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Having a bank account can simplify money management, but it’s important to know that there may be limits on how much money you can put in and move through your accounts. Limits like these can impact the timing and efficiency of your transactions.

Banking details matter to almost all of us. According to the Federal Reserve , 95% of U.S. households have at least one account with a bank or credit union. If you are wondering how much you should keep in checking and savings and whether bank accounts have limits, do read on. We’ll help you answer these important questions so you know where to keep your money and what to expect when you do your banking.

What are Maximum Deposit Limits?

Generally speaking, banks and credit unions don’t impose maximum deposit limits on checking and savings. This means that there usually is not a maximum deposit amount for your checking account that you need to know. The same applies for savings accounts. So if you were to win the lottery (wouldn’t it be nice?), you could go ahead and deposit that mega check into your checking or savings account without any issues.

There may, however, be maximum deposit limits for other types of deposit accounts. For example, if you’re opening a certificate of deposit (CD) account, the bank may cap those deposits at a certain amount. Depending on the bank, the maximum deposit may be as high as $1 million.

Now, do checking accounts have maximum limits on what you can deposit in a single transaction? Yes, they can, depending on the bank.

Maximum Account Balance Limits

Just as banks usually don’t impose a maximum deposit limit, they also don’t set limits on account balances. There is, however, a limit on how much of your money is protected by the Federal Deposit Insurance Corporation (FDIC).

The FDIC insures bank accounts in the very rare event of a bank failure. The FDIC coverage limit is $250,000 per depositor, per account ownership type, per financial institution. Having two checking accounts with the same bank or multiple savings or CD accounts at the same bank doesn’t affect your coverage limit if the total balance is under $250,000.

If you have multiple accounts at the same bank and the balances exceed $250,000, then it’s possible that part of your deposits might not be covered. The FDIC offers an online estimator tool that you can use to calculate how much of your deposits are covered at an insured bank.

One important note: Some banks participate in programs that extend the FDIC insurance to cover millions. If you want to keep large sums of money on deposit, you may want to consider these programs¹.

What Is the Right Amount of Money to Keep In a Checking Account?

How much money can you have in a bank account? The short answer is as much as you want. But a better question might be, “How much money should you have in checking?”

There are different rules of thumb you might follow. Much depends on your personal situation and comfort level, but let’s consider two popular ways to look at this matter. You may choose the “emergency account” route and keep two to three months’ worth of expenses in checking. You could add another 20% to that amount as a just-in-case cushion to cover any small unexpected expenses that might come up so you don’t have to tap into your emergency savings.

If your bank imposes a minimum balance requirement, you could use that as a guide instead when deciding how much to keep in checking. So if your bank has a $1,000 minimum daily balance in order to avoid a monthly service fee, you might aim to keep at least that much in checking.

What to Consider When Withdrawing Money

Maintaining a minimum balance in your checking and savings has some benefits. Specifically, it can help you to avoid fees or situations where you might run the risk of being short on funds. Here are three things to weigh when making withdrawals from bank accounts which can have implications in terms of maintaining your balance and avoiding excess charges.

Overdrafts

Overdraft occurs when you withdraw more money than you have available in your bank account, resulting in a negative balance. This is problematic because not only do you not have money to spend or pay bills, but also because your bank can also charge you a fee. According to the latest research from the Consumer Financial Protection Bureau , banks collected $15.47 billion in 2019 alone. Ouch! Keeping a minimum balance in checking and monitoring your balance regularly can help lower the risk of overdrafting your account.

Pre-Authorizations

Some transactions may require a pre-authorization hold before money is deducted from your account. For example, if you use your debit card to get $50 in gas, there may be an initial hold for that amount against your available funds. This lowers the dollar amount you have available for other spending. Having some extra funds in your accounts means all of your money isn’t tied up by these kinds of holds. Better yet, you might consider setting up a credit card account just for things like gas, hotel, and other travel purchases which often require pre-authorization.

Minimum Balance Requirements

As mentioned, banks and credit unions can impose minimum balance requirements for deposit accounts. This is separate from any initial minimum deposit requirement you might need to make to open the account. If your balance dips below the minimum deposit requirement, that could trigger a fee. How would you enter that “too low” zone? It might happen if you make a larger than usual withdrawal or debit card purchase, or decide to write a check that pays off your credit card bill one month.

Of course, you could avoid this by choosing a checking and savings option that doesn’t charge a monthly fee or set minimum balance requirements. This is an option if you’re banking with SoFi.

What to Consider When Depositing Money

The purpose of checking and savings is to hold your money until you need it. You therefore may not think twice about plunking some funds into your bank and parking it there. But when making deposits, it’s important to consider:

•   How much interest you’re earning with your bank vs. what you might earn elsewhere

•   How accessible your money is once you deposit it

•   What kind of fees you might pay to withdraw funds

Let’s review these points in a little more depth.

