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Having roommates can be a great way to reduce your monthly living expenses. It can also mean living in a bigger apartment or a nicer area than you could otherwise afford.

But negotiating finances with friends (or strangers) also comes with potential pitfalls, especially if you have roommates who don’t always pay what they owe, when they owe it.

Luckily, whether you already won the roommate lottery or are just trying to make the best of living with someone you barely know, figuring out how to share roommate expenses doesn’t have to be hard.

What follows are tips for splitting expenses with roommates so that everyone feels like things are fair in your household.

Managing Money With Roommates

These 25 strategies can help ensure that monthly expenses get divvied up fairly — and everyone is on the same page from the moment you first move in together.

1. Making Decisions Together

Whether you and a friend are moving in together for the first time or you already live together and you’re bringing in someone new, it can be helpful if you decide as a group how you’re going to handle finances. You might consider having a meeting right away to establish how you’ll be splitting costs.

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2. Making a List of What You Both Own

Before moving in together, you and your roommates may want to make a list of what you both already own and can bring to the apartment for communal use. For example, if your roommate has a stand mixer and you have a nice collection of baking pans, that can be a useful combination. If you can contribute a couch, your roommate might be able to find a kitchen table.

3. Figuring Out How You’ll Split Monthly Expenses

Many roommates find that sharing a household might mean sharing more than just rent and utility bills. You may want to consider sitting down with your roomies to figure out what monthly expenses beyond rent and utilities will be shared and how you will split up these costs. This may include cable, wifi, and any subscription services like video streaming.

4. Splitting Costs Evenly…

Since it can be difficult to determine who used a certain amount of electricity or watched the most Netflix, it could make sense to simply split costs down the middle (or evenly among roommates). That can save a lot of time and energy and could be the most fair arrangement.

5. …Or Splitting By Percentage of Use

If you or your roommate uses certain utilities or services significantly more than other members of the household, you might want to consider splitting by percentage of use. For instance, perhaps your roommate is a photographer and is always plugging in lights to take photos, and maybe you’re only home four days a week. A percentage is more complicated, but could be more fair.

Recommended: Strategies to Lower Your Energy Bill When Working From Home

6. Deciding Who Will Pay the Bills

To streamline bill paying (and make sure no bills end up falling through the cracks), it can be wise to put one person in charge of actually paying the bills. You may want to designate that person from the get-go, and then everyone else can send this person the money before the bills are due every month.

7. Keeping a Written Document of Expenses

Whether you split each cost evenly or by a percentage of use, it can make sense to write down each person’s share of expenses and what they can roughly expect to pay each month — so no one is blindsided when it comes time to pay the bills.

8. Figuring Out How to Divide Household Supplies

Once you have the details of the non-negotiable bills nailed down, you might next look at how you want to manage the cost of household supplies.

For example, while some roommates don’t mind toting their own roll of toilet paper into the bathroom, many find that it is easier and more economical to split the cost of a bulk package.

9. Deciding Whether to Share Groceries

Even if you have different tastes in food and purchase the most of your groceries separately, you may find that sharing basics, like gallons of milk, coffee, and juice, even bags of rice or quinoa, may be more economical. If you cook meals together, you may want to go in on even more weekly groceries to help save money on food.

10. Keeping Some Purchases Separate

Just because you plan to share a couch doesn’t mean you need to share the bill. While it may seem sensible to split the cost of furnishings and electronics for your rental, you may also want to consider what will happen when your lease is up.

Unless you and your roommates plan on selling everything when the time comes to move out (and splitting the proceeds), paying for things separately can make things simpler in the end.

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11. Establishing a Budget

If you and your roommate have agreed to buy groceries or other items together, you may also want to discuss a monthly budget before you start making household purchases.

You might be fine with generic OJ and laundry detergent, while your roommate wants to spring for the expensive name-brand stuff. Getting on the same page about how much you’ll spend each month on communal items can help avoid money squabbles later.

12. Finding an Easy Way to Track Expenses

You might give one roommate the responsibility for keeping track of monthly expenses and how much each roommate owes, as well as logging who paid what and when. They could do this on a spreadsheet or through an app. That way, each person will know exactly how much they owe, as well as what they’ve already paid.

