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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 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 11/12/25. 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.

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.

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®

SOBNK-Q325-052

The 30-day rule says, when tempted to make an impulse purchase, to wait 30 days and see if you still really want the item. This can help you avoid overspending, veering away from your budget, and taking on credit card debt. It forces you to pump the brakes on a purchase and wait before buying.

Here, you’ll learn more about the 30-day rule and how it can help you save money.

What Is the 30-Day Rule?

The 30-day rule is a simple strategy that has the power to help you control your spending and make solid financial choices. Here’s how it works:

Pros and Cons of the 30-Day Savings Rule

Now that you understand the principle behind the 30-days savings rule, consider the upside:

However, the 30-day savings rule can also have downsides:

Needs vs Wants

The 30-day rule can be an excellent way to manage the causes of overspending and help you differentiate needs from wants.

Examples of Needs

Needs are your basic living expenses; the items that are vital for daily life. For example, if you’re out of toilet paper, that clearly goes into the needs category, and doesn’t fit the rule. You could shop for a better price, sure, but it’s a pretty necessary purchase.

If your car is almost out of gas and you’ve got to drive to work in the morning, the same concept applies. Yes, if you need to eat dinner and the cupboards are bare and the fridge is empty, you’ll need food (but not necessarily steak and lobster).

Examples of Wants

On the other hand, wants are things that are not part of daily survival. Groceries to cook dinner are an example of needs, but a pricey sushi dinner or even that vanilla latte to go in the morning are clearly wants.

When it comes to shopping, you may find yourself giving into wants when you pick up some new shoes just because they’re on sale or decide to upgrade your phone even though your current one works fine.

There’s a middle ground, of course, where it may be tougher to decide if something is a need or want, and whether the rule applies. For example, you may have a big work conference coming up, and there’s a really sweet suit on sale.

On the one hand, you may have an outfit that will work just fine, but on the other, this one may be more appropriate, giving you the confidence to shine at the conference. In that case, it may make sense to think about the purchase for a day or two, rather than for a full 30.

The Role of FOMO Spending

FOMO (which stands for Fear of Missing Out) spending is the kind in which you feel that if you don’t buy a particular item, you might miss out on something important. This could happen if you see social media posts where friends (and perhaps even people you don’t know!) are buying something you don’t have. That can lead to what’s known as FOMO spending.

This anxiety can significantly influence how people spend their money, serving as motivation to spend funds that they can’t really afford. Some points to consider:

Each of these strategies is a way of practicing delayed gratification — and there are plenty of benefits to engaging in this healthy behavior (besides from possibly fattening your wallet).

Recommended: Why Do We Feel Guilty Spending Money?

Benefits of Delayed Gratification

Delayed gratification, according to studies, is often a trait found in successful people. When someone can delay satisfaction until the appropriate time, they are more likely to thrive financially, as well as in their relationships, careers, and health than those who haven’t yet mastered the skill.

It isn’t always easy to wait when doing something might make you feel good right now, but waiting can lead to bigger rewards in the future. As this becomes a practice, it can help to boost your overall self-control and achieve long-term goals.

One of the more well-known studies on delayed gratification involves, of all things, marshmallows. This study was conducted at Stanford University in the 1960s,^[1] and went like this:

The children who chose to wait, the researchers discovered, had higher standardized test scores. They also were found to have fewer behavioral issues and health problems.

You might use this study to think about your own ability to wait for greater rewards. Focusing on finances, you might consider times when a quick impulse purchase didn’t turn out to be the best move, as well as times when saving for something better was ultimately more rewarding. These moves can help you cut back on spending and, say, build up an emergency fund.

Recommended: How to Achieve Financial Discipline

Tracking Your Spending and Saving

The above strategies all have one thing in common. They involve tracking your spending and saving so that you can make choices that fit your budget, lifestyle, goals, and dreams.

As part of that process, it may make sense to identify where you’re overspending. The reality is that it’s gotten super easy to spend — and, therefore, overspend — in today’s frictionless financial world.

