Apr
28
2025
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Budgeting on a Fellowship Doctor Salary

By | Budgeting & Goals, Building Your Career, Life & Career, money, student_loan | No Comments

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.

Key Points

•   A medical fellowship typically offers a salary of around $75,943, which is lower than that of fully licensed physicians, necessitating careful budgeting.

•   Budgeting effectively involves categorizing expenses into fixed and variable types, ensuring that monthly expenses do not exceed income.

•   Housing is often the largest monthly expense; finding affordable housing or considering shared living arrangements can significantly reduce costs.

•   Utilizing income-based repayment plans, deferment, or forbearance options can help manage student loan payments while in a medical fellowship.

•   Seeking passive income opportunities, using credit card points, and practicing smart grocery shopping can further alleviate financial pressures during fellowship years.

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.


With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

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.

SoFi Student Loan Refinance
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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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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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Apr
24
2025
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Vesting Schedule: Important Things to Know

By | Growing Wealth, invest, Investing, Life & Career | Comments Off on Vesting Schedule: Important Things to Know

A vesting schedule refers to the requirements employees must meet in order to become “vested” and gain ownership of the assets the employer is providing, whether that’s company stock, 401(k) contributions, or another benefit.

In some companies, employees vest right away — i.e., there is no waiting period or other qualification they must meet to gain full ownership of a certain benefit. In other cases, the vesting schedule typically incentivizes employees by offering matching retirement funds, shares of company profit, or stock options over a certain time period.

For example, you may be partially vested in your 401(k) after one year, and fully vested after two years.

While remaining at a company for a certain amount of time is a common vesting requirement, hitting specific performance benchmarks may also be a part of the vesting contract.

An employee is fully vested when they receive ownership of a portion of, or all of, the assets their employer offers. If the employee were to leave the company before the assets were fully vested, they would lose out on some or all of those contributions/profits/stock options.

What Is a Vesting Schedule?

A vesting schedule is essentially a way to incentivize employees to stay with a company for a period of time. The reward for remaining with the company may include stock options or restricted stock units, retirement plan contributions (also known as the employer match), or other rewards.

So how does an individual know when they are partially or fully vested? The vesting schedule is typically provided when the employee is hired. But they can ask their employer for a vesting schedule, which lays out the conditions they must meet or the dates that must be reached before vesting begins.

Employees who are partially vested are only entitled to a percentage of the assets being offered: e.g., 25% after one year, 50% after two years, and so on. These employees have not yet met certain requirements, such as years spent with the company or hours worked during the year, for example. Those who are not “vested” are typically not entitled to any assets at all.

Employees who are fully vested have the right to full ownership of the assets; in essence, they’ve earned this additional form of compensation.

Three Types of Vesting Schedules

Vesting schedules may come in a few different varieties: immediate, graded, and cliff vesting.

Immediate Vesting

Immediate vesting schedules give employees full ownership of assets as soon as the assets hit their accounts.

For example, under an immediate vesting schedule, if an employer makes a matching contribution to a retirement account, that contribution belongs to the employee regardless of any other conditions. The employee is now free to do what they will with the contribution.

Note that if you open an IRA, you’re effectively vested immediately because IRAs are self-funded. Vesting schedules only pertain to employer contributions.

Graded Vesting

A graded vesting schedule increases the portion of vested assets over time. Typically as an employee’s tenure at a company increases, the amount of vested assets gradually increases — until the employee eventually owns 100% of the assets.

If the employee should leave the company before the vesting period is over, they will only be entitled to the portion of the assets in which they are already vested.

Graded vesting schedules are usually no longer than six years for retirement plans, according to federal guidelines, though employers may choose to use a shorter vesting schedule. With a hypothetical six-year vesting schedule, an employee might be 0% vested for their first two years of employment and 20% vested every year after that.

Cliff Vesting

This type of vesting schedule transfers 100% of assets to employees after a certain amount of time has passed. For example, an employee may need to work at their job for two years before they are fully vested. If they separate from employment for any reason before that period is up, they aren’t entitled to any of the assets.

