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You wouldn’t start out on a trip without a map. Yet, many of us are on a financial journey without a clear plan of where we want to go and how we’re going to get there. Only 67% of Americans report having a budget.

A personal budget can provide a roadmap for achieving financial goals, from saving for retirement to planning for a big trip.

Some people avoid making a personal budget because they don’t know where to start—others find the idea of tracking every single thing they spend money on overwhelming.

But without a personal budget, the little expenses can quickly add up quickly. That can make it harder to save money for the things you really want to have money for.

What is the goal of using a personal budget? Ultimately, it’s to help you achieve your own financial goals. A budget can help with planning expenses, plotting out where the money goes, and how much you need for a home down payment or a new car.

Here’s some information you might find helpful about making a personal budget.

What is a Personal Budget?

A personal budget is what it sounds like—a budget for your life and personal expenses. This can be as complicated or as simple as you want.

Just like budgeting for a company or a business project, budgeting for your life can let you plan out your finances and spend your money on the things you really want, instead of accidentally spending in bits and pieces and then not having enough left over for bigger goals.

To make a personal budget look at your income and expenses, then allocate money in distinct budget categories and plan ahead to figure out how much is needed for your financial goals.

How to Make a Personal Budget in 5 Steps

Step 1. Track Current Spending

A good first step to making a personal budget is tracking current spending. You probably need to know how much money you have and how much you’re spending in order to make a realistic budget and plan for the future.

Tracking your current spending can also help you identify areas of overspending and measure actual expenditures vs. expected expenditures.

It’s possible to track spending manually by gathering account information and going through last month or the past few month’s worth of expenses—don’t forget one-time expenses that might not have occurred in the previous month, like annual insurance payments.

Step 2. Create Spending Categories

You may also want to determine what categories to track in your spending — groceries, car expenses, housing, medical, etc — and then plot it out.
However, it doesn’t have to be complicated.

Too many categories can actually be counterproductive by making it overly difficult to track and harder to stick to. There are also a growing number of personal budgeting apps and services that make it easier to track expenses.

SoFi Relay allows you to connect all your accounts to one mobile dashboard and track spending habits in real-time.

Step 3. Calculate Recurring Expenses and Discretionary Income

After tracking spending, it is then possible to plot out how much you have in recurring expenses each month — rent or mortgage, student loans, utilities, etc. — and how much discretionary income.

You can review expenses and see where there’s room to trim spending in some places or to put more money towards other things. Creating a realistic and straight-forward budget makes it more likely you can stick to it.

Those with a budget are more likely to spend less than their income — generally a good thing.

Step 4. Set Financial Goals

Then you may want to set financial goals. Setting goals is at the crux of making a personal budget. That’s what separates proactively sticking to a budget from just passively tracking spending after the fact.

What do you want to spend money on? What are your long-term goals, short-term goals, debt obligations? How do you want to prioritize different spending and savings goals?

Talking to your significant other about individual and joint financial goals, even planning a weekly or monthly budget meeting, can help with setting a budget as a couple or a family.

Step 5. Create Budget for Each Category

Once expenses, income, and goals, have been plotted out, you could write down your target budget in each general category for the month. Actually writing down goals increases the odds of achieving them. And then at the end of the month you can evaluate how you did and adjust as necessary.

Tips for Creating a Personal Budget You Can Stick To

•   Simplicity is key to a good personal budget. Yes, you can track dozens and dozens of expense categories and put every single tiny transaction in a different spending bucket, but too often people get overwhelmed by the number of expense categories they’re attempting to track. Keeping it simple cuts down on the time it takes and increases the odds of actually sticking to your budget.

•   The 50/30/20 rule means 50% of after-tax income goes towards essential expenses, 30% goes towards discretionary expenses, and 20% goes towards savings goals. Essential expenses are things like housing, utilities, food, childcare, and medical expenses. Discretionary spending is stuff like shopping, entertainment, and travel. Savings includes retirement funds, like a 401k, and things like emergency funds and long-term goals. While the 50/30/20 rule has been around for years, it was popularized in Elizabeth Warren’s book, All Your Worth: The Ultimate Lifetime Money Plan.

•   Within these broader guidelines, it’s important to adjust a personal budget based on your specific goals and expenses. For example, if essential expenses take up more than 50% of income, then it might be possible to look at spending in more specific categories and see if there are places to cut down on costs, like eating out at restaurants vs. spending your food budget at a grocery store. Or if discretionary spending is taking up more than 30% of post-tax income, then it might be possible to cut down on shopping or miscellaneous expenses.

