilled at asking impactful questions to help you reflect and build more self-awareness. A coaching experience can provide clarity on what’s important to you and empower you to set realistic, flexible career goals.

The Takeaway

Setting — and working towards — goals isn’t easy, especially when it comes to your career. But the process can really pay off, both literally and figuratively.

Creating clear professional objectives prompts you to think about what you want, so you can pursue a position or career that truly satisfies you. While you may not achieve your goal overnight, simply having professional goals can give your work direction and purpose — you have an action plan and are working towards something you really want to achieve in your life.

To explore more work topics, check out SoFi at Work’s resource hub.

About the author

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.

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Lifestyle creep is defined as spending more as you earn more. Perhaps you’ve noticed that as your income rises, you may not grow your wealth, including your retirement account or that fund for the down payment on a house.

It may well be human nature that, when you get a salary hike, you decide to splash out on a fancier car lease, a bigger home, or a luxurious vacation. However, your spending may actually be outpacing your salary and even ringing up more credit card debt.

That’s lifestyle creep in action: Spending on “fun” non-essentials instead of putting that money to work for a more stable financial future. Learn more about it and how to rein it in while still enjoying the things money can buy.

What Is Lifestyle Creep?

Lifestyle creep can be a common phenomenon experienced as one progresses through their career. The meaning of lifestyle creep, sometimes known as lifestyle inflation, is the process by which discretionary expenses increase as disposable income increases.

Disposable income is income that isn’t already budgeted for necessities like housing, transportation, and food.
It could include anything from concert tickets to morning lattes to a second home— basically anything that is likely to fall more into a “want” category rather than something strictly “needed.”

Lifestyle creep can put you squarely behind the 8-ball when it comes to getting out of debt, saving for retirement, or meeting other big financial goals. And it’s one reason people can’t escape the vortex of living paycheck-to-paycheck.

Signs of Lifestyle Creep

Here are some specific signals that you may be experiencing lifestyle creep:

•   Despite earning more, you are not saving more.

•   You have stopped following your budget because you assume you’re earning enough not to have to worry about spending.

•   You feel as if you can afford to buy whatever you want and no longer stick to previous limits (such as, say, not spending more than a certain amount on an item of clothing or a piece of furniture).

•   While your salary has increased, your credit card debt has risen vs. been paid down.

What Causes Lifestyle Creep?

Graduating from the penny-pinching college life to your first full-time job is only one instance that can trigger lifestyle creep. It also can happen with any type of bump in cash flow that’s not part of your monthly budget, such as a raise, bonus, tax refund, gift, or winning a scratch-off ticket.

There are also psychological factors at play here, including the sometimes compulsive urge to keep up with the Joneses.

And before you blow it off as just envy with a lack of willpower, consider this: One landmark examination of a lottery winner’s effect on the neighborhood found that the larger reward the lucky gambler collected, the more likely their neighbors were to incur more debt and even file for bankruptcy.

The social pressure to keep up with the consumption habits of family and friends, even when it’s conspicuous, can cause real and serious financial stress.

Social media can make matters even worse, with studies showing that post envy could be causing people to live beyond their means just so their feeds can reflect their acquaintances’.

But how do you resist the urge to upgrade your 2015-era sedan when your neighbor rolls up in a shiny new SUV? The answers might be simple on paper, but switching your mindset from “Should I spend this on a shopping spree or a vacation?” to “Should I put this money into savings or invest it?” can be easier said than done.

Discerning Needs Versus Wants

First, a quick refresher on needs vs. wants: A need is something vital to survival, while a want is something that’s nice to have but strictly speaking not critical.

It’s normal to want to celebrate a new raise, but to avoid lifestyle creep, it can be important to make sure not to celebrate with something that will increase costs to the point of making the raise irrelevant.

Examples of Needs vs Wants

Here are a couple of examples of how needs and wants can compare:

•   A need is clothing to wear to work, to keep you warm in cold weather, and to enable you to go about your daily life.

•   A want would be those two pairs of shoes you bought not because you needed them but because they were cute and on sale.

