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If you’re thinking of buying a car, you are probably wondering how to budget for it. Figuring out how much to spend can be a challenge: Do you go for a cheaper used car or splurge on a fully loaded new vehicle? And how do you balance a car loan with other debt you may have?

Read on for strategies to determine a car-buying budget so you can make the best decision for your needs.

Determining How Much to Spend on a Car

There are a few guidelines to consider when you’re trying to figure out how much money you should spend on a car. Before you dig into the details, start by taking a minute to figure out your budget so you have an accurate idea of how much money you’re able to spend on a car.

Tally up your monthly income and all of your monthly expenses so you have a keen understanding of where you are spending your money. Once you have a solid grasp on that, you may be better able to decide how much to spend on a car.

Here are some common recommendations for determining how much to spend on a car. They may give you an idea of how much you should spend on a car, but of course it all depends on your specific circumstances.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure mobile banking app.

The 10% Rule

The 10% rule is pretty straightforward. The general idea is to not spend more than 10% of your gross annual income on a car. But the low limit can make it difficult to stick to this rule. If you just need a car that will get you from point A to point B, you may be able to find a vehicle that will fall under 10% of your income. But if you need a car with more features or more space, you may want to consider one of the following rules.

The 36% Rule

This rule takes into consideration your total debt-to-income ratio. This guideline suggests you keep all of your debt, including your car payments, to less than 36% of your income.

If you, like many Americans, have debt from credit cards, student loans, or a mortgage, you may want to calculate how a car payment would factor in.

•   Another related guideline is the 15% rule. This guideline suggests that you don’t spend more than 15% of your net monthly take-home pay on car expenses.

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The 20/4/10 Rule

This is a multi-part rule.

•   First, it suggests that when you buy a car, you make a down payment of 20%.

•   Secondly, it recommends that when you take out a loan to finance the car, you plan to pay it off in no more than four years.

•   Finally, the total monthly vehicle expenses shouldn’t be more than 10% of your monthly income. Having your dream car is great, but it may not be worth it if you can’t afford to save for retirement or focus on other goals because your disposable income is primarily going toward your car payments.

The 50/30/20 Rule

If you find the above rules unrealistic, you could also consider using the general 50/30/20 budget rule. This rule says that you should spend 50% of your income on needs, 30% of your income on wants, and 20% of your income should go toward saving.

Your auto loan would fall into the needs category, but if you opt for a more expensive vehicle, you could consider a portion of the payment as part of your wants. This way, you can get the car you need with the features you want, while still keeping your budget balanced by allocating some of your discretionary spending money to your car payment.

Finding a Car You Can Afford

Buying a car can be an intimidating process. Thankfully, there are plenty of options, so you can find a car that works for your lifestyle and budget. Here are some things to consider as you embark on your search for a car that fits into your budget technique.

What Are You Going to Use the Car for?

Will you use the car mostly for quick trips to and from work? Do you have a large family that you’ll be driving to and from baseball games, soccer practices, and play dates? How you plan to use the car may influence the type of car you choose to get.

It’s also worth considering the weather. Do you live in an area with harsh winters where a larger vehicle with all-wheel drive may be helpful? There are a wide variety of vehicles on the market that fill different needs so take the time to determine which features are most important to you.

Doing Your Research

Once you decide on the type of car you want to buy, you’ll want to dig into the research phase of the process, so you are familiar with the models available, the features, and their average price.

When you’ve decided on a few models, there are a variety of resources that can help you track down details on each car. Sites like Edmunds, Kelley Blue Book, and Consumer Reports have reliable information to help consumers. And hopefully being an informed shopper will take some of the intimidation out of buying a car.

Will You Buy Used or New?

You’ll also need to decide if you plan to buy a new or used car. If you are on a tight budget, a used car may be a more affordable option. Something to remember is that a car is a depreciating asset — it typically loses around 20% of its value within the first year.

Test Driving a Few Options

Before you consider buying, test drive a few options. Buying a car is a big purchase, so take your time if you’re able to. It can be worth trying the car out on a few different types of roads so you can see how it drives in different settings.

It can be easy to feel pressure to make a purchase after a test-drive, but it is a standard part of the car buying process. The salesperson will likely be interested in making the sale, but there’s no reason you need to decide on the car immediately after the test-drive. One option is to let the salesperson know at the beginning of the drive that you’re still researching options and don’t plan to buy during this visit.