You may find that you’re spending literally hundreds of dollars a month in ways you didn’t realize, whether that’s by picking up a quick coffee at the drive-thru window, a subscription you rarely use, or something else entirely.

When you know where your money is going, down to the last penny, it can help you adjust your budget in a way that prioritizes your financial needs and money goals. That could involve paying down debt, saving up for a vacation next summer, or banking some cash for the down payment on a house in the future.

Recommended: Savings Calculator

4 Other Tips and Strategies to Save Money

Here are some additional savings strategies to consider:

Pay Yourself First

Want to pay yourself first? You can do this by having money automatically deducted from your paycheck and transferred into your savings account. By automating your savings, you can make sure that you don’t spend money that can be helping to fund your future dreams.

Try Out Different Budget Methods

It can take a little trial and error to find a budget that works for you and your unique situation. Some people like the 50/30/20 rule, others use the envelope system, and there are many other options. Do a little online searching and experimenting to find one that works for you.

Use an App

Technology can help you track your spending and save more. Your financial institution may have tools that make this a snap. Or you might decide to take advantage of a roundup app that puts a little money into savings with every purchase you make. Again, see what your bank offers, or an online search can reveal alternatives.

Start a Side Hustle

Another way to save more is to earn more. Starting a low-cost side hustle can be one way to do just that. Whether that means walking dogs, selling your nature photos, or providing social media services for local businesses, there could be a simple and satisfying way to tap your talents and bring in more cash.

The Takeaway

The 30-day rule can help you save money. It says that if you are thinking of making an impulse purchase, you should wait 30 days before buying. If, after the end of that time, you still really, really want the item, go ahead and buy it if you can finance it. This can help you avoid overspending and racking up credit card debt. It may help you keep more money in your budget for essential spending or debt payments or in your bank account, earning some interest.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with 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 30-day rule for saving money?

With the 30-day rule, you wait 30 days before making a major purchase to be sure you really want or need it. This technique of waiting can help you delay gratification, feel more in control of your finances, and potentially avoid overspending on impulse buys.

Does the 30-days rule work?

The 30-day rule can work if you stick with it. By waiting 30 days before making a major purchase, you have time to consider whether you really need it, shop around for the best price, or decide that it was an impulse buy and you don’t really want it anymore.

What is the golden rule of saving money?

The golden rule of saving money is to save money before you spend. Some people refer to this as “paying yourself first.” By prioritizing saving, you can potentially minimize debt and reach your financial goals.

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 11/12/25. 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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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-Q225-024

Whether from parents, friends, or financial advisors, you have probably heard plenty of people say that you should be saving money. But did you ever stop and consider why exactly saving money is so important?

Saving money is truly a smart move: It can help you achieve your financial aspirations, prepare for the future, and weather unexpected events. It can even help you earn money without doing anything at all. When you look at it in a big-picture way, saving can also relieve a lot of money stress from your life.

Reasons Why Saving Money is Important

It can be hard to get motivated to save money just because it’s the “responsible” thing to do. But you may see the appeal once you understand the huge advantages that saving offers. Here are a few.

Peace of Mind

If money is tight, you may find yourself worrying how you will pay the rent or other critical bills if an extra unexpected expense were to suddenly come up, as they often do. After all, cars break down, and dental work can crop up. Or what if your kid discovers a passion for soccer and wants to go to a pricey summer camp.

Having savings in the bank (whether that’s an online bank or a traditional one) can provide the sense of security that comes with knowing you can get through these kinds of moments without hardship. You’ll be able to have that back-up money to afford many of life’s expenses that crop up. By saving, you may also worry less about tomorrow, knowing that you have stashed away some cash. That means you can breathe a little easier.

Avoiding Debt

When you have money in the bank, you can make purchases, planned or not, with the money that’s on deposit. That means you can avoid using high-interest credit cards or potentially taking out a personal loan or a home equity line of credit (HELOC) to pay for things.

