Smart Short Term Financial Goals You Can Set for Yourself

Smart Short-Term Financial Goals to Set for Yourself

Table of Contents

Short-term financial goals are generally things you want to achieve within one to three years. They can be “one and done” in nature (say, “Save enough money for a Caribbean vacation”), or they might be incremental steps to much larger financial goals, such as beginning to save for a child’s college tuition).

Setting financial goals can be an important step toward achieving them. After all, it’s probably not enough to simply hope your dreams become reality. Making a plan can significantly increase the likelihood that you’ll meet the goal. It will focus you on what you want to attain and help guide you toward getting there.

Here are some common short-term financial goals you may want to adopt plus intel on how to achieve them.

Key Points

•   Short-term financial goals are things you want to achieve within the next couple of years, such as paying off credit card debt or saving for a vacation or wedding.

•   Building an emergency fund is an important short-term financial goal to cover unexpected expenses and avoid relying on high-interest credit cards.

•   Budgeting can help you track your spending, prioritize your expenses, and work towards short-term financial goals.

•   Paying down credit card debt is crucial as high-interest rates can hinder progress towards other financial goals.

•   Contributing to your retirement fund, even in the short term, can have long-term benefits due to the power of compounding interest or dividends.

What Are Short-Term Financial Goals?

Short-term financial goals are typically objectives you want to attain within the next couple of years, unlike long-term financial goals (retirement, paying off a mortgage). Some examples of short-term financial goals include:

•   Paying off credit card debt

•   Saving for a vacation

•   Saving for a wedding

•   Stashing away money in an emergency fund.

Of course, goals will vary with your unique situation and . You might be totally focused on getting together enough money for the down payment on a new car, while your best friend might want to pay off their $10K in credit card debt.

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No account or overdraft fees. No minimum balance.

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6 Short-Term Financial Goals

Take a closer look at some of the most common short-term financial goals.

1. Build an Emergency Fund

Often, a short-term financial goal involves saving for an emergency fund. This kind of fund usually contains enough cash to cover three to six months’ (or more in some cases) worth of living expenses. The idea is that, just in case something unexpected comes up — such as job loss or a major car repair — you can afford your bills without resorting to high-interest forms of funding, such as credit cards.

Not only can an emergency fund keep you out of debt, it can provide peace of mind. Knowing that it’s in place and that it’s growing can be an important form of financial security. Some tips:

•   You can build an emergency fund by putting some money towards it every month. Consider setting up a recurring automatic transfer to send whatever you can spare (even $20 per paycheck) to the fund.

•   It can be wise to set up a separate savings account for your emergency fund so you won’t be tempted to spend it. Look for a high-yield savings account to help your money grow faster.

•   To build your emergency fund more quickly, funnel a large payment, such as tax refund or bonus, right into this account. A money windfall can really help plump up your savings.

💡 Learn how much you should save for emergencies by using our Emergency Fund Calculator.

2. Make a Budget

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

You can do this by tracking your income and expenses for a couple of months, to see what is flowing into and out of your checking account.

This will help you make a budget that helps keep your finances on track to meet your daily expenses and short-term savings goals. A few ways to accomplish this:

•   Review and test-drive a couple of budgeting techniques. One popular method is the 50/30/20 budget rule, which can guide you to put 50% of your take-home pay towards needs, 30% toward wants, and 20% toward saving. See if one type of budget clicks for you.

•   You might use a budgeting app to help you connect your accounts, categorize where your money is going, and see at a glance how you are progressing toward your short-term financial goals. A good place to start: See what kinds of financial insights tools your bank provides. You may find just what you are looking for.

•   Consider third-party budgeting apps. You might search online or ask trusted friends if they are using one that they would recommend.

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

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

3. Pay Down Credit Card Debt

Another important financial goal example is paying down credit card debt. If you carry a balance, you may want to make paying it off one of your top short-term financial goals. The reason: Credit card debt is typically high-interest debt. The average annual percentage rate, or APR, charged by credit cards was above 20% in mid-2024, according to the Federal Reserve Bank of St. Louis. That means that items you buy with a credit card could potentially cost you a hefty amount more than if you pay with cash.

What’s more, because the interest on credit card debt can be so costly, it can make achieving any other financial goals much more difficult. Here’s how you might work toward paying off your credit card debt:

•   You could try the debt avalanche method, which involves paying the minimum on all but your highest-rate debt. You then put all available extra funds toward the card with the highest interest debt. When that one is paid off, you would roll the extra payment to the card with the next-highest interest rate, and so on. By knocking out your highest-interest debt first, you may be able to save a chunk of money.

•   Another option for paying off debt is the debt snowball method. With this technique, you pay the minimum on all cards, but use extra money to pay off the debt with the smallest balance. When that’s paid off, you move to the next smallest debt and so on. This can give you a sense of accomplishment as you get rid of debt which in turn can help keep you motivated.

•   You might consider consolidating your debt by taking out a personal loan to pay off all of your cards. These usually offer a lump sum of cash to be paid off in two to seven years at a lower interest rate than credit cards. Having only one payment each month can help simplify the payoff process.

If you feel your debt burden is too great to be resolved with these options, you might want to speak to a certified credit counselor for advice.

