Mar
21
2025
Cost of Christmas Lights on Utility Bills

How Much Christmas Lights Cost to Run for a Month

By | Budgeting & Goals, Family Finances, money | Comments Off on How Much Christmas Lights Cost to Run for a Month

Many people love showing their holiday spirit with Christmas lights, whether just a strand of twinkle lights around a window or going all-out like the Griswolds.

While these lights are festive, it’s worth noting that they aren’t free. In fact, the cost of running holiday lights rose 13% last year, costing the average household $15.48 vs. $13.41 the prior year.

In this economy, every dollar can count, so if you want to learn how much it costs to run Christmas lights for a month and how to reduce that expense, read on.

Here, you’ll learn more about:

•   How much do Christmas lights cost to run?

•   How much does it cost to run Christmas lights for a month?

•   How can you save money on your holiday light electric bill?

Factors Affecting the Cost of Running Christmas Lights

Running Christmas lights uses energy, which can translate to higher utility bills. How much of an increase you see in your electric bill can depend on a number of factors, including:

•   How many strands of lights you use

•   The type of bulbs used in each strand

•   The number of hours you run your lights each day

•   How many days you run Christmas lights for

•   Where you live and what you pay per kilowatt hour for electricity.

All of these things can influence how large your Christmas lights electric bill turns out be once January rolls around. Understanding what you could wind up paying can help if affordably celebrating the holidays is your goal.

Keep in mind that other costs can drive up electric bills during the holidays, apart from Christmas lights. If you’re using the oven more often to prepare holiday meals, for example, that can result in a higher electric bill. You may also see a bigger bill if colder weather means the heat is kicking on more often or your kids are home all day using electronics more while school is out. Lowering your energy bill may require a multifaceted approach.

💡 Quick Tip: Tired of paying pointless bank fees? When you open a bank account online you often avoid excess charges.

How Much Electricity Do Christmas Lights Use?

The amount of energy used by Christmas lights can depend on the type of bulb and the number of bulbs per strand. The most popular options for Christmas lights include incandescent mini lights, mini LED lights, and ceramic C7 lights.

So which type of bulb uses the most energy?

The simplest answer is to look at the wattage of Christmas lights, based on bulb size and number of bulbs per strand. For example:

•   With C7 lights, for instance, you’re typically getting 25 lights per strand.

•   With mini LED lights, you’ll normally have 50 bulbs for a 14-foot strand and 100 bulbs per 32-foot strand.

•   With mini icicle lights, you often have 300 bulbs for a 26-foot strand.

Here’s how the average wattage for each one compares, though note that incandescent bulbs stopped being manufactured and sold in August 2023 (some people may still own and use strands of these, however):

•   C7 lights: 5 watts

•   C9 incandescent lights (2-¼” long): 7 watts

•   Mini incandescent lights: 0.4 watts

•   Mini LED lights: 0.07 watts

Between those three options, mini LED lights draw the least amount of energy per strand while C7 lights draw the most.

LEDs possibly lowering energy costs by up to 90% vs. the other options. Switching to LEDs could be a way to save money daily during the holidays.

Also note that you’d need four strands of C7 lights to equal the same number of bulbs in just one strand of incandescent or LED mini lights. This is important to understand because it can affect the number of kilowatt hours used and your overall energy costs.

Recommended: 23 Tips on Saving Money Daily

Cost of Running Christmas Lights

So how much do Christmas lights cost to run for a month? Or longer? Calculating your estimated cost of running Christmas lights matters when trying to lower your electric bill during the winter months. Again, what you’ll pay can depend on a variety of factors, including where you live and how much electricity costs.

The average household pays $0.17 cents per kilowatt hour for electricity, according to the U.S. Department of Energy, but prices may be significantly higher or lower in different parts of the country due to cost of living differences.

If you live in Connecticut, for example, you might pay an average of $0.21 cents per kilowatt hour. People living in Florida, however, might pay an average of $0.11 cents per kilowatt hour. Residents of Hawaii typically pay the most, currently spending $0.32 cents per kilowatt hour.

Here’s how to figure out how much you’ll pay for Christmas lighting:

•   Multiply the wattage of the lights by the hours per day the lights will be on, then divide by 1,000 to find kilowatt hours per day

•   Multiply kilowatt hours per day by your cost of electric usage to get the cost per day

•   Multiply the cost per day by the number of days your lights will be on

Calculating the Cost of Christmas Lights

Now, for how much does it cost to run Christmas lights? Here’s a look at what it would cost to run C7 lights, C9, and mini incandescent lights, and mini LED lights for six hours a day for 30 days, using a price of $0.14 cents per kilowatt hour. Here’s what you’d pay for each one:

Bulb Type

 Hourly Cost

 Daily Cost

 Monthly Cost
C7 (25 bulbs, 5 watts per bulb) $0.0175 $0.105 $3.15
C9 (25 bulbs, 7 watts per bulb) $0.025 $0.15 $4.50
Incandescent Mini Lights (100 bulbs, 0.45 watts per bulb) $0.0063 $0.0378 $1.13
Mini LED Lights (100 bulbs, 0.07 watts per bulb) $0.0042 $0.0252 $0.76

Keep in mind that these costs are for just one strand of lights, as noted. If you string together several strands on your tree, frame your windows with lights, and then drape your shrubs or street-facing windows outdoors with more, your costs will of course go up.

Also, in terms of what the average person spends on Christmas lights, it can vary by a state’s cost of living, as well as by what kind of bulbs are used. Louisiana residents who run LED lights, for example, would likely spend the least, since they are paying just over nine cents per kilowatt hour (currently the lowest rate in the US) and they would be using energy-saving bulbs. Meanwhile, Hawaiians who opt for incandescent bulbs would probably spend the most, since their bulbs use a considerable amount of power and they currently pay the highest national rate for energy of almost 33 cents per kilowatt hour.