Investment Opportunities

Keeping all of your cash in checking and savings may seem like a good idea. After all, your money is relatively safe (thank you, FDIC), and you can dip into it as needed. But if you’re hoping to grow wealth, then investing some of your money in the stock market can deliver better returns over time. Allocating part of your paychecks to an investment account where you can buy stocks, exchange-traded funds (ETFs), cryptocurrency, or IPOs could pay off over the long term more so than simply earning interest with a bank account.

Liquidity

Liquidity is an investing term that describes how easy it is to turn an asset into cash. Bank accounts are highly liquid since you can get money from them fairly quickly. For example, if you need $500 to pay for an emergency vet bill, you could swipe your debit card, write a check, or hit the ATM.

When deciding how much money to deposit to checking and savings, consider an amount you’d feel comfortable having on hand if you needed it in an emergency. Then, if there’s an amount beyond that which you don’t think you’d need to access right away, you could invest that or put it into a high-yield CD account.

Transfer and Withdrawal Fees

There may be times when you need to transfer funds between bank accounts — perhaps on a regular basis. It’s worthwhile to consider the kind of fees this activity may trigger, so you don’t wind up taking too much of a financial hit. For example, if your bank sets a savings withdrawal limit, you may have to pay an excess withdrawal fee if you go over that limit. The Federal Reserve eliminated the “six withdrawal per month limit” for savings and money-market accounts, but banks can still charge a fee for excess withdrawals. Check the policies at your bank. This can guide you when deciding how much to deposit in savings. You’ll want to think about how soon you might need to take that money out again and what it might cost.

The Takeaway

Bank accounts can make life easier when you need to pay bills, make purchases with a debit card, or set aside money for savings goals. That said, you’ll want to be aware of limits on your accounts in terms of minimum balance requirements, deposit limits, and withdrawal limits. This can help you to avoid excessive fees. Because your checking should be a convenient financial tool, not something that is causing you concern or charging you an array of fees!

Bank Better with SoFi

If you’re looking for a checking and savings option that’s accessible and fee-friendly, consider online banking with SoFi today. Not only do eligible accounts earn a competitive APY, you’ll also bank free of account and overdraft fees. Plus SoFi recently announced that deposits may be insured up to $2 million through participation in the SoFi Insured Deposit Program.

Why not see how simple and stress-free banking can be?

FAQ

How much money can you put in a checking account?

Generally, there’s no checking account maximum amount you can have. There is, however, a limit on how much of your checking account balance is covered by the FDIC (typically $250,000 per depositor, per account ownership type, per financial institution), though some banks have programs with higher limits. Banks can also impose daily, weekly or monthly limits on mobile check deposits.

Should I keep all my money in my checking account?

Keeping all of your money in your checking account usually isn’t ideal, as you may be able to earn a higher rate of return by investing some of it. It can, however, be a good idea to keep two to three months’ worth of expenses in checking, plus a small cushion of 20% to 30% extra for any surprise expenses that might pop up.

What is the limit of depositing money in the bank?

Banks may not impose an aggregate limit on how much you can deposit to checking and savings. But there may be limits on how much you can deposit each day via mobile check deposit, with a teller or through the ATM. This limit can vary from bank to bank.

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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.

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.
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.

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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A demand deposit account is a type of bank account that allows you to withdraw money “on demand,” without having to provide advance notice beforehand. Time deposit accounts only allow you to withdraw funds once the account reaches maturity.

Banks and credit unions typically offer both kinds of accounts: demand deposit (checking and savings accounts, for instance) and time deposit (such as certificates of deposit, or CDs). These two types of accounts are designed to meet different financial goals. Understanding the difference between demand deposits vs. time deposits can help you decide where to put your money.

What Are Time Deposits?

Time deposit accounts are savings accounts that require you to keep your money in the account for a set time frame. They can also be called term deposit accounts or term deposits since the bank can specify the term that the money must stay in place.

If you’d like to withdraw money before the term ends, the bank may allow that. However, they will likely charge you a penalty fee. They may also require you to give them a certain amount of advance, either in writing, in-person, or over the phone. Once you open a time deposit account, you typically can’t add any additional funds at a later date.

How a Time Deposit Works

A time deposit works by effectively locking in your money for a set time period or term. During this term, your money can earn interest at a rate specified by the bank.

A certificate of deposit account is the most common type of a time deposit or term deposit account. Banks often offer CDs with varying maturity terms, which can range anywhere from one month to five years or more.

While your money is in the CD, it earns interest. Once the CD matures, you can do one of two things:

•   Roll the principal and interest earned into a new CD with different terms

•   Withdraw the principal and interest earned

If you take money out of the CD before it matures, the bank will likely impose an early withdrawal penalty. This penalty usually involves forfeiting some of the interest earned. The size of the penalty can vary depending on how early you withdraw the money and the length of the CD.