Being Prepared to Walk Away

When buying a car, you may have to negotiate. Haggling can be an acquired skill, but if you’ve done the research and know exactly how much the car is worth, you can dust off your negotiating skills and try using them to work out a deal you’d be happy to accept. If negotiations aren’t going well, being prepared to walk away may help.

Recommended: Budgeting for Beginners

Saving For Your New Car

As you are saving for the purchase, consider which kind of bank account can help you get to your goal ASAP.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How much should I spend on a car based on my salary?

While there’s no exact formula for how much you should spend on a car based on your salary, and the specific amount depends on your unique circumstances, there are some guidelines to consider. The 10% rule says that you should spend no more than 10% of your salary on a car. The 36% rule holds that all of your debt, including car payments, should not be more than 36% of your income. Finally, the 20/4/10 rule says that you should put a down payment of 20% on a car, take out a loan to pay off the car in no more than four years, and that your total monthly expenses for the car, such as gas and maintenance, should not exceed 10%.

What is the 50/30/20 rule for a car?

The 50/30/20 rule is a more general budgeting rule that says you should spend 50% of your income on needs, 30% on wants, and 20% on savings. When applied to buying a car, that would mean you’d spend 50% of your income on the car itself, but you could allocate 30% toward features you want, which might allow you to buy a more expensive model or get additional features and upgrades on the car you’re purchasing. The remaining 20% would go toward your car payment.

Is $1,000 a month for a car a lot?

Yes, $1,000 a month for a car payment is typically considered a lot. General guidelines suggest that you spend no more than 10% to 36% of your income on a car — and the 36% figure applies to all your monthly expenses, including a car. For many individuals, $1,000 a month could exceed those guidelines. Plus, there are other car-related expenses you’ll need to pay for as well, including fuel and maintenance, which could be challenging with a high monthly car payment.

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

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

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

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

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

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.

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

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

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SOBNK-Q325-008

The average out-of-network ATM fee currently costs $4.77 per transaction, and those charges can really add up. Think about it: If you assessed a $5 fee when using an out-of-network machine to grab $40, you’ve paid over 10% of the amount withdrawn just to get that cash into your pocket.

Fortunately, you can avoid ATM fees. Try these seven simple techniques.

7 Ways to Avoid ATM Fees

Service charges are fairly common these days. You are probably used to getting hit with them when you order movie or concert tickets online, for instance. But if you are merely taking out your very own dollars from an ATM, you likely don’t want to pay for that privilege.

While it may not be possible to always avoid these fees, particularly if you travel frequently, there are some smart strategies for evading those charges. Follow this advice.

1. Planning Ahead

Before heading out for the day or evening, consider whether or not you may need cash. Some independent restaurants, stores, and barber shops still operate as cash-only businesses. So if you’re testing out a new spot, you may want to check the website or call so you’re prepared with cash if needed.

If an establishment only accepts cash and you don’t have any, you may get stuck using the nearest ATM, which may result in double fees from both your bank and the operator of the machine. It can also be a good idea to get some cash in advance (fee-free) if you’re going to a restaurant, gas station, or store that offers a discount for paying cash.

Choosing Restaurants That Take Credit Cards

A corollary to the above tip is to scope out a restaurant’s payment policies before you head out to dinner. It’s no secret that dining out can be a big expense (especially if you order that nice bottle of wine). Nor is it privileged information that many eateries are cash-only.

It’s wise to check the restaurant’s situation beforehand to make sure they take plastic. Otherwise, you will likely be forced to use the closest ATM, which can get pricey.

Taking Money Out Before Going Out

Another way to avoid ATM fees when dining out: Hit up the cash machine en route or earlier in the week. That way, you know you are covered.

Recommended: Pros & Cons of Living Cash-Only

2. Using Your Bank’s ATMs

Taking some time to familiarize yourself with your bank’s closest ATM locations (considering both home and work) can save you money and hassle down the line. There may be a location finder tool on the bank’s website or app, or you can do a general web search, or even use your phone’s maps app.

Generally, the larger, national banks will have more options for branded ATMs than smaller, regional institutions. Banks of all sizes, however, often partner with large ATM networks in order to expand their customers’ options and provide them with a fee-free banking experience.

Recommended: Cardless Money Withdrawal

3. Finding Partner ATMs

Another way to avoid out-of-network ATM fees is to find those terminals with which your bank has a relationship.