13. Deciding How You Will Pay Each Other

Gone are the days of writing checks or going to the ATM to reimburse roommates for rent and other expenses. With all the peer-to-peer money transfer options now available, you can quickly and easily pay each other without cash.

You may want to sit down with your roommates and decide which app you’re going to utilize, make sure everyone has it downloaded to their phones, and then use it to reimburse each other.

14. Drafting a Roommate Agreement

When you first move in with a roommate, or when another roommate is moving in, you might want to create a roommate agreement that is separate from the rental contract you have with your landlord.

The agreement could spell out all the financials, such as how you will split costs, as well as some basic ground rules, such as parking and having guests over.

15. Setting Consequences for Failure to Pay Your Share

Nobody wants to be the bad guy, but if a roommate isn’t paying their share of expenses, you may want to make sure that there are some consequences.

For instance, you could agree (and even include this in your “roommate agreement”) that if a roommate doesn’t pay the bills on time once, they would take on all the household chores until they can pay, and if they fail to pay a second time, they would need to to leave the rental.

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16. Making Late Payers Cover Late Fees

You may want to make it clear that If one roommate is late with their payment and, as a result, triggers a late fee or penalty, then that person would be responsible for paying those additional charges. (You may also want to make this rule clear in your “roommate agreement.”)

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17. Discussing Responsibility for Damage

It can be a good idea to also discuss who will be responsible for covering the cost of any unexpected expenses, such as damage to your rental.

You might agree (and put in your agreement), for example, that whoever is responsible for any damages must pay for them. That way, if your roommate’s dog chews up the door frame, it would be up to them to pay for the repairs.

18. Splitting the Security Deposit

It often makes sense to have all the roommates contribute to the security deposit. That way, they will all be equally invested in keeping the place nice so that they get their portion of it back upon moving out.

19. Sharing Expenses for Get-Togethers

Hosting get-togethers like BBQs and Super Bowl parties can be a great bonding experience for roommates and their friends. When having one of these events, all the roommates can chip in so that the celebration is fun, as well as affordable.


💡 Quick Tip: When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.

20. Having Monthly Meetings

Roommates that don’t communicate effectively can become resentful and end up disliking each other. By having monthly meetings to discuss finances and other issues, everyone has a chance to air their grievances and figure out solutions for problems going forward.

21. Avoiding Passive-Aggressive Notes

It can be tough to live with roommates and deal with all their quirks, especially when it comes to money. But even if someone is late paying a bill or otherwise not doing their fair share, posting notes can end up creating hostility.

You may be able to resolve the situation more effectively by being direct and honest with each other either in a one-on-one or monthly roommate meeting.

22. Not Laying Out Money for Bills Until Everyone Has Given Their Portion

If you are responsible for paying the bills, you may find that it’s easier to pay them with your money and then collect from your roommates later. However, this can put you in a bad position if your roommates take their time in paying you back.

Instead, you might want to set a rule that you will only pay the bills once your roommates have given you their share.

23. Discussing Ways to Save Money

If utility bills or other shared expenses are on the high side, you may want to sit down with your roommates and talk about some ways to cut expenses and save money. You might decide, for example, to invest in energy-saving light bulbs you can turn off using an app or get rid of one or two streaming services.

24. Finding Coupons Together

You can make saving money a group activity with your roommates. Every week, before you go shopping, you can all look for coupons to use at the store on sites like Coupons.com and Ibotta.

25. Choosing Responsible Roommates

When vetting potential roommates, it can be helpful to discuss some of the expense-sharing ideas listed here. If they are open and amenable to sharing expenses equitably, you should have very few issues when it comes to splitting costs.

You may also want to make sure any potential roomies have a steady income, good referrals, and a solid credit score, as this can indicate they tend to be responsible with money.

The Takeaway

While roommates come with many benefits, sharing a space — and expenses — with other people isn’t always easy.

Being open about finances and setting some ground rules from the get-go, however, can help ensure that everyone contributes their fair share and all your bills get paid on time.