That can help you avoid debt, which can help save a significant amount of cash in the long run.

Expanding Your Options

Generally, the more money you have saved, the more control you can have over your life and your financial security.

If you’re unhappy with where you live, for instance, having some savings can open up the possibility of moving to a more desirable location or putting a down payment on a new home.

If you dislike your job, having a cushion of cash in your savings account might afford you the option of leaving that job even before you have another one lined up.

Money certainly does not solve all problems, but having savings can give you a little bit of breathing room and allow you to take positive steps in your life.

Having Financial Freedom

Another benefit of savings is that you are on a program that can give you financial freedom. If you stick to a plan of stashing 10% or 20% into savings, as many financial experts recommend, you can avoid living paycheck to paycheck and have more financial freedom.

For example, with adequate savings, you might be able to take a sabbatical from work and pursue a passion project. You might have enough cash to start your own business or retire early. Or you might plan a luxe anniversary celebration somewhere tropical. Savings can enable your dreams.

Recommended: Guide to Improving Your Money Mindset

Saving for Big Purchases

Having a savings account is a great way to afford big purchases without racking up credit card debt and the high interest that goes along with it or turning to other expensive financing options.

Say you want to take your kids on a Disney vacation or you really need that second car. Or maybe there’s a designer bag that you’re totally in love with. By putting money aside in a savings account and earning interest on those funds, you can be in a position to buy your wish-list item outright, rather than borrowing funds to do so. (To see how your money can grow when in an interest-bearing account, you might use an online savings account interest calculator.)

Saving Money for Emergencies

Here’s another reason why it is important to save money: Life has its twists and turns. One minute, everything is humming along nicely, the next, your car needs $2,000 worth of repairs. Or the hot water-heater conks out or you lose your job. These situations and others can put a real strain on your finances.

That’s why financial experts generally recommend building up an emergency fund of at least three to six months’ worth of living expenses to prepare for any financial surprises.

It can be hard to prioritize this, but saving for an emergency fund is important. To help make it happen, you might set up an automatic transfer from your checking into savings the day after payday. This can painlessly, seamlessly whisk money to your emergency fund so it doesn’t sit in savings, tempting you to spend it. Whether the amount is $15 or $150, just do it. Every bit helps.

Recommended: Emergency Fund Calculator

Earning Interest

Savings accounts come with interest, which is the bank’s way of thanking you for keeping your money with them, where they can use it until you withdraw it.

Here’s an example: That can help your savings along. If you have $5,000 in a savings account with a 3.00% APY earning compound interest monthly, that would give you an extra $152 at the end of the year. Add $20 per month to the account and let it sit for five years, and you’ll have a total of $7,101. Nice! That’s cash in your account for doing absolutely nothing.

Reducing Your Taxes

Here’s the part about how saving money makes you money, beyond interest you’ll earn. If you save money into certain tax-advantaged retirement vehicles, not only do you have that nest egg for later in life, but you can lower your tax liability.

By putting money into your employer’s 401(k), if available, you can lower the income on which taxes are assessed. If you are self-employed, there are various retirement accounts that may allow you to put pretax dollars away for the future.

When you save money this way, you could even challenge yourself to put the tax savings back into a savings account. That’s a way to increase your money in the bank another notch or two.

Giving Back

Another reason why saving money is important is it can enable you to give back to others. When you have a cash cushion and aren’t living paycheck to paycheck, you have the opportunity to help those around you.

That might involve sending a few hundred dollars to a relative who has a big dental bill and is struggling to pay it. Or you might make a charitable donation to a medical research cause, a disaster fund, or a local after-school program that you love. The choice is yours, but having a healthy savings account can make it possible.

Benefiting from Compound Interest

Another big incentive to save, as mentioned above, is the power of compound interest.

Compound interest means you earn a return not just on the amount you originally put away, but also on the interest that accumulates.