What Are Demand Deposits?

With a demand deposit account, you are allowed to put money into the account or take money out of the account when you want and without giving any advance notice. Demand deposit accounts include checking accounts, savings accounts, and money market accounts.

The money in a demand deposit account is generally considered to be liquid, or ready cash, and you can withdraw any amount (including the entire balance) at any time without paying a penalty. However, some banks may charge a fee if you exceed a certain number of withdrawals from a savings account within one month.

How a Demand Deposit Works

Demand deposit accounts work by allowing you convenient, flexible access to your money. The most common example of a demand deposit account is a checking account. With a checking account, you can deposit money, then access it by:

•   Using a debit card to make purchases online or in stores

•   Withdrawing cash at ATMs or through a teller

•   Scheduling online bill payments

•   Linking it to mobile payment apps

A trade off for this easy access to your money is that demand deposit accounts typically don’t pay high rates of interest, and checking accounts generally don’t pay any interest at all. While you can sometimes find an interest-bearing checking account, checking account interest rates tend to be on the lower side.

There are other types of interest-bearing accounts that fall under the demand deposit umbrella. They include: traditional savings accounts, high-yield savings accounts, money market accounts, and kids’ savings accounts.

Federal Insurance for Demand and Time Deposits

The Federal Deposit Insurance Corporation (FDIC) provides insurance coverage for member banks, which is passed on to account holders. The FDIC insures both demand and time deposit accounts, including:

•   Checking accounts

•   Savings accounts

•   Money market accounts

•   CD accounts

The standard FDIC coverage limit is $250,000 per depositor, per account ownership category, per insured financial institution. The National Credit Union Administration (NCUA) offers similar coverage for time and demand deposit accounts held at member credit unions.

Recommended: How Do Calculate Interest on a Savings Account?

Demand Deposit Pros

When comparing demand deposit vs. time deposit accounts, it helps to understand the pros and cons of each type of account.

Here are some of main benefits of demand deposit accounts:

•   They give you access to your money without being required to give the bank advance notice.

•   They offer multiple ways to manage and access money, including online and mobile banking, automated clearing house (ACH) transfers, direct deposit, ATM banking, and branch banking.

•   There is the potential to earn interest on balances and, in some cases, rewards on purchases.

Demand Deposit Cons

While demand deposit accounts can make managing money and growing savings convenient, there are some potential downsides to keep in mind. These include:

•   There may be monthly fees or other fees.

•   Since interest rates can vary, you may need to shop around to find the best rate.

•   Banks may limit the number of withdrawals you’re allowed each month.

Time Deposit Pros

Time deposit accounts can be a great place to keep your savings — if you understand how they work. Here are some of the advantages of opening a time deposit account:

•   They offer a guaranteed rate of interest, so there’s very little risk of losing money.

•   They typically offer a higher interest rate than you can get on a demand deposit account.

•   There are generally no fees if you leave the money in the account until maturity.

Time Deposit Cons

Opening a time deposit account could make sense if you want a place to park your money for several months to years and earn a higher rate of interest. But it’s important to keep these cons in mind:

•   You may pay an early withdrawal penalty if you need to take any or all of the money out prior to maturity.

•   There is often a minimum deposit required.

•   Most time deposit accounts do not allow you to make additional deposits once the account is open.

How to Choose Between a Demand and Time Deposit Account

Demand deposit vs. time deposit: which one should you pick? The answer will depend on your financial needs and goals.

You might choose a demand deposit account if you:

•   Want convenient access to your money via a debit or ATM card, online banking, mobile banking, or at a branch

•   Want to be able to earn some interest on your savings while still having easy access to the money

•   Don’t mind the possibility of paying checking or savings account fees

A time deposit account, on the other hand, may be more appropriate if you:

•   Want to earn a higher interest rate than you can get on a standard checking or savings account at a bank

•   Have a sum of money you don’t need to touch for the immediate future

One good solution is to have a mix of demand deposit accounts and time deposits. This might include a checking account (for paying bills and everyday spending), a savings account (to hold your emergency fund), and one or more CD accounts to fund your longer-term goals. Just be sure to pay attention to minimum balance requirements and fees for each account you open.

When choosing between different types of savings accounts and CDs, you’ll also want to consider the interest rate and the annual percentage yield (APY).

The difference between the interest rate vs. APY is that the APY tells you the total amount of interest you earn on the account over one year. While it’s based on the interest rate, the APY also takes into account the compounding interest (when interest accrues on previously accrued interest) to give you the most accurate idea of what you’ll earn in a year.

APY, however, is not to be confused with annual percentage yield, or APR, which refers to what you can owe in interest charges on a loan.

Recommended: What Is a CD Ladder?