The biggest advantage of partnership networks is the potentially vast number of fee-free ATM locations available. Some of the largest networks even include ATMs in locations like convenience stores, pharmacies, and retailers.

If your bank partners with an ATM network, you may be able to perform ATM transactions at their terminals without getting hit with any fees from your bank, though some locations may still collect ATM surcharges. It can be wise to familiarize yourself with the policies before you start regularly hitting the machines for cash.

The easiest way to find your bank’s partners is to check the back of your debit card. If you see a logo for Allpoint, for example, you can search their app for the closest of their 55,000-plus locations.

This doesn’t automatically mean that your transaction will be entirely fee-free, but either your bank or the partner may waive charges. It’s a good idea to check with your bank for details.

Bank Partner ATMs Explained

What are bank partner ATMs? This means that there is a relationship between your bank and their partner and you can likely use their ATMs fee-free.

These kinds of partnerships can exist for various reasons. Perhaps you bank at a relatively small, local bank network. They may team up with a larger network of ATMs to make it more convenient for customers to get cash on the go.

Or perhaps you bank at an online bank, which doesn’t have brick-and-mortar locations but wants to provide access to cash machines. Their partner network can provide terminals fee-free, a nice perk for the bank’s clients.

4. Taking Out More Than You Need

How else to avoid ATM fees? Consider that ATM fees are typically per transaction, so one easy way to avoid extra charges is to withdraw more cash than you need. This is particularly true when traveling overseas, where surcharges can be significantly higher than domestic ATM fees. The downside is that you may feel uncomfortable keeping a bunch of cash on hand.

The Benefits of Less Frequent Withdrawals

Making less frequent withdrawals can have a few pros:

•   Saves you time thanks to fewer visits to the ATM

•   Costs you less in fees (if they are assessed)

•   Can help with budgeting; taking one larger lump sum may focus you more on your spending vs. grabbing $20 here and there without realizing how much cash you are going through.

Recommended: ATM Withdrawal Limits – What You Need to Know

5. Getting Cash Back

If you need cash and aren’t near one of your bank’s ATMs, you may be able to avoid paying an ATM fee by finding a nearby grocery store, gas station, or large retailer. Many of these retailers offer cash back when you make a purchase using your debit card.

If you go this route, you’ll need to make a purchase (ideally for something you need) and ask for cash back. The cashier will add the amount of cash you want to the purchase price and give it to use as cash, typically without charging any fee.

Where Can You Get Cash Back?

Many retailers allow you to ask for cash back, often with a stated maximum amount. You might be able to get cash when making a purchase at:

•   Gas stations

•   Grocery stores/supermarkets

•   Large retailers, such as Target and Walmart, but you may have to use a particular card for this benefit.

6. Choosing a Different Bank

Not all banks charge out-of-network ATM fees. If you’re getting hit with fees, especially double fees, you may want to consider switching banks to an institution that has a larger ATM network, doesn’t charge ATM fees, and/or refunds ATM fees charged by machine providers.

Some banks will reimburse up to a certain amount every month in fees charged by an out-of-network provider. If you suspect you’ll use non-network ATMs frequently, you may want to consider a bank that will refund you.

Some Banks Reimburse ATM Fees

The banking industry is changing, and several players now embrace the idea of reimbursing ATM fees. This puts the customer first. It also addresses the fact that online-only financial institutions are getting more popular; this means there are no bank-owned terminals because there are no brick-and-mortar locations.

7. Using Personal Payment Apps to Pay Your Friends

With peer-to-peer (P2P) payment apps like Venmo, you can often avoid a trip to the ATM entirely. Once you set up an account and link your bank account, it’s easy to move money directly from your account to your friends’ accounts. Your bank may also have its own P2P payment app.

The Takeaway

Costing an average of $4.77 each, out-of-network ATM fees can be annoying and add up quickly. But, fortunately, this is usually an avoidable expense. One way to avoid ATM fees is to do some research on where your financial institution’s branded ATMs are located in your area, as well as ATMs that are in their partner networks. Other options include using payment apps or asking for cash back at a retail cash register when it’s available.

FAQ

How do you avoid paying fees at an ATM?

There are several ways to avoid paying ATM fees, For instance, you might only use in-network or partner bank ATMs, carry cash, and/or use credit cards or P2P payment apps.

Is it free to withdraw cash from ATMs?