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Tips to Save on Your Christmas Lighting Bill

If you’re looking for ways to lower your energy bill when you start plugging in your holiday lights, follow this advice.

Embracing Energy-Efficient LEDs

As mentioned, the wattage of Christmas lights plays an important part in determining how much you pay for electric bills over the holidays. Between C7 lights, incandescent lights and LED lights, LED lights are highly energy-efficient. According to the Department of Energy, residential LEDs that are ENERGY STAR rated use up to 75% less energy and last 25 times longer than incandescent lights.

People who use LED Christmas lights tend to pay far less than those using incandescent bulbs or C7 lights. So it follows that an easy way to save money on your electric bill and reduce energy usage would be to use mini LED lights as often as possible. Aside from that, LED bulbs emit less light and are less likely to overload sockets, making them a potentially safer option for Christmas lighting compared to other types of bulbs.

So if you still have some incandescent bulbs in your box of Christmas decorations, you may want to think about swapping them out for LEDs. (You won’t find incandescents made or sold in the US anymore either.)

Benefits of Solar-Powered Outdoor Lights

You might consider using solar-powered outdoor lights on your house over the holidays. These strands depend upon energy collected by small panels that gather and hold energy from the sun during the day.

These strands don’t plug in and draw no electrical power. So they can be especially easy and economical to use over the holidays.

Battery-Operated Lights for Smaller Displays

If you like to create smaller displays, you might consider battery-powered strands of lights. There is a wide range of how long these lights will stay illuminated, but this can be a good unplugged option to try for small-scale displays. While you do have to pay for the batteries, it can be cheaper than plugging in lights for weeks on end.

Recommended: 18 Common Misconceptions About Money

The Takeaway

A higher-than-usual electric bill can put a damper on your holiday celebrations. Estimating your potential costs beforehand can help you manage utility expenses. And you can decide whether it’s worth it to invest a little money in upgrading your current Christmas lights to energy-efficient options.

Having the right banking partner, such as one with budgeting tools, can also help make tackling high utility bills after the holidays 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

Do LED Christmas lights use a lot of electricity?

Compared to C7 lights or incandescent mini lights, LED Christmas lights use the least amount of energy. Specifically, they can use up to 90% less energy while lasting longer. LED Christmas lights also emit less heat and can be easier to install than other types of holiday lighting.

Do Christmas lights raise your light bill?

Holiday lights can raise your electric bill during the winter months. How much it costs to run Christmas lights can depend on several things, including the type of bulbs used, how many light strands you’re running, how long you turn the lights on for, and the average cost of energy per kilowatt hour in your area. Using timers and switching to energy-efficient bulbs can be helpful for reducing your Christmas lights electric bill.

Do Christmas trees use a lot of electricity?

Christmas trees can use a lot of electricity, depending on the type of lights you use, the number of strands on the tree, and how long you leave your tree plugged in each day. Using mini LED lights can reduce electric costs for Christmas tree lighting, while using C7 bulbs to light your tree could result in a higher energy bill.

About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.


Photo credit: iStock/BanksPhotos

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 direct deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with 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 Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 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 Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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.

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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Mar
20
2025

What Is an Authorized Signer on a Bank Account?

By | Family Finances, money, Money & Life | Comments Off on What Is an Authorized Signer on a Bank Account?

An authorized signer is a person who has access to a bank account but doesn’t actually own the funds in the account. Their limited rights to the account differentiate an authorized signer from, say, a joint owner.

It could make sense to add an authorized signer to personal or business bank accounts if you’d like someone else to have access either for convenience or in case you’re unable to manage the account yourself. Here’s a closer look at what it means to be an authorized signer on a bank account and how to add one.

Key Points

•   An authorized signer can conduct transactions within a bank account but does not own the funds within it.

•   Account owners are legally responsible for activities conducted by authorized signers on their accounts.

•   Authorized signers can write checks, pay bills, and make deposits, but their authority ends upon the account owner’s death.

•   The account owner can limit the authorized signer’s access, such as restricting check-writing privileges.

•   Adding or removing an authorized signer requires completing a form with the bank and possibly an in-person visit to add the signer, and the account owner can revoke the signer’s status at any time.

Definition of an Authorized Signer


An authorized signer on a bank account is someone who has the right to make transactions from the account, at the discretion of the account owner. However, an authorized signer does not own the funds in the account. The account owner can choose to whom to grant authorized signer status, and they can revoke that designation at any time.

In addition, it’s worth noting that the account holder may be able to limit the authorized signer’s access. For instance, some financial institutions may allow the account owner to cap check-writing privileges at $500 or $1,000 for the authorized signer. Any amount above that could require two signatures on the check.

Online banks and traditional banks often allow customers to add authorized signers; some may allow you to add more than one. A bank account authorized signer may be a:

•   Spouse

•   Adult child or grandchild

•   Parent

•   Sibling

•   Another relative

•   Friend

•   Business partner (if you’re adding someone to business bank accounts)

Some points to note:

•   Authorized signers are often added to business accounts so that the authorized signer can make deposits or write checks as needed.

•   Authorized signer status applies while the account owner is still living. You can’t be an authorized signer on, for example, a savings account after death of the account owner, as your authority ends with their passing.

•   As briefly noted above, an authorized signer is different from a joint owner of an account. With a joint account, the parties each have access to, as well as ownership of, the money in the account.

Also, adding an authorized signer is not the same as opening a bank account for someone else. For example, a parent might open a bank account for a minor child. The parent is the primary account owner, while the child is a joint owner, or it might be a custodial account. (This will depend on the financial product chosen.)