Cliff vesting schedules for retirement accounts are three years at most, according to federal guidelines, but may be shorter.

Vesting and IRAs

Most people might be familiar with traditional IRAs and Roth IRAs, which individuals can set up and contribute to themselves. But there are a couple of IRA options that employers can contribute to as well, including SEP and SIMPLE IRAs.

Employers may offer SIMPLE IRAs in place of a 401(k). They can then offer funds that match employee contributions, or they can make non-elective contributions, money they put in an employee’s account regardless of how much that employee has contributed themselves.

A SEP IRA is a retirement plan available to self-employed workers and small business owners. Unlike with other IRA plans, with a SEP IRA employees do not make contributions. Employers, including the self-employed, make contributions for them. Self-employed individuals act as their own employer and employee.

By law, required employer contributions to SEP IRAs and SIMPLE IRAs are immediately vested. This goes for any other IRA-based plan as well.

Vesting and 401(k)s

When you contribute to your 401(k), your employer may offer matching contributions to incentivize you to save at least enough to get the match.

While your own contributions to your 401(k) are 100% yours immediately, your employer may decide to give you ownership of the employer matching funds according to a vesting schedule.

It’s important to know the difference between your vested 401(k) balance and your overall balance. Your 401(k) may offer a variety of different vesting schedules, the terms of which are laid out in the plan document. As noted, some plans offer immediate vesting, while others may offer cliff vesting after up to three years of service, or a graded vesting system in which an employee’s vested percentage grows over time.

When Must Employees Be 100% Vested?

A retirement plan’s “normal retirement age” is the age set by the plan at which an employee is eligible to receive their full accrued benefits. In the case of annuity payments or other installment payments, this is the date employees can begin receiving payments.

According to government rules, employees must be 100% vested by the time they reach normal retirement age, which is typically age 65 in the private sector. With some government jobs, employees who are at least 62 may be considered fully vested. Again, terms vary and so do age requirements; it’s best to check with your employer.

Additionally, employees must be immediately 100% vested in their accrued benefits if an employer decides to terminate a plan, including for the following reasons: voluntarily; as part of bankruptcy proceedings; when the company is sold; or because of a switch to another retirement plan.

At such a point, employer matching contributions and any profit sharing are fully vested regardless of any previous vesting schedule.

Sometimes employers will terminate only part of a retirement plan — for example, if a factory closure forces 25% of the company workforce to be laid off. In this case, workers affected by the partial termination have the same vesting rights as those affected by a full plan termination.

Vesting Stock Options

Employee stock options offer employees the chance to buy company stock at a predetermined price, and are often offered on a vesting schedule as well. Employees are often not allowed to buy the stock — also known as exercising their stock options — until they are vested.

As with other types of compensation, vesting can follow a number of schedules, including graded scheduling, which allows employees to exercise their stock option gradually, and cliff scheduling. In some cases employees may be granted stock options that are immediately vested.

Once a stock option vests and an employee exercises it, they can sell the stock or hang on to it and hope the value appreciates.

What Are Restricted Stock Units?

Restricted stock units (RSUs) are another form of compensation in which employees are promised a specific amount of stock at a later date. While there are some differences between ESOs and RSUs, one similarity is that both may follow a vesting schedule and don’t belong to the employee until they are vested.

Employees who receive RSUs from a private company — a company whose shares don’t trade on the open market — may not be able to sell them until the company goes public in an initial public offering.

Learning more about stock market basics may be useful in understanding how employee stock options work.

Why Companies Choose to Use Vesting

The different vesting schedules and the rules around them can get complicated. So why would an employer go through all that trouble? By using vesting schedules, employers are trying to align employees’ goals with their own.

It can be time-consuming and costly to find new employees, so when an employer finds someone they like, they want them to stick around. Vesting schedules are one way employers can motivate employees to stay with the company for a certain period of time.