It should be free to withdraw cash from an ATM provided you use your bank’s or its partner bank’s network. If you use an out-of-network terminal, however, you could pay a fee to both your bank and the machine’s operator.

Why do some ATMs charge you for withdrawing money?

You may be charged a fee if you use an out-of-network ATM. Because you are not a member of the bank providing the terminal, they can assess a charge to handle your transaction. In addition, free-standing ATM machines are a for-profit enterprise, offering the convenience of cash while earning a fee on every transaction.

About the author

Julia Califano

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

SOBNK-Q325-033

If you’re curious about how banks are regulated, it’s important to understand that multiple agencies help keep America’s financial institutions safe and compliant with the law. Some of the key regulatory agencies are the Office of the Comptroller of the Currency (OCC), the Federal Reserve (the Fed), and the Federal Deposit Insurance Corporation (FDIC).

In this guide you’ll learn more about how bank regulation works, including who regulates banks, what bank regulators do, and how your money is protected.

What Do Bank Regulators Do?

Here are some of the key points to know about what bank regulators do and how they can provide customers with a sense of financial security:

•   Review the financial health of banks and step in as they deem necessary

•   Regulate foreign banks that are in business in the United States

•   Examine banks to make sure their practices are safe, sound, and fair

•   Intervene if banks are failing and ensure that depositors are protected up to the limits of insurance (and sometimes beyond).

Recommended: Guide to Opening a Bank Account as a Non-US Citizen

Who Regulates Banks?

The next aspect to delve into is who has the responsibility of regulating banks and can intervene when they deem necessary. These are the three key players when it comes to oversight of commercial banks:

Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency (OCC) is an independent bureau within the U.S. Department of the Treasury. Its role is to charter, regulate, and supervise America’s national banks and federal savings associations.

In addition, the OCC oversees federal branches and agencies of foreign banks doing business on U.S. soil.

The OCC describes its mission as:

•   Ensuring that these institutions conduct business in a safe and sound manner

•   Determining that there is equitable access to financial services and customers are treated fairly

•   Making certain that the banks it oversees are complying with all applicable laws and regulations.

The Federal Reserve

The Federal Reserve, or the Fed, is responsible for regulating a different set of entities: some state chartered banks, certain nonbank financial institutions, bank and financial holding companies, and foreign banking organizations.

The Federal Reserve is America’s central bank, and has a broad jurisdiction as it works to promote the health of the U.S. economy and the stability of the financial system. Among its key functions are:

•   Conducting on-site and off-site examinations of banks to make sure they are operating in accordance with applicable laws.

•   Making sure that banks have enough capital available to withstand economic fluctuations. This can involve reviewing balance sheets, projections, and other financial materials.

•   Possibly reviewing “resolution plans,” which detail how a financial organization would resolve a situation in which it was in financial trouble or failed.

Recommended: Federal Reserve Interest Rates Explained

The Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation (FDIC) plays a role in insuring its member banks so that, in the rare event of a bank failure, depositors are covered for $250,000 per account holder, per ownership category, per insured institution.

However, the FDIC does more than this. It also supervises state-chartered banks that are members of the Federal Reserve. It this capacity, it oversees more than 5,000 banks and savings associations, and does the following:

•   Checks for safe and sound operations

•   Examines institutions to be sure they are complying with consumer protection regulations and laws.

A Brief History of Bank Regulation

America’s banking history has taken some twists and turns, as regulation has gone in and out of favor. Here are some key points in U.S. banking to consider:

•   In 1791, the First Bank of the United States was created, but its charter was not renewed in 1811. The reason? While the bank provided some stability to the new nation’s economy, people worried that it put too much financial control in the hands of the federal government.

•   State banks began to flourish and funded the War of 1812, but, with a large amount of credit being extended, the federal government stepped in again, chartering the Second Bank of the United States in 1816.

•   There were again worries that the federal government had too much power over the nation’s purse strings. In 1836, the Second Bank was dissolved.

•   An era of free banking emerged, without federal oversight or, in many cases, the need to have an official charter to do business. The federal government tried to rein this in with the National Banking Act of 1863; the OCC was formed to charter banks and ensure that they backed their notes with U.S. government securities.

•   The next few decades were a bit of a bumpy ride, with bank panics, such as the Panic of 1907, occurring. The Federal Reserve was created in 1913 to help bring order to the economy.

