Jul
14
2025
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How to Automate Your Finances

By | Budgeting & Goals, money | No Comments

You probably know how easily you can tap to pay for items when shopping and click to send a friend money for your share of dinner. Why can’t most of your financial transactions be that easy?

They can be. You can be freed from much of the usual day-to-day account activity by automating your finances. Doing so can eliminate your wondering whether you have paid bills on time, allocated the right amount to savings, and more.

Automating your finances can be a smart money move that saves you on late fees and reduces financial stress. It may also help you establish and stick to a budget, as well as get on a path to growing your wealth.

Deciding where and when to automate personal finances need not be complicated. Here’s a guide sharing what it means to automate your finances, the different ways you can put your money management on autopilot, and tips for making the process super simple.

Key Points

  • Automating finances simplifies bill payments and savings through prescheduled and preapproved fund transfers.
  • Automated fund transfers can be used to receive paycheck funds quickly, pay bills on time, and steadily increase savings for emergency funds, retirement contributions, college, and more.
  • Automated investing may promote consistent portfolio growth and long-term financial stability.
  • Creating a budget accounting for retirement and savings goals, debt payments, and other expenses can help you set up automatic payments and transfers.
  • Regular financial reviews can help you quickly catch errors and prevent overdrafts.

What Does It Mean to Automate Your Finances?

Automating your finances means you use today’s technology to preschedule and preapprove transfers of your funds. It’s a “set it and forget it” way to pay bills, move money from checking to savings, and even enrich your retirement account.

The beauty of doing so means you can avoid late fees (which many of us, no matter how responsible we are, get hit with sooner or later). You may also become more organized and free your mind to ponder better things. Worrying about when bills are due is so last decade, after all!

Check out our Money Management Guide.

This article is from SoFi’s guide on how to manage your money, where you can learn basic money management tips and strategies.


money management guide for beginners

What Kind of Accounts Can You Automate?

If you’re wondering what kind of accounts you can automate, you’ll probably like this answer: Almost any kind. Here’s a list of some of the most popular:

  • Credit cards
  • Rent or mortgage
  • Utilities
  • Investment accounts
  • Loans (car, personal, etc.)
  • Insurance
  • Savings (from short-term vacation funds to your emergency fund to retirement accounts).

Automating payments can spare you late fees and overdraft charges. It can also help you streamline the process of staying active and accountable on your accounts (a great way to avoid winding up with credit charge offs).

It may also help keep your credit score from being impacted by missed payments. In fact, payment history contributes 35% to your FICO® score.[1] You want to protect those digits.

(BTW, it’s a good idea to scan for common credit report errors on an annual basis, just to make sure nothing is amiss.)

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open a bank account online.

Increase your savings
with a limited-time APY boost.*

*Earn up to 4.00% Annual Percentage Yield (APY) on SoFi Savings with a 0.20% APY Boost (added to the 3.80% APY as of 7/10/25) for up to 6 months. Open a new SoFi Checking & Savings account and enroll in SoFi Plus by 8/12/25. Rates variable, subject to change. Terms apply here. SoFi Bank, N.A. Member FDIC.

Different Ways to Automate Your Finances

ways to automate your finances

When it comes to the set-up of automating personal finances, there are a few different techniques to try. Here, you’ll learn some of the most popular options so you can decide what’s right for you, whether it’s one method or a combination.

Option 1: Sign Up for Automatic Payments With Your Creditor

Here’s how this works: Say your wifi provider or landlord of your rental apartment gives you an automatic bill payment option.

•   Through their payment portal, you’ll set up an autopay schedule, connecting the service provider to your bank account. On the agreed-upon date (say, rent is due by the 7th of every month so you select to pay on the 6th), they will automatically deduct the amount from your checking.

•   In some cases, you may be assessed a fee for this privilege; it varies with the provider.

•   When you opt into this kind of plan, you may be given the opportunity to have the payment charged to a credit card or deducted from an account other than your bank account. Look carefully, though; you may wind up paying additional fees for this.

Recommended: Guide to Automated Credit Card Payments

Option 2: Set Up Bill Pay With Your Bank

You may find that some creditors don’t offer you the kind of convenience described above, but your bank may swoop in and help you pay automatically. Many major banks will issue payments on your behalf to a creditor or service provider, which can make your life infinitely easier. No more writing checks every month and digging around for stamps. Here are the steps to take:

•   Check with your bank about what they offer. Typically, they will need the name, account number, and potentially the address of the business you are paying.

•   You’ll also need to assess how long this process will take every month; it may not be instantaneous. You’ll want to make sure the money arrives on time and you are not charged any late fees so your credit score doesn’t suffer.

•   Then you’ll sign up for the series of payments to be handled by your bank.

Option 3: Set Up Direct Deposit With Your Employer (if You Have the Option)

An excellent way to automate and fund your personal finances is to set up direct deposit of your paycheck (the vast majority of salaried workers are paid this way). You’ll know your salary is getting sent to your bank account and when it hits. Some pointers:

  • You’ll likely need to share your account number and routing number with your employer in order to establish direct deposit.
  • You may also need a voided check to get the funds moving to the right place.
  • You can then schedule your automated payments for the right dates, when your balance is feeling especially flush.
  • A great hack to know about: Some bank accounts will allow you access to your paycheck funds a day or two early if you sign up for direct deposit with them. That’s another great way to keep abreast of those bills.

Option 4: Set Up Automatic Retirement Contributions

It’s all too easy to think, “I’ll get around to saving for retirement…someday.” Perhaps that’s why the American households had a median balance of only $87,000 in retirement accounts, according to the Federal Reserve’s most recent survey.[2] That’s probably not enough if your dream is moving to Hawaii at age 65 and spending your days with your toes in the sand.

That’s why learning how to automate your finances for retirement savings can be such a helpful practice. Many experts suggest depositing at least 15% of your pretax income into your retirement plan every paycheck. Some tips:

  • If your employer offers a retirement savings plan, you can authorize your HR or payroll department to automatically whisk away a certain amount of your pre-tax income every paycheck and put it toward retirement. You won’t miss what never hits your checking account, right?
  • Aim for the maximum amount allowed, or at least put in enough to get any company match that’s offered. Otherwise, you’re leaving free money on the table.

If you’re self-employed, you may be able to automate your savings with recurring transfers into such vehicles as a solo 401(k), SEP IRA, or SIMPLE IRA as you save for your future.[3]

Option 5: Put Your Savings on Autopilot

Your non-retirement savings are another important account to automate. Again, if your salary hits your checking account, you may feel rich and go spend more than you should. By automating your savings and funneling money from your paycheck straight into an account, you may avoid going on shopping sprees.

This can be a very effective tool. In one study by financial psychologist Brad Klontz, people who visualized their goals and set up automatic withdrawals enjoyed a 73% increase in their savings after just one month.[4]

Into what kind of account can you direct those funds? That’s up to you. Perhaps you want to have a few separate accounts that feed different goals. You might have one account for a down payment fund, one for vacation savings, and one for your child’s educational expenses. You can direct how much and how often you want each transfer to be.