•   Aligning goals with spending might make it easier to stick to a budget too, because it can make the budget more realistic and motivating. For example, if travel is important to you, then you might want to build your budget accordingly — spending less somewhere else. If you value getting out of credit card debt above all else, then build your budget accordingly — possibly setting aside more money towards that savings goals.

•   One of the biggest challenges people have is sticking with a personal budget after they make one. It can be important to stay on top of tracking your expenses even after you make a budget and re-evaluating the math regularly, like at the end of every month. If you’re struggling to meet your budget targets, then examine the numbers in more detail and adjust. Why are you struggling? Where is the extra money going? One last thing that can help is to spend only what you can see — ie. using cash or prepaid debit cards can limit your spending in a way credit cards can’t.

Common Mistakes in Personal Budgeting

Besides making a personal budget overly complicated or failing to accurately track expenses and align them with realistic goals, there are some other common mistakes when making a personal budget. Here are some common tips that might help you create a budget you can actually stick to:

•   Budget with after-tax income. This is known as net income, after you pay taxes to Uncle Sam. Gross income is the amount you make before paying taxes, but it doesn’t do much good to budget with money you don’t really have. And maybe don’t plan in a bonus or tax refund until you actually receive it.

•   Though you want to be relatively simple in planning your budget, with the 50/30/20 rule, you do want to be accurate in your recording. It’s easy for small expenses to add up — an Uber ride here, a coffee there — and the only way to really know what kind of money you have is to keep track of all the details. Using a budgeting and financial tracking app, like SoFi Relay, can make that easier.

•   Plan ahead, especially for the inevitable. Christmas is always Dec. 25. Taxes are always due on April 15. In your budgeting, you might want to save for the things you know are coming. As much consistency and planning as possible makes it easier to not get caught by surprise and end up blowing your whole budget on Christmas presents.

•   Set goals and be consistent. It’s one thing to track your spending, but without setting targets it’s hard to know if you’re really on track for what you want. If you don’t set long-term goals, then you’re more likely to spend small amounts of money on immediate gratification (new shoes, an extra glass of wine) and then not have that money later. Consider getting into the habit of paying yourself first — ie. including in your budget an amount designated for savings.

The Benefits of a Personal Budget

Maybe this all sounds like a lot of work and you’re not sure why you should bother. It might not seem clear what the goal of using a personal budget is, but tracking expenses and budgeting your spending have a number of benefits — all of which might be helpful in achieving your overall financial goals and all the things you want to do.

Budgeting can help control spending, especially unnecessary spending, by providing feedback. According to one study , consumers who received feedback on credit card receipts spent 9.6% less over the course of the trial than those who didn’t receive feedback.

This is especially important in the digital era. About 60% of all payments these days are made via non-cash methods, such as credit or debit cards. And research shows many consumers spend more with a credit card than they would with cash. They’ll even spend more on the same thing if they buy with a credit card vs. cash. It’s easy to lose track without budgeting. And that’s why, if you’re struggling to stick to a budget, operating with just cash can help.

Budgeting can also reveal opportunities to reduce expenses, either by highlighting where spending is higher than intended or where there might be a disconnect between your financial goals and financial reality.

Creating a budget can also help reduce financial stress by adding structure and clarity. According to a new study , more than half of all millennial respondents said that they were stressed “a lot” or “some” about their debt. A budget can help!

Tracking Your Spending With SoFi

If you need help with tracking your spending, opening an online bank account with SoFi may be a good option. You can easily see your weekly spending in the SoFi app to help you determine if you are on track with your budget.

Get started with SoFi Checking and Savings® and stay on track with your personal budget.

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

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SoFi members with Qualifying Deposits can earn 4.60% 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 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 4.60% 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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Credit card debt is an increasingly severe problem in the U.S. As Americans become more dependent on their small plastic cards, the amount of debt seems to just get bigger. And bigger.

According to Experian , the average American has a credit card balance is almost $6,200. Along with individual and household debt, the total amount of credit card debt in the U.S. has reached its highest level ever.

Whether debt has got you down, or you’re wanting to consolidate your existing credit cards and opt for ones that have the best perks and benefits for your circumstances, the question of canceling a credit card can be an extremely sticky one.