Roles and Responsibilities of an Authorized Signer


An authorized signer on a bank account typically has the right to:

•   Check account balances

•   Sign checks drawn on the account

•   Pay bills

•   Schedule transfers to other accounts

•   Use a debit card to make purchases or withdraw cash from the account

•   Deposit funds to the account

•   Stop payments

You may be able to add an authorized signer to a business account, checking account, or savings account. If state laws allow, an authorized user may also be able to close the account.

You may wonder why someone would add an authorized signer to a bank account. It could make sense in certain situations.

•   Seniors may choose to add their children as authorized signers to help them manage their money.

•   A business owner may add one of their employees to the account and delegate certain tasks, such as paying invoices or making deposits.

•   Someone who’s undergoing medical treatment for a serious condition may add a family member or friend to make sure their bills are paid so they can focus on their health.

An authorized signer has no right to any assets in the account after the account owner passes away unless they’re also listed as a beneficiary. If you’d like your authorized signer to be able to inherit your account, you’d need to fill out a beneficiary form with your bank.

Recommended: How Do Savings Accounts Work?

Differences Between an Authorized Signer and Account Holder


The main difference between an authorized signer and an account holder is simple: The account holder owns the account; an authorized signer doesn’t.

An authorized signer can’t make any changes to the account’s ownership. They don’t have any automatic right to the money once the account holder passes away. The account owner can revoke their authorized signer status at any time. Account holders are also legally responsible for anything authorized signers do with the funds in the account.

To recap:

•   Account owners (including joint account owners) own the funds in the account and have discretion over how the account is managed, including when to add or withdraw an authorized signer.

•   Authorized signers have the right to conduct certain transactions in the account, but they don’t own it and their authority ends when the account holder dies. (In other words, there’s no access or rights for an authorized signer on a bank account after the death of the owner.)

•   Beneficiaries inherit funds in the account once the account passes away, but have no rights to it during the account owner’s lifetime.

Another angle on this matter: The difference between an authorized signer vs. joint owner bank account is that joint owners have equal ownership, control, and access with one another. They also share equal legal responsibility for account transactions.

A joint bank account owner may or may not automatically inherit a bank account when the other account owner passes away. If the account is held with rights of survivorship, the account becomes theirs. If it’s held as tenants in common, the share of the account belonging to the deceased owner passes to their heirs.

How to Add or Remove an Authorized Signer


Adding or removing an authorized signer typically requires you to fill out a form with your bank. You may add an authorized signer when you open a new bank account or after the account is established.

You’ll need to give the bank some information about the person you want to add, including their:

•   Name

•   Date of birth

•   Social Security number

•   Address and phone number

The bank may allow you to specify the level of access you’d like your authorized signer to have. This is similar to how credit cards may allow you to set spending controls for an authorized user. Your bank may also request an in-person meeting with your authorized signer to confirm their identity and create a signature card.

If you want to remove an authorized signer, you’ll need to let the bank know and complete any paperwork that’s required. You may be able to complete the process on your bank’s website or in their app. Once an authorized signer is removed, they no longer have any rights to transact in the account.

Legal Implications and Considerations


As the account holder or owner, you’re responsible for anything that an authorized signer does. That could lead to tricky legal situations if they engage in irresponsible or even criminal behavior, such as check fraud. At the very least, you could put yourself at risk for overdraft charges or other fees if the authorized signer mismanages funds in the account.

Before you add someone as an authorized signer, it’s important to consider how trustworthy they are and how comfortable you feel giving someone else access to your bank account. If your bank allows you to set controls on what an authorized signer can or can’t do, you may want to weigh the benefits of doing so. That way, you could likely minimize worries about an authorized signer overspending from your account.

Recommended: Savings Account Calculator

The Takeaway


Adding an authorized signer to a bank account may be something to consider if you’d like to have a backup person who could access your account if needed or someone to whom you could delegate some personal finance tasks.

If you’re interested in opening a new checking account or savings account, and are exploring joint accounts, see what SoFi offers.

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

Can an authorized signer withdraw money from the account?

Authorized signers can typically write checks on the account, use a debit card to make purchases, withdraw cash at ATMs, or make withdrawals in person at bank branches. If your bank gives you the option, you may be able to limit the types of withdrawals an authorized signer can make. For instance, you could possibly put a cap on ATM withdrawals, or make it necessary to have two signatures on checks for more than $1,000.

Does an authorized signer have access to online banking?

An authorized signer can have access to online and mobile banking if the bank offers that feature. They would need to create a unique user ID and password to log in and access any accounts they have access to.

Can an authorized signer be held liable for account activities?

Account owners, not authorized signers, are legally responsible for any activity that occurs in the account. That’s an important legal point to consider if you’re thinking of adding an authorized signer to bank accounts you own. It’s wise to be sure you feel they are a trustworthy individual.

About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.


Photo credit: iStock/miniseries

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 direct deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with 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 Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 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 Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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.

*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.

SOBNK-Q324-032

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Mar
20
2025

Guide to Adding a Beneficiary to a Bank Account

By | Family Finances, Life & Career, money, Money & Life | Comments Off on Guide to Adding a Beneficiary to a Bank Account

Adding a beneficiary to a bank account is similar to naming a beneficiary to a life insurance policy or retirement account. A bank account beneficiary is entitled to receive the assets in the account when you pass away.

Should you name a beneficiary to your bank accounts? Maybe, if you’d like to ensure that the money goes to a specific person, group of persons, or entity after you die.

There are, however, some bank account beneficiary rules to keep in mind when deciding how to handle your accounts. Here, you’ll learn more about:

•  What a bank account beneficiary is

•  What privileges a beneficiary has

•  The pros and cons of naming a beneficiary to a bank account.

