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You’ve probably seen the phrase “ACH routing number” on your bank statement, and wondered what exactly it is anyway. It shouldn’t be as hard to figure out as Wordle, so let us explain: An ACH number is a nine-digit number sequence that banks and credit unions use to move funds electronically within their financial network.
Since ACH numbers play a vital role in banking, let’s take a closer look.

What is an ACH Routing Number?

An ACH number is an ID code that banks use. It’s an important bit of data that directs funds being sent electronically between financial institutions. You might think of it as akin to GPS coordinates that get money where it needs to go.

The acronym ACH stands for the Automated Clearing House network and enables money to move across a network of thousands of institutions, quickly and securely. ACH numbers were developed in the 1970s, when the volume of checks threatened to slow down the banking system. This was the beginning of a big shift towards electronic banking. Today, the ACH network is a major financial hub, akin to the Grand Central Station or LAX of money transfers.

Note the word “clearing” in “automated clearing house.” An ACH routing number helps clear funds for quicker transfer. How fast is an ACH transfer? It often happens the same or the next business day. That tops paper checks, which can take longer to mail, deposit, and clear.

Here are a couple of examples of how ACH numbers ease your daily life: A bank uses an ACH routing number when you authorize autopay for a loan or service provider; that’s an ACH debit. When your employer puts your pay directly into your bank, that’s an ACH credit. Both of these can be seamless, speedy transactions.

Recommended: What is ACH and How Does it Work?

How to Find Your ACH Routing Number

Let’s say you want to sign up to pay your homeowner’s insurance automatically every month, or you need to enroll in a P2P app to send the money. You may not be certain about what those required ACH digits are. To find your bank’s ACH number, you have a couple of options, which we’ll share with you here. It’s actually quite easy to find them once you know where to look.

Checkbook

Banks typically print the ACH routing number right on your check. You may be used to simply calling it your bank’s routing number. It’s the nine-digit number sequence at the bottom, next to your account number.

Bank Phone App or Bank Website

Many banks provide account details, including routing numbers, right on their phone apps and websites. Log in with your user ID and password, click on your bank account, and search for details. (But please, don’t do this at, say, a bustling coffee shop, where your connection may be public.)

Internet

Another simple way to find your ACH routing number is to use your search skills. Put “ACH number” and the name of your bank into a search engine, and you should be able to find it. Keep in mind that some large banks may have multiple regional ACH numbers; make sure you are snagging the one associated with your location.

What is an ABA Routing Number?

An ABA (American Bankers Association) routing number is the first number sequence that appears on the bottom left of your paper checks. It identifies your bank, which likely holds very many accounts, while your account number indicates your personal financial product. ABA numbers have been around for over 100 years, facilitating check processing.

Given that your ABA routing number identifies your bank, you may find that it’s the same if you have both checking and savings accounts at a single financial institution. Your account numbers will differ, but that routing number is constant.

ABA vs. ACH Routing Numbers: The Differences

So, you may ask, how are ABA and ACH routing numbers different? The truth is they are likely the very same number. Strictly speaking, the ABA number is used in processing transactions with paper checks, while ACH digits are used in electronic funds transfers. It’s a vital code as money is moved electronically (often in batches) among financial institutions. But today, by and large, ABA and ACH numbers are one and the same.

Use Cases

Let’s look at how the ABA vs ACH routing number might be used in your typical banking life. Yes, they are probably the same string of digits, but here’s how it may help to think of them:

•   To set up a payroll direct deposit or, for instance, a monthly automatic debit of your mortgage payment, you will need to provide the ACH number, because these are electronic transactions.

•   If you were making a one-time payment to, say, a doctor’s office, and they asked you the account and routing number of the check, you would look at the bottom of your paper check and read them off those digits.

History

ABA numbers have been in use since 1910, which was quite a different era. These digits allow for checks to draw funds from one account and deposit them in another. More than a half century later, in the late 1960s, a group of California banks banded together to find a speedier alternative to check payments. They launched the first ACH in the U.S. in 1972; that was a key milestone in the evolution of electronic banking.

Numerical Differences

In the past, ABA and ACH numbers were slightly different, with the first two digits varying. Today, they are typically identical. Your bank’s ABA routing number and ACH routing number are likely to be the same.