4. Pay Off Student Loans

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

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

Keep in mind, however, that if you refinance federal student loans with a private loan, you will lose access to such benefits as deferment and forgiveness. Also, if you refinance your loans into one with a longer term, you could wind up paying more in interest over the life of the loan.

Also note that not all refinancing options are created equal. There are bad actors out there who might promise to get rid of all your debt but will only damage your credit score. If you do refinance your student loans, you’ll want to make sure you’re working with a reputable lender.

5. Focus on Your Retirement Fund

Yes, saving for retirement is typically a long-term goal, but if you’re not yet saving for retirement, a great short-term financial goal may be to start doing so. Or, if you’re putting in very little each month, you may want to work on upping the amount. Here are a couple of specific ideas:

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

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

While retirement is a long-term vs. short-term financial goal, taking advantage of this savings vehicle can reduce your taxes starting this year. Here’s why: Money you put into a retirement fund likely offers tax advantages, such as lowering your taxable income.

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

6. Begin to Build Wealth

If you already have an emergency fund, you may want to start thinking about what you are hoping to buy or achieve within the next several years, and also building your wealth in general. As you save money, think about where to keep it to help it grow. The power of compounding returns, as mentioned above, or compounding interest in the case of a bank account, can really help in this pursuit.

•   For financial goals you want to reach in the next few months or years, consider putting this money in an online bank account that offers a high interest rate vs. a traditional savings account, but allows access when you need it. Options may include a HYSA (high-yield savings account, often found at online banks) or a money market account.

•   For longer-term savings, you may want to look into opening a brokerage account. This is an investment account that allows you to buy and sell investments like stocks, bonds, and mutual funds. A taxable brokerage account does not offer the same tax incentives as a 401(k) or an IRA, but it is probably much more flexible in terms of when the money can be accessed.

Just keep in mind that there’s risk here: These funds will not be insured as accounts at a bank or credit union usually are. Bank or credit union accounts are typically insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) up to $250,000 per depositor, per account ownership category, per insured institution.

How Do You Create a Short-Term Financial Goal?

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

How to Set SMART Financial Goals

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

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

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

•   Attainable: Make sure your goal is realistic (you may not be able to pay off your entire credit card debt in a month or even a few months) and develop strategies to achieve it, such as working on alternate Saturdays to bring in more money (a benefit of a side hustle).

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

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

Using the SMART method can help you crystallize and achieve your short-term financial goals.

Difference Between Short-Term and Long-Term Financial Goals

In discussing short-term financial goals, it’s likely that you might wonder how these differ from long-term goals. Here are a few examples that can help clarify the aspirations above from those that require a longer timeline.

Examples of Long-Term Goals

•   Save for retirement

•   Pay off a mortgage

•   Buy a second home or investment property

•   Save for a child’s (or grandchild’s) college education

•   Fund a business idea

•   Take out life insurance and/or long-term care policies

Of course, long-term goals will vary from person to person. One individual might be focused on being able to retire at age 50 while another might aspire to make a significant charitable contribution.

The Takeaway

Short-term financial goals are the things you want to do with your money within the next few years. Some typical (and important) short-term goals include setting a budget, starting an emergency fund, and paying off debt. In addition, opening a retirement account and otherwise building wealth can be valuable goals, too.

Having the right banking partner can help you reach your near-term money goals. 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.


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As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% 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 4.00% 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.

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Safe Deposit Box: Key Things to Know

Safe deposit boxes are storage units located in banks that offer a secure way to store important items you may not want to keep at home, such as critical documents, collectibles, and family heirlooms.

Due to the growth of online banking and digital storage, safe deposit boxes aren’t as popular as they once were. However, there are some situations where these boxes can be useful. Here are key things to know about safe deposit boxes.

Key Points

•   Safe deposit boxes are secure storage units in banks, ideal for safeguarding important documents and valuables from theft or environmental damage.

•   Items like birth certificates, jewelry, and stock certificates are suitable for storage, while cash and original wills should generally be avoided.

•   Renting a safe deposit box involves fees, which vary by size and institution, typically ranging from $15 to $350 annually.

•   Access to safe deposit boxes is limited to bank hours, which can be inconvenient, especially in emergencies, and their contents are not insured by the bank.

•   Alternatives to safe deposit boxes include personal home safes, digital storage options, and attorney offices for legal documents, each with its own advantages and disadvantages.

What Is a Safe Deposit Box?

A safe deposit box (also called a safety deposit box) is a secure locked box, usually made of metal, that stays in the safe or vault of a federally insured bank or credit union. They are typically used to keep valuables, important documents, and sentimental keepsakes protected from theft or damage.

Safe deposit boxes often come in two different sizes, usually 3” by 5” or 10” by 10,” and can be rented for an annual fee. In exchange for the fee, banks provide security measures to protect your valuables, such as alarms and surveillance cameras. In addition, the safe deposit boxes are stored in vaults that are designed to withstand natural disasters such as fires, floods, hurricanes, and tornadoes.

Unlike a bank account, however, the contents of a safe deposit box are not protected by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA). As a result, there is still a small risk that you could lose the items in your container due to theft or damage.

Recommended: What Are the Differences Between FDIC and NCUA Insurance?

What You Should and Shouldn’t Keep in a Safe Deposit Box

Safe deposit boxes can be a good place to keep hard-to-replace documents and small valuables that you won’t need to access frequently. However, you generally don’t want to keep any items that you may need to grab in a hurry in the box, and certain items are prohibited.