Of course, there are options about where exactly you keep your savings. Some possibilities to consider:

  • Standard savings accounts are good, but a high-yield savings account can be even better. These tend to pay a significantly higher annual percentage yield (APY) than a standard account and are often offered by online vs. traditional banks.
  • Certificate of Deposit (CD) accounts can be another good option. These are time deposits, meaning you commit to keep the funds with the financial institution for a specific period of time, which may typically range from a few months to several years. In return, you are assured a specific interest rate. However, there may be penalties if you withdraw funds early.
  • A TreasuryDirect account can allow you to make recurring purchases of electronic savings bonds directly from your paycheck. You can learn more about this at the Treasury Direct website.

Option 6: Set Up Regular Contributions to Your Emergency Fund

Your emergency fund is another type of savings that can benefit from automated infusions of money. An emergency fund is a stockpile of easily accessed cash that can tide you over when unexpected circumstances hit. Perhaps you get a major car repair or medical bill or are laid off from your job. An emergency fund can let you pay bills without accessing a high-interest line of credit (say, ringing up too much debt on your credit card).

In terms of emergency funds, keep the following in mind:

  • It’s wise to have at least three to six months’ worth of basic living expenses in the bank. That means mortgage or rent, utilities, insurance payments, food, childcare, and other must-have goods and services, plus minimum debt payments.
  • Most people can’t create this fund with a single, lump-sum deposit. Making regular transfers into your account (even if it’s only $20 per paycheck or per month) will get you started. Any contribution is better than nothing!
  • Where to keep your emergency fund? Since you want it to be available almost immediately in urgent situations, a **high-yield savings account** or **standard savings account** can be a good option. Either way, you’ll earn some interest. A money market account, which combines some of the features of savings and checking accounts, may also serve this purpose.

Option 7: Sign Up for Automated Investing With Your Brokerage

If you currently have an investment portfolio or are planning on starting one, that’s another task that can be made simpler by technology. Automated investing can allow you to achieve consistency with minimal effort, which can help you build your net worth over time.

Some examples:

  • As noted above, you might set up recurring transfers into a retirement plan that invests the funds for you.
  • You may automate contributions to a 529 investment account, designed to help families save for future educational expenses, such as college.
  • You can automatically transfer money from your checking account into a brokerage account.
  • You might work with a robo-advisor that picks investments based on your needs and preferences and also rebalances your portfolio.
  • Investing apps are another possibility to help automate investing. These can be as simple as the ones that round up the price of purchases and then invest the change for you.

Tips to Successfully Automate Your Finances

money automation tips

Now that you have a good grounding in the benefits and how-to’s of automating personal finances, consider these strategies for success:

Create a Budget Based on the Balance You Get Paid

Look at where your money stands after you deduct your retirement and savings amounts. With the remaining funds, you can plan out ways to budget. There are various techniques out there, like the 50-30-20 budget rule, among others. Do an online search and see what resonates with you.

A budget will guide your saving and spending and can reveal how you are doing in terms of setting financial goals and meeting them on other fronts, such as a vacation fund or a retirement account.

It will help you handle good vs. bad debt more effectively. All are terrific ways to avoid excessive debt and build wealth.

Be Aware of All Your Bill Due Dates

As you automate your finances, do pay careful attention to the due dates on your bills. Who wants to see their hard-earned cash get drained by late fees?

  • Look at the calendar; check when your paycheck hits and when certain bills are due. Some creditors may set your due date in stone; others may have some flexibility. Similarly, some autopay portals may allow you to set the payment date; others may have a specific date on which they will debit funds.
  • Make sure you understand if there’s any lag with automatic payments. Be sure they will arrive on time.
  • It can be better to stagger autopayments so you don’t risk overdrawing your account. See what best suits your lifestyle and money style to keep your account in good shape.

Review Your Bank Account and Bank Statements Often to Stay on Top of Your Transactions

One of the pleasures of automating your finances is that you are freed from thinking and worrying about your money and your bills on a regular basis. However, daily life involves all kinds of money blips, from treating your bestie to a fancy birthday dinner to (ugh) having fraudulent charges appear on your credit card bill.

So do review your bank account and other statements regularly to make sure everything is as it should be and that your balance isn’t too low. Check in with your accounts often. Should you check your bank account every day? Not necessarily. A couple of times a week can be a good cadence.

Increase Your Contributions When It Makes Sense

While you’re checking your finances and bank balances, don’t overlook whether it’s time to increase your contributions to help meet your savings goals. If you’ve gotten a raise or paid off a student loan, you may have funds available to save more.

Or you might find that a chunk of change has accumulated in your checking account which could do more for your finances if used elsewhere. There are times when you may want to increase your transfers to reflect your positive financial status.

The Takeaway

Automating your finances can be a great way to take control of your money and make bill paying and saving so much more convenient. That kind of organization can let you breathe easier when it comes to managing your money and be more successful in meeting your financial 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.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

How often should I review and adjust my automated finances?

You should review your finances and automated transactions regularly to monitor your payments and balance, which for some people may mean a couple of times weekly; for others, it might be every other week. Also, it’s wise to check in when you have significant changes in your life, whether you’ve gotten a raise, took out a mortgage, or moved to an area with a higher cost of living. You may want to recalibrate your automated transfers.

Is it safe to automate my finances?

By and large, it is safe to automate your finances. You should, however, check in regularly to make sure you are not overdrafting or getting close to it, and also to keep in touch with your money. It’s possible that a glitch could delay a payment and, unfortunately, it’s important to be aware of any potential signs of fraud when conducting any type of financial transaction.

What are the best tools or apps to use for automating my finances?

There are an array of tools and apps for automating your finances. A good place to start may be with your very own financial institution. They may have automated savings and investing products, roundup apps, and other tools to help you make the most of your money and grow your wealth.

Can I still make manual payments even if I have automatic payments set up?

In many cases, you will still be able to make a manual payment even if you have automated payments set up. This could occur when you have an additional bill for an account that is set on autopay, or when you have a credit and want to pay a lower amount. Check with your creditor or the financial institution handling the transfer for details on how to do this smoothly.

Article Sources
  1. myFICO. What is Payment History?.
  2. Board of Governors of the Federal Reserve System. Survey of Consumer Finances, 1989 – 2022.
  3. IRS. Retirement plans for self-employed people.
  4. CNBC. Use financial psychology to crush those saving goals.

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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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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 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, 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 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY 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, 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 members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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 Checking & Savings 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.


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.

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Jul
10
2025
11 Ways to Save Money on Your Internet Bill

11 Ways to Reduce Your Internet Bill

By | Budgeting & Goals, Family Finances, money | Comments Off on 11 Ways to Reduce Your Internet Bill

Wondering how to lower your internet bill? With families paying roughly $73 every month for high-speed internet services, it can be a significant drain on the monthly budget. But the internet, like a cell phone plan, has become just as necessary for everyday life as other major utilities, especially with remote working and learning environments.