Using technology and smart money management resources can also make it easier to track and share expenses with your roommates.

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FAQ

How should roommates split expenses?

Roommates should split expenses fairly and transparently. Start by creating a budget that includes rent, utilities, groceries, and other shared costs. Next, you’ll want to discuss and agree on a method for splitting these expenses, such as equally or proportionally based on income or room size. You might use a shared spreadsheet or app to track payments and ensure everyone is contributing their fair share.

What should you not share with roommates?

While living with roommates, it’s important to set boundaries. You may want to avoid sharing personal items like clothing, toiletries, and electronics to prevent hygiene issues and misunderstandings. It’s also a good idea to keep financial information, such as bank details and passwords, private, especially if you’re living with someone you don’t know well. Establishing some boundaries and being clear on what is — and is not— communal can help maintain a respectful and comfortable living environment.

How do you divide expenses when living together?

To divide expenses when living together, you’ll want to first list all shared costs, including rent, utilities, groceries, and internet. The next step is to talk about and agree on a way to split these expenses. You might divide them up 50/50 or proportionally based on income. Or, you might designate specific expenses for each person. Whatever you decide, it’s a good idea to set a regular time (say monthly or quarterly) to review your monthly budget and make any needed adjustments.

About the author

Julia Califano

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

SOBNK-Q225-051

Coupons have been around for a while and for good reason: They can help you save significant cash on groceries, household items, clothing, and many other products. These days, you can find coupons in the newspaper, inside stores, online, and via retailer and coupon apps. Staying organized and regularly checking these sources can help ensure a steady supply of coupons, and enable consistent savings on purchases.

If you’re ready to save some dough, here are simple tips on finding, using, and maximizing your money with coupons.

Where to Find Coupons

A great way to begin couponing is to scan your kitchen pantry and bathroom cabinet and make a list of the products and brands that you purchase regularly. You can then start looking specifically for coupons for as many of those items as you can. Here are some key places to look.

Newspapers

Even in today’s digital world, it’s still worthwhile to go old-school and check out the Sunday newspaper coupon inserts.

What makes Sunday newspapers such a rich source of savings is the fact that they offer a wide variety of different types of coupons, including store coupons (which are issued by the store and can only be used at that particular retailer) and manufacturers’ coupons (which are issued by the company that makes the product, and can be used at any retailer that carries the product and accepts coupons).

If this week’s paper has a lot of good coupons, consider buying extra copies. Dollar stores often sell papers at a discount and can be a good place to stock up. But even if you have to pay full price, it could still be worth it.

Also keep in mind that some towns and cities publish free local newspapers that carry coupon inserts. Often, these publications get delivered or mailed right to your home.

Magazines

Magazines are still around, and can be a great source of coupons, particularly manufacturer coupons. You may want to flip through some of the magazines stocked at the checkout aisle next time you’re waiting in line at the supermarket.

Some women’s magazines even put together an index of all the coupons that each issue includes.

To up the odds of finding coupons for products you enjoy, consider browsing magazines that reflect your lifestyle.

Based on what you find, you might decide that getting a subscription (which is usually low cost, and a better deal than buying single issues) could be worthwhile.

Websites

If clipping isn’t your cup of tea, you can print coupons from websites that aggregate coupons, such as coupons.com , retailmenot , and valpak. These sites make it easy to search for and find deals.

Another online resource is P&G Everyday . This site offers printable coupons exclusively for Procter & Gamble brands (e.g., Crest, Pampers, Tide). You will need to create an account before you can print coupons.

You may also want to look at the list of items you typically stock in your home and head to the manufacturers’ websites.

Many companies have coupons you can print from their site. Some also reward you with coupons if you sign up for their e-newsletter.

Store sites are also worth checking out. Many grocery and drug store websites offer both manufacturer and store-specific coupons.

You may even be able to download these coupons directly to your store loyalty card, and redeem them simply by presenting your store card at checkout or possibly when ordering online.

Some department store sites also offer printable coupons and savings passes you can use that same day in store, and you may also be able to sign up to have coupons emailed to you directly.

Inside Stores

Many grocery stores, drug stores and supercenters provide coupons in circulars and flyers available inside the store. These can be a great place to find coupons that you’ll actually use.