Here’s a breakdown of things to keep — and not to keep — in a safe deposit box.

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Items Typically Kept in a Safe Deposit Box

•   Important documents: Documents that are difficult to replace and often needed for legal purposes are commonly stored in safe deposit boxes. These include: birth certificates, marriage licenses, car titles, divorce records, citizenship papers, property deeds, and mortgage documents.

•   Valuables: Jewelry, rare coins, stamps, and other valuable collectibles can be safely stored away from potential theft.

•   Financial Instruments: Stock certificates, bonds, and other financial instruments that require safekeeping can be securely stored in a safe deposit box.

•   Backup data: You might store external hard drives or USB drives containing sensitive personal or business information here to protect against data loss.

•   Personal keepsakes: Irreplaceable items like family heirlooms, photos, and memorabilia can be stored to ensure they don’t get lost or damaged.

Items to Avoid Putting in a Safe Deposit Box

•   Cash: While you may be tempted to store some cash in your safe deposit box, you’re likely better off putting the money in a high-yield savings account at a bank or credit union, which will allow your money to grow. The cash will also be insured (up to certain limits) by the FDIC or NCUA.

•   Original copies of wills: Original wills should not be stored in a safe deposit box because they may be difficult to access immediately after the owner’s death, delaying probate. You might instead store a copy of a will.

•   Durable power of attorney: Similar to wills, these documents might be needed quickly in emergencies, and delays could cause significant issues. Consider storing a copy.

•   Passport: If you need to travel urgently, accessing your passport from a bank vault could be problematic due to limited bank hours.

•   Frequently used items: Any items you need regular access to should not be kept in a safe deposit box due to limited accessibility.

•   Prohibited items: Banks and credit unions generally prohibit the storage of firearms, explosives, weapons, hazardous materials, illegal substances (such as drugs), alcohol, perishable items, and cremated remains.

How Much Does a Safe Deposit Box Cost?

Rental fees vary by the box’s size and financial institution. The average cost to rent a box at a commercial U.S. bank runs between $15 and $350 per year. Additional costs may include fees for lost keys or late payments.

Some banks and credit unions will offer discounts on a safe deposit box cost if you have a relationship with the bank. In some cases, an institution may offer free access to a safe deposit box as a perk to their customers.

How to Get a Safe Deposit Box

To rent a safe deposit box, you’ll generally need to follow these steps:

1.    Research your options. Not all banks and credit unions offer safe deposit boxes. You’ll want to find an institution that both provides this service and is conveniently located.

2.    Meet the requirements. Many banks require you to be an existing customer with a checking or savings account. However, some banks may allow noncustomers to rent boxes for an additional fee.

3.    Provide identification. You’ll need to bring valid identification, such as a driver’s license or passport, to verify your identity. If you plan to allow another person access to your safe deposit box, they will need to be present and show ID as well.

4.    Sign a rental agreement. You (and, if applicable, your corenter) will need to sign a rental agreement outlining the terms and conditions of the box rental.

5.    Make a payment. You generally need to pay the initial rental fee upfront. Some banks may offer discounts for long-term rentals or automatic payments.

6.    Get your key. Upon completing the paperwork, you will receive a key to your safe deposit box. The bank retains a second key. Both keys are required to access the box. If the bank offers keyless access, they will likely scan your finger or hand.

Keep in mind that every time you wish to access your safe deposit box, you’ll need to present your photo ID, as well as your key (if it’s not keyless). The bank may also require your signature before allowing you to open your box.

Recommended: How Long Does It Take to Open a Bank Account?

How Safe Is a Safe Deposit Box?

Safe deposit boxes are generally very secure. They are housed in a bank vault, which offers robust protection against theft, fire, flood, and other disasters. Banks employ multiple layers of security, including surveillance cameras, alarms, and restricted access to the vault area.

When you rent a safe deposit box, the bank typically gives you a key to use. The bank also retains a second “guard key” which must be used by a bank employee in tandem with your key. Some banks now use a keyless biometric entry system, where you scan your finger or hand instead.

However, it’s important to note that the contents of a safe deposit box are not insured by the bank or the FDIC. As a result, you may need to obtain separate insurance or add a rider to your homeowners or renters insurance for coverage.

Recommended: Are Online Savings Accounts Safe?

Pros and Cons of Safe Deposit Boxes

Safe deposit boxes can be a good way to protect your valuables. Here are some of the upsides of renting one:

•   Security: Safe deposit boxes offer a high level of security, since they are stored in areas with limited access and stepped-up surveillance.

•   Environmental protection: They can protect your valuables from environmental damage, such as a flood or fire.

•   Privacy: The contents of a safe deposit box are known only to the renter, offering a high degree of privacy.

•   Organization: Safe deposit boxes help keep important documents and valuables in one secure location, making it less likely you will misplace them.

But safe deposit boxes also come with downsides. Here are some to consider:

•   Limited access: Access is restricted to bank hours, which can be inconvenient, especially in an emergency.

•   Cost: There is an ongoing rental fee, which varies based on the size of the box.

•   Not insured: Contents are not insured by the bank or FDIC. Separate insurance may be needed for valuable items.

•   Delayed access for loved ones: In the event of the renter’s death, accessing the box may require legal processes that could delay access to important documents.