To help, here are 11 great tips for cutting back costs of the internet. Learn how to save money by negotiating your rate and other other smart strategies.

Key Points

•   To help save money on an internet bill, explore different internet service providers to find more affordable options.

•   Negotiate with the current service provider for lower rates — or use a third-party service to do the negotiating.

•   Verify that the internet speed matches the paid-for plan, and if it doesn’t, request a discount.

•   Using auto-pay for internet bills may reduce the monthly cost by $5 to $10.

•   Combining internet service with other services like cable TV can result in package discounts.

Increase your savings
with a limited-time APY boost.*

*Earn up to 4.00% Annual Percentage Yield (APY) on SoFi Savings with a 0.20% APY Boost (added to the 3.80% APY as of 7/10/25) for up to 6 months. Open a new SoFi Checking & Savings account and enroll in SoFi Plus by 8/12/25. Rates variable, subject to change. Terms apply here. SoFi Bank, N.A. Member FDIC.

How Much Does the Average Household Spend on Internet Services?

The average household spends about $73 a month on internet services, according to the 2024 Broadband Pricing Index. But internet prices can vary significantly depending on the speed you require, what other services you have it bundled with, what promotional offers you qualify for, and the way the internet is delivered to your home.

Broadband (cable or fiber) is the high-speed internet connection many of us have come to depend on, but some homes utilize dial-up, cable, or even satellite internet connections. These come at varying price points. Understanding what you have and what your options are in your neighborhood can help you find the best deal.

Recommended: How to Organize Your Bills

11 Money-Saving Internet Tips

With internet prices accounting for a notable portion of your monthly budget, you may be wondering how to cut internet costs — without sacrificing quality. To help you do that, here are 11 money-saving tips for decreasing your internet bill.

1. Shopping Around

Depending on where you live, you may have a handful of internet providers to choose from. If you’re not happy with the cost of your current internet bill, you can research what competitors are charging. They may offer low promotional deals for the first six months, year, or even two years. Often the deal is a lower rate, but sometimes it involves a prepaid gift card or other bonus.

It’s a good idea to read the fine print, as the price may go up when the promotional period ends. There may also be one-time fees to start up the service that could counterbalance any savings. Still, if you find a good offer, it could be an option if you want to find out how to lower your internet bill.

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

2. Negotiating for a Better Rate

If you spot a better offer from another company, you don’t have to jump ship. It may be worth your while to call customer service for your current provider and negotiate your rate down. Letting them know that you’ve found a better deal elsewhere but appreciate their service can go a long way. To retain you as a customer, they may be willing to offer you a discount.

If the conversation with the customer service rep feels like a dead end, you may want to end the call and try your luck with another rep. You can also ask to speak with a manager.

Not comfortable haggling for a bargain over the phone — or just don’t have time to spend on hold? You might be able to find a third-party service to negotiate your rate for you. Services like Trim, BillFixers, and BillCutterz will call and negotiate on your behalf, but they’ll take a cut of any savings they earn you.

3. Checking Your Internet Speed

Your internet contract should spell out a certain speed that you’re meant to receive. Higher-tier plans offer faster speeds (and cost more). But internet service providers (ISPs) may not be delivering that speed to you at all times; in fact, recent research shows that on average, Americans are getting just 32% of the speed they pay for.

You can test your internet speed with a third-party test site like speedtest.net, though many ISPs have their own proprietary speed tests. If you discover that you’re not getting anything close to the speed your contract stipulates, you may want to call customer service to demand a discount or faster speeds. Some providers may even offer a bill credit for the time you paid for higher speeds but didn’t receive them.

4. Downgrading Your Plan

In some cases, you may be paying for faster speeds than you really need. If you regularly stream 4K videos and rely on Zoom meetings for your job, paying for fast internet is likely worth the cost. But if all you use the internet for is checking email, scrolling through Facebook, and occasionally streaming Spotify, you might be fine with slower internet service.

Similarly, individuals who live alone or with one other person are less likely to need internet services as fast as a larger household with multiple users accessing the internet at the same time.

Some ISPs offer “economy tiers” as slow as 3 mbps, though they may not always advertise these. If that sounds too slow for you, there may be a middle ground between the bottom and top tiers. Calling customer service to discuss options could be a good move if you’re ready to downgrade.

Recommended: How to Save Money on Streaming Services

5. Bundling with Another Service

Many ISPs offer discounts when you bundle your internet service with a phone plan or cable TV package. While this technically lowers your internet bill, it could add on new or higher costs for other services, so proceed with caution.

If you want cable TV or have it through another provider, it doesn’t hurt to see how much a bundle can save you. But if you won’t use cable TV, it likely isn’t the right move for you.

6. Using Auto Pay

Often, you can get a monthly discount on your internet bill by opting in to auto pay, sometimes as much as $5 or $10 a month. To avoid overdraft fees, however, it’s important that you ensure there’s enough money in your checking account before the auto pay processes each month.

7. Reviewing Your Bill

Many ISPs offer a temporary promotional discount when you switch to their service, but your costs could go up afterward. That’s one of the reasons why it’s a good idea to review your bill every month, even if it’s on automatic bill payment. Doing so will alert you to changes in your bill total, whether it’s from the end of a promotional period or other unexpected charges.

If you have questions about your bill, it’s wise to call customer service as soon as possible. The longer you wait, the more months you’ll pay a higher rate.

8. Buying Your Own Equipment

ISPs usually charge you a monthly rental fee to use their modem and router. Before 2019, consumers might have also paid a fee to use their own equipment instead. Either way, consumers typically paid an extra fee.

But in 2019, Congress passed the Television View Protection Act, which prohibits internet providers from charging you a fee to use your own equipment. You’ll pay an upfront cost for such equipment, but over time, it could save you money on your internet bill.

9. Paying with a Cash Back Credit Card

Not every ISP allows you to pay your bill with a credit card. But if you have a cash back credit card that offers rewards with every swipe, you may want to find an internet provider that does permit it.

For example, if your card offers 3% cash back rewards and your monthly internet bill is $64, that’s nearly $2 in savings every month. It’s not a huge savings, but every bit can help.

10. Researching Low-Income Programs

Lifeline is a federal program that offers a monthly discount to eligible low-income consumers for internet and phone service. You must apply for the program and if you’re accepted, you then sign up for it and choose a participating internet service provider near you (you can also check to see if your current provider offers Lifeline). If you’re struggling with your internet bill, it can be a good idea to see if you qualify for this program.

11. Reducing Usage

Some internet plans have monthly data caps. Once you reach these caps, your ISP may charge you extra for usage (or slow down your speeds significantly).

If your bill regularly has fees for exceeding your data cap, you might want to switch to a provider with unlimited data (this may cost more as a monthly fee) or focus on reducing internet usage at home.

The Takeaway

Knowing how to lower your internet bill without sacrificing quality is important. If you’re willing to do some research and make some phone calls to customer service, you might be surprised by how much money you can save — and use elsewhere in your monthly budget. Or, you can put your savings in a bank account for a future financial goal.

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.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

How much is a good amount to spend on the internet?