The Takeaway

An ACH (automated clearing house) number is a routing code: nine digits a bank uses to transfer funds electronically in a fast-paced web of banks. The ACH system has been used for decades and makes life easier by keeping transactions safe and speedy. While ACH numbers used to be different from ABA routing codes (the kind traditionally used on checks), today these two strings of digits are usually exactly the same. To find your ACH number, just look at your checks, your bank’s app or website, or use a search engine. It’s that easy!

Speaking of easy, allow us to tell you a bit about banking with SoFi. We make storing, spending, and managing your money super simple with our linked Checking and Savings accounts. Sign up with direct deposit, and you’ll pay no fees while earning a competitive APY.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

Which routing number do I use to transfer money?

To transfer funds domestically, you’ll use the ACH routing number and your account number. International wire transfers, however, may require different codes.

What is the difference between ACH and direct deposit?

ACH is a system of moving funds electronically between banks. Direct deposit is a specific kind of transaction that uses this ACH network. It allows your employer to send your paycheck directly into your bank account.

Should I use ACH or the wire routing number?

Which routing number you use will depend on the kind of transaction you are conducting. If you are moving money around domestically, the ACH and wire routing number may be the same; check with your bank. If, however, you are wiring money to a foreign account, you will probably need to use SWIFT codes instead to complete the money transfer.

Do I use my ACH number for direct deposit?

Yes, you need to provide your employer with your ACH number as well as your bank account number to set up direct deposit.

What is ABA on a wire transfer?

When you arrange a wire transfer, the banks involved will need to use a routing number. If this is a domestic transfer of money, your ABA/ACH routing number may or may not be used; check with your bank to be sure. A different wire routing number might be required. If you are sending or receiving money internationally, a SWIFT code will be used instead. These codes help ensure the funds get to the right account.

What does ABA stand for?

ABA stands for the American Bankers Association, an industry organization.

What is the difference between the ABA and wire routing number?

These may be the same nine-digit number. The ABA code is the series of numerals on your check, next to your account number. You can check with your bank representative or with its app to see if the wire routing number is the same or if you need a different series of numbers. A wire routing number will usually be different when you are sending funds internationally; in that instance, you’ll need your bank’s SWIFT code.

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Photo credit: iStock/fizkes

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

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

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Spring has been a traditional house-hunting season. That’s when parents of school-age kids often look for a place to call home — one they can settle into before classes begin in September.

And summer certainly has its merits for looking at houses, from the comfort of walk-throughs in warm weather to seeing gardens in full bloom.

But buying a house in winter can be a wise move. The so-called “off season” bestows some very real benefits for those who are looking for a new place. These may include everything from less competition (and fewer bidding wars) to faster closing schedules.

While increasing mortgage rates and low inventory have led to high home prices in recent years, industry watchers are expecting prices to decline in some “hot” markets (like Texas and Florida) in late 2023, early 2024. That suggests that the winter ahead might be a good time to bundle up and rev up a home search.

Read on to learn seven smart benefits of shopping for a house in winter. You just might snag a great deal on your dream house.

Why You Should Buy a Home in Winter

Wondering why you should consider buying a house in winter, when the days may be short, the trees bare, and the weather nasty? Here are some very good reasons.

1. Having Less Competition for Homes

Not everyone wants to or is able to shop for houses during the winter months. Freezing temperatures and inclement weather can keep would-be homebuyers away.

During the winter season, many parents are busy managing school schedules and events, and many people are also busy traveling and hosting guests over the holidays.

But there’s an upside: Fewer people shopping for homes could mean less competition for those in the market for a house. And diminished competition might mean winter homebuyers can be more discerning in their choices. There’s less pressure to snap up a house for fear another buyer will get to it first. In addition, you may be less likely to end up in a bidding war with a slew of other interested buyers, which can drive up costs.

While there are often fewer houses for sale during the winter, buyers may be more likely to land their desired home closer to the asking price (or even below).


💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

2. Profiting from a Buyer’s Market in Winter

With some buyers distracted by the jam-packed holidays, it can be trickier to sell a home in the wintertime. Some sellers only put their homes on the market in the winter because they really have to.

The seller’s snag, though, can be a boon for buyers, as winter homesellers may be more motivated to get the sale completed faster than their summertime counterparts.

Motivated winter sellers might be willing to negotiate on things like price, closing costs, and the closing date. Perhaps they need to relocate for work or another time-sensitive reason and are eager to get the deal done.

In some cases,houses that are on the market in the winter have been there since the summer selling season. Homes like these are sometimes referred to as “stale listings.” The seller may be ready to take what would previously be deemed a too-low offer, just to move ahead with a deal.