Recommended: Different Types of Savings Accounts You Can Have

The Takeaway

If you’re looking for a safe place to stash vital papers or valuable possessions, you might consider renting a safe deposit back at a brick-and-mortar bank or credit union. Items stored in these containers are protected against theft, loss, or damage due to a flood, fire, or other disaster.

But the protection has limits: Unlike regular bank accounts, safe deposit boxes are not insured by the FDIC. Also keep in mind that safe deposit boxes aren’t ideal for items you may need to grab in a hurry, since access is limited to banking hours.

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 4.00% APY on SoFi Checking and Savings.

FAQ

What can I use instead of a safe deposit box?

Alternatives to a safe deposit box include:

•   A fire-rated personal home safe: This can offer protection from environmental damage (such as fire or flood). However, a thief could potentially steal the whole safe.

•   Digital storage solutions: Cloud services can securely store important documents and data backups.

•   An attorney’s office: For legal documents, a trusted lawyer’s office may offer secure storage.

•   Private vault facility: These are a viable alternative to a safe deposit box but tend to cost more.

Can safe deposit boxes be jointly shared?

Yes. When you open a safe deposit box, you can designate one or more corenters who will have equal access to the box. This is useful for couples, business partners, or family members who need shared access to important documents and valuables. Each renter typically receives a key, and all corenters’ signatures are required on the rental agreement.

Is it safe to keep money in a safe deposit box?

While it is physically safe to keep money in a safe deposit box, it is not recommended. Cash stored in a safe deposit box does not earn interest and is not insured by the Federal Deposit Insurance Corporation (FDIC). You’re generally better off keeping cash in a high-yield savings account or other insured financial instrument that offers safety, liquidity, and interest earnings.

Do banks know what you put in a safety deposit box?

No. The contents of a safe deposit box are private, and bank employees do not have access to the items stored inside. When you rent a safe deposit box, you receive a key, and the bank retains a second key. Both keys are required to open the box, but only you can open it and see its contents. This ensures privacy and confidentiality.


Photo credit: iStock/AlexSecret

SoFi members with direct deposit activity can earn 4.00% 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 4.00% 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 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


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

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

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What Is a Series E Savings Bond?

What Is a Series E Savings Bond?

Series EE bonds, or Patriot Bonds, were initiated in 1980 as a low-risk way for Americans to save. The money invested is guaranteed to double in 20 years.

They build upon the tradition of Series E bonds, or war bonds, which were introduced by the federal government in 1941. Learn more about this savings vehicle here.

Key Points

•   Series EE bonds, introduced in 1980, are low-risk U.S. Treasury bonds guaranteed to double in value within 20 years, making them a safe investment option.

•   These bonds can only be purchased electronically through a TreasuryDirect account, with a minimum purchase of $25 and a maximum of $10,000 per person annually.

•   Interest on Series EE bonds compounds semi-annually and is taxable at the federal level, although tax exemptions may apply for qualified education expenses.

•   Holding Series EE bonds for 20 years will yield a guaranteed return, but they can also be held for an additional 10 years to continue earning interest.

•   Alternative investment options, such as high-yield savings accounts and stocks, may offer better returns but come with varying levels of risk compared to Series EE bonds.

What Is a Series EE Bond?

A series EE bond is a U.S. Treasury bond. It’s considered to be a very safe investment, as it’s backed by the U.S. government. It is guaranteed to double in value in 20 years, even if the government has to add funds to it to meet that mark.

To provide some context, here’s a quick look at what bonds are and how bonds work. A bond is a debt instrument. Bonds are issued by corporations or governments in order to raise capital. The bond market is huge — much larger than the equity markets. (In 2023, the market cap of the global bond market was about $133 trillion, versus $111 trillion for the stock market.) Investors provide capital to companies and governments when they buy the bonds, effectively loaning their money to that institution.

Meanwhile, the bond issuer agrees to pay investors the capital back, along with interest, after a certain period.

There are different kinds of bonds investors can purchase, including municipal, corporate, high-yield bonds, and U.S. Treasuries. A savings bond is a type of U.S. Treasury bond, issued with the full faith and credit of the U.S. government, meaning there’s virtually no chance of losing money. Savings bonds allow the government to borrow money for various purposes while giving investors a reliable and predictable stream of interest income.

Series E bonds, which were created in 1941 to help fund the WWII effort, were replaced in 1980 with Series EE bonds, or Patriot Bonds.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.00% APY, with no minimum balance required.

How Do Series EE Bonds Work?

If you’re interested in buying bonds, here are details on how a Series EE bond works:

•   Series EE bonds are electronic and can only be purchased and managed online with a TreasuryDirect account. They are available in any denomination starting at $25, up to $10,000 per person named on the bond, per calendar year.

•   These bonds are guaranteed to double in value in 20 years, even if the government needs to kick in extra cash. You can hold the bond for up to 10 additional years to continue to earn interest.

•   When you purchase a Series EE bond, the interest rate will be stated. Through October 31, 2024, the interest rate is 2.70%.

•   Interest is earned monthly, compounding semi-annually, for up to 30 years, unless you cash it sooner.

•   Series EE bonds can be cashed in (or redeemed) after 12 months, but early withdrawal can trigger a penalty of partial interest loss.

•   Electronic Series EE bonds can be cashed in via the TreasuryDirect site.