The average household spends around $73 monthly on broadband internet services, according to recent research. You may be able to spend less for slower internet or by bundling with another service; often, you can also find promotional deals, too. Ultimately, you’ll know if you’re spending a fair amount on the internet by comparing rates from other services and asking your friends and neighbors what they’re paying.

How can you lower your internet bill?

To lower your internet bill, you can try several tactics, including switching providers, negotiating for a better rate, using your own equipment, setting up auto pay, and even looking for low-income plans. Using a combination of strategies may help you get the best internet deal possible.

How much will your budget improve when you save money on your internet bill?

How much your budget improves when you save money on your internet bill depends on how much you’re able to reduce your internet bill by. For example, many people save $5 or $10 by setting up auto pay on their internet bill; this means they have between $60 and $120 extra a year to use elsewhere. Others earn cash back by using a rewards credit card to pay the bill; the earnings might be as little as 1% cash back, but every cent saved helps.

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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 during a 30-day Evaluation Period (as defined below).

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 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, 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 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY 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, 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 members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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 Checking & Savings 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.


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09
2025
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How to Set Financial Goals and Set Yourself Up for Success

By | Budgeting & Goals, Financial Independence, money | No Comments

Most of us have life and financial goals that are intertwined. Whether that means buying a home, launching a nonprofit by age 30, having three kids and putting them through college, or all of the above, reaching those aspirations takes planning and focus.

Solid financial planning can help you realize those dreams. Here’s your guide to setting smart money goals and achieving them, step by simple step.

Check out our Money Management Guide.

This article is from SoFi’s guide on how to manage your money, where you can learn basic money management tips and strategies.


money management guide for beginners

Key Points

•   Identify and prioritize financial goals, including both short-term and long-term objectives.

•   Apply S.M.A.R.T. criteria to set specific, measurable, achievable, relevant, and time-bound goals.

•   Track spending meticulously to manage and adhere to a budget effectively.

•   Focus on paying off high-interest debt to enhance overall financial health.

•   Regularly review and adjust financial goals to align with changing personal circumstances.

What Are Financial Goals?

Financial goals are the aspirations you have for how you will bring in income, spend it, and save it. These can be short-term dreams, like financing a vacation to Tulum next winter, or longer-term ones, such as retiring by age 50.

Identifying these goals and then creating a roadmap to achieve them is what smart financial management typically boils down to.

Short-Term Financial Goals

Short-term goals are usually defined as things you want to achieve with your personal finances typically within a year.

Examples of short-term financial goals could be anything from starting an emergency fund to finding a budget that works for you to saving up for a new mobile phone.

Long-Term Financial Goals

When you pull back and think big-picture about money management, you have likely entered the realm of long-term financial goal setting. These are goals that can take several years or even decades to achieve.

Examples of long-term goals would be saving enough money to buy a house, putting your kids through college, or retiring comfortably.

What Are S.M.A.R.T. Goals?

s.m.a.r.t. financial goals

When you are thinking about your financial goals and doing some research, you may come upon the acronym S.M.A.R.T. Think of this as a guideline to help you set and achieve your money aspirations. Here’s what it stands for:

•   S for Specific: Instead of your goal being “to be financially comfortable,” try to be more precise. Perhaps your goal would be to have no debt except your mortgage and a certain amount in your retirement fund.

•   M for Measurable: It can be wise to assign real numbers to your goals. For instance, to save $200K in your kids’ college funds is a measurable aspiration. Just saying, “to pay for college” can be too vague to work toward.

•   A for Achievable: Setting unrealistic expectations can lead to frustration and disappointment. Think about your lifestyle, income potential, cost of living, and other key factors, and set reasonable goals.

•   R for Realistic: Similarly, plan steps to achieve your goals realistically. Don’t expect to cut your expenses to the rock bottom or ignore the impact of inflation over time.

•   T for Time-based: Give yourself specific goals and due dates, such as “Save $500 a month until I have $5,000 in my emergency fund 10 months from now.”

How to Set Financial Goals

Next, consider the specific steps of setting financial goals. Break it down as follows:

1. Assessing Your Finances

Figuring out exactly what your current finances look like is a vital step. Sure, you probably know when you get paid, but have you checked how much is going toward your retirement savings fund every pay period or — gulp — exactly how much you’re spending on food delivery? Keeping a close eye on your finances might help you set smarter money goals.

It might seem easy to ignore the finer details of our finances in favor of blissful ignorance, but failing to know where you and your money stand might harm your financial health down the line.

So if you haven’t looked at where your money is going in a while, taking a look at how much money you’re bringing in, how much you’re spending, and how much you’re saving might help you set more meaningful money goals.

•   Check out your bank statements, credit card statements, and even online banking records to help you determine where your money is going every month.

•   Write down big numbers like credit card, personal loan, or student loan debt. This can help you plan for payoff.

•   Consider using tech tools to help you wrangle your finances. There are plenty of apps you can download, and online banking might be able to help you too. Typically, banks offer apps where users can easily access details about their spending and balances. Your credit card bill or app can also often provide a graphic representation of where your dollars fly off to each month.

2. Figuring Out What Is Most Important to You

Once you have a snapshot of your overall financial situation, it can be worthwhile to spend some time reflecting on your money goals: what is really important to you.

While there are many things a person ideally should be saving for, like a down payment on a house or retirement fund, your financial goals might not be the same as your sibling’s or your coworker’s.

Just like your parents always told you: You’re unique. And so is the process of setting financial goals. What might they look like?

•   You might want to pay off student debt as fast as possible in order to free up more cash every month.

•   You might be working toward public service loan forgiveness and not be as focused on quickly paying off student loans.

•   Perhaps your financial goal is to save up an emergency fund or take a vacation in six months.

•   You might want to retire and move to another country by the time you’re 55.

It’s likely that your goals will be a mix of short-term and long-term aspirations, as described above.

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*Earn up to 4.00% Annual Percentage Yield (APY) on SoFi Savings with a 0.20% APY Boost (added to the 3.80% APY as of 7/10/25) for up to 6 months. Open a new SoFi Checking & Savings account and enroll in SoFi Plus by 8/12/25. Rates variable, subject to change. Terms apply here. SoFi Bank, N.A. Member FDIC.

3. Establishing a Fun Budget

Okay, but what if you just want to go clothes shopping once a month without feeling guilty or take that Budapest vacation you’ve been dreaming about?

Make it work! Setting a financial goal is all about having your money serve you. Here are some pointers:

•   Planning out your discretionary spending might not only help keep your finances on track but can also help you inject an extra fun quotient into your life. That’s a win-win.

•   When a budget is too harsh and punitive, you might wind up making impulse buys or otherwise overspending. If you know you have some cash stashed for mood-lifting purposes, you can hopefully avoid that scenario.

But whether you’re focused on saving up for a down payment on a house or a trip to Disneyland, you won’t get there without a plan. Making a budget will get you focused and help you take control of your finances.