The Takeaway

There are two key differences between demand deposit and time deposit accounts: how easily you can access the money in the account and how much interest the account earns.

Demand deposit accounts (which include checking accounts, savings accounts and money market accounts) allow you to withdraw money from the account at any time, whereas time deposit accounts (such as CDs) require you to deposit your money for a specific length of time. While demand deposit accounts offer more flexibility, they typically offer lower interest rates than time deposit accounts.

One option to consider for your day-to-day banking: See what SoFi offers.

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.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What is the difference between demand deposit and time deposit?

The key difference between demand deposit vs. time deposit is access. With demand deposit accounts, you generally access your money at any time without paying a penalty or giving the bank any advance notice. With time deposit accounts, you generally can’t withdraw money until the account reaches maturity.

Which type of deposits with the banks are called demand deposits?

Demand deposit accounts include checking accounts, savings accounts, and money market accounts. Checking accounts can allow you to use a debit card, pay bills online, and manage money through online and mobile banking. Savings accounts are used to hold money you don’t plan to spend right away and may offer interest. Money market accounts combine features of both checking and savings accounts.

Why are demand deposits considered money?

Demand deposit accounts hold money that you can withdraw whenever you want. You can use this account to get cash, pay bills, make purchases, or complete other financial transactions. The money in these accounts is a liquid (or easily accessible) asset.

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Photo credit: iStock/FG Trade

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

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

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

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Unless you’re already a millionaire, you might be interested in finding ways to make more money and increase your net worth so you can join the ranks of the rich. You may even be tempted to participate in a get-rich-quick scheme to achieve your goals.

But hold on a minute: Get-rich-quick schemes attract people with the lure of easy money, but all too often, they create more financial problems instead of solving them.

Understanding these scams can help you avoid them — and avoid getting scammed by fraudsters.

What Is a Get-Rich-Quick Scheme?

Generally speaking, a get-rich-quick scheme is any plan or strategy that promises to put large amounts of money in your bank account for little to no investment. The term “get rich quick” has a less than desirable connotation, since these ventures often fail to live up to their claims.

It’s not uncommon to see get rich-quick-schemes advertised or promoted using language that’s designed to pique consumers’ interest. For example, you might come across a social media influencer that promises to help you “make money while you sleep” or “make money instantly without paying anything.”

That type of wording is often a red flag, and it may be a sign that a get-rich-quick scheme is actually a thinly veiled scam.

Get-rich-quick schemers can also take a more subtle approach and make promises that seem legitimate when taken at face value. Student loan forgiveness scams that claim to be able to help you wipe out student debt in exchange for a fee are a great example of this (you’ll learn more examples of these traps in a minute).

Recommended: 8 Common Online Bank Scams and How to Avoid Them

How Do Get-Rich-Quick Schemes Work?

Get-rich-quick schemes work by drawing people in and using some type of financial incentive as bait. Potential victims may be told that they’ll be able to make a large amount of money very quickly if they just pay a fee or make an initial investment. Or they’ll be told that they can get their debts eliminated for much less than what they owe.

In other cases, a get-rich-quick scheme is a major money scam that’s designed to get people to part with their hard-earned money in exchange for a product or service that will supposedly help them make more money. The purpose of this type of scheme is to get people to purchase something; the individual who’s hawking it can then make money themselves. Put simply, you are unlikely to benefit financially.

Using social media influencers as an example again, an influencer might promote a book or a course that teaches a “proven” system for how to make money online. They encourage their followers to buy the book or course and suggest that if they do so, they’ll be able to grow their income and get rich.

What their followers may not realize is that the influencer is likely getting paid for that promotion. Their posts may be sponsored by the book author or course creator. Or perhaps they’re earning affiliate commissions for referring people to the products. If the influencer convinces enough people to buy whatever it is they’re selling, they might get rich quick while their followers may not.

Technically, influencers and bloggers are required to disclose paid relationships to their audience. But disclosure alone doesn’t convey any guarantee that the product they’re promoting will work the way they say it will. So people buy in, expecting results that they may or may not see.

Recommended: How To Make Money Even With No Job

Are Get-Rich-Quick Schemes Illegal?

Get-rich-quick schemes themselves are not outlawed, though there are numerous regulations that attempt to protect consumers from scammers. As mentioned, influencers are required to disclose relationships they have with the brands that they promote. The Truth in Advertising Act exists to prevent companies or individuals from making false or misleading claims when advertising products and services. Advertisers must also be able to back up the claims they make with scientific evidence, when appropriate.

Whether a get-rich-quick scheme falls within legal boundaries or is illegal can largely depend on the nature of the scheme. Multi-level marketing (MLM) is a great example. What is an MLM? In simple terms, it’s a business structure in which people earn commissions by selling products or services to friends and family members. Mary Kay and Avon are two well-known examples of multi-level marketing operations that are legit.