Many of us find ourselves wondering the best course of action to reduce credit card debt without affecting credit score, and the concern is valid.

While closing an account may play a role in getting a better handle on any existing debt, it’s important to understand ways to cancel a credit card in a way that doesn’t end up setting you back even more.

Ahead are some common steps that are typically needed to be taken in order to fully cancel a card, including sending a written confirmation and keeping a watchful eye on your credit report after you’ve put through a cancelation request.

Do You Really Need to Cancel?

It can be tempting to cancel cards or close accounts when things get overwhelming. But sometimes this may not be the best option.

In many cases, canceling a credit card can actually damage one’s credit score. In fact, canceled accounts may remain on a credit history for several years after the date they are closed. (With a card in negative standing, it will remain on your credit history for up to seven years, and a cancelled card in positive standing typically remains for 10 years.)

It’s important to take the time and analyze your motivations behind canceling an account before you actually do. After all, it may be smarter to simply cut up or hide a credit card rather than officially canceling.

As always, the decision is up to you, but it’s helpful to take these considerations into account before finalizing a decision that may have a long-lasting impact on your credit health and your long-term financial future.

Closing One Account at a Time

If you’ve decided that canceling your card is the best way to go for you, there are some things you may want to keep in mind before getting started.

First of all, when it comes to canceling credit cards, it’s important to remember that not all of them are created equal.

Depending on the exact reasons that led you to wanting or needing to cancel a card, you may want to consider a few things before pulling the trigger.

For example, if you’re thinking of canceling a card, you may want to consider canceling new ones instead of old ones to avoid impacting your credit score.

In the world of credit, older, more established credit in good standing is looked upon more favorably than new, and so you may want to keep this in mind when choosing which card you would like to cut.

On top of this, some credit cards may offer more appealing rewards programs for your lifestyle than others, so you may want to take stock of the perks that come with each card before deciding which one you want to stop using.

Paying Off or Transferring Your Balance

Depending on the total amount of credit you have available, closing a card account with a high credit limit could run the risk of damaging one’s credit score.

If you are carrying high balances on other cards or have active loans, this damage could be especially noticeable, since your debt-to-credit ratio (also called your credit utilization ratio) may affect your credit score. (Typically, you’d want to stay at 30% or below.)

If you’re planning on canceling a credit card, you will likely want to ensure that you’ve paid off any remaining balances on that account. If you fail to do so, you may end up having to pay interest charges on any remaining balance.

If you normally carry a balance from one month to another, you may need to take extra care to pay the full statement balance before canceling a card in order to make sure there is no money left in your balance and avoid future interest charges.

You may also want to take some time to brush up on your knowledge of credit card utilization, as it can be important to understand when it comes to canceling your credit cards smartly.

In order to lessen the negative impact of closing one of your credit card accounts, you may want to pay off all of the balances you carry on all of your cards first.

If you cancel a card while carrying zero balances on all your cards, your credit utilization rate should stay at zero, so even if you cancel a card and remove its balance, your rate shouldn’t be impacted.

Contacting a Credit Card Company

Once you’ve paid off your credit card balance, you will want to contact your credit card company to put through your request to close your account.

Sometimes, you will be able to cancel a credit card without making a phone call. It may be helpful to look up how to cancel a particular credit card online to see if your credit card company offers this option.

In most cases, you will want to contact your credit card company by phone. Usually, your customer service number will be printed on your credit card.

From there, you’d inform your credit card company that you are canceling your card. Keep in mind that some companies require you to speak to a customer service representative in order to complete this process, while others are more flexible.

It’s helpful to know that credit card representatives may be trained to try to convince you to keep your account open. Remember that you have the right to close your account at any time.

Before you hang up the phone, you may want to ask your representative for their name so that you can include it along with your written notice of cancelation.

Sending Written Confirmation

Once you’ve called and canceled your card, you may choose to mail a written confirmation letter to your credit card company. This can be a good option in order to protect yourself generally, but also in the event that the customer service representative made a mistake while putting through your card cancelation request.

In the letter, you would write things like your name, phone number, address, and account number as well as the details from the call you had with your credit card representative. If you got their name, you may want to also include it here.

You might choose to also state that you’d like your credit report to show that the account was closed at your request.

If you choose to mail a letter, consider sending it via certified mail so that you can ensure the company receives it, and make sure to keep a copy for your records.