4. Staying On Track

Once you’ve decided on a money goal or two, it’s time to put a plan into action. Your plan will vary depending on whether you’re tackling a long-haul climb out of credit card debt or saving an emergency fund. A bit of advice:

•   Managing your money isn’t a “set it and forget it” proposition. Life happens. You may get a raise one month, and then have a (surprise!) major dental bill the next. It’s important to check in with your money regularly.

•   Adapt your budget when things shift. Everything from getting a nice bonus to having a baby can be a good reason to check in with your money goals and recalibrate.

•   Whatever your financial goals, there are tools that can help you along on your financial journey. Having the right banking partner can play a crucial role. Look for a bank that can help you set up automatic deductions from your checking account on payday to savings toward your financial goals. And find a bank that doesn’t charge you all kinds of fees; after all, they’re enjoying the privilege of using the money you’ve deposited!

6 Examples of Financial Goals to Consider

types of financial goals

If you’re looking for help brainstorming how to manage your money aims, here are some popular financial goal examples to consider:

1. Build an Emergency Fund

Whether you’re easily covering your monthly expenses or grabbing change from the bottom of your bag to buy a coffee, many people are living paycheck to paycheck. But what if that paycheck disappeared or if you had a large, unexpected expense? Enter the emergency fund.

Recent history has taught us a lot about how emergencies can arise. Stashing away an emergency fund might help you comfortably weather a pandemic, a “company-wide restructuring” that eliminates your position, or an unexpected illness that cuts into your freelance earnings.

Consider a long-term financial goal of setting aside about three to six months’ worth of expenses. Use an online emergency fund calculator to do the math and help you save at the right rate.

2. Track Your Spending

As mentioned above, keeping track of your expenses is important. Sometimes, spending that starts as an occasional thing (that TGIF latte) becomes a regular expense that drags down your budget.

Or you might find that you are dealing with lifestyle creep, which occurs when you earn more but your spending rises too, keeping you at the same level of wealth.

If you track your expenses, you can see how your money is tracking. You might decide to cut back on streaming services or realize that now that you’ve paid off your credit card debt, you could put more toward retirement.

3. Pay Down Credit Card Debt

High-interest credit card debt can feel like a treadmill: You keep putting in more and more effort, seemingly without getting closer to the finish line. Many people carry credit card debt, which can cut into your ability to save. What’s more, if your balance is more than 30% of your card’s credit limit, your credit-utilization ratio may negatively impact your credit score. In fact, it’s ideal to use only 10% or less of your credit limit.

It’s no wonder that for many of us, setting a financial goal involves the words “pay off my credit card.” Indeed, making a plan to pay down debt instead of focusing on those minimum monthly payments could help you dramatically improve your finances. Your credit card statement will tell you how much to pay to get rid of debt in three years; that can be a helpful guideline.

If you need other options, consider:

•   A balance-transfer credit card, which offers low or no interest for a period of time (typically 6 to 18 months), may also be useful.

•   A personal loan, which may offer a lower interest rate. You can use that to pay off the credit card debt and then have a lower amount due to pay off the loan.

•   You might also consider a debt management plan or meeting with a nonprofit debt counseling agency if you feel you need additional help.

When you get out from under the burden of this kind of debt, other doors (like to a home you own) may open. It can give your budget just the kind of breathing room you crave.

4. Pay Off Student Loans

Paying off student loans is another move that can help you reach your financial goals. Doing so frees up funds in your budget for other uses. Some ideas:

•   Make extra payments toward the principal when possible. That might mean a little more every month or applying a windfall like a tax refund.

•   Refinance a student loan. This could potentially lower your rate and help you pay off your debt sooner.

•   Pay biweekly instead of monthly. This means you make an extra payment each year, again helping shorten the timeline to becoming free of student loan debt.

•   Enroll in autopay. Federal student loan servicers and many private lenders will lower your interest rate a bit if you opt into automatic payments. While it won’t make a huge dent in what you owe, every little bit can help.

5. Contribute to Your Retirement Fund

Most of us know we should be saving for retirement, but that financial goal can be easier said than done when there are so many competing places to put our money.

The good news is that when you set up a retirement account and start saving, even small amounts can grow over time, which makes saving for your golden years a great financial goal. Contributing regularly — whether through your employer’s plan or an IRA — is worthwhile, especially when inflation is high.

Many experts say that a smart financial goal is to be saving 10% to 15% of your pre-tax paycheck for your retirement. One smart move: If your employer offers a company match of dollars put toward retirement, put in at least the minimum required to snag it. So if your company says you must contribute 6% of your salary to get a 50% match, that means if you put in 6%, they will add 3% to your savings. Don’t leave that money on the table!

6. Save More Money

Another way to hit your financial goals, big and small, is to save more money. Here are a few techniques:

•   Automate your savings. Set up seamless recurring deductions from checking to savings for just after payday. Doing so means you don’t have to remember to allocate the funds. And you won’t see the money sitting in checking, tempting you to go shopping with it.

•   Challenge yourself each month to give up an expense. For instance, don’t buy any pricey coffees for one month and put aside the savings. Next month, no movies. The following, no takeout lunches. You can do it!

•   See about bundling insurance premiums or paying annually vs. monthly to save money.

•   Negotiate bills. See if your credit card provider will lower your rate, for starters.

Recommended: Passive Income Ideas

How to Adjust Your Financial Goals if Your Circumstances Change

Sometimes, life throws you curveballs. You don’t get the raise you were hoping for. A family member has a medical issue that requires more money to manage than you expected. Or you move to a new town with a higher cost of living.

In these situations, you may need to ramp down some of your financial goals. Perhaps you can’t have that emergency fund fully saved by the end of this year. You could lower how much you put away and reconcile yourself to the fact that you won’t meet your goal as soon as you would have liked.

This is just another reason why checking in with your money and adjusting your budget often is important.

And don’t forget the bright side: If you get a major salary bump or a windfall, you can use that to crush your goals that much sooner. Staying flexible can be vital, regardless of which way your finances are trending.

The Takeaway

Setting smart financial goals is an important step in managing your money and achieving your life goals.

By taking such steps as evaluating your financial situation, creating a budget, and setting smart benchmarks, you can be on track to check off your aspirations. Whether that means saving for summer vacations, eliminating credit card debt, or retiring early, taking control of your money can be a very good feeling. And finding the right banking partner can help make the process even easier.

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.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

What is a good financial goal?

Financial goals need to reflect what’s important to you, but for most people, they are a mix of short-term aspirations (like having an emergency fund and minimizing credit-card debt) and long-term plans, like retirement savings.

How do you stick to a financial goal?

Sticking to a financial goal can be easier if you set up automatic deductions that transfer money from checking (where you might be tempted to spend it) to savings. Also, getting familiar with your finances, developing a plan, and regularly checking your progress are good moves.

What are some money management tips?

It’s a good idea to assess your finances and make short- and long-term goals. Then, allocate a percent of your earnings and set up automatic deductions to your savings; pay down high-interest debt (like credit cards); establish an emergency fund; and start saving for retirement. Even if it’s just a small amount, it will grow!