MLMs are not illegal, but pyramid schemes are. What’s known as a pyramid scheme can resemble an MLM, but the difference is that all the money is made by bringing new people into the program. The person who recruited a new participant earns money by charging them an entry or registration fee or perhaps an introductory product package of some sort. The higher up you are in the pyramid, the more money you can make.

A Ponzi scheme is another type of illegal get rich quick scheme. In a Ponzi scheme, the person or persons at the top promise investors they can double or triple their money. They take the investors’ money and keep it for themselves, paying out nominal amounts to people who invested earlier in the scheme. The scheme can keep going — and continue making the people at the top rich — as long as new investors keep joining. Bernie Madoff, the convicted financial fraudster, was notorious for running one of the largest Ponzi schemes in history.

Recommended: Avoiding Mobile Deposit Scams, Fakes, and Hacks

Examples of Get-Rich-Quick Schemes

Get-rich-quick schemes can take many different forms, and it isn’t always easy to recognize them for what they are. Some of the most common examples of legal (and illegal) get-rich-quick schemes include:

•   MLMs and pyramid schemes disguised as MLMs

•   Work-at-home scams that promise you’ll earn major money

•   Investment scams that promise high returns for very little money

•   Side hustle and online business scams

•   Debt relief and credit repair scams

•   Lottery scams

•   Fake job listing scams

•   Scams related to student loan forgiveness or government benefits

•   Home improvement scams

•   Mystery shopping scams

•   Giveaway or free prize scams

And of course, there’s the ever-enduring “Nigerian prince” scheme. This scam and its many variations promise you a large inheritance, finder’s fee, or compensation in exchange for accepting a deposit into your bank account. Scammers, who claim to be royalty (perhaps hoping that will impress their target and sound legitimate), ask that once you receive the deposit, you send part of the money back to them and keep the rest.

In reality, the scammer is trying to trick you into handing over your bank information, so they can try to use your account number and routing number to cheat you. Or else they ask you to wire them a small amount to cover processing fees before they can send the money along to you. It’s an ongoing get-rich-quick scheme that unfortunately continues to collect victims.

Are Get-Rich-Quick Schemes Reliable?

A get-rich-quick scheme can make lots of promises, but they generally fall short when it comes to the delivery. What you can usually count on with a get-rich-quick scheme is that you’ll lose money if you participate. That’s because that’s how these schemes are designed to operate.

Getting money for nothing sounds attractive, and so it’s easy to fall victim to influencer schemes when you see the lavish lives they lead on social media. But there’s a significant difference between rich vs. wealthy and, again, there’s no guarantee that any get-rich-quick scheme will produce the results you want.

Even if you don’t lose money outright, you may only get a small return on investment. Or it can take much longer to see results. For example, say you’re interested in becoming a blogger so you can quit your full-time job. You see a popular writing course advertised by lots of different bloggers who claim to be making six figures a year.

You buy the course, believing that in exchange for your payment of just $497 you’ll soon be on your way to making $10,000 or more each month from home. Except you complete the course and don’t see instant results. In fact, it takes you more than three years to build up your business to the point where you’re making any kind of steady income.

You might eventually get rich, but there’s no “quick” about it. That’s why get-rich-quick schemes are so problematic. They rely on people looking for a shortcut to easy money, despite the reality that building one’s income and net worth typically takes years.

Recommended: Are You Bad with Money? Here’s How to Get Better

Tips to Spot a Get-Rich-Quick Scheme

Identifying a get-rich-quick scam isn’t always easy since some scammers can be so convincing and seem so sincere. And in some cases, schemes for quick riches are based on legitimate ways to make or invest money. If you’re worried about getting conned by a get-rich-quick schemer, here are some of the ways to spot a scam in action.

Upfront Payment

A request for upfront payment is often a dead giveaway that a scam is afoot. Email phishing scams like the “Nigerian prince” scheme are a great example. There are some common credit card scams that fall into this category as well. These scams make false claims about being able to raise your credit scores overnight or wipe out credit card debt instantly, as long as you pay their fee first.

Misleading Headlines With False Claims

Scammers often use clickbait-y headlines to grab consumers’ attention. They can make claims that are grandiose or outright false to get you to click and check out their product or service. You may not realize how misleading those claims are until you’ve bought into the scheme.

Secret Tips and Information

Another tactic scammers may use to get your attention is to tell you they have insider information that they’re willing to share with you to help you get rich. Of course, you’ll only be able to access those secret tips once you’ve purchased something or paid them a fee. It’s particularly important to be wary of those so-called secrets when it comes to investing, since insider trading is illegal.

“100% Success Rate Guaranteed!”

Scammers may also use language that suggests that everyone who’s ever used their product or service has seen success or that success is guaranteed. That could fall under the heading of misleading information in violation of the Truth in Advertising Act. And even if it’s technically true that the success rate is 100%, the results may not be the same for everyone.