Recommended: A Guide to Counter Offers

3. Closing on Your Purchase Faster in Winter

Closing is when the title of a property legally changes hands from the seller to the buyer. When buyers and sellers are negotiating the sale of a home, they work together to set a closing date when the house title will officially transfer between the parties.

Real estate agents often work with mortgage brokers to find a suitable day that will allow enough time for the deal to be executed properly.

In warmer months, banks, inspectors, and appraisers are usually handling a lot of new buyers. In practice, this glut of interested buyers could mean mortgage brokers are backed up for weeks or even months.

In the winter, when fewer interested buyers are typically calling, things can slow down for lenders. As a result, cold-weather buyers might be able to close on their homes faster and get settled in more quickly.

Recommended: What Are the Different Types of Mortgage Loans?

4. Understanding a Home’s Condition More Clearly

Visiting a property in person can tell a buyer a lot about a home. But, in the summertime, some of a house’s less attractive qualities can be masked by warm weather, blossoming gardens, and the brilliant summer sun.

Seeing a house in the winter can give buyers a chance to understand how it holds up under tougher conditions. Is the house too gloomy in low light? Does cold air creep in from the windows? Does ice jam up the gutters causing the roof to leak? Does a long driveway that needs to be shoveled seem less appealing in the winter than in June? You could be destined for some home maintenance costs. Getting a chance to suss out potential problems like these can provide a fuller picture of what actually living in a property might be like year-round.

Keep in mind, though, that some aspects of a home can be harder to grasp in the winter months. For example, it’s tough to test out an air conditioning unit in the wintertime. And snow could cover up foundation issues.


💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

5. Hiring Movers Can Be Easier in Winter

Let’s say you do find a new home and move forward with buying a house in winter. Moving costs in the winter can be cheaper than in the summer. Fewer people buying homes means less demand for movers, which in turn could mean more competitive pricing.

With lighter schedules, moving companies may also be more flexible and able to accommodate your desired moving dates. (It can be helpful to stay flexible with move dates in the winter, since a big snowstorm might mean sudden delays.)

Still, if you move when snow is falling, that will obviously slow down your move and make it pricier. Try to reschedule if inclement weather is in the forecast.

6. Getting More Time and Attention from Realtors

Movers aren’t the only people who are less busy in the winter months. Fewer people shopping for houses could mean there’s less work for real estate agents.

Agents may have more time in the winter to spend helping individual buyers find the house that meets their exact needs. Also, when it comes time to negotiate, agents may have more hours to go to bat for their clients to secure a better deal.

7. Taking Advantage of Last-Minute Tax Savings

Buying a house by late December (rather than waiting until the following spring) may allow buyers to take advantage of last-minute savings on that year’s taxes.

The mortgage interest deduction allows homeowners to subtract mortgage interest from their taxable income, lowering the amount of taxes they owe. Married couples filing jointly and single filers can deduct the interest on mortgages up to $750,000. Married taxpayers filing separately can deduct up to $375,000 each.

However, you cannot deduct mortgage interest in addition to taking the standard deduction. To take the mortgage interest deduction, you’ll need to itemize. Itemizing only makes sense if your itemized deductions total more than the standard deduction. For the 2023 tax year, the standard deduction is $13,850 for single filers and $27,700 for those married, filing jointly.

Recommended: How to Qualify for a Mortgage: 9 Requirements for a Mortgage Loan

Financing Your Home Purchase

No matter what season you may be house-hunting, it’s important to figure out how to finance a potential purchase before you find the home that’s “The One.”

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

https://www.sofi.com/signup/mort“>

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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Setting financial goals is an important step toward becoming financially secure.

If there is something you hope to achieve in the not-too distant future — say, to buy a car or make a downpayment on a home — it may not be enough to simply hope you get there. Making a plan can significantly increase the likelihood of you meeting the goal.

Going day to day without any financial goals in place can cause you to spend too much, then come up short when you need money for unexpected bills and have to rely on high interest credit cards.

Short-term financial goals are generally things you want to achieve within roughly one to three years. They can be singular goals, and once reached you are done. Or, they might be incremental steps to much larger financial goals (such as funding your retirement, paying off a mortgage, or paying for a child’s college tuition).

Setting and reaching short-term money goals can also give you the confidence boost and foundational knowledge you need to achieve larger goals that will take more time.

While everyone’s goals are different, here are some short-term financial goals you may want to start working towards.