•   A need is groceries to feed your household.

•   A want would be buying a pricey salad for lunch every day vs. bringing food from home or going out for a deluxe sushi dinner every Friday night to celebrate the end of the work week.

•   A need is basic health care expenses and new running shoes when your old ones wear out.

•   A want would be getting massages and hiring a personal trainer.

As you see, lifestyle creep could entice you to spend significant amounts on the “wants” in life because they are fun and you feel you can afford them. But allowing those purchases to increase instead of putting money toward debt reduction and longer-term aspirations can be problematic. After all, part of financial wellness is prioritizing goals such as being able to contribute to your child’s education and having a healthy retirement savings account.

Tips for Avoiding Lifestyle Creep

Giving every extra penny of a cash windfall to a credit-card company doesn’t sound like much fun. But just knowing that lifestyle creep exists, and recognizing it in your own life, can put you ahead of the game when it comes to making better decisions with your money.

Here are a few possible ways you can avoid lifestyle creep while still enjoying the good things in life.

Celebrating Small

If you earn a raise, you should absolutely celebrate — especially if it’s higher than the average 3.7% forecast for 2025. But to outsmart lifestyle creep, you may want to take a deep breath and resist the urge to run to the store for that expensive thing you’ve had your eye on. Instead, consider a small way to congratulate yourself, like a dinner with friends.

Creating a Budget

One way to avoid lifestyle creep may be to give all income a job to do. That extra $200 a month shouldn’t just be chilling in a checking account with no purpose, like a freeloading cousin camping out on the couch.

Letting that extra money hang out in the checking account too long with nothing to do might lead to unplanned spending. If you see the money sitting idle, you might splurge on a weekend trip or that budget-busting espresso maker. Putting that money to work (earning interest in a high-yield savings account or paying down debt) could be a wise move. And if you have a solid budget in place, using money that way can be effortless.

Building a Budget to Control Lifestyle Inflation

With the advent of online banking, most people are likely equipped with everything needed to make a budget right on your phone or computer. Many financial institutions offer tools that can help with tracking of your money as it flows in and out of your accounts.

Don’t have a basic budget already? Getting a raise can be a great time to crunch the numbers and be financially stable and responsible with that money. There are many different budget techniques you can experiment with, such as the envelope system or the 50/30/20 budget rule. If there’s already a budget in place, a new raise is a great time to reconfigure the budget to make sure it still ticks all the financial boxes.

Avoiding Mindless Spending

Mindless or pointless spending might happen when there is unexpected extra cash sitting in the bank account. Much like the itch to spend that crisp, new $20 bill included in a childhood birthday card, there may be psychological and emotional temptation to spend money in the bank account without considering whether or not a new, say, brand gaming system is really needed.

Casually buying unnecessary items could indicate compulsive or impulsive spending. This in turn could mean missing an opportunity to put money to work for the future, sustainably upgrading a lifestyle by planning ahead for financial growth.

Tracking Your Spending

When it comes to managing money, losing track of expenses could not only lead to a blown budget, but also overdraft fees, returned checks, or other unnecessary fees that could put you even further behind.

Tools to Track Spending

If you really struggle with this one, there’s an app for that. As mentioned above, many financial institutions offer tools for budgeting and tracking exactly where your money is going. Start there, and see if what is available works well for you. If not, there are various third-party apps that you can explore.

Turn on the Auto-Pilot

One of the easiest ways to ensure that you’re only spending what’s in the budget is to automate as many payments and contributions as possible. After all, money you don’t have is a lot easier to not spend.

This strategy can start at work. If you get a raise, you might elect to increase your 401(k) contribution (or start one if you haven’t yet). And while it means that your take-home pay may not change, your money transferred into a retirement account can painlessly grow.

You also can automate online bill payments and savings and investment contributions, all with the intention of getting the money out of your tempted hands ASAP.

Outlining Clear Goals

What’s your endgame? Do you want to retire early with a million dollars or more in the bank? Is owning a home a part of your plan? One key to avoiding lifestyle creep is to set long-term financial goals and keep your eye on the prize.