Recommended: 8 Ways to Make Your Money Work For You

If It Sounds Too Good to Be True

Here’s perhaps the easier rule for spotting a get-rich-quick scam: if something seems too good to be true, it probably is, as the saying goes. Attempting to fact-check or verify claims that someone is making about a product or service can help to weed out scammers. If you can’t verify any of the claims they’re making, that’s a sign to be wary of their statements.

Going to Trusted Sources, Not Influencers or Celebrities

Influencers and celebrities can make a lot of money promoting products or services that are designed to help you get rich. But again, they may be getting paid for that promotion, so they can’t be considered a reliable source.

Researching get-rich-quick offers through trusted sources is important for separating fact from fiction. For example, the Federal Trade Commission (FTC) can be a great resource for reading up on the latest scams targeting consumers.

Unwilling to Share Their Business Model

Transparency is key to rooting out get-rich-quick scammers. Let’s say someone claims to be able to help you make $10,000 by starting your own business from home but is unwilling to tell you how they do it. That’s a sign that you might not want to take them at their word.

“You Do Not Need Any Experience!”

Wouldn’t it be nice if you could make a fortune with no prior experience or knowledge? That’s the hope upon which some get-rich-quick fraudsters capitalize. While there are legitimate ways to make money that don’t necessarily require years of experience, scammers can use that to persuade people to buy into a product or service that leaves you holding the bag. Or they can twist their wording to make it seem like you can make money even without experience, when really, there’s a steep learning curve involved.

Recommended: 6 Money Habits to Develop Financial Success

Alternatives to Get-Rich-Quick Schemes

Getting rich overnight probably isn’t the cards for most people, unless they happen to win the lottery or a wealthy relative passes away and leaves them a huge inheritance. If you want to get rich (or become wealthy), you’ll most likely need to put in some effort and give it some time.

Here are some legitimate wealth-building alternatives to get-rich-quick schemes:

•   Starting and growing a business

•   Using side hustles to supplement your income

•   Asking for a raise or promotion at work

•   Moving to a higher-paying job with a different company

•   Reducing spending and paying down debt

•   Investing money consistently

•   Working with a financial advisor or wealth manager

Admittedly, these ideas may seem a lot more boring and difficult than get-rich-quick schemes. But they’re all proven ways to increase financial stability and raise your net worth.

Banking With SoFi

Trying to get rich can be a lofty and elusive goal, but you can certainly take steps to improve your financial situation. Keeping your money in the right bank account can be a great place to start.

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.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

Can get-rich-quick schemes be good?

Get-rich-quick schemes often require you to pay money for an investment or product that claims to help you grow your wealth immediately. Typically, though, the results you get can be very different from what you expect. In other words, they are unlikely to be good.

How many businesses are considered get-rich-quick schemes?

There are no definitive statistics on how many businesses are considered to be get-rich-quick schemes. Multi-level marketing companies and direct sales companies often get labeled as get-rich-quick operations, even when those businesses are legitimate. This makes hard numbers difficult to find.

What can I do if I have fallen for a get-rich-quick scheme?

If you’ve fallen for a scam, try to minimize or limit your losses by not funneling any more money into the scheme. If you believe the scheme is illegal, you can report it to the Federal Trade Commission. You could also file a police report and report the scheme to your state attorney general’s office. If a scammer tricked you into handing over your banking or financial information, alert your bank to monitor your account for potentially fraudulent transactions. You may also need to update your login details for financial websites.

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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.

*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.

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

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

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When planning a move to a new city or state, the cost of living is an important consideration. Here’s why: Cost of living tells you how much money it takes to maintain a basic standard of living in a given place. If you were offered your dream job in a city 1,000 miles away, you’d want to know whether the salary would allow you to live well…or whether you’d have to be on a super tight budget.

Location typically plays a major role in determining the level of income needed to finance your lifestyle. For instance, a dollar doesn’t buy as much in New York as it would in Des Moines. If the cost of living is higher because you live in a major city, you’ll likely have to allocate more of your budget toward everyday expenses, such as housing, food, and transportation.

It’s important to understand the factors that affect cost of living calculations and what a higher or lower cost of living means for your finances. Otherwise, you could wind up with an uncomfortable level of “sticker shock” if you relocate.

What Is the Cost of Living?

The cost of living is the cost to cover basic household expenses. The cost of living can vary from state to state and city to city. As you might guess, renting a 1,500-square-foot home is likely to be much more affordable in a small town in the middle of the country than doing so in a hip neighborhood in San Francisco.

That said, you can also have different costs of living within the same metro area. For example, someone who owns a home in the suburbs of a major city may have higher or lower expenses compared to someone who lives downtown.

In terms of what the cost of living is used for, it’s a gauge for determining affordability. Before moving to a new location, you might look at the cost of living in that area to help you decide if it’s realistic for your budget.