What Is a Beneficiary on a Bank Account?

A bank account beneficiary is an individual or entity who’s entitled to inherit assets once the account owner passes away. Generally, the beneficiary to a bank account can be anyone you choose to name, including:

•  A spouse

•  Adult children

•  Siblings or other relatives

•  Trusts

•  Charitable organizations.

It may be possible to name a minor as the beneficiary to a bank account if your financial institution allows it. However, you might be better off appointing someone to act as a custodian for them and naming that person as the beneficiary, since leaving assets to children can get tricky from a legal perspective.

You could also set up an account in their name if you want to establish an account for a minor. The minimum age to open a bank account alone is typically 18 or 19, depending on which state you live in. However, parents can open youth savings accounts or teen checking accounts on behalf of minor children.

All beneficiaries to the account have an equal share. So, if you have five adult children and you name each of them as beneficiaries to your bank account, it would be a five-way split when it’s time to divide the assets. Each person would receive 20%.

Bank Account Beneficiary Rules

If you’re interested in naming one or more beneficiaries to your bank accounts, it’s helpful to understand a little more about how it works. Your bank can offer more information on adding beneficiaries or removing them, if necessary. In the meantime, here are a few key things to know.

Is a Beneficiary Required?

You’re not required to name a beneficiary to a bank account. However, if you’re opening a new bank account, the bank might ask you if you’d like to name one or more beneficiaries.

Is there an advantage to naming a bank account beneficiary? There are a couple, actually.

•  Naming a beneficiary ensures that the person you choose will inherit the assets in your account after you’re gone.

•  Bank accounts that have a beneficiary are not subject to probate. Probate is a legal process in which a deceased person’s assets are inventoried, outstanding debts are paid, and remaining assets are distributed to their heirs. It can be costly and time-consuming, but accounts with named beneficiaries are exempt from the process.

Can Beneficiaries Interact With Your Account?

You might be wondering what control, if any, a beneficiary might have over your account. For example, when can a beneficiary withdraw money from a bank account?

The simple answer is that a beneficiary can’t do anything with the account until you pass away. Unless you add them as a joint owner, they wouldn’t be able to make withdrawals or get information about the account.

Once you pass away, however, the money becomes theirs. At that point, they could do whatever they like with it since they technically own it. Keep in mind that naming a beneficiary wouldn’t prevent a government withdrawal from your account if your balance is offset for unpaid debts.

Recommended: What Is Private Banking?

Does Marriage Affect Beneficiary Rules?

Whether marriage impacts bank account beneficiary rules can depend on how the account is owned and what state law dictates.

If you and your spouse are both listed as joint account owners, for instance, then the beneficiary you name would likely need to wait until both of you pass away to collect any money. An account that’s owned solely by you could be passed on to your beneficiary without any of the money going to your spouse.

However, your spouse may be able to contest the beneficiary designation with the probate court. You may also need your spouse’s consent to leave assets in a bank account to someone other than them after your death.

If you get divorced and your spouse was the beneficiary to your bank account, you’d likely want to update that designation. Otherwise, they’d still be entitled to any money from the account after you’re gone.

Are There Any Downsides to Having a Beneficiary?

Naming a beneficiary to a bank account has its upsides, but there are some potential drawbacks to keep in mind as well.

•  The beneficiary can do what they want with the money once they inherit it. If you’d like to have a say in how they manage those funds after you’re gone, you might be better off leaving the money in a trust instead. With a trust, you can specify exactly how and when your heirs can access their inheritance.

•  Beneficiary designations can also get tricky if you change your mind later. You may need to close the account and open a new one to remove a beneficiary, depending on your bank’s policy.

•  Naming beneficiaries can also be problematic if it causes infighting among your heirs. For example, you might name your daughter the beneficiary to your checking account but not your son. That could lead to squabbles between them and even legal disputes if your son challenges the beneficiary designation after your death.

Do All Banks Allow Beneficiaries?

Do bank accounts have beneficiaries automatically? Usually, the answer is no. But most banks allow you to name a beneficiary to bank accounts. Credit unions can allow them too. You can check with your bank to see if naming one or more beneficiaries is an option.

If your bank does allow beneficiaries, it’s a good idea to familiarize yourself with the rules. For example, the bank might restrict who you can name and the number of beneficiaries allowed. Or it might have certain guidelines for changing or removing beneficiaries later.

Can you open a bank account for someone else if your bank doesn’t allow beneficiaries? You might be able to, depending on the bank’s rules. For example, you could set up a joint account for yourself and someone else or open an account for a minor child. Either one could allow you to bypass beneficiary designation rules.

Payable-on-Death Accounts vs. Bank Account Beneficiaries

When you open a new bank account you may be able to designate it as a payable on death (POD) account. Payable on death means that when you pass away, the money in the account is payable to the beneficiary or beneficiaries that you named at the account opening.

It’s possible to add a beneficiary to a bank account after the fact. That may be as simple as filling out a form or logging onto online banking and adding the beneficiary’s information to an existing account. The money in the account would still be payable on death to the beneficiary once you pass away.

Whether your bank specifically refers to your account as payable on death or not, the beneficiary rules are the same. Anyone who’s named to inherit the assets in the account would not be able to touch them until after you’ve died.

Recommended: How Many Bank Accounts Should I Have?

The Takeaway

Adding a beneficiary to a bank account could make transferring money to loved ones easier, especially if you’d like them to be able to sidestep probate or just feel financially secure during a trying time. If you’re not sure whether you can add a beneficiary to a bank account or not, you can ask your bank for more details.

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

Can a beneficiary take over a bank account?

A beneficiary is entitled to inherit a bank account when the original account owner passes away. Someone who is listed as a beneficiary, but not a joint owner, would not be able to take over the account or access it during the owner’s lifetime.