Two financial goals that can be beneficial to almost everyone include growing a short-term emergency fund and longer-term savings plan. But from there, the sky’s the limit and your goals are entirely up to you.

You can use an online emergency fund calculator to simplify the math while accruing cash. Financial experts suggest having at least three to six months’ worth of living expenses in the account.

Avoiding New Debt

This might seem like a no-brainer, but you aren’t likely to get out of debt if you keep adding new debt to the pile. One key way to avoid debt is to use credit cards responsibly.

Minimizing your debt (and the important credit utilization ratio, which compares what you owe to your credit limit) can be a smart step when avoiding lifestyle creep.

Recommended: Money Management Guide

Getting Your Head in the Game

Lifestyle creep likely isn’t impossible to reverse, but one could argue that the further you’ve allowed yourself to fall into the luxury lifestyle, the harder it could be to pull yourself out.

One way to get your head in the game is to make lists, starting with your needs (electricity) vs. wants (electric car.) From there, you could prioritize your “wants” and start to cut from the bottom.

Are there things in your life that just exist because they can? Consider eliminating them completely or finding clever ways to save money, such as shopping consignment vs. retail or eating lunch out one day a week vs. all five.

Choosing Your Friends Wisely

Peer pressure is a powerful motivator, but the perceived wealth of your friends, neighbors, and acquaintances can be a far cry from the actual state of their finances.

If you seem to find yourself in situations where there’s pressure to overspend, including family Disney holidays with all the bells and whistles, nights out on the town, or an invite to a destination wedding, you may want to consider finding a circle of friends who share the same financial goals and lifestyle as you.

After all, it’s a lot easier to say “Let’s just cook at home to save money” to a friend who won’t pressure you to try the trendy new restaurant in town.

Spending a Raise

So what exactly should someone do with extra money after a raise? Paying more into a retirement account, paying off debts, or just putting some extra dollars towards a specific savings goal are some approaches to take. This can allow you to boost your financial wellness and meet your long-term goals vs. getting caught up in impulse buying.

Recommended: Mobile Banking Tools

The Takeaway

Lifestyle creep is defined as spending more as you progressively earn more. By spending, you miss out on the opportunity to pay down debt and save for future financial goals, such as buying a home or eliminating student loans. By being aware of lifestyle creep and minimizing it, you can stay on budget and manage your money better. Having the right banking partner can also help with that.

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 does lifestyle creep impact long-term financial goals?

Lifestyle creep can make it challenging to achieve long-term financial goals. For example, if you get a raise and spend it on fun purchases, you may struggle to accrue enough money to meet long-term goals, such as saving for retirement.

How can I spend mindfully while still enjoying life?

One way to spend mindfully while still enjoying life is to have a budget that includes a small fund for “fun” spending. If you know you have some cash allocated for enjoyable activities or purchases, you may not feel deprived. You might, say, choose not to spend your “fun money” one month and then have twice as much the next month to use.

How do I recover financially after falling victim to lifestyle creep?

A budget can help you stay on track vs. falling victim to lifestyle creep. By carefully tracking your spending, you can avoid overdoing it. Also, you might consider whether social media is triggering you to overspend, or if your current group of friends typically value spending over saving and you therefore follow suit. Minimizing those influences could have a positive effect on your finances.

Can lifestyle creep impact my retirement goals?

Lifestyle creep can impact your retirement goals. If you receive raises but spend the increase in your paycheck on dining out or vacations, you may then be unable to meet your retirement goals and other long-term financial aspirations.

Are there tools to help combat lifestyle creep?

One good tool to help combat lifestyle creep is to have a budget that you can stick with. It can be worthwhile to experiment with different methods to find one that suits you. Also, using tech tools, such as spending trackers, can help you avoid lifestyle creep. They can help you keep tabs on where your money goes. Also, some financial experts advise unsubscribing from marketing emails that advertise sales and can encourage unplanned spending. Similarly, disabling one-click shopping on social media could help combat lifestyle creep.

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