•   With the debilitating Great Depression, which began in 1929, new regulations were needed. The FDIC was formed in 1933 to help shore up the faltering economy.

•   More recently, after a period of deregulation, the government responded to the financial crisis of 2007 and the subsequent Great Recession. It passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, designed to improve accountability and financial transparency in America’s financial system.

•   In 2021, President Biden signed an executive order that charged federal regulators with improving their oversight of bank mergers, as part of a larger effort to increase competition in the country’s economy.

•   An example of financial regulation in action occurred in mid-March 2023, when the federal government stepped in as two banks faltered. The government even took the step of guaranteeing deposits over the typical FDIC insurance maximum of $250,000 per depositor, per ownership category, per insured institution.

Recommended: How Much Money Do Banks Insure?

Who Regulates Credit Unions?

Not everyone, however, keeps their accounts at a bank. There are other financial institutions, such as credit unions.

If you have an account (or multiple accounts) at a credit union, the institution that holds your money will be regulated at either the state or federal level. The National Credit Union Administration (NCUA) has oversight of federal credit unions. State-chartered credit unions are regulated by their state.

Also, credit union accounts can be insured by NCUA vs. FDIC. It’s NCUA that provides $250,000 coverage per depositor, per ownership category, per insured institution.

Who Regulates Savings and Loan Associations?

As of April 2025, there are 546 savings and loan associations (sometimes called “thrifts”) operating in the U.S. While these financial institutions used to be federally regulated by the Office of Thrift Supervision (OTS), that bureau ceased to operate in 2010.

Now, savings and loans are regulated by the OCC and the Fed. These organizations are tasked with ensuring the thrifts are following the applicable laws and operating safely and soundly.

How Do I Know Who Regulates My Bank?

If you are curious about how your own bank is regulated, you can use the FDIC BankFind tool and/or the OCC’s search tool HelpWithMyBank.gov.

If you don’t get the answer you are seeking there, you can call the OCC Customer Assistance Group at 800-613-6743 for further assistance.

The Takeaway

Banking regulation helps keep our financial institutions safe and sound and compliant with the appropriate laws. It also helps protect our economic stability and consumers’ deposits.

Several agencies are involved in banking regulation, such as the Fed, FDIC, OCC, and NCUA. While they rarely need to take action such as overseeing a bank closure, it can be wise to know who they are and how they function. This can help you feel more secure about your bank account.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How do I know which agency regulates my bank?

The agency that regulates your bank will likely depend on the kind of bank that holds your money: The Office of the Comptroller of the Currency (OCC) oversees national banks and federal savings associations; the Federal Reserve (the Fed) regulates some state-chartered banks, certain nonbank financial institutions, bank and financial holding companies, and foreign banking organizations; and the Federal Deposit Insurance Corporation (FDIC) supervises state-chartered banks that are members of the Federal Reserve.

To help find out who regulates your bank, you can use the FDIC BankFind tool and/or the OCC’s search tool HelpWithMyBank.gov.

Does the FDIC regulate banks?

The FDIC regulates state-chartered banks that are members of the Federal Reserve. In addition, an array of banks are insured by the FDIC. This means that clients’ accounts are insured for $250,000 per depositor, per ownership category, per insured institution.

What level of government regulates banks?

Banks are typically regulated by the federal government, with the Office of the Comptroller of the Currency (OCC), the Federal Reserve (the Fed), and the Federal Deposit Insurance Corporation (FDIC) overseeing many banks. State-chartered banks may also be regulated by their state’s agency.

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

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

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

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

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

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.

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

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

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

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

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOBNK-Q325-010

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.

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.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure mobile banking app.

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.

💡 Quick Tip: Bank fees eat away at your hard-earned money. To protect your cash, open a checking account with no account fees online — and earn up to 0.50% APY, too.

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 eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

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.

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

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

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

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

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

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.

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

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

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

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

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOBNK-Q325-004

If you recently graduated from college or are about to, congratulations. Those closest to you will typically celebrate your achievement, and some gifts may come rolling in, often in the form of cash.

As you get ready to start the next chapter of your life, you may wonder what to do with any money you receive. Should you pay down debt, invest the funds, go shopping?

The answer will depend upon your personal finances and your goals, but here are 25 ideas to inspire you.

1. Jump-Starting an Emergency Fund

Establishing an emergency fund can be a great first step toward financial stability. Having this cushion can help you to handle a financial setback, such as a costly car repair, trip to the ER, or loss of income, without having to rely on high interest credit cards.