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 during a 30-day Evaluation Period (as defined below).

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 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, 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 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY 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, 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 members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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.

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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.


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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19 Budgeting Categories For Your Budget

By | Budgeting & Goals, money | No Comments

Building a budget can pay off quite literally: It provides guidelines for your money and helps you wrangle your spending and saving to achieve financial health. But it can only work well for you if you have the right spending and budgeting categories that allow you to track and manage your money well.

In this guide, you’ll learn how to divide your expenses into three main categories (namely, needs, wants, and savings), and then further separate things into smaller groups. Whether you’re just starting out on your independent financial life or if you’re looking to tweak your existing budget, this process can help you truly understand your spending habits and optimize your finances.

Key Points

•   Personal budget categories help organize and track expenses for better financial management.

•   Common budget categories include housing, transportation, food, utilities, healthcare, debt payments, savings, entertainment, and personal care.

•   It’s important to customize budget categories based on individual needs and priorities.

•   Tracking expenses within each category helps identify areas for potential savings and adjustments.

•   Regularly reviewing and adjusting budget categories can help maintain financial balance and achieve financial goals.

9 Budget Categories for Needs

Of course, you probably are wondering what actually constitutes budgeting categories. First, focus on the needs of life.

This category, which represents the largest chunk, includes expenses that you must pay in order to live and work. You might think of these as things you actually need to survive — they’re sort of like the air, water, and food of your budget.

So, for instance, a fancy dinner out or a caramel latte are definitely food, but they wouldn’t necessarily go in this category. Groceries would though.

A good rule of thumb is to have this category take up about 50% of your after-tax income. Housing and utilities are likely to take up the biggest chunk, but ideally no more than 30% of income.

The percentages, however, are just guidelines. Because the cost of living in different states varies across the country, you may need to adjust your budget according to where you live.

Recommended: How to Make a Budget in 5 Steps

1. Housing

Whether you pay rent or have a home mortgage, paying to keep a roof over your head is definitely a need. In addition, you may have property taxes to pay if you are a homeowner, and home maintenance costs can be part of this category for renters and owners alike.

2. Utilities

Depending on your living situation, you might pay for electricity, wifi, heating fuel, telephone service, water, sanitation services, and other necessities.

3. Insurance

Having car, health, life, homeowners or renters insurance and possibly pet insurance can be important. You don’t want to wing it with this kind of protection (and auto insurance is required).

4. Groceries and Personal Care Items

Of course, you need food and toiletries as part of daily living. So the food you purchase to make meals and items like toothpaste go into your budget as “needs.” However, buying that $7 pack of cookies or $40 hair conditioner? Those might be better deemed “wants.”

5. Transportation

Car ownership expenses, public transportation, and the occasional Uber to get to urgent care can all be considered necessities.

6. Clothing

Yes, you need a warm winter coat if you live in the climates that get chilly, plus boots. And you need basic garments to wear to work and on your off-hours. However, if you buy a cool jacket because you love it or yet another pair of cute shoes since they are on sale, those are not vital to your survival and should go in the “wants” category.

7. Debt

Minimum payments on outstanding debts like credit cards, student loans, auto loans, or personal loans would also go into the 50% needs portion.

8. Parenting Expenses

Child care, as well as child support or alimony payments, go into the “must” bucket of your budget. Those are not discretionary expenses.

9. Health Care

Depending on your insurance coverage, you may have expenses related to staying well, such as copays, prescription costs, and the like. Treating yourself to a massage that isn’t medically required? That’s not a “need” but a “want.”



Recommended: Recommended: 50/30/20 Budget Calculator.

6 Spending Categories for Wants

These are expenses that don’t qualify as needs and don’t include your savings and payments towards debt. Though it can sometimes be tricky to separate needs from wants, if you can live and earn your income without it, then it’s probably a want.

If you can live and earn your income without it, then it’s probably a want.

This is where you could put spending on clothing outside of what you need on a day-to-day basis, dinner and drinks out with friends, going to the movies, gym memberships, personal care, and miscellaneous spending.

As a general guideline, this category shouldn’t take up more than 30% of your spending. Go over that amount, and you could wind up depleting your checking account and winding up with credit card debt.

1. Clothing and Personal Care

Treated yourself to a new but unnecessary shirt as part of a little retail therapy? Took yourself to the spa for a day? Or bought yourself a fancy watch since you got a promotion? Those are all wants. They aren’t necessarily bad things, but be clear that they are not vital to your survival.

2. Dining Out and Drinking

It’s part of life to meet friends and loved ones for happy hour or a nice meal, or to get a bubble tea while running errands on the weekend. Or maybe you don’t feel inspired to cook so you order some Pad Thai for pickup or delivery. These are all discretionary food expenses vs. those that are vital to your survival.

3. Entertainment

While entertainment can definitely enrich your life, it goes into the “wants” category. This includes things like concert, play, and movie tickets; books and magazines; cable and streaming services; downloading music; and attending festivals and fairs.

4. Gym Memberships, Self-care, and Grooming

You could just workout for free at home while watching a Youtube video, so health club memberships, yoga or Pilates classes are “wants.” Same goes with self-care and grooming: Facials, manicures, and the like are considered discretionary. That $50 hair conditioner you can’t live without? That isn’t a “need” either.

5. Travel Expenses

If you are traveling for business purposes to pitch a new account, that’s more of a “need,” but otherwise, a getaway is a “want.” So tally up any airfare, rental car costs, hotel or Airbnb, food, and tour/attraction tickets, and consider them “wants.”

6. Home Decor

If your mattress bites the dust and you replace it, that is a “need,” but deciding to buy a new couch because your home could use a spruce-up is a “want.”

Categorizing Your Savings

Under the 50/20/30 rule, it’s suggested that savings take up 20% of your post-tax income. This is the money you’re putting toward your retirement, emergency fund, and other savings. You can also put payments against debt above minimums here since this can ultimately save money on interest, it’s considered savings.

Here are specifics.

1. Emergency Fund

Financial experts recommend having three to six months’ worth of basic living expenses socked away in case of emergency. This could mean job loss or receiving an unexpected and major medical or car repair bill. You don’t want to have to resort to using your credit card for such things.

It can be wise to keep this money in an online bank account where you will likely earn more interest than at a traditional bank. You can use an emergency fund calculator to determine how much you should be savings for an emergency fund.

2. Retirement Savings

If you aren’t offered a 401(k) or something similar at work, you can still contribute to your retirement savings account like an individual retirement account (IRA). You might be able to find a low-fee, or no-fee, IRA online.

Recommended: How to Open an IRA: Step-by-Step Guide

3. Other Short- and Long-Term Savings

You’ll also probably want to fund non-retirement savings goals, such as saving for a summer vacation or the down payment on a house. It can be a good idea to open a separate savings account, ideally where you can earn higher interest than a standard savings account, such as a money market fund, online savings account, or a checking and savings account.

To make sure saving happens each month, you may also want to set up an automatic transfer from your checking account into this account on the same day every month, perhaps after your paycheck gets deposited.