What happens when you add a beneficiary to your bank account?

When you add a beneficiary to your bank account, you’re telling the bank that you’d like the money in the account to go to that person (or persons) when you pass away. The beneficiary would be able to inherit the account from you after your death.

Who gets the money in your bank account after your death?

If you name one or more beneficiaries to a bank account, then those beneficiaries would be entitled to get the money in your account when you pass away. On the other hand, if you don’t name a beneficiary, then your bank account can get included in your estate. It would then be distributed to your heirs, according to the terms of your will or state inheritance law if you die intestate (without a will).

About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.


Photo credit: iStock/g-stockstudio
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 direct deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with 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 Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 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 Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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.

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

This article is not intended to be legal advice. Please consult an attorney for advice.

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20
2025

13 Tips for Aggressively Saving Money

By | Budgeting & Goals, Family Finances, money | Comments Off on 13 Tips for Aggressively Saving Money

Saving money can help you to feel more in control of your finances and your life. When you have cash stashed away, you know you are prepared for financial emergencies and can also be working toward your short-term goals (like planning a wedding) or long-term ones, like retirement.

Often, though, saving happens gradually, like a slow drip. But there are people who want to save more aggressively, or there could be a moment in your life that spurs you on to accrue as much money quickly as you can.

If you’re interested in how to aggressively save money, there are smart strategies to help you do just that. Implementing an aggressive savings budget takes a certain amount of commitment, since you may need to make some significant lifestyle changes. That can be worth it, however, if the payoff is watching your money grow faster.

What Is an Aggressive Savings Plan?

An aggressive savings plan is a blueprint for setting aside a sizable amount of your income, typically over a fairly short time period. A 30-year-old who’s hoping to retire by 40, for example, might utilize an aggressive savings plan to save and invest 50% or 60% of their take-home pay over a period of 10 years to reach their goal.

For perspective, the personal savings rate in the U.S. was 3.4%, as of June 2024. That is the percentage of disposable income that citizens are socking away, whether in a savings account or a retirement fund. So the vast majority of people aren’t saving aggressively on a regular basis. Taking an aggressive approach to savings is something you might consider only if you have a specific goal you’re interested in achieving with your money.

Why an Aggressive Savings Plan Can Be Beneficial

Following an aggressive savings budget takes financial discipline, and it may not be right for every person or every financial situation. If you can stick with an aggressive savings plan, however, there are some tangible benefits you might be able to reap.

Here’s why an aggressive savings plan can work in your favor:

•   You can set aside money for large or small goals.

•   Reaching your savings goals can take less time.

•   Saving money becomes a habit.

•   You can learn to manage money better.

•   It becomes easier to learn to live on less.

•   You can avoid debt when you’re focused on saving vs. spending.

•   It teaches you how to prioritize needs vs. wants.

Saving aggressively can become a lifestyle if you’re able to accustom yourself to spending less. But even if you only apply an aggressive savings plan for a few months, you might be surprised at just how much money you can set aside.

Whether you follow a turbocharged savings plan for a short or long time, it can definitely improve your financial status and even be a form of financial self-care, since you’re likely avoiding debt and improving your money mindset.

Earn up to 3.80% APY with a high-yield savings account from SoFi.

No account or monthly fees. No minimum balance.

9x the national average savings account rate.

Up to $3M of additional FDIC insurance.

Sort savings into Vaults, auto save with Roundups.


Tips for Building an Aggressive Savings Plan

There’s no single strategy for how to save aggressively; instead, there are numerous steps you can take to shape your savings plan. If you’d like to stop overspending money and start saving instead, these tips can help you get your finances on the right track.

1. Paying Yourself First

“Pay yourself first” is an often-repeated piece of personal finance advice. It simply means that you should set some of your paychecks aside for saving before doing anything else. The good news is that paying yourself first is relatively easy to do.

Some of the ways you can pay yourself first include:

•   Contributing part of your salary to your 401k at work

•   Scheduling recurring transfers from checking to savings each payday

•   Using direct deposit to route payments directly to savings and bypass checking.

Paying yourself first ensures that money makes it to savings, rather than being spent. If you’ve struggled with sticking to a savings habit, adopting this mentality can make it easier to stay the course.

2. Getting Out of Debt

Debt can be a significant obstacle to saving money. If you’re spending hundreds or even thousands of dollars paying off credit cards, student loans, or other debts each month, you might have very little left to save.

Getting rid of your debt can help to free up more money so you can follow through on an aggressive savings budget. Focusing on debt payoff also requires you to control spending habits, since the goal is to not create any new debts in the process.

If you have high-interest credit card debt, consider balance-transfer offers that charge zero percent for a period of time, giving you breathing room to pay down your balance. Or you might take out a lower interest rate personal loan to consolidate and pay off your debt.

Recommended: 15 Creative Ways to Save Money

3. Tracking All of Your Spending

An aggressive savings plan won’t really work if you don’t know exactly where your money is going. Keeping track of your spending is essential for making your plan work.

There are different ways to track spending, including:

•   Writing purchases down by hand

•   Using a spreadsheet

•   Linking bank accounts to an expense tracking or budgeting app.

The method you choose isn’t as important as tracking all of your expenses regularly, including cash spending. Getting into the habit of tracking expenses can make the next step in your aggressive savings plan easier to tackle. You’ll be much more aware of where your money goes and how you might economize.

4. Utilizing a Budgeting Method

A budget is a plan for spending money each month. Making a budget each month is central to how to save aggressively, since you can decide how to allocate the money you’re earning.

In its most basic form, making a budget means adding up expenses and subtracting them from income. When you’re trying to save aggressively, the goal is to make the gap between income and expenses as wide as possible.