You can also often find printable coupons in kiosks situated inside stores, often near the entrance. In some cases, after you’ve paid for your items, you may receive coupons (printed separately or at the bottom of your receipt) for items that you purchased that you can use for a future visit.

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Coupon Apps

Some stores, such as Target, have their own app that you can download to your phone and then show at checkout for discounts on items you are buying that day. These offers can often be combined with manufacturer and store coupons to create really good deals.

There are also cashback apps, such as Ibotta and Checkout51, which allow you to earn cash back on many of the products you buy. All you have to do is link your loyalty card to the app or snap a picture of your receipts. Once you earn a certain amount (such as $20), you can redeem your cash back.

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Keeping Coupons Organized

Coupons aren’t worth anything if you don’t have them on you or you can’t find them when you need them.

If you use paper coupons, a good first step is to find a way to contain the chaos, such as using zip-lock bags, a binder, a coupon wallet, a recipe box, or any other storage container. The idea is to have a single landing spot for all coupons. If possible, it’s wise to file them away as you get them, so you don’t have a big mess to deal with all at once.

You may also want to come up with a filing system, such as grouping coupons by grocery category (e..g, dairy, produce, frozen foods), aisle, or expiration date.

It’s also a good idea to go through and edit your collection periodically. Stores typically don’t take expired coupons, so it’s best not to let them eat up space in your filing system. Consider setting a certain day each week or month to go through and purge.

If you use coupons via an app or other electronic means, it’s wise to have the app downloaded and open when you are ready to shop to make the experience as smooth as possible.

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Maximizing Your Coupon Savings

Shaving off just a little here and a little there can be nice, but may not make a major change in your spending habits. The real savings that comes with couponing is when you combine coupons with other coupons, as well as other sales offers.

Here are some tricks:

Matching Coupons to Sales

In order to really save money with coupons, you ideally only want to use them on sale items that you typically buy won’t blow your budget.

You can hold onto a coupon until the item goes on sale, or if you see that a store is having a sale on something you buy regularly, you can then check the store circular, manufacturer’s websites, or your app to see if you can find a manufacturer’s coupon for it.


💡 Quick Tip: When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.

Stacking Coupons

This means using more than one coupon for the same item. For example, you can significantly increase your savings by combining a manufacturer coupon with a store coupon for the same item. You might be able to then amp up savings even more by using a cashback app.

Keep in mind that not all stores allow coupon stacking. You may want to review each store’s coupon policy to see where you can employ this trick.

Using Competitor’s Coupons

Lots of stores accept competitor coupons. It’s a good idea to find out which ones in your area do, and then work those coupons and sales to your advantage. When in doubt, it never hurts to ask.

The Takeaway

Using coupons can be a great way to save money on the products you love, and help keep your everyday spending in line with your budget. You can often find useful coupons in Sunday newspaper circulars, coupon websites, retailer apps, as well as store and manufacturers’ websites. Coupon apps can also help you find coupons for your favorite products quickly.

To really rack up savings with couponing, it pays to go beyond just using a coupon here and there. Consider combining a manufacturer’s coupon with a store coupon, a sale, and a cashback or coupon app.

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

FAQ

How Do Beginners Start Couponing?

It’s relatively easy to start couponing. The first step is to gather coupons from Sunday newspaper inserts, store flyers, and online sources like retail and couponing sites. It’s also a good idea to download store apps, where you can often find digital coupons.

Next, choose a few stores with good coupon policies and start small by matching coupons to sale items. As you get more comfortable, you can expand your sources and strategies. You might even consider joining a couponing community for more tips and support.

What Is the Trick to Extreme Couponing?

Extreme couponing involves maximizing savings through planning and resourcefulness. The key is to combine multiple coupons with sales, rebates, and store promotions — a practice known as “stacking” — to maximize discounts. Extreme couponers also tend to stockpile essentials when they are at their lowest prices. Being flexible and patient is crucial, as the best deals generally don’t come every week.

How Do Couponers Get So Many Coupons?