Some types of compensation, such as stock options, add another layer of incentive to the mix. That’s because as a company flourishes, that company’s stock may theoretically become more valuable, incentivizing workers to work hard to keep the company successful.

Additionally, having some time before an employee is fully vested in their benefits allows companies a bit of a trial period. If a new hire doesn’t work out, the company can let them go without owing them additional benefits.

How to Find Out Your Vesting Schedule

It’s critical to know how and when employer contributions to retirement accounts vest. That way, individuals can make informed decisions about when to leave their jobs, while minimizing the amount of money they’re leaving on the table. For example, to make the most of their benefits, an employee with 12 months to go before they are fully vested may want to hang on to their job for another year before they start looking for a new one.

To fully understand an employer’s vesting policies, employees can speak with a representative in their human resources department. They may also get details of their retirement plan by reading the summary plan description, which lays out how it operates and what it provides. Individuals may also check their annual benefits statement. This statement should reflect an employee’s accrued and vested assets, and it may lay out what assets an employee will forfeit upon termination.

The Takeaway

Vesting schedules are a tool used by employers to motivate employees to stay with the company by offering full monetary or stock contributions after a certain period of employment. There are generally three different types of vesting: immediate, cliff, and graded.

For employees, it’s important to understand the vesting schedule of one’s retirement plan, stock options, or RSUs. This information can help guide career decisions as well as investment decisions.

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For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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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Apr
23
2025
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Are You Ready to Buy a House? — Take The Quiz

By | Financial Independence, Home Ownership, Life & Career, mortgage | No Comments

Buying a house can be the single largest financial move you’ll ever make. What’s more, once purchased, your home is likely to be your biggest asset and possibly a path to building wealth.

So this rite of passage probably isn’t something to be done without a lot of preparation. For instance, when preparing to buy a home, you usually have to focus on such factors as:

•   Saving for a down payment

•   Optimizing your credit score

•   Understanding what your monthly expenses will be

•   Considering the dynamics of the real-estate market

•   Researching where you want to live

•   Making sure you’re ready for the responsibilities of homeownership.

You’ll learn more about these factors in a minute, but first, take this quiz to get a read on just how ready you are to dive into house-buying. While it won’t answer the question, “Am I ready to buy a house?” definitively, it can help you gauge where you stand.

Then, read on to learn more about how to make snagging your dream house become a reality.

Key Points

•   Financial readiness involves saving for a down payment, optimizing credit scores, and understanding monthly expenses.

•   Real estate market dynamics and preapproval provide a competitive edge in homebuying.

•   Home maintenance requires budgeting and time for repairs and regular upkeep.

•   Community integration involves settling in one area for several years to recoup costs.

•   A favorable debt-to-income ratio and credit score improve mortgage offers and interest rates.

Home Buyer Readiness Quiz

Now that you’ve taken the quiz, here’s more intel on how to get ready to buy a house.

Recommended: First-Time Home Buyer Guide

Financial Factors

Home ownership can be quite expensive, and has become especially pricey in recent years. As you may know, housing prices soared during the pandemic, rising over 40% in some areas. In an effort to stem that, as well as other aspects of inflation, the Fed has been raising interest rates, so it’s become more expensive to borrow money, too, further squeezing potential homebuyers.

But don’t let that discourage you: Homeownership is still a goal you can realize, especially if you prepare for the following:

•   Down payment: Ideally, lenders like to see a 20% down payment (although SoFi offers flexible down payment options). Plus, you’ll need to have enough money left over for closing costs, moving costs, and any renovation costs involved.

•   Private mortgage insurance: If you are putting down less than 20% on your home purchase, you may have to pay private mortgage insurance (PMI). This helps protect your lender as you may look like a less well-qualified home purchaser. This cost is typically charged along with your monthly interest payment by the lender. It’s wise to include this amount in your calculations, if necessary, as you move toward buying a house.

•   Income: Knowing the answer to “When can I buy a house?” doesn’t depend on a particular salary. However, mortgage lenders do like to see two years of steady income, because both job continuity and consistent income are important.