How Does the Cost of Living Work?

Cost of living calculations work by measuring how much it costs to live in a specific location, using basic living expenses as a guide. The cost of living is not static; it can go up or down over time. Looking at cost of living trends for a certain city, region, or state can give you an idea which way consumer prices are trending.

There are a number of entities that perform cost of living calculations. The Council for Community and Economic Research, for example, maintains a cost of living index for participating cities across the U.S. Other organizations calculate cost of living for locations around the world.

On a personal level, the most important question to ask is, “What does the cost of living mean for me?” The simple answer is that cost of living can determine how far your income is able to go toward funding your lifestyle.

Factors That Determine Cost of Living

When discussing cost of living and expenses, you’re talking about necessities. In other words, the things you need to spend money on to live each month. According to the Economic Policy Institute, that includes:

•   Housing

•   Food

•   Childcare

•   Transportation

•   Healthcare

•   Taxes

•   Other necessities, such as clothing, household supplies, and personal care items

Cost of living calculators use prices for those types of expenditures in a particular area to determine how much it costs to live there on average. Consumer prices for goods and services are largely a product of supply and demand, and what’s happening with inflation. Inflation is a general upward trend in prices over time.

When inflation is higher, prices tend to rise across the board, which brings a higher cost of living. Even when inflation is lower, prices may still be higher in some areas than others if there’s higher demand for goods and services.

Calculating Cost of Living

Cost of living indexes collect information about various costs for different cities and locations, then use average prices to determine how much it costs to live there. If you’re comparing two cities, you can use a cost of living index to see which one is less expensive.

If you’d like to calculate your personal cost of living, you’d use your spending history to determine your average monthly expenses for these categories:

•   Housing

•   Food

•   Transportation

•   Utilities

•   Childcare, if applicable

•   Healthcare

•   Taxes

•   Other necessary expenses

Using those numbers can tell you how much it costs to maintain your basic standard of living each month. You can also add in your average monthly spending for debt repayment or non-essentials or discretionary expenses, like dining out, travel, or recreation, to get a sense of what your actual cost of living adds up to.

What Is the Cost of Living Index?

Generally speaking, a cost of living index is a measurement of average prices. Similar to a stock market index, a cost living index is meant to provide a benchmark for comparison. The Consumer Price Index (CPI) is often referred to as a cost of living index, though that description isn’t entirely accurate.

The CPI measures the average change in prices over time for a market basket of consumer goods and services. That’s how the U.S. Bureau of Labor Statistics (BLS) defines the Consumer Price Index. The CPI isn’t a true cost of living index but an inflation index. Changes to the CPI can be an indicator of how inflation is changing; whether it is rising, falling, or remaining flat.

Does Cost of Living Vary State by State?

The cost of living by state is not uniform and what you might pay to live in one state could be very different from what you’d pay to live in another. That’s important to keep in mind if you’re considering moving across state lines to a new location. The more expensive a state is, the less purchasing power your money holds.

For example, the California cost of living index is much higher than the Texas cost of living index. So why do some states have a higher cost of living? Again, it depends largely on things like supply and demand, though taxes and average incomes can also play a part.

When the average income in a state is higher and job opportunities abound, that can lead to an increase in people moving to the state. That means more demand for housing, which can send home and rental prices soaring. More people can also mean more demand for everyday goods and services, such as food or utilities. As demand rises, prices can follow suit.

So, in our example above, if you were living in Texas in a two-bedroom rental apartment and were offered a job at the same salary in California, you’d face a higher cost of living. If you moved there, you might have to rent a smaller home. Your groceries would likely be more expensive as well as your other monthly necessities. You might find you couldn’t eat out or go to concerts as often since prices are higher.

Recommended: What Percentage of Income Should Go to Rent and Utilities?

Which State Has the Lowest Cost of Living?

As of 2024, West Virginia had the lowest cost of living in the U.S., with a cost of living index of 84.3. For perspective, cost of living indexes are generally based on 100 as an average. So an index of 84.3 means that the cost of living in West Virginia is 15.7% less than the national average.

Housing, which is typically the biggest expense most people have, is nearly 40% cheaper in West Virginia compared to the U.S. average. The median sale price for a home there was $284,000 as of January 2024.

Which State Has the Highest Cost of Living?

Hawaii is the most expensive place to live in the U.S., with a cost of living index of 188.4. Housing is more expensive there than in any other state in the country, with a median list price of $714,100 as of January 2024. A home buyer would have to shell out considerably more to live in Hawaii’s natural paradise than elsewhere in America.

But housing demand isn’t the only factor. Higher taxes and higher costs for transporting goods and materials to the state are some of the other factors that drive up the cost of living in Hawaii. Other states that rank among the most expensive include New York, California, and Massachusetts.