Couponers accumulate a large number of coupons through various sources. They often subscribe to Sunday newspapers for inserts, sign up for store loyalty programs, and follow brands on social media for exclusive offers. Many also join couponing websites and apps that provide printable and digital coupons. In addition, some couponers participate in coupon swaps and trade with others to diversify their collection. Consistency and dedication are key to building a substantial coupon stash.

About the author

Kylie Ora Lobell

Kylie Ora Lobell is a personal finance writer who covers topics such as credit cards, loans, investing, and budgeting. She has worked for major brands such as Mastercard and Visa, and her work has been featured by MoneyGeek, Slickdeals, TaxAct, and LegalZoom. Read full bio.

SOBNK-Q225-045

From record-high inflation to interest rate hikes from the Federal Reserve, the last several years have been plagued with financial unrest.

That may explain why only 28% of U.S. adults say they have enough emergency savings to cover at least six months’ worth of expenses, according to Bankrate’s 2025 Annual Emergency Savings Report.

For many Americans, this lack of reserves is a source of stress. The Bankrate survey found that a full 59% of U.S. adults are uncomfortable with the amount of emergency savings they currently have.

HR leaders have taken note. In fact, a growing number of employers now offer ways to help employees bolster their backup savings as part of their overall financial wellness benefits. If you’re interested in being one of them, read on. What follows are six moves that can help your organization build an emergency auto savings program that works best for your employees and your company.

1. Evaluate Employee Needs

The pandemic demonstrated that a huge percentage of employees in all salary ranges weren’t financially prepared for what was to become one of the most unprecedented periods of history.

This lack of preparedness added to an already stressful situation (working remotely, worries about health, child and elderly care needs, et cetera). Even with the pandemic well behind us, however, employees are still on edge. SoFi at Work’s Future of Workplace Financial Well-Being 2024 study found that 86% of U.S. workers are facing at least one source of major financial stress. What’s more, employees are spending over eight hours per week while at work dealing with issues related to their financial situation (that adds up to more than 10 weeks of work each year).

Adding an emergency savings plan can help employees alleviate a significant amount of financial stress and provide a solution to the lack of short-term savings. This might be especially appealing for younger members of your workforce who may have fewer resources to rely on than older employees.

To determine how effective an auto savings program will be for each segment of your staff, you might think about creating a preliminary survey of employees to see what they feel they need most from a short-term savings plan.

Consider the following questions:

•   Will you participate or do you feel there are already too many demands on your paycheck?

•   Are you more likely to join if the company offers a match or initial contribution?

•   Will you gravitate to emergency savings in lieu of long-term retirement savings?

•   Do more accessible after-tax savings in a 401(k) account that can be used for emergencies appeal to you?

•   Do you think automatic enrollment in an emergency saving plan could help you feel more financially secure?

2. Check Out the Competition

A good next step is to determine what competitors are offering their existing talent and new recruits in the short-term financial wellness arena. For example, is an emergency savings program common among companies competing for your talent? Do most competitors offer a match or contribution to get employees, especially new hires, started?

Use the results of this data and the survey of employees to devise the most effective program for your employees (see below) and, importantly, to help convince team members and management why an automated emergency savings program is right for your company’s comprehensive compensation and benefits package.

3. Determine the Impact of an Emergency Savings Program on Your Total Rewards Strategy

In recent years, you’ve likely had to shift or alter some of the components of your total rewards strategy, including compensation, benefits, flexibility, performance recognition, and career development. In light of those changes, where does an emergency auto savings benefit fit into the new reality? How does it fit with your HR financial wellness goals and business strategy?

The answers are likely to be positive. It’s hard to imagine a total rewards strategy that doesn’t have a place for emergency auto savings, especially in light of recent times.

That said, it’s important that you structure and implement this benefit in a way that not only fills a need but enhances your overall strategy to retain, attract, and maximize talent. Be aware that when you add an important benefit such as emergency savings, you may shift the balance in your employees’ financial well-being focus from long-term to short-term goals.

As you implement the plan, you may need to realign your employee value proposition and total rewards strategy to encompass current and immediate needs while redoubling your efforts to educate and motivate employees on long-term financial wellness goals such as saving for retirement and healthcare costs.