•   Interest earned on Series EE bonds is taxable at the federal level. Federal estate, gift, and excise taxes, as well as state estate or inheritance taxes, may also apply. If the money is used for qualified education expenses, however, you may not be subject to taxes.

•   The TreasuryDirect site also makes 1099-INT statements of interest earnings available annually.

Recommended: Understanding the Yield to Maturity (YTM) Formula

Understanding Series E Bonds

The popularity of Series E bonds may have hinged largely on the patriotic call to purchase them as part of the war effort. Buying bonds served two purposes: It helped the government to raise money for the war and it also helped to keep inflation at bay as shortages threatened to push consumer prices up. Apart from that, there were other qualities that might have made a Series E saving bond attractive.

These bonds were issued at 75% of their face value and returned 2.9% interest, compounded semiannually if held to 10-year maturity. So investors were able to earn a decent rate of return on their investment.

Series E bonds were also affordable, with initial denominations ranging from $25 to $1,000. Larger denominations of $5,000 and $10,000 were added later, along with two smaller memorial denominations of $75 and $200 to commemorate the deaths of President Kennedy and President Roosevelt, respectively.

Series E bonds were redeemable at any time after two months following the date of issue. Bond purchasers could redeem them for the full face value, along with any interest earned.

Interest from Series E bonds was taxable at the federal level but exempt from state and local taxes, adding to their appeal. And because they were issued by the federal government, they were considered a safe investment.

Recommended: Understanding the Yield to Maturity (YTM) Formula

Series EE Bond Maturity Rate

The maturity rate for EE bonds depends on when they were first issued.

Here’s a table showing the maturity dates for Series EE bonds over time:

Issuing Date Maturity Period
January – October 1980 11 years
November 1980 – April 1981 9 years
May 1981 – October 1982 8 years
November 1982 – October 1986 10 years
November 1986 – February 1993 12 years
March 1993 – April 1995 18 years
May 1995 – May 2003 17 years
After June 2003 20 years

Are Series EE Bonds Right for Me?

Series EE bonds can be a convenient, low-risk way to help your money grow over time. Plus, many people like the idea of investing in America and having their investment backed by the U.S. government. However, the rate of return may not be optimal, and the bonds are typically held for quite a long time versus a short-term investment.

Here are two popular alternatives you might consider to grow your money:

Savings Accounts

A savings account is a deposit account that’s designed to hold the money you don’t plan to spend right away. You can find various types of savings accounts at traditional banks, credit unions, and online banks. Savings accounts can pay interest, though not all at the same rate.

High-yield savings accounts at online banks, for example, tend to pay much higher rates than basic savings accounts at brick-and-mortar banks. Currently, they may offer around 4.60% APY (annual percentage yield) versus 0.58% for savings accounts.

Stocks

If you’re unclear about how stocks work, they effectively represent an ownership share in a company. When you buy shares of stock, you’re buying an ownership stake in a publicly traded company. The way you make money with stock investing is by buying low and selling high. In other words, you want to purchase stocks at one price then sell them for a higher price.

Stock trading can be a more powerful way to build wealth over time versus keeping money in a savings account or buying bonds. But there’s a tradeoff since stocks tend to be much riskier than bonds or savings accounts. Buying shares of mutual funds or exchange-traded funds (ETFs), which hold a collection of different stocks as well as bonds, is one strategy for managing that risk.

Recommended: Bonds vs. CDs: What’s Smart for Your Money?

Banking With SoFi

Series EE savings bonds can be a safe way to earn a steady rate of return. However, they aren’t the only way to grow your money.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

When should I cash in EE savings bonds?

Series EE savings bonds are optimally held for 20 years, at which point the money invested will have doubled. If you’d like to keep earning interest, you may hold the bonds for up to an additional 10 years.

How long does it take for a Series EE savings bond to mature?

Series EE savings bonds mature in 20 years. At the end of that period, the initial investment’s value will have doubled. You may hold them an additional 10 years and continue to earn interest, if you like.

Do Series EE savings bonds double after 20 years? 30 years?

Series EE savings bonds double after 20 years. If you don’t redeem them, you may continue to earn interest on them for another 10 years, for a total of 30 years.


Photo credit: iStock/loveguli

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


SoFi members with direct deposit activity can earn 4.00% 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 4.00% 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 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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.

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

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

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Navigating Needs vs Wants: Your Guide to Smart Budgeting

Budgets typically require you to categorize your expenses by “needs” versus “wants.” While that sounds straightforward enough, it’s not always easy to do. There may be times when you want something so badly (say, a leather jacket or trendy sneakers), it feels like a need. Or, you might dismiss a real need, like taking a week off work, as a want by not fully grasping its importance to your mental health.

Distinguishing between wants and needs, however, is key to your financial well-being — it provides the framework for a budget, allows you to make the most of the money you have, and can help you reach your future goals.

Read on to learn the real difference between needs versus wants, and how to fit both into your budget.

Key Points

•   Differentiating between needs and wants is essential for effective budgeting, as it helps manage essential living expenses while allowing for enjoyable purchases.

•   Needs typically include essential items for survival and functionality, such as food, housing, transportation, and healthcare, while wants enhance quality of life.

•   The distinction between needs and wants can be subjective, as individual circumstances may influence whether an expense is categorized as essential or indulgent.