There’s no single way to make a budget. For example, you might try zero-based budgeting, the 50/30/20 budget method, or cash envelope budgeting. Experimenting with different types of budgets can help you to decide which method works best for you.

Also consider different tools to help you along. Your financial institution may offer budgeting tools, you can download apps, you might use a journal, or even manage your budget in an Excel spreadsheet.

5. Cutting Down Expenses

How to stop spending money is a common challenge; succeeding at it can help you save aggressively. The key is knowing how to prioritize needs over wants and looking for areas in your spending that you can reduce or eliminate.

For example, you can start by making the obvious cuts and jettison streaming services you don’t use or canceling your gym membership. But you can go a step further and look for more drastic ways to reduce expenses, such as:

•   Renting out a room or taking on a roommate

•   Getting rid of your car and using public transportation

•   Embarking on a no-spend year

•   Moving to a cheaper area.

Whether these types of saving tactics will work for you or not can depend on your situation. But allowing yourself to be creative when finding ways to cut expenses can help to bolster your aggressive savings plan.

6. Opening a High-Yield Savings Account

If you’re saving aggressively, it’s important to keep your money in a secure place where it can earn a great interest rate. The higher the rate and annual percentage yield (APY), the more your money can grow.

That’s where high-yield savings accounts come in. High-yield savings accounts can pay an interest rate and APY that’s well above the national average. For example, the typical savings account at a traditional bank pays 0.46%, as of the summer of 2024. But you might find a high-yield account at an online bank that’s paying over 4.00% or more instead.

When looking for a high-yield savings account, consider the APY you can earn. But also pay attention to things like fees, online and mobile banking access, and monthly withdrawal limits. These are important factors when sizing up the best option.

Recommended: Understanding High Yield Savings Accounts

7. Starting a Side Hustle

Starting a side hustle can help you to generate additional income that you can add into your aggressive savings budget. According to a recent report, 36% of Americans have at least one side hustle.

There are different types of side hustles you can try, including ones you can do online and ones you can do offline. For example, you might try your hand at freelancing if you want to make money from home or get paid to deliver groceries in your spare time. You could drive an Uber or sell crafts you make on Etsy.

The great thing about side hustles is that you can try different ways to make money to see what works best. Just remember that any earnings from side hustles or temporary work over $400 are taxable.

Recommended: 11 Benefits of Having a Side Hustle

8. Avoiding Eating Out at Restaurants

Grabbing dinner out can be convenient, but it can also derail your plans to save aggressively. If you’re spending $50 a week on takeout food or meals with friends, for instance, that’s $2,600 a year that you’re not saving.

Learning to plan meals and make food at home can cut that expense out of your budget. If you want to share meals with friends, consider inviting them to a potluck dinner at your house instead. That can be a great way to try new foods without having to blow your budget.

9. Saving Money Windfalls

Windfalls are any money that comes your way that you might not have been expecting. So that can include:

•   Tax refunds

•   Rebates

•   Bonuses

•   Cash-back rewards

•   Financial gifts (i.e., birthday money or wedding money)

•   Inheritances.

Some money windfalls may be small and add up to just a few bucks, while others might be hundreds or even thousands of dollars. It may be tempting to spend those amounts (because it feels like free money), but you can make better use of them by adding them to savings instead.

10. Investing Your Money

Investing your money is the best way to grow it through the power of compounding interest. Compounding means your interest earns interest. When you invest money in stocks, exchange-traded funds (ETFs), and other vehicles, you have a chance to earn interest at much higher rates than what you could get with a savings account, which means the compounding factor is enhanced too. (However, do remember there is risk involved; these investments aren’t FDIC-insured.)

The longer you have to invest, the more your money can grow. So if you’re not investing yet, it’s important to get started sooner rather than later. Some of the best ways to start investing include adding money to your 401k, contributing to an Individual Retirement Account (IRA), and opening a taxable brokerage account.

11. Automating Your Finances

Deciding to automate your personal finances can make saving aggressively less time-consuming, since it’s something you don’t have to actively think about. As mentioned above, you can set up automatic transfers from checking to savings each payday. What’s more, you can also automate deposits to your investment accounts and your bill payments.

Automating ensures that bills get paid on time and that the money you’ve earmarked for savings in your budget gets where it needs to go. You can set up automatic deposits and payments through your bank account; it typically takes just a few minutes.

12. Utilizing the 30-Day Rule

The 30-day rule is fairly straightforward: If you’re tempted to spend money on an unplanned purchase, impose a 30-day waiting period. Thirty days is enough time to decide if you really need to buy whatever it is you’re considering and, if you do, to find the money in your budget to pay for it without having to rely on a credit card.

Using the 30-day rule can help you to curb impulse spending, which can be a hurdle to making an aggressive savings plan work. If you decide the item is still something you want to buy, then you can make the purchase guilt-free. But you might find that what seemed like a smart buy at the time is no longer something you need.

13. Living Below Your Means

Living below your means simply means spending less than you earn each month. When you spend less than your income, you have money left over that you can add to your savings goals.

All of these aggressive savings tips outlined here can help you to get into a mindset of living below your means. When you’re focused on cutting down expenses and sticking to a budget, living on less money than you make doesn’t seem like a struggle.

The Takeaway

Saving aggressively can take some getting used to if you’ve never tried it before, but the end result can be well worth the effort. As you find your savings groove, it’s important to have the right banking tools so you can make the most of your money.

Opening the right bank account can make it easier to follow an aggressive savings plan.

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

Are there downsides to aggressive savings plans?

Saving money aggressively can mean having to make certain sacrifices in the short-term. For example, you may have to say no to dinner out with friends, vacations, or new clothes. But those temporary sacrifices can pay off if you’re able to reach your savings goal relatively quickly.