4. Select the Solution and Roll Out Best for Your Goals

At SoFi at Work, we’ve found that selecting the right solution is critical to the utilization and effectiveness of every benefit in your total rewards strategy. Following the McKinsey framework can work well for all types of benefit rollouts, including emergency auto savings programs. These four principles can also help ensure benefit rollouts are integrated into your business strategy.

Choose Partners Wisely

As of 2024, there are two ways to set up ESAs for employees: One is to link these accounts to an existing 401(k), where the ESA shares the same platform as the 401(k) plan. Another option is to set up an ESA with an outside bank or financial institution.

For many employers, an out-of-plan solution is appealing because these accounts are often hosted through banking platforms that can offer easier access to the funds for employees, while reducing employer responsibility and involvement. If you go this route, you’ll want to look for a credible partner that can provide expert support and advice to a wide variety of employees with varying financial needs. Consider partnering with a bank, credit union, or other financial institution that offers a low-cost, easy-to-use platform, like SoFi At Work’s Emergency Vault.

Focus on What’s Feasible

Make the program feasible to launch, which will help you make meaningful progress for employees in the short term as you lay down the foundation for long-term initiatives. This is key with emergency savings rollouts because by helping to relieve some short-term financial stress, you allow employees to focus on long-term goals sooner rather than later.

Make It Sustainable

Sustainable programs are able to flex with your business over time and during uncertain business conditions. Can your emergency auto-save program survive current or future political and economic changes? To answer this, your company may need to weigh questions such as: Do the engagement benefits of a match outweigh the cost of sustaining the program? Is the plan flexible enough to undergo changes in the economy, your workforce, and your business strategy over time?

Get Personal

Enable personalization where you can. This way, employees are likely to feel emergency auto savings can help meet their unique needs. Offering a range of amounts that employees can automatically withdraw is the first step toward personalization. Providing calculators and other educational tools that help employees determine how much they need to save and how much they can afford to save is another personalization tactic.

Recommended: How Much Should Your Employees Have in Emergency Savings?

5. Use Communication Effectively

Top-notch communication techniques can help you drive participation and, importantly, change savings behavior in your workforce.

When asking for participation and engagement, lead with empathy. If there’s one thing the pandemic should have taught us, it’s that one size doesn’t fit all when it comes to supporting employees, who have had many different experiences and have many different needs.

Coordinating communications about the importance of emergency savings with other financial well-being education programs can help get the word out in an immediate and holistic way.

Clarity is Key

Accompany your rollout with extremely clear communications telling employees exactly what they can expect, including:

•   How payroll deduction works

•   How much — or how little — employees can save in the account

•   Calculators, tools, and education efforts designed to help employees determine what they should/can save

•   Thorough explanation of any company match offered — how much, how often, and portability

•   Which bank, credit union, or other financial institution will run the account

•   How much, if any, interest will be earned

•   How withdrawals can be made

•   The fact that withdrawals can be made for any reason, no questions asked, with no penalties or tax consequences

•   A reminder that if employees leave the company, they may easily transfer their contributions to the account to their own savings account

Meet Employees Where They Are

Make sure effective and thorough communications are available across platforms so you can keep up with your far-flung workforce. Simply posting on the company website and hoping people sign up likely won’t work, especially for remote workers who may be feeling disconnected from corporate communications.

In all communications, make sure you take a multi-platform, consumer-grade, mobile-native technology approach.

6. Take Ongoing Pulse Checks

To determine engagement and any ongoing tweaks that need to be made, you’ll want to establish metrics to measure success at least quarterly. Then you’ll want to benchmark those results against your competitors and national averages to add an “outside-in” perspective.

Solicit employee input on the success of the program in three ways — employee surveys, focus groups with critical talent segments, and analysis of recent departing employees and job candidates who declined an offer.

Metrics can also help you track how well the benefit is supporting business goals. For instance, a customer-service-oriented company may find a higher focus among phone reps and fewer errors when staff is less burdened with financial worries.