•   Implementing a budgeting method like the 50/30/20 rule helps allocate finances into needs, wants, and savings, promoting better financial management.

•   Regularly reviewing and adjusting budgets ensures they remain relevant to changing financial situations and goals, fostering long-term financial health.

Understanding Needs and Wants

Both wants and needs are psychological factors that drive your spending behavior. Understanding the difference between wants and needs is key for setting up a budget that allows you to meet your basic needs, enjoy your life, and still work towards your future goals.

When it comes to budgeting, needs are usually defined as your essential living expenses, things necessary for your health, and expenses that are required for you to do your job.

Wants, on the other hand, are generally defined as desires for things that go beyond the basic necessities. They can range from small indulgences like a fancy coffee or a new hardcover to luxurious items like a premium car or designer clothes.

To stay on top of your budget and avoid overspending, it’s important to distinguish between needs and wants. However, you may find that these terms are more fluid than they appear at first. While working through your list of expenses, it may seem like items can fit into both categories, making the process somewhat confusing. It can help to dive deeper into what exactly constitutes a need versus a want.

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

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Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

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Identifying Your Needs

Strictly defined, a need is something that is necessary to live and function. By this definition, a need includes food, clothing, shelter, and medical care.

In budgeting, however, the category gets broader. There are things that you could technically survive without, but which you need in order to operate as a functional, productive member of society — and to keep that job that’s getting you the paycheck you need to buy food and keep a roof over your head.

For example, if you work in a position that requires you to show up at a specific time and place, transportation is going to be a need, not a want. Since insurance offers financial protection, and in some cases is legally required, you can count insurance as a need.

Needs tend to be recurring expenses that, generally, eat up a large chunk of your paycheck.

Examples of Needs

Here are some common budget items that typically count as needs:

•   Rent or mortgage payment

•   Utilities (e.g., gas, electricity, water)

•   Food

•   Transportation

•   Insurance

•   Necessary clothing

•   Healthcare

Recognizing Your Wants

Wants are basically everything that’s not a need. They are expenses that help you live more comfortably and enhance your quality of life.

Wants are the things you buy for fun or leisure. You could live without them, but you enjoy your life more when you have them. For instance, food is a need, but daily lunches out are likely more of a want. Outerwear is definitely essential to protect you from the elements, but if you have two other coats in your closet, that jacket you’re eyeing is probably a want.

Wants are not inherently bad or a poor use of your money. Often, they can help you accomplish important goals like meeting people and socializing with friends, having fun, or staying healthy. Along with needs, they deserve an important place in your budget.

Examples of Wants

Here are some examples of expenses you might classify as wants in your budget:

•   Entertainment

•   Dining out

•   Travel

•   High-end clothing

•   Fancy cars

•   Fitness classes/gym memberships

•   TV or music streaming accounts

•   The latest smartphone

•   Coffeehouse drinks

•   Hobby-related expenses

Where the Line Between Needs vs Wants Gets Blurry

Sussing out your financial needs versus your wants might sound like a simple task. But this seemingly black-or-white issue can actually get surprisingly gray, depending on your situation.

One source of confusion is that wants and needs won’t be the same for everyone. For example, two people may both need a car for work. However, one might need a luxury car to drive around important clients, while the other just needs a car that will get them to and from work. In the second case, a basic car will suffice.

Another complicating factor is that some expenses contain both wants and needs. Your grocery bill, for example, is a need because you need to eat. However, some items on the list, like expensive cheeses, soda, and ice cream represents wants rather than needs.

The Wants vs Needs Test

To determine if something you want to purchase is a want or a need, consider:
Does this fulfill a basic need? (Basic needs typically include food, water, security, and necessary clothing.)

•   Is this essential to living a healthy life?

•   Will not having this in your life cause you any sort of harm?

•   Will this make you happier or healthier in the long term?

•   Is it necessary for you to do your job?

Another good way to differentiate wants from needs is to let some time pass before you make a decision about a purchase. Generally, the desire to purchase a need will grow stronger over time, while the desire for a want will wane with passing time.

Another distinguishing characterisitc betweens needs and wants is that needs rarely change over time, whereas wants are often trends that will fade. If you’re trying to rein in unnecessary spending, it pays to think consider whether a purchase will make you happy, healthy, or otherwise fulfilled for a long time, or if it’s just something you want because it’s currently popular.

While there’s something to be said for retail therapy, you don’t want to fall into the trap of buying things because they make you feel better in the moment (especially if it means running up credit card debt). These purchases tend to get forgotten relatively quickly, sometimes in a just a few days or weeks. If on the other hand, a purchase will likely service it’s purpose for at least two years, you can feel better about spending the money.

Practical Strategies for Budgeting

To account for both needs and wants in your budget, you might consider the 50/30/20 budget framework.

This approach divides your net income into three basic categories, spending 50% on needs, 30% on wants, and 20% on savings and paying off debt (beyond the minimum payment). Just keep in mind that those percentages may not be realistic for everyone. If you live in an area with steep housing costs, for example, you may need to spend more than 50% on needs and take some away from the wants and/or savings categories.

Recommended: See how your money is categorized using the 50/30/20 rule calculator.

To see how your spending currently measures up, go through your monthly expenses, create a master list of things you spend your money on, and then create a list of needs and wants. You’ll want to place insurance and a basic phone plan under needs, but a subscription to a streaming service or a premium cable package will more than likely fall under wants.