How can I save aggressively if I do not make a lot of money?

Starting a side hustle can help you to create more income so that it’s easier to save aggressively. But if that’s not an option, you can still save at an above-average rate by cutting down your expenses as much as possible and using windfalls to grow your savings whenever they come your way.

Can you aggressively save long-term?

Whether you’re able to save aggressively for the long-term can depend on how committed you are to your plan. If you have a clear reason for saving, then you may not need any added motivation to keep going. On the other hand, you may need to take a temporary break from saving as aggressively if you find yourself chafing under a strict spending regime.

About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

Photo credit: iStock/Farknot_Architect

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 direct deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with 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 Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 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 Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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.

*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.

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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20
2025

Tips for Financially Recovering From Money Addiction?

By | Family Finances, Life & Career, money | Comments Off on Tips for Financially Recovering From Money Addiction?

When you think of addiction, you might automatically think of people who are dependent on drugs or alcohol as a coping mechanism. But it’s also possible to be addicted to money. This issue can manifest itself through unhealthy behaviors such as gambling, frequent overspending, or extreme saving (yes, it’s possible to overdo a good thing).

Having an addiction to money can be harmful financially and emotionally; it can also put a strain on your personal relationships. Recognizing the signs of a money addiction can be the first step in making a recovery. Read on for a closer look at the signs and symptoms of money addiction, how it can impact your life, and strategies that can help you overcome it

Key Points

•   Money addiction involves compulsive financial behaviors that can harm personal and financial well-being.

•   Signs of money addition include an obsession with obtaining, spending, or saving money, as well as risky financial behaviors like gambling.

•   An addiction to money can lead to stress, debt, and strained relationships.

•   Recovery requires acknowledging the problem, seeking help, and using money positively.

•   Improving your financial habits and mindset can help break the cycle of addiction.

What Is Money Addiction?

Broadly speaking, addiction is defined as a chronic disease that leads people to engage in compulsive behaviors, even when the consequences of those behaviors may be negative. The precise cause of addiction isn’t known, but it is believed to be a combination of a person’s genetics, brain circuitry, environment, and life experience.

When someone has a money addiction, their compulsive behaviors are centered around money, and they may approach their finances in a way that’s outside the norm of what people typically do.

For example, having a lack of savings or too much debt are common financial challenges that many people face. If you have a healthy relationship with money, you might try to remedy those issues by opening a high-yield savings account and setting up an automatic transfer of 5% or each paycheck into the account, or by creating a workable debt payoff plan. While your finances might not be in great shape, there isn’t any indication of compulsive behavior.

Someone with a money addiction, on the other hand, will typically have a different relationship with their finances. They might commit to an aggressive savings plan, for example, because they believe they have to save even if it means sacrificing basic needs. Or they may compulsively shop for emotional fulfillment while turning a blind eye to their debt.

Can You Be Addicted to Money?

Money addiction is a real thing for many people. The Diagnostic and Statistical Manual of Mental Disorders (DSM), which is the official manual of the American Psychiatric Association, specifically recognizes certain financial behaviors as addictive. For example, the DSM classifies gambling disorder as an addictive disorder.

Whether you end up addicted to money can depend in part on your experiences and the money values you developed in childhood. If you frequently ask yourself, “Why am I bad with money?” the answer could be that you learned negative financial behaviors from your parents and the people you grew up around. Genetics and biology also play roles.

What money addiction looks like for one person might be very different for another. And it can sometimes be difficult to recognize those behaviors as addictive. For example, someone who spends $20 a day on lottery tickets in the hope of someday winning the jackpot might not see that as compulsive or having a money addiction. They could fail to realize how that behavior might be harming them financially because they’re so focused on the idea that they’ll win eventually.

Signs You May Be Addicted to Money

How do you know if you have an addiction to money or are just bad at managing it? As mentioned, experiencing common money issues such as debt or a lack of savings can indicate that you might need to work on learning personal finance basics like budgeting. But there are other signs that could point to a full-fledged money addiction. Here are some signals:

Life Revolving Around Obtaining Money

One major clue that you might be addicted to money is feeling obsessed with the idea of getting it. It’s one thing to wonder how you’re going to stretch your finances until your next paycheck; it’s another to spend most of your waking hours thinking about how to get money. If you often think of how you can obtain money instead of considering how to make the most of the money you do have, that could be a sign of a money addiction.

You don’t have to be broke to have this mindset either. You might be making $250,000 a year at your job, for example, but still not think it’s enough and constantly consider ways you could make more money.

Engaging in Dangerous or Risky Behavior

Certain behaviors could signal a money addiction if they involve your taking big risks that you’re not necessarily comfortable with. For example, when a money addict gets paid, they might take that money to the casino instead of using it to pay bills. Their addictive mindset doesn’t allow them to factor in the risk that instead of winning big, they might lose it all.

Money addiction can play out in other ways that might not seem risky at first glance. Trading stock options or futures, for example, is something plenty of people do every day. If your guess about which way a stock will move pays off, you could net some decent profits.

Where that kind of behavior becomes problematic is if you’re constantly losing money, but you continue investing anyway. It’s similar to the person with a lottery ticket addiction. You keep telling yourself that your winning number is sure to come up eventually, but in the meantime, you’re steadily losing money.

Not Wanting Others to Know Your Money Struggle

Covering up your money behaviors can be another strong hint that you have a financial addiction. That includes things like hiding receipts, credit card bills, or bank statements, or hiding the things you’re purchasing from a spouse, significant other, or another family member. You may act defensive or defiant when someone tries to ask you about your money situation.

Here’s another simple test to determine if you’re addicted to money. If you have to ask yourself, “Why do I feel guilty spending money?“, that could suggest that you know there’s a problem with what you’re doing.