What Are Short-Term Financial Goals?

Short-term financial goals are typically achievements you want to attain within the next couple of years. Unlike long-term financial goals (retirement, paying off a mortgage), they represent things you want to check off your money management list in the near term. Of course, everyone’s short-term aspirations will differ, but some financial goal examples include:

•   Paying off credit card debt

•   Saving for a vacation

•   Saving for a wedding

•   Stashing away money in an emergency fund.

Read on to learn more about some of the most common of these short-term financial goals.

Building an Emergency Fund

Often, a short-term financial goal might include saving for an emergency fund. This is often considered to be a smart financial goal example.

An emergency fund is cash savings that can cover three to six months’ (or more in some cases) worth of living expenses. The idea is that, just in case something unexpected comes up, such as a medical bill, job loss, or a major car or home repair, you can afford it without resorting to high-interest forms of funding.

Knowing that you have money in the bank in case of an emergency can bring peace of mind and also make it easier to work toward your other financial goals.

An emergency fund can also act as a buffer to keep you out of debt, since you’ll be less likely to have to rely on credit cards should something unexpected happen.

You can build an emergency fund by putting some money towards it every month, or you make it happen more quickly by funneling a large payment, such as tax refund or bonus, right into this fund.

Tracking Your Spending

Getting a sense of how much you are actually spending each month is a critical step in working towards both short-term and long-term financial goals.

You can do this by tracking your expenses for a month or so, then setting up a realistic budget to help you prioritize your spending, rather than spending haphazardly (which can lead to trouble when it comes time to pay bills and/or having any money leftover for savings).

You can track your spending by using a budgeting app. SoFi Relay, for example, allows you to connect all of your accounts on one dashboard and then categorizes your credit card and debit card transactions by budgeting categories.

You can also create a budget the old-fashioned way by going through your bank statements, bills, and receipts from the last few months and categorizing each expense with a spreadsheet or on paper.

Once you see where your money is actually going, you may discover some surprises (such as $200 a month on lunches out) and also find places where you can easily cut back. You might decide to bring lunch from home a few more days per week, for example. Or you might want to get rid of rarely used subscriptions or streaming services or ditch the gym membership and work out at home.

This money you free up can then be redirected towards your savings goals, like creating an emergency fund, buying a house, or funding your retirement

Paying Down Credit Card Debt

Another important financial goal example is paying down credit card debt. If you carry a balance, you may want to make paying it off one of your top short-term financial goals. The reason is that the interest on credit card debt can be so costly, it can make achieving any other financial goals much more difficult.

One strategy for paying off credit card debt is what’s known as the avalanche method, which involves paying the minimum on all but your highest-rate debt. You then put extra money toward the card with the highest interest debt. When that one is paid off, you would roll the extra payment to the card with the next-highest interest rate, and so on.

Another option is the snowball method, in which you pay the minimum on all cards, but use extra money to pay off the debt with the smallest balance. When that’s paid off, you move to the next smallest debt and so on. This can give you a sense of accomplishment that helps keep you motivated.

Or you might consider consolidating your debt by taking out a personal loan to pay off all of your cards. Personal loans usually offer lower interest rates than credit cards, and having only one payment each month can help simplify the payoff process.

Paying Off Student Loans

Student loans can be a drag on your monthly budget. Paying down student loans, and eventually getting rid of these loans, can free up cash that will make it easier to save for retirement and other goals.

One strategy that might help is refinancing into a new loan with a lower interest rate. You can check your balances and interest rates across your federal and private loans, and then plug them into a student loan refinancing calculator to see if refinancing offers an advantage.

It’s important to keep in mind, however, that not all refinancing options are created equal. There are scores of bad actors on the internet who might promise to get rid of all your debt but will only damage your credit score. If you do refinance your student loans, you’ll want to make sure you’re working with a reputable lender.

You may also want to keep in mind that refinancing federal student loans with a private lender could mean losing some of the benefits associated with federal student loans, such as income-based repayment or deferment if you fall on hard times.

If you have multiple student loans and won’t benefit from consolidating, consider using the avalanche or snowball method of repayment (described above) to pay them off faster.

Contributing to Your Retirement Fund

If you’re not yet saving for retirement, a great short-term financial goal may be to start doing so. Or, if you’re putting in very little each month, you may want to work on upping the amount.

If your employer offers a 401(k) and gives matching funds, for example, it’s normally wise to contribute at least up to your employer’s match. You can then start increasing your contributions bit by bit each year.