4. Additional Debt Payments

If you can pay more than the minimum on your credit card bill or make extra payments on your loans, that can decrease what you are spending on interest. That in turn can help increase your overall financial health and wealth.

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Why Categorizing Your Budget Is Important

Categorizing your budget is important because it can give you a much better sense of where your money goes versus just paying whatever bills turn up.

•   When you see how much cash goes towards the different kinds of “needs,” “wants,” and savings, you can better manage your cash. Tracking your spending can bring greater financial insight.

•   Also, as you categorize and tally your spending, you may see that much more than 30% of your take-home pay is going to ”wants.” That could convince you to recalibrate and cut back.

•   Or you might notice that you are spending way more than 50% on “needs.” This can happen when you are just starting out in your career or if you live somewhere with a high cost of living. Again, you might look to lower costs.

Finalizing Your Budget Categories and Getting Started

Now that you have an idea of how to allocate your income based on standard budgeting categories, you may want to start building out your budgeting plan.

If you find that your monthly expenses (including savings) are higher than your monthly take-home income, you’ll likely want to make some adjustments. One of the easiest places to do this is within the “wants” bucket.

Here, you can scout for unnecessary expenses you may be able to do without. For instance, maybe you would be fine saving on streaming services by dropping one or two platforms, cooking at home a few more times per week, or cutting back on clothing purchases.

If your “musts” are eating up more than 50%, perhaps you want to consider moving to a less expensive home or taking in a roommate. Another option could be to start a side hustle to bring in more income or train up for a higher-paying line of work.

It can help to keep in mind that the 50/30/20 guideline is just that, a guideline. Everyone’s situation is different and your numbers may vary depending on many different factors, including where you live, your income, how much debt you have, and your savings and investment goals. (There are also other budgeting methods to try, if you like.)

The Takeaway

Putting expenses into categories and coming up with a spending plan can bring significant benefits. These include being able to pay off debt, saving up for short-term goals (such as an emergency fund, a vacation, or a down payment on a home), and funding your retirement.

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.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

What are the 4 main categories in a budget?

There are different ways to categorize a budget, but commonly, people focus on their take-home pay, their spending on their “wants,” their “needs,” and how much they save.

What categories should you have in a budget?

When building a budget, it’s important to know how much income you have after taxes, what are the expenses that are necessary for your survival, what is your usual discretionary spending (which some people call the “fun stuff” in life), and how much are you saving. Within the last three buckets, you can subdivide into more specific categories.

How do you organize a budget?

One good budgeting technique is the 50/30/20 budget rule. This principle says that 50% of your take-home pay should go towards necessities, 30% to discretionary spending, and the remaining 20% should be saved.

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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 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, 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 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY 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, 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 members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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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.

*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.


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Calculating If It’s Cheaper To Drive Or Fly Somewhere

By | Budgeting & Goals, money | Comments Off on Calculating If It’s Cheaper To Drive Or Fly Somewhere

Maybe you are heading up the California coast to visit Yosemite, or perhaps there’s an out-of-town wedding coming up that you can’t miss. You may be wondering whether it makes more sense to drive to your destination or fly and which is kinder on your wallet. There are a variety of factors to consider, such as how quickly you need to get where you are going; how expensive airfare is vs. a rental car and hotel room; and more.
So before you start booking flights for a getaway or thinking about tuning up your car for a roadtrip, take a look at whether it’s cheaper to fly or drive. Here’s how to size up the cost.

Key Points

•   The type of trip you’re taking, the number of people traveling, and the length of the trip can help determine whether it’s cheaper to drive or fly.

•   Financial considerations for driving include gas, hotels, meals, and car maintenance.

•   Flying costs include ticket prices, seating, luggage fees, and airport transportation costs.

•   Driving allows time to sightsee and take side trips; flying can save time.

•   For trips under 600 miles, driving is often more economical and practical. For longer trips, flying may be cheaper.

Pros and Cons of Driving vs Flying

It can be easy to assume that the main benefit of flying is saving time and the main advantage of driving is saving money. However, it’s not quite so simple. In fact, the pros and cons of driving vs. flying depend on the type of trip you’re taking, your priorities, and your personal preferences. Here’s a look at some of the factors worth weighing.

Pros of Driving

As you’re thinking about driving vs. flying, there are plenty of good reasons to get behind the wheel rather than head to the airport.

•   When it comes to the “is driving cheaper than flying” question, the answer is often yes! It can be significantly cheaper to travel by car than by air, especially if you’re going with a large group of people. After all, six people flying to Vegas will each need their own ticket, but they can all pile into the same minivan.

•   Also, will you need a car when you get to your destination? If you’re going to, say, spend a week at a national park that’s a two-hour flight from home, it might be less costly to drive there. That way, you don’t need to rent a vehicle as well as buy plane tickets so the money you need to save in a travel fund could be a lower amount.

•   When considering the flying vs. driving conundrum, it’s worth noting that traveling by car can have other benefits beyond saving money. You can easily indulge in some sightseeing. Traveling by car offers flexibility so you can see the sights you want, whether that’s a quick detour through a national forest on your way across the country or planning a route that takes you from the Air and Space Museum in Washington, D.C., to the National Blues Museum in St. Louis, to the Buffalo Bill Museum in Colorado. You can have fun and create memories while saving money on family travel too.

•   Driving also means you can more easily access any type of food your heart desires, not just what’s available in the airport. Some people even plan their road trip routes to go through foodie cities — whether that means enchiladas and sopapillas in Santa Fe or pierogies in Pittsburgh — around dinner time to take advantage of local restaurants. (Of course, making smart choices about where to stop and what to order is one way to save money on a road trip.)

•   Driving is likely more comfortable than being constrained to an airplane seat. If you’re six foot six and aren’t interested in spending five hours with your knees touching your chin, you might be more inclined to ride out a trip in the car — where you can stop to stretch as often as you need.

•   If you’re traveling with a pet, such as a large dog, a car could be more comfortable for both of you as well.

One other benefit? Science shows us that the anticipation that builds in advance of a trip may lead to a happiness boost before the trip and could even help you enjoy the vacation more. That means that a long drive to get to your vacation destination might make the trip even sweeter when you finally do arrive.

Cons of Driving

Let’s be honest, though: When thinking about driving vs. flying, hitting the road has its downsides, too, however.

•   One of the more significant disadvantages, of course, is that you can’t just sit back and relax while you’re driving — you’re the one responsible for making sure the car gets there safely.

•   It also can take more work to plan a trip, as you have to choose what route you’ll take, where you’ll stay, and whether you’ll be hitting drive-throughs from California to New York or making reservations at noteworthy restaurants along your route. If you don’t do that prep work, you may end up piling into any motel you can find and grabbing food at any dingy rest stop. Nothing like driving for hours with greasy fast-food bags stinking up your car with stale french fry smell, right?

•   There’s also the consideration of the cost of gas and wear and tear to your car — though there are, of course, steps you can take to increase mileage and save money on gas. When you get on the road, you are risking a flat tire or worse, so it’s worth thinking about how you’d handle a roadside emergency. You also need to bring your A game and alertness for a long-haul trip.