Over time, that means you can end up with much more than you started with. And the earlier you start saving, the more your money grows, since compound interest is able to work its magic over a longer time horizon.

You saw an example above that involved putting money into a savings account at a bank. Here’s another example: A person who starts putting $100 per month towards retirement at age 25 will wind up putting $12,000 more of their money into their retirement fund by age 65 than the person who started saving $100 per month at age 35.

But because of compound interest (and assuming a 7.00% annual rate of return), the person who started at 25 will wind up with over $120,000 more at age 65 (way more than the extra $12,000 they deposited).

How to Get Started with Saving

If you’re convinced that saving is the right move, how do you actually do it? The key is to make a budget and make sticking to it easy.

This doesn’t have to be intimidating. The key is to get familiar with what you spend, what you earn, and what your goals are.

Here are some steps you could take to help get started.

Figuring Out What You’re Saving for

Is it a long-term goal, like retirement or your kids’ college tuition? A short-term goal, like an emergency fund? Or a medium-term goal, like a wedding or home renovation? It can help to get a sense of how much you need to stash away and by when.

The point of this is twofold:

•   First, you can divide the amount you need by the months left until your deadline to get a clear picture of how much you’ll need to save each month.

•   Second, you will know where to put your money. If your goal is less than a couple of years away, you may want to keep your savings in an online savings account, a certificate of deposit (CD), or money market account.

These options might help you earn more interest than a standard savings account but still allow you to access your money when you need it.

If your goal is in the distant future, you might consider investing the money in a retirement account, 529 college savings plan, or brokerage account so that it could have the chance to grow over time. All investments, however, come with risk, and growth is not guaranteed.

Sticking to a Budget

You don’t really know where your money is going unless you track it. That’s why for a month or two, you may want to take note of all your daily and monthly expenses.

Next, you’ll want to tally up your net monthly income, meaning what goes into your account after the different types of taxes and deductions are taken out.

The difference between your monthly income and your expenses (everything from rent to student loan payments to food and dining out) is what you have left over to save. If there’s not enough left over, you can work on finding ways to cut spending or increase your income. You might try following the 50/30/20 budget rule to help guide your spending and saving.

Putting Savings on Autopilot

If you’re manually putting cash away every month, it can be easy to fall behind.

For one thing, you may forget to move money into savings regularly amid your busy schedule. And, unless you protect the money in advance by transferring it to a different account, you may accidentally spend it.

One way to avoid this is to set up automated savings through your bank account or retirement plan.

If you’re putting away the amount you identified you need for your goal, you may get there without even thinking about it.

Recommended: The Different Types of Savings Accounts

Common Places to Save Your Money

Where to put your money as you save? Consider these options:

•   Traditional savings account: You could put your money in a savings account at a financial institution, whether at a bank or credit union.

•   High-yield savings account: These accounts are likely to pay a much higher interest rate than a conventional savings account while offering the same convenience and security. They are often found at online banks.

•   CD: A CD gives you a specific rate of interest but you must agree to keep your money in the account (that is, not withdrawing any of it) for a specific term, whether that’s several months or years. Withdrawing earlier could trigger penalties.

•   Investments: There are many options here, such as Treasury bills and bonds. These can earn healthy returns and are typically considered safe places to keep money.

A quick note: While typically it’s a savings account that earns interest, some checking accounts earn a bit of interest, too. This can be especially true if you deposit your money in a checking account at an online bank. While it may not offer a high rate of interest, earning some money on what you keep in your checking account can contribute toward building your wealth.

The Takeaway

It’s important to save money for a variety of reasons. It can provide peace of mind, open up options that improve your quality of life, increase your wealth due to compound interest, and possibly lower your tax liability, and may even allow you to retire early. Many people earn wealth through a combination of working and savvy saving. Having the right banking partner can be part of the process.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with 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 are the benefits of saving money?