•   Debt-to-income (DTI) ratio: You’ll need to see if your monthly income allows you to afford the mortgage payment you’d be taking on. This typically involves calculating your debt-to-income ratio or DTI.

Here’s an example: Say you make $6,000 a month, before taxes. You’re paying $1,500 a month in rent, and when you add in car payments, credit card debt, and student loan payments, that equals another $700. You’ve got monthly expenses, then, of $2,200; when you divide that by your monthly income ($2,200/$6,000), then your debt-to-income ratio is 36.7%, which is in the range of what many lenders like to see.

•   Credit score: It’s helpful to know your credit score before you go home shopping and, if it’s under 700 (meaning either at the low end of a good score or a fair credit score), work to build it. That can open you up to more mortgage offers and lower interest rates.

•   Mortgage options: Speaking of mortgages, connecting with lenders or mortgage brokers can help you gain a better understanding of how much house you can afford, what kinds of mortgages are available, and whether you can get prequalified or even preapproved before you shop in earnest. This can give you an edge in or possibly even be necessary in today’s tight housing market.

•   Homeownership costs: In addition to the mortgage payment and any PMI, you’ll need to budget for property taxes, heating costs, and other regular expenses. Make sure to factor those in as you develop a budget for your life as a homeowner.


Get matched with a local
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$9,500‡ cash back when you close.

Recommended: How to Qualify for a Mortgage

Housing Market Conditions

When determining if you’re ready to buy a house, also consider housing market conditions. Among the key factors:

•   Location: Of course, you’ll want your home to be in a desirable location, however you define “desirable.” It could mean being in the heart of a busy city — or in a peaceful place along a river. If you have or plan to have a family, quality schools are likely important, and so forth.

It’s likely going to make your house hunt more manageable and productive if you narrow down where you want to live to a few towns or neighborhoods. Otherwise, you might spend a lot of time and effort driving all over and not being able to whittle down the choices.

•   Real-estate dynamics: In desirable locations, competition is fierce today, with homes often selling quickly after being put up for sale and bidding wars occurring. And, as demand has increased, available housing (especially for first-time homebuyers looking to purchase in affordable price ranges) has therefore decreased.

So, you’ll have to be prepared to compete in the current housing market conditions, which means having your financial situation in order so you can make a timely offer on a house of choice.

Check out local real estate
market trends to help with
your home-buying journey.

Lifestyle Considerations

Let’s say you’re confident that you have the financial resources to purchase a home in your neighborhood of choice. Before you move forward, here are a couple of lifestyle issues to consider:

•   Home maintenance: If you’re used to renting, your landlord has played a key role in home repairs and so forth. If you buy a home, you would now be your own landlord. That means dealing with broken boilers, leaky roofs, yard maintenance, and more. Be sure you budget for that financially and are also prepared for the responsibility.

•   Community: Think about whether you are ready to settle down in a particular community for at least a few years. If not, you may not break even when you sell the house you bought. Here’s why: It can take time to recoup closing costs and other expenses you covered when purchasing the home.

The Takeaway

Homeownership can be the foundation of the American dream for many people. It’s also a potential avenue to build wealth. But when you should buy a house depends on a variety of factors. Before you dive in, do your research, save for your down payment, and optimize your finances so you are ready to handle the responsibility.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

‡Up to $9,500 cash back: HomeStory Rewards is offered by HomeStory Real Estate Services, a licensed real estate broker. HomeStory Real Estate Services is not affiliated with SoFi Bank, N.A. (SoFi). SoFi is not responsible for the program provided by HomeStory Real Estate Services. Obtaining a mortgage from SoFi is optional and not required to participate in the program offered by HomeStory Real Estate Services. The borrower may arrange for financing with any lender. Rebate amount based on home sale price, see table for details.