Living in Denial About Spending

Your spending patterns can be one of the best gauges of whether you have a money addiction, provided you own up to them. Avoiding your financial life can be a symptom: If you shy away from checking your bank statements or adding up how much credit card debt you have, those could be red flags for money addiction.

Understanding why you spend the way you do can be a first step toward recovery. For instance, there’s a difference between compulsive vs. impulsive spending. Knowing which one you engage in more often can help you identify the triggers that are leading to bad money habits.

Unwilling and Unable to Change Money Habits

Another sign of money addiction is a sense of resignation, or knowing that you have a problem with money but not doing anything about it. You might feel ashamed to let someone else know that you need help with money, for instance. Or you might take the attitude that things have been the way they are for so long already that there’s no point in trying to change the situation.

Fearing the Loss of Money

No one wants to lose money but having an unnatural fear of doing so could be a clue to a money addiction. Being afraid of losses can keep you from making smart decisions with your money that could actually improve your financial situation. For example, you might be so afraid of losing money in the stock market that you never invest at all. In the meantime, you could potentially miss out on thousands of dollars in compound interest growth over time. Or it might have you working 24/7 and never enjoying downtime because you are so focused on making as much as possible to avoid feeling poor.

Another expression of money addiction could be saving so much that you have very little spending money. If you feel compelled to save a certain, possibly excessive, amount, it could keep you from paying bills on time and enjoying the occasional dinner out or movie because you feel every penny must go into your bank account. This behavior can be akin to hoarding and can likewise interfere with daily life.

Effects of Money Addiction

How money addiction affects you personally can depend on what form your addictive behaviors take. Generally, there are a number of negative side effects you might deal with as a result of money addiction, including:

•   Constantly feeling worried or stressed over money

•   Failing to set or reach financial goals

•   Carrying large amounts of debt

•   Having little to no money in savings

•   Missing out on legitimate opportunities to grow your money

•   Getting no enjoyment from the money that you do have

•   Living with a scarcity mindset

•   Having strained personal relationships because of money.

In short, money addiction can keep you from having the kind of financial life and daily life that you want. The longer you’re addicted to money without addressing the causes, the more significant the financial and emotional damage might be. The sooner you learn to manage money better, the less you will pay (literally and figuratively) for it.

Tips to Recover From Money Addiction

If you have a money addiction, you don’t have to stay stuck with it. There are things you can do to cope with and manage an addiction to money, similar to how you’d deal with any other type of addiction.

Improving your money mindset can lead to positive actions and break the addictive cycle. Here are some key steps on your path to recovery.

Being Honest

Before you can break your addiction to money, you first need to be honest with yourself that you have a problem. It can be difficult to acknowledge that you have an issue with money, but it’s necessary to identify what’s behind your compulsive behaviors.

You may also need to come clean with others around you if your financial behaviors have affected them directly or indirectly. For example, if you’re hiding $50,000 in credit card debt from your spouse, that’s a conversation you need to have. They probably won’t be thrilled to hear that you’ve run up so much debt, but they can’t help you address the problem if they don’t know about it.

Seeking Help

Fixing a money addiction might not be something you can do on your own. You might need professional help, which can include talking to a qualified therapist to understand your money behaviors and improve them. Or it could mean working with a nonprofit credit counseling company to hammer out a budget and a financial plan for getting back on track. Or it might mean taking both of these steps.

Even having an accountability partner can be helpful if you’re struggling with overspending. Any time you’re tempted to make an impulse buy, you can call up your accountability buddy and ask them to talk you through it until the urge to spend passes.

Using Money for Good

Depending on how it’s used, money can do a lot of good. If you have negative associations with money, you can help turn that around by using it for positive purposes.

For example, you might start making a regular donation to a charitable cause you believe in. Or if you’ve neglected saving in favor of spending, you might try paying yourself first by putting part of every paycheck into a high-interest savings account. Prioritizing savings and focusing on your needs vs. wants can be a form of financial self-care that can help with breaking a money addiction.

Understanding Why Basing Your Self-Worth on Money Is Unhealthy

When you’re addicted to money, you might have a mindset that the amount of money you have determines your value. That’s an easy trap to fall into if you spend a lot of time on social media, where you’re likely to see a steady stream of influencers living dream lives. You can end up in a cycle of FOMO (or fear of missing out) spending in an effort to live a lifestyle that you can’t really afford.

That’s not a healthy place to be financially or mentally because you can find yourself constantly chasing “things” in order to feel whole. Recognizing that your self-worth goes beyond how much money you have in your bank account or which designer brands you wear can be a key step in recovering from a money addiction.

The Takeaway

Money addiction can strain or even wreck your finances, but it doesn’t have to. If you identify the issue and then are willing to take steps to manage it, you may well be able to thrive. Consider taking some first steps, whether that means opening a new bank account for savings and automating deposits into it, or contacting a credit counselor. Moves like these can help you develop a positive relationship with 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

What is it called when you are addicted to money?

It’s called a money addiction when you have an unhealthy relationship with money that leads to compulsive or dangerous behaviors. Being addicted to money means that you have an emotional or mental dependence on it that can have potentially harmful side effects.

Can saving money be an addiction?

Saving money can be an addiction if you’re so focused on saving that you neglect meeting your basic needs or you’re blind to your ability to use money for good. If you’re only interested in seeing your savings account balance go up, you might miss out on opportunities to put your money to work in other ways or enjoy life.

Does money create dopamine?

The release of dopamine in the body is associated with pleasurable or novel experiences. If you get a rush from certain money behaviors, like saving excessively or impulse shopping, then that’s a sign that those behaviors might be triggering a dopamine release.

About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.


Photo credit: iStock/Povozniuk

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