The next step is to tally up what you’re spending in each category and see how the totals compare to your monthly take-home income. If you find your current spending is out of line with your chosen breakdown (such as 50/30/20), you’ll want to make some adjustments.

You might start by moving things around. Some of the items you’ve indicated as needs may actually be wants, or vice versa.

Next, you’ll want to look for places to cut back. While you may think your needs costs are fixed, it may be possible to shop around for a better price on certain monthly essentials, like insurance or a phone plan. Or, maybe you don’t need to drive to work but could spend less by taking public transporation or carpooling with a coworker.

Typically, however, it’s easiest to find places to cut back in the wants category. For example, you might decide to get take-out less often and cook more nights a week, brown bag your lunch, get rid of streaming services you rarely watch, and/or jog outside instead of going to a gym.

Any savings you uncover can then go towards your savings and debt repayment category. This can help you to get out from under high-interest debt faster (which will free up even more money for saving) and allow you to work towards goals like building an emergency fund, going on a vacation, buying a home, and funding your retirement.

💡 Quick Tip: Want a simple way to save more each month? Grow your personal savings by opening an online savings account. SoFi offers high-interest savings accounts with no account fees. Open your savings account today!

Reviewing and Adjusting Your Budget

Once you’ve rejiggered your spending and created a basic 50/30/20 (or similar) budget, it’s important to track your spending to make sure you’re sticking to your budget and spending an appropriate amount on needs versus wants.

One easy way to do this is to put a budgeting app on your phone (many are free for the basic service). Budgeting apps typically connect with your financial accounts (including bank accounts and credit cards), track spending, and categorize expenses so you can see exactly where your money is going each month.

Once you start tracking your spending, you may find that your original budget breakdown isn’t realistic and you’ll need to make some adjustments to your budget. For example, maybe it isn’t feasible to save 20% of your take-home pay right now. You might start with 5% or 10% and increase the percentage as your income grows.

It’s also a good idea to check in on your budget every six to 12 months. Your needs, wants, and goals will change over time. The key to creating a sustainable budget is to treat it as a living document and periodically evaluate it and adjust it as necessary to ensure that it meets your current financial goals.

The Takeaway

Some things you need — a place to live, electricity in your home, gas in your car to get to work — and some things you just want, like tickets to a concert or a membership to a gym. The key to smart budgeting is making room for both needs and wants, as well as saving. A balanced budget can help you live well right now, while also getting you closer to your short- and long-term financial goals.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.


SoFi members with direct deposit activity can earn 4.00% 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 4.00% 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 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


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

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How to Save Up for a Car

According to Car & Driver, the average transaction price for a new car tops $48,000 in spring of 2023. And Kelley Blue Book says that the average used car price tops $26,000.

Whichever option you may be pursuing to get yourself some wheels, that’s not an insignificant amount. You likely know that the more money you put down, the lower your monthly payments will be. That’s even more incentive to save up as much as you can for a car.

There are a few simple steps that can jumpstart the process and help you get your funds together for a car. These can include researching your options, then setting a budget for a new vehicle, and putting systems in place so it’s faster and easier to save.

Here’s how to make saving up for a car as quick and easy as possible.

Key Points

•   The average price for a new car exceeds $48,000, while used cars average around $26,000, highlighting the need for substantial savings.

•   Establishing a budget and calculating a down payment can lead to lower monthly payments and potentially better loan terms from lenders.

•   Setting a monthly savings goal helps in accumulating the necessary funds for a down payment, considering potential maintenance costs for an older vehicle.

•   Opening a separate high-yield savings account and automating contributions can streamline the saving process for a car purchase.

•   Cutting non-essential expenses and exploring additional income sources can significantly boost savings toward buying a car.

Researching Your Options

If your plan is to buy a new car, you can start getting a sense of costs by researching car options that might fit your needs and budget.

Some questions to consider when buying a car include:

•   Do you want a compact, sedan, wagon, minivan, truck or SUV?

•   Will you use it for work, travel or school?

•   What features are important, and which can you live without?

You can read articles, peruse car review sites, visit dealerships in person, and/or review manufacturers’ websites to research car models that appeal to you.

You may also want to look into purchasing a used or preowned vehicle, and seeing exactly how much this could save you. You can get a sense of costs by reviewing the used car market for the makes and models you are considering.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Calculating Your Down Payment

Once you have a rough idea of how much it will cost to get the car you want, you can start figuring out how much you may need for a downpayment.

Parting with a solid chunk of cash is never fun, but an appropriate down payment can help to make your car repayment process more manageable.

A 20% down payment is often recommended when purchasing a new car, and a downpayment of 10 percent is a general guideline for a used car.

But this is not a set rule.

A higher down payment can lead to lower monthly car payments. For one reason there’s less money to finance. For another, a lender might extend better terms, such as a lower interest rate, when you make a substantial downpayment.

Your down payment can include cash, the trade-in value of the vehicle you drive now, or a mix of the two.

Recommended: 12 Mobile Banking Features

Calculating Your Monthly Payments

If you believe you can save up enough to buy the car outright, way to go! That means you will ultimately pay less for the car because you’ll avoid paying any interest.

But if, like many people, you plan to get an auto loan, you may next want to determine how much your monthly car payments will be.