Qualifying for the reward requires using a real estate agent that participates in HomeStory’s broker to broker agreement to complete the real estate buy and/or sell transaction. You retain the right to negotiate buyer and or seller representation agreements. Upon successful close of the transaction, the Real Estate Agent pays a fee to HomeStory Real Estate Services. All Agents have been independently vetted by HomeStory to meet performance expectations required to participate in the program. If you are currently working with a REALTOR®, please disregard this notice. It is not our intention to solicit the offerings of other REALTORS®. A reward is not available where prohibited by state law, including Alaska, Iowa, Louisiana and Missouri. A reduced agent commission may be available for sellers in lieu of the reward in Mississippi, New Jersey, Oklahoma, and Oregon and should be discussed with the agent upon enrollment. No reward will be available for buyers in Mississippi, Oklahoma, and Oregon. A commission credit may be available for buyers in lieu of the reward in New Jersey and must be discussed with the agent upon enrollment and included in a Buyer Agency Agreement with Rebate Provision. Rewards in Kansas and Tennessee are required to be delivered by gift card.

HomeStory will issue the reward using the payment option you select and will be sent to the client enrolled in the program within 45 days of HomeStory Real Estate Services receipt of settlement statements and any other documentation reasonably required to calculate the applicable reward amount. Real estate agent fees and commissions still apply. Short sale transactions do not qualify for the reward. Depending on state regulations highlighted above, reward amount is based on sale price of the home purchased and/or sold and cannot exceed $9,500 per buy or sell transaction. Employer-sponsored relocations may preclude participation in the reward program offering. SoFi is not responsible for the reward.

SoFi Bank, N.A. (NMLS #696891) does not perform any activity that is or could be construed as unlicensed real estate activity, and SoFi is not licensed as a real estate broker. Agents of SoFi are not authorized to perform real estate activity.

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4 Tips for Handling Finances After a Pay Cut

By | Budgeting & Goals, Financial Independence, Life & Career, money | Comments Off on 4 Tips for Handling Finances After a Pay Cut

The economy is in a volatile place as of early 2025. Because of economic uncertainty, some companies have resorted to pay cuts to help cut costs. For the workers affected, it likely means scouring their budgets to trim some of their expenses. Taking a pay cut means facing the reality of no longer living the same financial life.

If you’ve just taken a pay cut — or you’re worried that you might soon be facing one — here are four strategies to handle your finances after your salary is reduced.

Key Points

•  If you experience a pay cut, create a budget to allocate income to needs, wants, and savings.

•  Track spending to identify financial patterns and impacts.

•  Cut expenses by reducing entertainment and other non-essential costs first.

•  Save money through deferring payments, using rewards, and shopping for deals.

•  Continue saving for retirement to maintain good financial habits.

1. Update Your Budget

First and foremost, create a budget if you don’t already have one. There are many options, including the popular 50/30/20 budget rule, which allocates 50% of your take-home pay to needs, 30% to wants, and 20% to savings or additional debt payments.

Whichever of the different types of budgets you choose, you’ll likely need to list all your expenses for weekly purchases, from groceries to gasoline and parking fees. Add monthly bills, including rent or mortgage, car loan, streaming services or cable, cellphone, utility bills, credit cards, student loans, and any other debt such as personal loans.

Next, examine all your expenses to see which ones you can lower or eliminate for the next six months. Add your income and include part-time jobs or side hustles, tax refunds, bonuses, and any child support or alimony. This will help you determine how much money you can spend for necessities, expenses, entertainment, and other things such as doctor visits.

In addition to a budget, create a plan for both short-term financial goals and long-term goals. A plan will help you determine when you can pay off any loans and how much you want to save for something like a down payment on a house.

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*Earn up to 4.30% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.60% APY as of 11/12/25) for up to 6 months. Open a new SoFi Checking & Savings account and enroll in SoFi Plus by 1/31/26. Rates variable, subject to change. Terms apply here. SoFi Bank, N.A. Member FDIC.

Recommended: 50/30/20 Budget Calculator

2. Track Your Spending

You could use a free money tracking app that can help you keep tabs on your spending and help manage your debt. To track your spending, decide if you want to track it daily, weekly, or biweekly. You might try different time periods before you decide on one.