The Takeaway

These six concepts are designed to help you build a successful, engaging, and effective employer-sponsored emergency savings plan. By reducing employee stress and increasing productivity and loyalty, you’ll help promote financial well-being in your workforce as well as enhance your company’s total rewards strategy and overall business objectives.

If you’re interested in setting up an emergency savings program, SoFi at Work can help. We provide an array of benefit platforms and education resources that can enhance financial wellness throughout your workforce.

Photo credit: iStock/alvarez

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SOAW-Q225-005

A medical fellowship after residency can provide the training you need for a successful career in your preferred specialty. But it also probably means you’ll make far less for a period of one to three years.

Do you get paid during a fellowship? Yes, you do. Primary care medical fellows earn an average salary of $75,943 per year. While that’s above the national annual median salary of $59,228, it doesn’t compare to the salary of a full-time family medicine physician of $273,000.

You may need to set and stick to a budget during your fellowship training period. Read on for some strategies that can help.

The Difference Between Residency and Fellowship

Residency usually takes place right after medical school and is designed to give doctors the experience needed to serve patients. A fellowship follows residency and is designed to train fellows in a narrower specialty.

While some fellows may earn more than residents (residents earn an average of $67,400 per year), their salary is still significantly lower than that for most working physicians. Usually, medical fellows have to pay for the majority of their living expenses, including housing and at least some meals.

Additionally, most fellows face a high student loan burden as well, with 73% of medical school graduates having some form of education debt. The average student loan debt of medical school graduates, including undergraduate loans, is $264,519.

With a relatively low salary and a high debt burden, being smart with money during fellowship years can be a big part of creating a strong financial foundation.

Fellows may feel like they have too much on their plate to devote time to thinking about personal finance. But just a few savvy budgeting strategies can help fellows spend wisely and potentially avoid getting deeper into debt.

10 Budgeting Tips for Living on Your Fellowship Doctor Salary

1. Finding a Budget that Works for You

The first step to smart budgeting is actually making a budget. Start by creating a list of monthly expenses in two categories: fixed expenses (those that stay roughly the same every month, such as rent, utilities, and insurance) and variable expenses (those that fluctuate, such as eating out and entertainment).

Next, note how much money is earned each month from fellowship or any other income sources. Use take-home pay after taxes and deductions.

Ideally, expenses should be less than income. If they’re not, work out where costs can be trimmed. With a reasonable budget in place, the next step can be to track spending each month.

2. Living Within Your Means

Expenses should not exceed the money you bring in. During a medical fellowship, you might be tempted to extend yourself financially with the expectation that your salary will soon increase dramatically. But going into debt isn’t a savvy way to start off your career.

Credit cards generally have the highest interest rates, so even a small balance can balloon into substantial debt down the line. Failing to make payments or using too much available credit could impact an individual’s credit score, which could make a difference when looking for a mortgage or car loan.

3. Choosing Housing Carefully

For most people, housing is the single largest monthly expense. That’s why it’s worth putting in the effort to find an affordable option that meets your needs. In a particularly expensive market, it may be worth getting roommates. Another factor to consider — the closer you are to your workplace, the more that can potentially be saved in commuting costs.

4. Delaying the Purchase of a New Car

For those living in an urban area, think about whether public transit or carpooling may be options for getting to work. If a vehicle is nonnegotiable, consider a used car rather than a new one. Cars lose much of their value when they’re driven off the lot for the first time, so it may be worth seeking out used cars that are in great shape at a great price.

5. Saving on Food

As a variable expense, food is an area with plenty of opportunities to save. If you have any meals provided for you as part of your fellowship, take advantage of the free food. Eating out can be tempting with a busy schedule, but it may be wiser to limit how often you go to restaurants and how much you spend there.

Since you won’t always have time to cook, preparing meals in batches to eat throughout the week could help you resist the temptation of going out.

To save money on food when you grocery shop, purchase what’s on sale, learn what produce is in season, and consider purchasing generic brands. Look for nonperishable items in bulk at discount stores. If you’re feeling extra thrifty, using coupons could save you some change, too.