You can sit down and crunch the numbers, or you can let an online car loan calculator do the work. These calculators are designed to help you estimate what your monthly car loan payments will be throughout the life of your auto loan.

Steps to Saving up for a Car

Once you have a general idea of how much you need to save up for a downpayment, and how much money you’ll need to budget each month after you purchase your vehicle, you can set the saving money process in motion.

Here are some smart steps to help you get to the finish line.

Figuring Out How Much to Save Each Month for a Car

You can come up with a monthly savings goal by taking the amount you’ve determined you’ll need for a car upfront (subtracting any money that may come from selling or trading in your current car), and then dividing it by however many months you have left until your ideal purchase date.

The number you get after doing this equation is how much money you ideally want to save each month to meet your goal. You might also think about saving more than that per month so you can prepare for your monthly payments.

And if you’re currently driving an older vehicle that is prone to issues, you may want to save a little extra as a cushion for any necessary maintenance or repair costs.

Remember, saving for a car isn’t an overnight process and it may take longer than you initially expected, and that’s okay–the key is to get started.

Finding the Right Savings Account to Save Up for a Car

If you haven’t set up a savings account yet, this may be a good time to do so.

Good options for a short-term saving goal like buying for a car include: a high-yield savings account, money market account, online savings account, or a checking and savings account.

These options can offer a higher interest rate than a standard bank account, yet allow you to access your money when you’re ready to buy your car.

Having a savings account that is separate from your spending account can help you keep track of your progress, and allow you to know exactly how much money you have for a down payment for your car.

Making Saving for a Car Automatic

Once you have a good place to start and build your car savings, consider setting up automatic contributions to this account. You may hear this referred to as automating your savings.

You can time these transfers to happen on the same day each month, maybe right after you get your paycheck.

This makes sure the savings happens (since you won’t have to remember to transfer the money), and also ensures that you don’t accidentally spend the money you want to put aside each month to save up for your car.

Cutting Back on Extras

If your current budget doesn’t give you much room to save for a car, you may want to see if you can pair back some of your monthly expenses.

For instance, if you’re paying a high price for cable each month, but primarily watch streaming services, you may be able to cut that line item right out of your budget for a significant savings.

Or, if you seldom use your gym membership, you might want to pause or cancel it and jog around the neighborhood and/or stream workout videos at home for free instead.

Or, you might be able to save money on food by cooking more and eating out/getting takeout less often. You might also decide to only use your credit card for essentials for the next few months.

Any changes you make don’t necessarily have to be permanent. You may decide that you can go back to certain spending habits once you have a sufficient down payment to buy a car.

Finding a Extra Stream of Income

If your current income is only enough to cover your current bills, you may want to look into taking on a low-cost side hustle to help you save up for a car.

You might be able to get some extra work delivering people’s groceries, mowing lawns, babysitting, cleaning houses, driving for a ride-share service, selling homemade goods online, or working as a virtual assistant.

Or you might be able to turn one of your talents into some freelance work, such as designing websites or managing social media for a local business.

Earning a little extra cash can go a long way, giving you the chance to put more toward a car, borrow less money, and lower your monthly payment.

Trading in or Selling Your Old Car

Trading in your old car to help fund your next car purchase, and is often a good option to lower the overall amount you’ll owe on your new vehicle.

To get the most money, it’s a good idea to compare what different dealers will offer you for the car.

You can also research what your car may be worth on sites like Edmunds and Kelley Blue Book to see if your trade-in offer seems reasonable.

You may also want to look into selling the car yourself to a private party since it could yield a higher price than trading in. The tradeoff is that this typically requires a little more work.

Recommended: How to Switch Banks

Getting the Best Deal on a Car

When you’re ready to start seriously shopping for a car, you’ll want to take advantage of any deals you can find, such as rebates and special dealership offers.

You can receive quotes from multiple dealerships; it’s a good idea to ask them if the price quoted includes deducted rebates. This process may feel tedious, but it can help you learn which make and model you can afford.

If you’ll be financing the car, you may also want to shop around for auto loans. You can check with various lenders, including banks and credit unions, to see who might offer the best lending terms.

With that information in hand, you can ask the car dealership whether it can offer a better financing deal.

If you do decide to go the used car route, it’s a good idea to follow the steps recommended by consumer.gov, such as finding out if the car has any recalls, researching if the warranty is still in effect, and having a mechanic inspect the vehicle before making a purchase, for your financial (and physical) protection.

The Takeaway

A car is a major purchase, and it’s a good idea to save up as much as you can before you take the plunge.

For one reason, you may be able to buy the car outright, and avoid taking a loan (and paying interest). For another, the higher your down payment, the lower your monthly car payments may be once you purchase the car.

Learning how to save money for a car can take a little trial and error. You may need to rejigger some of your expenses and find ways to cut back and/or bring some extra money, at least temporarily.

Ready to start saving up for that car? You may want to consider signing up for a SoFi Checking and Savings account.

With SoFi Checking and Savings’s Vaults feature, you can separate your spending from your savings (even create a Vault specifically for car savings) while still earning competitive interest on all your money.

Plus, you’ll earn a competitive annual percentage yield (APY), and there are no account fees.

Sign up for SoFi Checking and Savings, and start saving up for that car today!


SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


SoFi members with direct deposit activity can earn 4.00% 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 4.00% 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 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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.

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.

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