After you track your spending for a couple of months, you’ll see a pattern emerge that indicates where most of your money goes. You’ll also be able to gauge the impact a pay cut has had on your finances. Are you overall in good shape but no longer able to apply additional payments to a loan’s principal? Or are you now living paycheck to paycheck? The answer can help guide your next steps.

3. Cut Expenses

The next step should help keep more money available in your bank account for necessities: trimming how much money goes to the “wants” in life. One place many consumers can cut costs is from entertainment, such as their streaming services. These can really add up. Canceling all or some of these services can improve your cash flow, which is how much money you have left over at the end of the month.

Another place where you can slash expenses is from your food budget. Consider using digital coupons, shopping at warehouse clubs, or going out to eat for lunch instead of dinner to save money on food.

Your expenses include debt such as credit cards, student loans, and personal loans. Paying more than the minimum balance, refinancing to a lower interest rate. and making extra payments can help you pay down the loan sooner.

Consider refinancing your student loans by checking out both fixed and variable rates. Interest rates are at historic lows. You might be able to pay down your credit card bills faster by taking out a personal loan; those interest rates are often lower. And if that’s the case, the debt could be paid sooner.

Automating your finances can make your life easier. This will also help you avoid paying late fees. You can either have your bills paid automatically through your checking account or set yourself a reminder on your calendar if you have some bills such as utilities that are a different amount each month.

You can also automate your savings. You can have money taken out of your checking or savings account each month and have it automatically invested into your workplace 401(k) plan or an individual retirement account (IRA).

In addition, you could consider opening an online bank account with a high-yield APY. That way, your savings could earn money for you as it’s sitting in your account.

Ways to Save

When your salary has been slashed, there are several ways you can save money immediately and long term.

•  Call your mortgage, auto loan, utilities, credit card, and student loan companies to see if you can defer loan payments for several months. Skipping a few payments can help you get back on your feet sooner. If the company cannot provide this option, see if the interest rate can be lowered on, say, credit cards.

•  Check with your local nonprofit organizations. Many provide food or partial payments for utility bills. Look online to see if stores are offering deals. Stock up on staples such as beans, rice, and pasta if they are on sale.

•  If you are still short of money, you might consider talking to family members and friends about obtaining a short-term loan.

•  Now might be the time to use credit card rewards for cash, food, or gift cards. People who have been saving credit card rewards for a vacation might want to go ahead and use them now. Some credit card companies will let you transfer the rewards for cash to your statement or use them for food delivery.

•  Other companies let you use your rewards to receive gift cards. Using these gift cards at retailers that sell staples and necessities such as food, detergent, and other personal items can help you spend less money.

•  Many credit cards will give cash back on purchases such as food and gasoline. See which credit cards are the most beneficial for your financial needs before signing up for a brand-new credit card.

•  Another way to save money is to use cash for gasoline. Some gas stations offer a cheaper price for consumers who use cash. The savings can add up quickly, especially if you have a longer commute.

•  Finally, each month, look for other ways you can save money. If your credit card company denied your request last month to lower your interest rate, try calling again. Rules can change often.

4. Save for Retirement

While you could skip saving for retirement, it’s ideal to continue socking away some money (even if it’s less than previously) each month from your paycheck into a 401(k) plan or IRA. The money you stash away for retirement can lower your taxable income, meaning you’ll owe the IRS less.

Continuing to save money for retirement is a good habit, especially if your salary reduction is temporary. Once you stop contributing to a retirement account, it can be difficult to catch up on your retirement savings. If you have your retirement contribution automatically deducted from your checking or savings account, saving for your future is easier.

The Takeaway

While it can be difficult to navigate a pay cut, creating a budget, tracking your spending, shopping for deals, and cutting expenses can help you save and get through a tough time. These moves can help you stay afloat during a challenging financial period. In addition, opening a new bank account with low or no fees and favorable interest rates could help you maximize your money.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.60% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

How to survive taking a pay cut?