There are many benefits of saving money: It helps you save for your future, cover unexpected expenses, make major purchases, and have financial freedom. What’s more, the money you save can help make you more money, thanks to compounding interest and lowering your tax bill.

What are common things to save money for?

Common things to save money for are an emergency fund, retirement, a big purchase (like a car, a vacation, or the down payment on a home), and educational expenses, among others.

What happens if you don’t save money?

If you don’t save, you may lack financial security and the ability to meet certain aspirations. For instance, you wouldn’t have a retirement fund and would therefore have to keep working indefinitely. You wouldn’t have money for a big purchase like a car or a home or your child’s education. Plus you wouldn’t be able to handle some expenses, whether planned or unexpected, and might have to take out a loan or use credit cards, which means you are paying for the privilege to borrow funds. That takes away from your earnings.

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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

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.

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SOBNK-Q125-034

Ever dream of leaving your job to pursue a project you’ve always been passionate about, like starting your own business? Or going back to school without taking out student loans? What about the option to retire at age 50 instead of 65 without having to worry about money?

Any of these opportunities could happen if you’re able to achieve financial freedom — having the money and resources to afford the lifestyle you want.

Intrigued by the idea of being financially free? Read on to find out what financial freedom means and how it works, plus 12 ways to help make it a reality.

What Is Financial Freedom?

Financial freedom is being in a financial position that allows you to afford the lifestyle you want. It’s typically achieved by having enough income, savings, or investments so you can live comfortably without the constant stress of having to earn a certain amount of money.

For instance, you might attain financial freedom by saving and investing in such a way that allows you to build wealth, or by growing your income so you’re able to save more for the future. Eventually, you may become financially independent and live off your savings and investments.

There are a number of different ways to work toward financial freedom so that you can stop living paycheck-to-paycheck, get out of debt, save and invest, and prepare for retirement.

12 Ways to Help You Reach Financial Freedom

The following strategies can help start you on the path to financial freedom.

1. Determine Your Needs

A good first step toward financial freedom is figuring out what kind of lifestyle you want to have once you reach financial independence, and how much it will cost you to sustain it. Think about what will make you happy in your post-work life and then create a budget to help you get there.

As a bonus, living on — and sticking to — a budget now will allow you to meet your current expenses, pay your bills, and save for the future.

2. Reduce Debt

Debt can make it very hard, if not impossible, to become financially free. Debt not only reduces your overall net worth by the amount you’ve got in loans or lines of outstanding credit, but it increases your monthly expenses.

To pay off debt, you may want to focus on the avalanche method, which prioritizes the payment of high-interest debt like credit cards.

You might also try to see if you can get a lower interest rate on some of your debts. For instance, with credit card debt, it may be possible to lower your interest rate by calling your credit card company and negotiating better terms.

And be sure to pay all your other bills on time, including loan payments, to avoid going into even more debt.

3. Set Up an Emergency Fund

Having an emergency fund in place to cover at least three to six months’ worth of expenses when something unexpected happens can help prevent you from taking on more debt.

With an emergency fund, if you lose your job, or your car breaks down and needs expensive repairs, you’ll have the funds on hand to cover it, rather than having to put it on your credit card. That emergency cushion is a type of financial freedom in itself.

4. Seek Higher Wages

If you’re not earning enough to cover your bills, you aren’t going to be able to save enough to retire early and pursue your passions. For many people, figuring out how to make more money in order to increase savings is another crucial step in the journey toward financial freedom.

There are different ways to increase your income. First, think about ways to get paid more for the job that you’re already doing.

For instance, ask for a raise at work, or have a conversation with your manager about establishing a path toward a higher salary. Earning more now can help you save more for your future needs.

5. Consider a Side Gig

Another way to increase your earnings is to take on a side hustle outside of your full-time job. For instance, you could do pet-sitting or tutoring on evenings and weekends to generate supplemental income. You could then save or invest the extra money.