How Much Should Your Cost of Living Be?

Your cost of living should be a figure that, given your income, you can reasonably afford to pay. When your expenses exceed your income, that can cause shortfalls in your budget each month. You may need to use credit cards or loans to fill the gap, which can leave you with a pile of bills, wondering how to pay off high-interest debt.

When calculating your ideal cost of living, start with your income. Then work your way backwards to determine how much you should be spending on things like housing, food, transportation, utilities, and other necessities. If your income comfortably covers those things, you can then decide how much to allocate to savings, debt repayment, or “wants” like travel and entertainment.

Also, consider your household size. The cost of living for a single person can be very different from the cost of living for a family of four. So you may need to allocate more of your budget for necessities if you have a spouse, partner, or children in your household.

Quick Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

Tips to Improve Cost of Living

If you’ve run the numbers and your cost of living is higher than you’d like it to be, you aren’t necessarily out of luck. There are some things you can do to try and bring it down. Here are some ideas for ways to reduce your cost of living:

•   Eliminate unnecessary spending from your budget.

•   Move your money to a different financial institution to avoid bank fees and/or earn higher interest.

•   Plan meals at home, and cut down on restaurant meals.

•   Consider refinancing student loans or your mortgage to lower your interest rate.

•   Consolidate credit card debt using a 0% balance transfer offer.

•   Shop around for better rates on auto, homeowners, or renters insurance.

•   Aggressively pay off debt.

•   Consider moving to a cheaper area.

•   Take on a roommate to share expenses.

•   Downsize into a smaller home.

•   Sell a vehicle if you own more than one.

Some of these money-saving ideas are relatively easy to implement; others may seem a bit more extreme. But the more you can cut your expenses, the easier it may be to improve your cost of living.

You can also research different ways to make more money. That might mean taking a different job, getting a part-time gig, or starting a side hustle. If you’re contemplating a move for a higher-paying role, remember to factor in the cost of living in a new location to see how far a higher salary might go. A higher cost of living could eat up the salary boost you’ll receive, and so you’d want to be prepared for that.

Managing Finances With SoFi

Achieving a manageable cost of living starts with keeping a close eye on your budget and spending. Even making small changes, such as cutting out high banking fees and earning more interest, can free up more cash that you can use to save and fund your financial goals.

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.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

https://www.sofi.com/signup/banking/v1“>

FAQ

What is a cost of living adjustment?

The Social Security Administration (SSA) applies a cost of living adjustment to Social Security benefits, based on changes to the Consumer Price Index. That means benefits can rise as the cost of living does. In other words, these adjustments are designed to ensure that recipients’ benefit payments are able to keep pace with inflation.

How can I compare the cost of living between two cities?

The easiest way to compare the cost of living between two cities is to use a cost of living index, which measures the relative cost of living in different areas of the U.S. You can subtract the cost of living index for the city that’s lower from the one that’s higher to figure out how much cheaper it is.

Which country has the highest cost of living?

Monaco is the most expensive country to live in. The average monthly cost of living there, as of 2024, is $6,538.

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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.
*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.

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

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

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

What Is an Aggressive Savings Plan?

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

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

Why an Aggressive Savings Plan Can Be Beneficial

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

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

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

•   Reaching your savings goals can take less time.

•   Saving money becomes a habit.

•   You can learn to manage money better.

•   It becomes easier to learn to live on less.

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

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

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

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

Tips for Building an Aggressive Savings Plan

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

1. Paying Yourself First

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

Some of the ways you can pay yourself first include:

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

•   Scheduling recurring transfers from checking to savings each payday

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

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

2. Getting Out of Debt

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

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

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

Recommended: 15 Creative Ways to Save Money

3. Tracking All of Your Spending

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

There are different ways to track spending, including:

•   Writing purchases down by hand

•   Using a spreadsheet

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

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

4. Utilizing a Budgeting Method

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

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

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

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

5. Cutting Down Expenses

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

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

•   Renting out a room or taking on a roommate

•   Getting rid of your car and using public transportation

•   Embarking on a no-spend year

•   Moving to a cheaper area.

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

6. Opening a High-Yield Savings Account

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

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

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

Recommended: Understanding High Yield Savings Accounts

7. Starting a Side Hustle

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

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

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

Recommended: 11 Benefits of Having a Side Hustle

8. Avoiding Eating Out at Restaurants

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

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

9. Saving Money Windfalls

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

•   Tax refunds

•   Rebates

•   Bonuses

•   Cash-back rewards

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

•   Inheritances.

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

10. Investing Your Money

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

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

11. Automating Your Finances

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

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

12. Utilizing the 30-Day Rule

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

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

13. Living Below Your Means

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

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

The Takeaway

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

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

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with 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.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

Are there downsides to aggressive savings plans?

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

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

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

Can you aggressively save long-term?

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

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

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

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