If you’ve experienced a pay cut, smart moves to survive include creating or updating a budget, tracking your spending, shopping for deals, and reducing expenses.

How to budget after a pay cut?

After a pay cut, take a fresh look at your budget. Review and trim expenses, prioritize debt payments, and consider using credit card rewards to fund essentials. It can be wise to funnel a small amount of money into an emergency fund to provide a cushion.

Is it ever wise to take a pay cut?

Yes, it could be wise to take a pay cut for an opportunity to work in an industry or company you have set your sights on. Or, if you are working at a job and pay cuts happen, accepting that situation could allow you to maintain cash flow and benefits while you wait to see if your pay goes back up or you find another job.

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 11/12/25. 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.

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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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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

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7 Ways to Save Money on Commuting to Work

By | Budgeting & Goals, Building Your Career, Life & Career, money | Comments Off on 7 Ways to Save Money on Commuting to Work

Many people are back into the full-time commuting groove again and finding that it can be a major cost. And by cost, it can mean the impact it has on both money and mood.

Some people spend 30 minutes commuting each way; others two or three times that. Some get on an express train while others drive their own car and deal with traffic woes and gas prices.

One way to lessen the burden of commuting (beyond listening to terrific podcasts while en route) is to lower the cost. Here, learn smart ways to do just that.

Key Points

•  Working remotely can significantly cut commuting costs and time.

•  Living closer to work can reduce driving expenses, though it may increase living costs.

•  Carpooling can distribute commuting costs among riders.

•  Choosing a cheaper car can lower ownership costs.

•  Tracking and budgeting commuting expenses can help identify savings.

How Much Does It Cost To Commute?

Commuting to work is a major portion of all driving in the United States. Whether you commute by car daily or just two or three times a week, gas can certainly set you back. But a hidden cost of driving is depreciation, a car’s loss in value over time. Indeed, depreciation is actually the largest annual cost of car ownership, according to AAA.Add to that increased maintenance and repair costs of cars as they age and are driven more frequently.

For 2024, AAA pegged the average cost of car ownership per mile at 82 cents (assuming you drive 15,000 miles per year). That number includes depreciation, finance, fuel, insurance, license/registration/taxes, and maintenance/repairs. At that rate, the cost of driving 15 miles to work and back (30 miles round trip), comes in at $24.60 per day, not including tolls. If you commute daily, you may be spending around $123 a week or $482 a month just to get to and from your place of work (again, not including tolls).

Here’s a look at some ways to reduce the heavy cost of commuting.

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*Earn up to 4.30% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.60% APY as of 11/12/25) for up to 6 months. Open a new SoFi Checking & Savings account and enroll in SoFi Plus by 1/31/26. Rates variable, subject to change. Terms apply here. SoFi Bank, N.A. Member FDIC.

1. Aiming for a “Remote First” Culture

Working remotely part- or full-time is a surefire way to cut commuting time and costs. The easiest way to maximize working from home is to find a job at a company where it’s standard. This option has become popular since the pandemic.

If your work makes it possible to work from home sometimes, you may want to try to make it a regular occurrence. That way you can more easily optimize your time spent in the office and save tasks best for home for the day you regularly work from home.

If you work from home regularly, it also means you can get better at it, from setting up a home office that truly works to figuring out how working at home can make you more productive than working in the office, not merely save you the time and money of a long commute — although that’s important, too.

Of course, the easiest way to save money commuting to work is not to do it at all. This not only spares the cost of gas, maintenance, subway tickets, or bus fare, but it also saves precious time.

The money that would have been spent on a commute to work can be put into a high-yield savings account to help you reach your savings goals faster.

2. Living Closer to the Job

One of the most obvious ways to reduce commute time is to make it so your car is less expensive.

There are roughly two ways to do this: Drive less or drive less expensively.

The easiest way to drive less is to live closer to work. While that may save money on gas and maintenance, it could end up being more expensive to live closer to work, especially in a large city.