6. Explore New Income Streams

You can get creative and brainstorm opportunities to create new sources of income. One idea: Any property you own, including real estate, cars, and tools, might potentially serve as money-making assets. You may sell these items, or explore opportunities to rent them out.

7. Open a High-Yield Savings Account

A savings account gives you a designated place to put your money so that it can grow as you keep adding to it. And a high-yield savings account typically allows you to earn a lot more in interest than a traditional savings account. Some high-yield savings accounts may offer an 3.00% APY compared to the 0.41% APY of traditional savings accounts.

You can even automate your savings by having your paychecks directly deposited into your account. That makes it even easier to save.

8. Make Contributions to Your 401(k)

At work, contribute to your 401(k) if such a plan is offered. Contribute the maximum amount to this tax-deferred retirement account if you can to help build a nest egg. In 2024, that’s $23,000, and in 2025, that’s $23,500, not including catch-up contributions available to those 50 and above.

If you can’t max out your 401(k), contribute at least enough to get matching funds (if applicable) from your employer. This is essentially “free” or extra money that will go toward your retirement.

9. Consider Other Investments

After contributing to your workplace retirement plan, you may want to consider opening another investment retirement account, such as an IRA, or an investment account like a brokerage account. You might choose to explore different investment asset classes, such as mutual funds, stocks, bonds, or exchange-traded funds.

When you invest, the power of compounding returns may help you grow your money over time. But be aware that there is risk involved with investing.

Although the stock market has generally experienced a high historical rate of return, stocks are notoriously volatile. If you’re thinking about investing, be sure to learn about the stock market first, and do research to find what kind of investments might work best for you.

It’s also extremely important to determine your risk tolerance to help settle on an investment strategy and asset type you’re comfortable with. For instance, you may be more comfortable investing in mutual funds rather than individual stocks.

10. Stay Up to Date on Financial Issues

Practicing “financial literacy,” which means being knowledgeable about financial topics, can help you manage your money. Keep tabs on financial news and changes in the tax laws or requirements that might pertain to you. Reassess your investment portfolio at regular intervals to make sure it continues to be in line with your goals and priorities. And go over your budget and expenses frequently to check that they accurately reflect your current situation.

11. Reduce Your Expenses

Maximize your savings by minimizing your costs. Analyze what you spend monthly and look for things to trim or cut. Bring lunch from home instead of buying it out during the work week. Cancel the gym membership you’re not using. Eat out less frequently. These things won’t impact your quality of life, and they will help you save more.

12. Live Within Your Means

And finally, avoid lifestyle creep: Don’t buy expensive things you don’t need. A luxury car or fancy vacation may sound appealing, but these “wants” can set back your savings goals and lead to new debt if you have to finance them. Borrowing money makes sense when it advances your goals, but if it doesn’t, skip it and save your money instead.

The Takeaway

Financial freedom can allow you to live the kind of life you’ve always wanted without the stress of having to earn a certain amount of money. To help achieve financial freedom, follow strategies like making a budget, paying your bills on time, paying down debt, living within your means, and contributing to your 401(k).

Saving and investing your money are other ways to potentially help build wealth over time. Do your research to find the best types of accounts and investments for your current situation and future aspirations.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

FAQ

How can I get financial freedom before 30?

Achieving financial freedom before age 30 is an ambitious goal that will require discipline and careful planning. To pursue it, you may want to follow strategies of the FIRE (Financial Independence Retire Early) movement. This approach entails setting a budget, living below your means in order to save a significant portion of your money, and establishing multiple streams of income, such as having a second job in addition to your primary job.

What is the most important first step towards achieving financial freedom?

The most important first step to achieving financial freedom is to figure out what kind of lifestyle you want to have and how much money you will need to sustain it. Once you know what your goals are, you can create a budget to help reach them.

What’s the difference between financial freedom and financial independence?

Financial freedom is being able to live the kind of lifestyle you want without financial strain or stress. Financial independence is having enough income, savings, or investments, to cover your needs without having to rely on a job or paycheck.