Keeping an Eye on Your Credit Score

When canceling credit cards, patience is key. From the moment you begin the process to the moment your credit card is officially canceled, it may take one month or even longer, depending on the company.

After your account has officially been canceled, you may wish to keep tabs on your credit report to ensure that your credit card has in fact been listed as closed.

If, for some reason, the card is still marked as open, you may need to get back in touch with your credit card representatives and, possibly, repeat some or all steps in this process.

Know that it can sometimes take several weeks for changes to show up on your credit card report. For this reason, it’s good practice to get into the habit of checking your credit score regularly, whether or not you’ve recently closed a card.

Of course, if you did just cancel a card, you may want to wait a month or so to see whether or not closing your account impacted your credit score.

Keep in mind that, every twelve months, you can get one free copy of your credit report online through AnnualCreditReport.com . Some credit card companies may also offer apps that allow you to check your score for free.

Destroying Your Card

Once you’ve confirmed that your card is canceled, then you’re almost done with the process.

If you’ve ensured that the account is in fact closed, then you can officially destroy your card in the manner of your choosing.

Though cutting up a credit card may provide a feeling of freedom and catharsis, it’s important to be careful to choose a method that makes sure the information on your card is not recoverable.

If you have access to a shredder, shredding your card may be the most efficient and secure way of destroying it.

If you’re using scissors, make sure that you properly cut up all the identifying pieces of information on the card, including your signature, the expiration date, CVV number, and the credit card number itself.

From there, ensure you properly dispose of the shards. For an added layer of security, consider throwing them away in more than one garbage can.

Maintaining a Healthy Relationship with Credit

Despite the array of credit card-related woes many Americans experience, it is possible to leverage credit cards in a healthy and productive way.

Depending on your needs and financial circumstances, finding ways to use credit to your advantage is a great way to ensure that you don’t wind up with more debt than you can handle.

A credit card cancelation can often offer an opportunity to take stock of the way you’re using credit, and establish better practices moving forward.

Once you’ve familiarized yourself with your credit utilization, and taken a look at the rewards you are currently signed up for, you may choose to go about things differently in the future.

One of the best ways to help you keep tabs on your credit is to build a practice of checking your balance and your credit score regularly.

This may look like downloading an app that lets you see all of your savings, checking, and credit card accounts in one place, or just getting into the practice of logging into all of your account on a regular basis.

Whichever way you choose to go about it, there are several strategies you can try out that may help you to keep your credit in check.

From leveraging balance transfers to using the snowball method to help pay off any debt balances you currently have, there are ways to help you get your credit card debt and finances under control—regardless of whether or not you decide to get rid of some of that seemingly precious plastic.

Looking for a way to manage credit card debt? With SoFi Personal Loans, you can consolidate with a potentially lower interest rate.

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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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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You might have heard the phrase “there’s no such thing as free money.” You may also have heard that “money doesn’t grow on trees,” but we’re pretty sure money is still made of paper. While cash back from your credit card isn’t exactly free money, using credit wisely can be beneficial.

How Does a Cash Back Perk Work?

Cash back is the rebate of the credit card world. The money that you get back, depending on the card and the deal you’ve gotten, may come in the form of a check, statement credit, or deposit with your financial institution.

With points, you might end up with $10 off your next Starbucks purchase; but you might actually prefer The Coffee Bean and Tea Leaf, so a Starbucks card may hold no value for you. With a cash-back reward, you typically get to decide how you want to spend the money: your mortgage, your lunch, your boyfriend’s birthday present, or even your credit card debt.

While some credit card companies offer a flat cash-back rate, other cards offer some combination of a flat cash back rate, and a specialized cash back rate for certain categories (often ones you can choose).

Card holders may be eligible to receive varying amounts—typically a percentage of spending in a certain category, e.g., dining, hospitality, airlines, or groceries.

But choosing a cash-back card with the best rewards isn’t so simple. There are many different kinds of cash-back rewards which may be available.

What’s Available

•   Cash back on a monthly, quarterly, or annual basis.

•   The cash back could be for any kind of purchase or for particular purchases in certain categories like dining, gas, groceries, etc. Sometimes it might be a combination of these two with higher rates of return on certain categories.

•   Timed spending bonuses: If you spend a certain amount within a certain prescribed time you may be eligible for even more cash back than the base amount.