A good target is to have enough money set aside to cover three to six months of living expenses. It’s fine to start small, however, and build this fund up over time.

2. Paying Off Credit Card Debt

It’s not uncommon to accumulate credit card debt in college. Laptops and textbooks can be costly, and it can be hard to have time to work a significant number of hours. The sooner you pay off any balances you are carrying, however, the less you’ll pay in the long run and the easier it will be to handle new expenses, like rent and car payments.

3. Buying Interview Clothes

Whether you graduated from college early or just completed grad school, you may be job hunting. While the knowledge, skills and attitude you can bring to a company may be what’s most important, how you dress for the interview can also form a lasting impression on potential employers. Depending on your industry, that might mean a suit for men and a suit or dress for women.

4. Reducing Your Student Loan Debt

If you took out a student loan for college or graduate school, you may want to use some of your graduation money to start paying down your loan balance. The more you can knock down your loans, the less interest you’ll owe and the less you’ll pay overall.

If you make an extra payment, however, it can be a good idea to make sure that your loan officer applies the extra amount to the balance, rather than next month’s payment.

5. Saving up for an Apartment

If you’ll be moving into your own place after graduation, you’ll likely need to come up with your first and last month’s rent, plus a security deposit, in one fell swoop. You may also want to save up for furniture and household items, like dishes, cookware, and linens, to set up your new place.

6. Investing in Mutual Funds

While investing can sound intimidating, one easy way to get started is to invest in one of the different types of mutual funds. While these funds typically charge an annual fee and involve some risk, they are managed by professional investors who typically spread your money over a mix of securities, such as stocks and bonds. You can choose a mutual fund based on its past performance, how aggressive (or stock-heavy) it is, and the type of fees they charge.

7. Opening a High-Interest Savings Account

Traditional savings accounts typically offer very low interest. If you are saving your graduation money for a short-term goal, like buying a car or building an emergency fund, you may want to put it in an account that offers higher interest than a traditional savings account, but is still insured and allows easy access to your money. Some good options include: a high-yield savings account, money market account, online savings account, or checking and savings account.

8. Getting a Start on Retirement Saving

It’s never too early to start saving for retirement. Thanks to compounding returns (which is when the money you earn on your money also earns money), the earlier you start putting money aside for retirement, the easier it will be to meet your goal. If your employer offers a matching program for your 401(k), you may want to consider taking full advantage of it and contributing at least up to their match.

Recommended: The Average 401(K) Balance by Age

9. Going on a Trip

Before you jump into the working world, you may want to take some time off and explore some new destinations. Traveling is not only fun, it can also be a way to learn more about the world, gain insights into different cultures, and potentially even make some new connections.

The experience of traveling may also energize you and help you gain clarity about what you want your future to look like.

10. Saving up for Grad School

If you’re planning to pursue a higher degree, you may want to use your graduation money to jump start your grad school fund. In general, it can be better to pay for your education out of pocket rather than taking out student loans which, thanks to interest, make the cost of higher education even higher.

11. Putting Money Into Real Estate

You may not have enough money to purchase a home yet, but you could try investing money into a REIT (real estate investment trust). Modeled after mutual funds, REITs offer a lower-cost way to invest in the real estate market.

These trusts are also liquid, which means you can sell at any time. Like stocks, you can buy and sell REIT shares on an exchange. As with any investment, investing in a REIT involves some risk.

12. Buying a Car

If you’ll be needing a car to get around, it can be a good idea to start saving for a down payment or, even better, paying for the car in cash. Whether you buy a used or new vehicle, the more cash you can put down initially, the less you’ll have to finance, and the less you’ll end up paying for that car.

13. Joining AAA

Whether you already have a car or you’re planning to buy one, you may want to use a bit of your graduation money to join AAA. Having a AAA membership can provide peace of mind when you’re out on the road, and can end up paying for itself should you get a flat tire or two, or need a tow in the wee hours of the morning. AAA membership also gets you discounts on many hotels, rental cars, and other products and services.

14. Starting a Business

If you are planning to launch your own business straight out of college, you may want to funnel your graduation money right into your new venture. If you need additional cash for your start-up, you might also consider taking out a small business loan or crowdfunding your idea on a site like GoFundMe and Kickstarter.