If you don’t have access to a 401(k), you may be able to set up an IRA online and start funding your retirement there. (Keep in mind that there are limits to how much you can contribute to a retirement per year that will depend on your age.)

While retirement is a long-term vs. short-term, financial goal, taking advantage of this savings vehicle can reduce your taxes starting this year. Here’s why: Money you put into a retirement fund is taken out of your income before taxes are calculated.

Even more importantly, starting early can pay off dramatically down the line. Thanks to the power of compounding interest (when the money you invest earns interest, and that interest then gets reinvested and earns interest as well), monthly contributions to a retirement fund can net significant gains over time.

Saving More Money

If you already have an emergency fund, you may want to start thinking about what you are hoping to buy or achieve within the next several years, and also beyond.

This could be anything, including buying a new high-tech toy, going on a great vacation, making a downpayment on a home, or doing a major renovation.

Saving up for this goal, rather than paying for it with a credit card, helps you avoid paying more for those things in the form of high-interest payments.

For financial goals you want to reach in the next few months or years, consider putting this money in a bank account online that earns more than a traditional savings account, but allows you access when you need it. Options may include a money market account or an online savings account.

For longer-term savings, you may want to look into opening a brokerage account.

This is an investment account that allows you to buy and sell investments like stocks, bonds, and mutual funds. A taxable brokerage account does not offer the same tax incentives as a 401(k) or an IRA (individual retirement account), but is much more flexible in terms of when the money can be accessed.

What are S.M.A.R.T. Financial Goals?

In addition to the short-term financial goals examples and guidance you’ve just learned, there’s another way to think about this topic: using the acronym S.M.A.R.T. This system can help you both with identifying and achieving your goals. Here’s what this stands for and how considering your financial aspirations through this lens can be helpful:

•   Specific: A goal should identify exactly what you are saving for, whether that’s paying off credit-card debt or buying a used car.

•   Measurable: How much is your goal? How much do you need to save? Perhaps your credit card balance is $5,673. That would be your measurable goal.

•   Attainable: Make sure your goal is realistic (you don’t want to attempt to pay off that credit card debt next month) and develop strategies to achieve it, such as working on alternate Saturdays to bring in more money (a benefit of a side hustle).

•   Relevant: Check that your goal really matters to you and isn’t just something you’re doing to, say, keep up with your friend group. Do you really need to save towards a potentially budget-busting vacation?

•   Time-bound: Set “by when” dates for your goals. This helps to keep you accountable. If you want to save $3,600 for an emergency fund within a year, figure out how you will come up with the $300 per month to put aside.

Using the S.M.A.R.T. method can help you crystallize and achieve your short-term financial goals.

The Takeaway

While day-to-day spending tends to grab most of our most attention, it is important to also focus on bigger goals.

Short-term financial goals are the things you want to do with your money within the next few months or years. Some key short-term goals include setting a budget, starting an emergency fund, and paying off debt.

From there, you may want to start saving for things you want to buy or do in the relatively near future, and also start thinking about investing your money to help you build wealth over time.

SoFi can help give you a boost in reaching your money goals. When you open an online bank account with us, you’ll have an array of benefits that help you bank smarter. You’ll be able to spend and save all in one place, earn a competitive APY, pay zero account fees, and access the Allpoint network of 55,000+ fee-free ATMs globally.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

What are the 7 key components of financial planning?

Financial planning for your personal goals can be thought of as involving seven key components: Creating and following a budget, making sure you have access to cash (such as an emergency fund), saving and paying for large purchases (a car or home), managing your risk (avoiding high-interest debt, perhaps), investing your money to grow it, building a retirement fund and doing estate planning, and keeping track of your financial life and communicating about it with those closest to you.

How do you write a 5 year financial plan?

If you are creating a personal 5 year financial plan, it’s wise to include these elements: Save for goals like an emergency fund, a down payment on a house and retirement while paying off high-interest debt. You’ll likely want to create a budget that allows you to understand your cash flow and put a chunk of money towards savings (many experts recommend between 10% and 20%) every month.

How do you create a short-term financial goal?

To create a short-term financial goal, identify what you want and how much money you need. Then, looking at your budget and seeing what cash you have available, see how long it will take to save up enough money. For instance, if you want to have $2,400 in a travel fund from now, you will need to put $200 a month aside. Check your cash flow and see where you can free up funds (maybe less takeout food and fancy coffees, for starters) to meet this goal.

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

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

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