•   Certain cards might also offer non-cash benefits like flight upgrades or extended warranties on purchases made with that card.

Why Do Cash Back Rewards Even Exist?

How is this even possible? Getting paid to spend money sounds like the kind of job you invented when you were twelve—it couldn’t possibly be real.

It turns out that the money you’re getting back comes from some very real places. Of course, credit card companies will try to get you sign up with them instead of their competitors. It’s dog-eat-dog out there. Credit card companies have since come up with a variety of tools to attract customers, and cash back is a common reward.

But where does the money come from? If you’ve ever been asked to fulfill a credit card minimum purchase amount you know where it comes from. The $10 minimum at the cafe is not there entirely to keep you adding extra shots to your morning latte (although you’re totally going to anyway).

The Pros

With so many kinds of credit cards out there, why would you consider a cash-back card?

•   Credit cards with cash-back rewards might actually help you earn more money than a low-interest-rate checking account with a debit card. Some checking account interest rates can often be less than 1% APY. Getting 5%—or more—cash back on your purchases is a lofty difference. Credit card spending, though, is still spending—not saving—an important difference to keep in mind when making purchases. Buying within a budget is still an important consideration.

•   Some cash-back cards offer sign-up bonuses or bonuses for spending over a certain amount or in a certain categories. When used responsibly, these types of bonuses could be used for special purchases a buyer might not have been able to afford otherwise. Two tickets to Paris please!

•   Consumers with credit scores of 740 and higher are typically the ones who qualify for cards with the highest cash-back rewards, which could be up to 6% when purchasing items from designated categories. Yet another reason to pat yourself on the back for your high credit score.

The Cons

Okay, so maybe some of the maxims are correct. Nothing in life is free and money doesn’t grow on trees. Like anything good in life, there can be a downside (we’re looking at you, cupcakes).

•   Many cash-back programs actually come with a maximum on rewards. While it seems that the more you spend the more you get, eventually you might just be spending more.

•   Some cash-back credit cards have annual fees. While this may seem small compared to the money you’ll be getting back, it might be worth it to do the math and make sure the pros outweigh the cons before you are convinced that this card is worth your spending power. Some cards with hefty fees reward the cardholders with perks beyond the cash-back bonus.

•   Like any other credit card, if the balance due is not paid on time, there are typically interest charges and fees added to the principal balance. That amount may negate any cash-back rewards you earned during that statement cycle.

•   Perhaps the biggest con: Choosing and managing a credit card can be complicated. Lots of homework, (i.e., research online, with your bank, has to go into this one before you may feel ready to commit to this endeavor. With occasional fees and sometimes hard-to-acquire gains, your research is key to making sure you find one that works for your spending habits. Cash-back credit cards can pay off, but it might take some digging to find the right one.

Unfortunately, at the end of the day, there’s no free lunch. Credit card companies are in the business of making money and they rely on your debt to fund their businesses.

Using credit wisely—and reaping all the rewards—typically means paying the balance due in full each billing cycle. Getting to that point can take some time, though.

See how using cash back from a SoFi Credit Card can help you pay off debt and boost your investments.

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New and existing Checking and Savings members who have not previously enrolled in direct deposit with SoFi are eligible to earn a cash bonus when they set up direct deposits of at least $1,000 over a consecutive 25-day period. Cash bonus will be based on the total amount of direct deposit. The Program will be available through 12/31/23. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC.

SoFi members with direct deposit can earn up to 4.00% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 3/17/2023. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet

¹See Rewards Details at SoFi.com/card/rewards.

SoFi cardholders earn 2% unlimited cash back rewards when redeemed to save, invest, a statement credit, or pay down eligible SoFi debt.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Remember your kids as little ones, riding on their tricycles and grabbing fistfuls of Cheerios? Now they are soon off to college, and you might be feeling bittersweet. Your children can finally do their own laundry (hallelujah) and you get some much needed quiet time around the house.

Sending kids to college is not just a transition for your children, it’s also a big step in parenthood for you. You may be sending your first child to college, but what if you have another child headed off to educational pursuits not too far behind?

If you have two kids going to college at the same time, the double whammy can hurt right in the wallet. As you navigate college dorms, tuition, and how to make sure your kids know where all of their classes are, you might have a few questions on how to support them over the next four years. We’ve compiled a few tips that could help guide you through sending your kids to college.