•   And we can’t forget one of the main reasons many people choose to fly vs. drive: it takes a whole lot longer to drive than to fly. Think about cruising cross-country by car versus hopping a red-eye from Los Angeles to New York: One takes days, the other takes hours.

Pros of Flying

Booking a plane ticket is often the best option when deciding whether flying vs. driving is the best way to travel.

•   It’s faster — a whole lot faster! If you’re taking a business trip to attend a crucial half-day meeting in another city, your highest priority might be the speed of flying in and out. That time-saving advantage is one of the biggest pros when it comes to choosing to fly. A trip that could take days of driving might only take hours in the air.

•   Air travel can be more relaxing. You’re free to close your eyes and snooze away the hours until you arrive at your final destination. There’s no question of what route to take, where to stop, and when you’ll leave and arrive — the airline has that all figured out for you. You can take off from New York and wake up in L.A. ready to roll, without the exhaustion of a multi-day road trip holding you back.

•   Flying can be cheaper than driving. How, you ask? If your road trip involves an overnight stay at a hotel, it might tip the car travel into more expensive territory. Plus, you’ll save money on eating out. The driving vs. flying cost might wind up surprising you!

Cons of Flying

Of course, there are downsides to flying to consider.

•   You’ll pay a premium in exchange for a speedy arrival and the convenience of flying. It is often more expensive to fly than to drive — possibly a lot more expensive. And if you are traveling with your squad or family, that price differential will be magnified.

Sometimes, on short flights, the time differential between flying and driving isn’t that much. If you’re thinking of taking a 60-minute flight versus a five-hour drive, it might be a wash when you think about getting to the airport, going through security, waiting to board, retrieving your luggage…you might actually be better off driving in terms of time invested.

•   You might also have to sacrifice a little personal space and dignity when flying. Airplane seats can be a tight squeeze, and more and more people are packed onto flights. This means that you can pretty much count on being kind of uncomfortable while you engage in a silent but cutthroat battle with your seatmate over who gets to use the single armrest.

•   And if you’re a nervous flier, the anxiety of air travel might outweigh the benefit of getting to your destination sooner.

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Is It Cheaper to Fly or Drive?

For many people, the factor of whether it’s cheaper to fly or drive will determine how they travel. While you may be tempted to merely compare ticket prices to gas prices to decide which one is cheaper, don’t forget to take into account extra costs like eating out, luggage fees, and hotel rooms. These can wind up emptying out your checking account rather quickly! Let’s break this down for you in a bit more detail.

Calculating the Cost of Driving

Here are a few travel costs of driving to consider:

•   Gas

•   Hotel rooms

•   Eating out

•   Car maintenance

•   Possibility of having to rent a car if you don’t own one or yours isn’t available

•   Tolls

Hotel Rooms

There is of course a huge price spread in hotel rooms. If you are going to stay in a motel when driving, it will be much more affordable than pulling into a city and staying at a posh hotel where even parking your car can be a considerable expense.

Maybe, however, you could use points from your rewards credit card to book a room, or perhaps you are a frequent guest at a hotel chain and could bring the cost down. These are among the many ways to lower hotel costs.

Opportunity Cost of Time Spent Driving

Another thing to consider is what you lose if you spend more than, say, a day driving. Do you have to take unpaid time off from work? Do you need to hire childcare since your kids are in school while you’re away? Think through the implications before you opt for a long haul on the highway.

Calculating the Cost of Flying

Now, think about the costs associated with flying:

•   Ticket

•   Seating choice

•   Luggage fees

•   Eating out

•   Transportation to and from the airport

•   Airport parking

•   Car rental, if needed

Rental Cars

The cost and availability of a rental car can vary tremendously. If you are renting a car in a small suburb, it likely won’t cost as much as hopping into the driver’s seat over Memorial Day weekend at a major city’s airport. Your destination city, location of car pickup and dropoff, size and style of car, and timing will all matter.

You can scan what rental company or credit card rewards might lower the price if you need to rent a car after a flight.

Accessing Remote Areas

Another factor to consider is where you’re heading to. Not all locations are easily and affordably accessed by plane. For instance, if you are heading to a destination wedding in the Rockies over the summer, you may find that the direct flights that were plentiful and lower-priced during ski season have become sparse, booked-up, and pricier than you expected.

Or you might find that the closest airport is hours away from your destination, so you will be renting a car and driving anyway. That could tip the balance and lead you to decide to drive the whole way vs. flying.

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A Rule of Thumb for Deciding Which Saves You More Money

As far as rules of thumb, some say for trips of around 600 miles or shorter, it’s wiser to drive.

For longer trips, the value of driving will decline as the distance increases, unless of course you want to experience the pleasures of a road trip and stop off at some other places en route.

Obviously, there are also such variables as whether you are traveling a common and readily available route, such as from New York, New York, to Orlando, Florida, or if you are covering ground between two Western US locations that have infrequent and expensive flights.

Luckily, in this day and age, you don’t need a map and a calculator to figure out which transportation method will be more cost-efficient. You can easily use an online calculator like this one from Travelmath or this
one from BeFrugal to get an idea of how travel costs may compare whether you are driving or flying. Technology is here to help you make the best choice for whatever trip you may be planning. Bon voyage!

SoFi: Better Banking at Home and on the Road

Technology isn’t just making travel-planning better; it’s improving banking too. And at SoFi we use it to bring you smart, seamless, and super-simple ways to manage your money.

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.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

Is driving cheaper than flying?

Driving typically costs less than flying, but if you wind up needing to pay for lodging en route, it might not be as good a deal. You can use online tools to compare driving and flying costs for different itineraries.

How much more expensive is flying than driving?

Flying is typically more expensive than driving, but it’s important to consider other factors. For instance, if you fly to your destination, will you then need to rent a car? How far are you traveling? Driving is typically more economical for shorter distances, while flying is often cheaper for longer trips. It can be helpful to use online tools to compare costs and find the best deal for the particular itinerary you have planned.

Is it more energy-efficient to fly or drive?

In recent years, studies have indicated that flying may be better than driving. However, the answer to this question depends on how many people are in your party. When multiple people share a road trip, the emissions per person are lowered. This, in turn, makes driving more environmentally friendly than taking to the skies. But if the choice is flying or driving cross-country solo, you’d be better off with the plane.

Should you drive 5 hours or fly?

If you drive five hours at 60 miles per hour, you will cover about 300 miles. That is considered a fairly short trip and so from a cost perspective, you may well be better off driving.

Is it better to drive 12 hours or fly?

If you drive 12 hours at 60 miles per hour, you will cover about 720 miles. That’s a significant distance, and it will deprive you of a day and a half of productive time, whether that means earning money or taking care of your family. Only you can assess which option makes more sense, based on cost, scheduling, and other factors.

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SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 during a 30-day Evaluation Period (as defined below).

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 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, 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 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY 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, 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 members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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 Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.

1SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.


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

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