One of the main amenities people seek when deciding where to live is distance from their job. If you work near where a lot of other people work, trying to live near that job is likely to be pricey as the cost of living may be higher.

So how to make driving less expensive if you can’t reduce the amount of driving necessary to get work? Get someone else to drive, at least some of the time, or drive cheaply (more on both options below).

💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

3. Giving Carpooling a Spin

Carpooling means a shared ride to and from work, typically with someone who works in the same area or nearby.

Carpooling doesn’t magically get rid of the costs of commuting to work, but it can distribute them among riders or reduce them. Gas costs can be split, and maintenance costs can be reduced as the car is operated less frequently.

Even if you’re the one driving, you can often get access to high-occupancy-vehicle lanes, which means less time on the road and less time stalled in traffic.

4. Getting a Cheaper Car

Let’s say you have no choice about how far you have to drive and how frequently you have to do it. That may be a bummer, but it doesn’t mean you’re out of options for saving money. Some cars are cheaper to operate than others, and there are wide variations between them. Generally, smaller is better.

For new cars, according to AAA, a small sedan is the cheapest to own, costing $54.24 per mile, even less than hybrids (66.07 cents) and electric (84.69 cents) vehicles.

More numbers to know: the costs for subcompact SUVs (67.51 cents per mile) and medium sedans (70.38 cents per mile).

There are, of course, other ways to get around besides a car.

Recommended: Savings Calculator

5. Taking Public Transportation

About 3% of commuters are straphangers, bus riders, and other public transit users, according to the most recent U.S. Census data. While a mass-transit commute to work is not costless, it can certainly save money on a per-trip basis.

If you own a car, using mass transit (or driving to a transit stop) won’t spare you from insurance, the cost of a new car, or depreciation, but the costs of car ownership associated with actual driving (gas, maintenance, etc.) will go down.

The only downside is that the ability to commute to work by public transit is often largely determined by locale. Someone who works in an area with a public transit system that serves the office can choose to live somewhere with efficient access to that system.

This will likely be in or near a large city, where the share of commuters who use public transit is far higher than the 3% national average. If you work in a city like New York, Chicago, Washington, Boston, Philadelphia, San Francisco, Seattle, or Baltimore, public transit might be an efficient commuting option.

And although public transit may not entirely remove the need for a car, it could make it so a household with two adults only needs a single car, vastly reducing the cost of car ownership.

Finally, some companies offer commuter benefits, such as pretax income to be spent on costs related to the commute.

6. Doing the Legwork

Often the most affordable way to get to work is without using a car or public transportation; that means by foot, bicycle, or some other non-internal-combustion vehicle.

Biking may be impractical or stressful in many parts of the country. Still, some commuters may be up for the challenge. Cycling provides an aerobic workout and can trigger the release of endorphins, build muscle, and increase bone density.

Rolling road warriors may want to invest in a variety of gear to enhance safety and comfort. That can add to the cost, but these expenses will likely pale compared to car-related bills.

Recommended: Reasons to Switch Bank Accounts

7. Tracking Expenses

To reduce costs, commuters have to first get a handle on their spending, whether for gas, maintenance, or mass transit — or even coffees, snacks, and lunches on the job. Creating a budget and accounting for where your money goes is an important step.

Once you see where your money is going (and exactly how much you are spending on commuting) each month, you can then make informed decisions about where you want your money to go. You may find easy places to cut back, such as brewing coffee at home or walking to the train station instead of driving and paying for parking.

Any money you free up can then get siphoned off into a savings account earmarked for a future — and fun — goal, like going on vacation or making a down payment on a home.

The Takeaway

By better understanding the cost of commuting, you can make wise decisions about lowering your costs and saving money on this often-daily expense. From working from home when possible to carpooling and beyond, there are ways to keep your costs down.

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 3.60% APY on SoFi Checking and Savings with eligible direct deposit.

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 11/12/25. 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.

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/.
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.

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

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