15. Joining a Wholesale Club

As you transition from dining hall or parent-supported dining, you may want to look into joining a wholesale club like Costco, BJ’s, or Sam’s Club. These member-only stores can save you a lot of money when you buy in bulk, and could especially come in handy if you’re splitting costs with your roommates.

16. Donating to Charity

Donating some money to charity can be a solid option when you’re deciding what to do with graduation money. If you have a particular cause you’re passionate about, you can look for relevant charities on Charity Navigator.

If you give to a tax-exempt 501(c)(3) organization, you may be able to write the charity donation off on your taxes.

17. Taking Your Parents to Dinner

If your parents helped pay for your college education, you might want to show your gratitude by taking them out to dinner. It doesn’t have to be anything fancy; the idea is to let them know that you truly appreciate their love and support. This could apply to a grandparent, family member, or a friend who funded your education as well.

18. Saving for a Home

While owning a home might not be in your immediate future, you may want to use your graduation money to start saving up for a down payment.

To get a sense of how much you might need, you can start looking at real estate prices in the area where you would like to live. Ideally, you would want to put 20 percent of the purchase price down and avoid private mortgage insurance.

19. Saving for Your Wedding

Weddings can cost on average more than $35,000 for the ceremony and reception. Of course, there are ways to have a cheaper wedding, such as keeping it small or having it in your backyard, but wedding costs can still add up quickly. If you’re engaged or planning to be soon, you might want to use some of your graduation money to start a wedding fund.

20. Paying for Additional Classes or Certifications

Even though you graduated with a degree, you may find that you need some additional training to stand out in your field.

To be more competitive when it comes to the job market, you might want to use your graduation money to pay for additional classes or certifications. This could possibly lead to an increase in your salary as well.

21. Paying for Personal Care

When you go in for job interviews, you’ll want to look your best. Along with buying professional clothes for your interviews, you may also want to invest in other aspects of your personal appearance, such as getting your hair cut or styled, getting your nails done, or having your teeth whitened. Putting your best foot forward can help you feel more confident.

22. Moving to an Area with a Stronger Job Market

If your home town doesn’t have the best job market for your field, you may want to consider moving somewhere that offers more opportunities. You could put your graduation money towards moving expenses, such as renting a truck or professional movers.

23. Hiring a Career Coach

If you’re having trouble finding the job you want, you might consider using your graduation money to hire a professional career coach. These pros can help you revise your resume, improve your LinkedIn profile, build your network, and help you plan out your career. Typically, the best career coaches will have extensive experience in human resources and/or recruiting.

24. Getting Health Insurance

If you graduated from college later than your peers or you’re finishing up grad school, then you may no longer be on your parents’ health Insurance. You may want to start by looking for a health insurance policy on the government marketplace. As you compare policies, it can be a good idea to keep your medical needs, such as prescriptions and specialty doctors’ visits, in mind.

25. Paying Back Anyone You Owe

If you borrowed any money from family or friends during college, you may want to use graduation money to settle up. This shows that you are responsible and true to your word. If you end up in a bind again in the future and need to borrow, your family and friends will know that you can be trusted to pay them back.

The Takeaway

If you’re not sure whether to spend or save your graduation money, it can be helpful to look at both your short-term needs, such as paying off credit cards and buying a car. as well as your long-term goals, like creating a comfortable retirement nest egg.

The answer to how to use graduation money is different for everyone, but it can be a good idea to weigh all of the options before you make any major spending decisions.

Whether you’re saving for something specific or storing cash until you’re ready to invest, finding a bank account with low or no fees and a good interest rate can be a smart move.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

What are you supposed to use graduation money for?

What you opt to do with your graduation money depends on your personal finances and goals. Some things you might choose to do with the money include using it to build an emergency fund, saving up for a car, using it to rent an apartment, or putting it toward your student loans.

What is the smartest thing to do with your graduation money?

One smart thing you could do with your graduation money is use it to pay off high-interest debt, such as credit card debt. You could also choose to save for your future, such as for retirement or a down payment on a house. Ultimately, however, what you choose to do with the money is up to you. Be sure to weigh all your options before making a decision.

Is $1,000 a good graduation gift?

Yes, $1,000 is typically considered a good graduation gift. The amount is generous and can be helpful in getting you started on your life after college. For example, you could use it to pay down debt, such as credit cards or your student loans, or put it toward creating an emergency fund.

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

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

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

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

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

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.

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

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

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