6. Traveling with Rewards Points

During your fellowship, you’ll probably want to go on vacation and take a well-deserved break. But your trip doesn’t have to break the bank. Fellows with a decent enough credit score may qualify for credit cards that offer significant point bonuses, which can be redeemed for travel costs like flights, hotels, or rental cars. Some cards may require cardholders to spend a certain amount upfront to qualify for a bonus, so double check you’re not taking on unnecessary expenses or carrying a balance if you don’t need to.

7. Taking Advantage of Income-Based Repayment Plans, Deferment, or Forbearance

Those with eligible federal loans who cannot afford to make payments may be able to pause their payments through deferment or forbearance options if they meet certain qualifications.

Income-driven repayment (IDR) plans allow borrowers to tie their monthly payment to what they make over 20 to 25 years. After that, the balance is forgiven on one of the IDR plans, the Income-Based Repayment (IBR) Plan. Eligibility for these programs largely depends on the types of student loans that the borrower holds and when they were borrowed.

Those who are in a qualified graduate fellowship may be able to request a student loan deferment while in a medical fellowship. If successful, they likely won’t have to make payments during the fellowship. In some cases, borrowers may not be required to pay accrued interest, for example, if they hold subsidized federal student loans.

Borrowers who don’t qualify for deferment but are still struggling financially may be able to apply for forbearance, but would likely be responsible for paying the interest that accrues.

Fellows who are interested in pursuing a career in public health may also consider the Public Service Loan Forgiveness program. In that program, borrowers who work for a qualifying government or non-profit organization may be able to get their loans forgiven after 10 years of qualifying payments.

8. Trying to Save

Living on a fellow’s salary may not leave much room for saving, but if at all possible, setting small savings goals could be helpful.

For example, if you don’t already have an emergency fund, you could try to put away some money every month until you have about three to six months of living expenses saved.

Once you have a cushion for emergencies, consider contributing to a retirement account, such as a traditional or Roth IRA. The power of compound returns means investing early can translate into gains over time. The longer money is invested, the more time it potentially has to grow and withstand any volatility.

9. Considering Passive Income

As a fellow, you probably don’t have extra time to take on a side hustle. If you’re looking for ways to potentially boost your pay, consider looking into low-effort sources of passive income, which can allow you to earn money without investing much time or energy.

Examples include renting out a room or your car. It may require some effort up front, but if you can increase your cash flow without working too much, it could be worth it.

10. Refinancing Your Student Loans

Dealing with student loans can be challenging when you’re living on a medical fellowship salary.

Refinancing your medical student loans is one way to help make your debt more manageable and potentially free up some extra cash.

When you refinance your loans with a private lender, you get a new loan, ideally with a lower interest rate and/or more favorable term.

Depending on your situation, student loan refinancing can lower your monthly payment. Note: You may pay more interest over the life of the loan if you refinance with an extended term.

Keep in mind that when refinancing with a private lender, you do give up the federal benefits that come with most federal student loans, such as deferment, forbearance, income-based repayment programs, and student loan forgiveness. If you plan on using those programs at any point in time, it is not recommended to refinance your federal student loans.

The Takeaway

Fellowships can be an excellent opportunity to hone in on your medical specialty of choice, but the relatively low salary may require some creative budgeting in order to keep expenses in line with income.

Some ideas to consider include creating a passive income stream, shopping smarter at the grocery store, establishing a realistic budget, and finding an affordable living situation.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

Is a medical fellowship worth it?

Whether a medical fellowship is worth it depends on an individual’s situation and goals. Medical fellowships provide advanced learning and training as well as practical work experience in very specific specialties. Medical fellows tend to be highly respected, and a fellowship can be a solid foundation for a successful career.

However, medical fellowship programs are extremely competitive to get into, fellowships require a significant time commitment, and the salary is substantially lower than the salary of a full-time physician.

Does a medical fellowship pay more than a residency?

A medical fellowship generally does pay more than a medical residency. The average salary for a primary care medical fellow is $75,943 per year, while the average salary for a medical resident is $67,400 per year.

How long is a medical fellowship?

A medical fellowship is typically one to three years, but the exact length of time depends on the area of specialization. For example, family practice physicians generally have a three-year fellowship, while general surgeons have a five-year fellowship.

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