Financing Your Kids’ Education the Debt-Free Way

If you are putting multiple kids through college, then you know how much tuition and other costs can beat down your budget. You might want to start by talking with your spouse or someone you trust about finding the cash to finance your children’s education.

There are several ways to get creative with saving for your child’s college tuition that might help you avoid going into massive debt.

Scholarships can also play a role in financing your children’s education. They can be especially helpful since you won’t need to pay them back after your child graduates, and they can be used to directly fund tuition. Scholarship hunting can be a daunting task though.

Your mini-mes are most likely overwhelmed with selecting their university, studying for college entrance exams, and finishing out their high school senior year.

You could band together on scholarship applications by helping them find scholarships they are eligible for and compile a list. Ultimately, it’s up to your child to make the effort to complete the requirements. Encouragement is key here!

A Borrower’s Way to Pay

If paying for tuition out-of-pocket is out of reach, it’s recommended to first apply for federal financial aid by filling out the Free Application for Federal Student Aid (FAFSA®) . You may be faced with several options here, including Federal Direct Loans, which can be either subsidized or unsubsidized, PLUS Loans work-study, or grants.

Federal Direct Subsidized and Unsubsidized loans are offered to students who are enrolled at least half-time in school. Each of your kids will need to fill out their own FAFSA—parents cannot take out these types of loans on behalf of their children. That’s where the Parent PLUS, or Direct PLUS, loan comes into play.

The Direct PLUS Loan allows parents of undergraduate students to take out a loan to pay for education expenses not covered by other financial aid. It’s helpful to have a strong credit history, as anything adversely affecting your credit could also affect your eligibility to receive a Direct PLUS Loan.

Are You Cashing In on Ramen and Mac ‘n’ Cheese?

Your kids might not be accustomed to fending for themselves when it comes to food. If you’re concerned about your child’s eating habits while in college, you could make clear what you will or will not be paying for in groceries.

If you want to help out your kiddos, you could send them food items to get them through the week. You might want to check with the college residence hall coordinator first about any rules on using a mini fridge. Or you could stick with items that can be stored in a plastic bin or inside a closet to make things easy.

Let Your Kids Spread Their Financial Wings

Tuition continues to rise, and so does the cost of living. Tuition and fees for full-time, in-state students attending four-year public colleges and universities saw a 2.6% increase between the 2018-19 academic year and 2019-20.

How will your children support themselves in school? There are several ways, and it might be advantageous to have a conversation with your kids early on about how they can take care of themselves financially.

Some universities offer work-study programs, which give student workers the opportunity to work a job that fits within their class schedule. Students would need to fill out the FAFSA to determine eligibility for federal work-study.

If your child qualifies, it will be noted in their financial aid award. If your child is awarded work-study, they will still be responsible for securing a job that fits within the program.

Your kids could also explore part-time opportunities off-campus, such as waiting tables or picking up a gig as a nanny.

Another alternative, if you have the ability, is to support your children financially. You could determine an appropriate amount to keep your child on the right path or consider offering cash incentives for good grades. If you have the funds to help throughout the year, this could help offset student loan debt.

You Come First

Sending your kids to college can be a priority, but you come first. You might want to prioritize your money goals first, such as retirement. You don’t want to be caught dumping all of your potential retirement savings into tuition if you are short on your retirement goals.

You could make a plan and ask yourself how much you want to contribute each month to retirement, regardless of other pressing expenses. Tuition can be covered in a variety of ways, but borrowing from your retirement stash or neglecting it could have an impact on your retirement goals.

They’re Off to College, but They Still Need You

Just because you successfully guided your offspring to college doesn’t mean that they don’t need you. You can probably expect to answer text messages (because we all know actual phone calls are a thing of the past with Gen Z’s) on how to make a pot of coffee or what that genie lamp light means on the dashboard of their car (hint: check your engine oil!). Remember, they may still lean on you for support as they transition into adulthood.

Then There’s the Whole Paying It Back Thing

Four years are going to fly by. When your kids are well on their way to their post-grad careers, you could check out how refinancing their student loans might help. Refinancing student loans with SoFi can create one monthly payment.

Your child could even reduce their interest rate when they refinance, depending on the terms of their existing financing. If they have federal loans, know that refinancing means they’ll no longer qualify for federal protections or repayment programs.

Learn more about student loan refinancing with SoFi.

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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.

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.

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOSL19028

Read more