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Whether you’re mulling a job offer or thinking about a new career, you may be wondering whether $80,000 is a good salary for a single person in 2026. It certainly can be. An $80,000 salary is higher than what the typical American worker makes. According to the Social Security Administration, the average salary nationwide is $69,847.

If you have no dependents, that income is likely enough to cover your basic needs with some discretionary money left over. However, several factors, including where you live and your spending habits, can all impact how far your pay will go.

Is $80K a Good Salary?

While it’s not a six-figure salary, an annual salary of $80,000 is generally considered a respectable wage, especially for a single person. Of course, your local cost of living plays an important role in whether a salary is “good” for you or not. You might feel financially comfortable living in one area — and like you’re just getting by in another.

It can be helpful to take a look at your expenses to understand where your money is going and if your income can keep up. A money tracker provides you with a bird’s-eye view of your spending so you can see where you might need to make adjustments.

Median Household Income in the US by State

An annual salary of $80K may be higher than the average salary in the U.S., but how does it stack up next to wages in different states? Here’s a look at what a typical household in each state earns, per U.S. Census Bureau data.

State	Median Household Income
Alabama	$66,659
Alaska	$95,665
Arizona	$81,486
Arkansas	$62,106
California	$100,149
Colorado	$97,113
Connecticut	$96,049
Delaware	$87,534
Florida	$77,735
Georgia	$79,991
Hawaii	$100,745
Idaho	$81,166
Illinois	$83,211
Indiana	$71,959
Iowa	$75,501
Kansas	$75,514
Kentucky	$64,526
Louisiana	$60,986
Maine	$76,442
Maryland	$102,905
Massachusetts	$104,828
Michigan	$72,389
Minnesota	$87,117
Mississippi	$59,127
Missouri	$71,589
Montana	$75,340
Nebraska	$76,376
Nevada	$81,134
New Hampshire	$99,782
New Jersey	$104,294
New Mexico	$67,816
New York	$85,820
North Carolina	$73,958
North Dakota	$77,871
Ohio	$72,212
Oklahoma	$66,148
Oregon	$85,220
Pennsylvania	$77,545
Rhode Island	$83,504
South Carolina	$73,350
South Dakota	$76,881
Tennessee	$71,997
Texas	$79,271
Utah	$96,658
Vermont	$82,730
Virginia	$92,090
Washington	$99,389
West Virginia	$60,798
Wisconsin	$77,488
Wyoming	$75,532

Average Cost of Living in the US by State

From grocery store bills to gas prices to mortgage payments, your cost of living is tied, in part, to where you reside. As you think about whether an $80K salary is good, it can be helpful to understand where prices for necessities such as housing, food, transportation, and childcare may be higher.

With that in mind, here’s the average cost of living in each state, according to U.S. Bureau of Economic Analysis data.

State	Average Cost of Living
Alabama	$47,096
Alaska	$66,356
Arizona	$56,211
Arkansas	$46,259
California	$67,565
Colorado	$66,448
Connecticut	$66,645
Delaware	$60,131
Florida	$62,618
Georgia	$52,806
Hawaii	$60,711
Idaho	$48,098
Illinois	$60,612
Indiana	$51,821
Iowa	$49,473
Kansas	$51,082
Kentucky	$48,901
Louisiana	$50,454
Maine	$63,046
Maryland	$58,310
Massachusetts	$71,946
Michigan	$54,197
Minnesota	$58,433
Mississippi	$43,947
Missouri	$54,405
Montana	$58,499
Nebraska	$54,512
Nevada	$56,103
New Hampshire	$68,900
New Jersey	$65,873
New Mexico	$48,119
New York	$66,426
North Carolina	$53,334
North Dakota	$58,090
Ohio	$52,708
Oklahoma	$46,319
Oregon	$58,150
Pennsylvania	$59,260
Rhode Island	$58,041
South Carolina	$51,423
South Dakota	$54,100
Tennessee	$51,507
Texas	$54,060
Utah	$52,677
Vermont	$62,629
Virginia	$58,224
Washington	$62,837
West Virginia	$50,286
Wisconsin	$54,705
Wyoming	$55,543

How to Live on $80K a Year

Even though $80,000 is a good salary for a single person, it’s still a good idea to create a budget. There are all sorts of budgeting methods out there, and it may take some trial and error before you find the approach that works best for you. Whatever method you choose, be sure it fits your basic needs and leaves you with some funds left over to pay down debt, save, and enjoy.

Recommended: U.S. Average Income by Age

How to Budget for an $80K Salary

One popular approach to budgeting calls for organizing expenses into different categories, then designating an amount or percentage you can spend per month in each category.

An example of this is the 50/30/20 budget rule, where you reserve 50% of your salary for “needs,” 30% for “wants,” and 20% for saving.

Another, similar option is the 40-30-20-10 budget. Here, expenses are broken down as follows:

•   Housing, groceries, utilities, gas: 40%

•   Discretionary spending: 30%

•   Savings, retirement, and investments: 20%

•   Additional debt payments or savings goals: 10%

If you need help getting started with your budget, consider enlisting the help of a budget planner app.

Maximizing an $80K Salary

To make the most of your salary, try to strike a balance between working toward short- and long-term financial goals. For instance, if your employer offers a 401(k), consider signing up for it. And check your budget to see if you can contribute the maximum amount each month.

Another way to make the most of your income? Build an emergency fund. A good rule of thumb is to save enough to cover three to six months’ worth of expenses.

Quality of Life With an $80K Salary

The quality of life you can have on an $80K salary can be greatly impacted by where you live. If you’re in an area with a low cost of living, you may be able to afford a comfortable lifestyle with that level of income. But that may not necessarily be the case if you live in a pricey part of the country, such as in a major coastal city.

Is $80,000 a Year Considered Rich?

While there’s no single definition of rich, $80,000 would likely not qualify. On the other hand, it’s significantly more than what the typical U.S. worker makes and would be a very good entry-level salary for many professionals who are just starting out.

Another way to think about wealth is by looking at net worth. To calculate your net worth, simply subtract your outstanding debts from the value of your combined assets. A positive net worth is one where your assets are worth more than your liabilities. Conversely, a negative net worth is when your liabilities are more than your assets.

Recommended: Net Worth Calculator by Age

Is $80K a Year Considered Middle Class?

Short answer: Yes. Based on guidance from the Pew Research Center, a middle-class household has an income between $56,600 and $169,800. An $80,000 salary is within that range.

Example Jobs that Make About $80,000 a Year

The highest-paying jobs in your state probably pay more than $80,000 a year, but that said, there are plenty of good, stable roles out there where you can command that level of pay. Here are some to consider:

•   Agricultural engineer

•   Credit analyst

•   Fashion designer

•   Police patrol officer

•   Accountant

Of course, salary is just one consideration. You’ll also want to find a job that you’re passionate about and that fits your personality. If you’re reserved, for instance, you might think about looking for jobs for introverts.

The Takeaway

An annual salary of $80,000 is considered good for a single person and is higher than the average pay in the United States. But just how far that money will go for you depends on your financial obligations, where you live, and other factors. In some areas, getting by on $80K a year might be tight, while in others, you may have enough breathing room to start working on your savings goals.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Can I live comfortably making $80K a year?

You can live comfortably on $80,000 per year. However, keep in mind that your local cost of living has a big impact on just how far your money will go.

What can I afford with an $80K salary?

With an $80,000 salary, a single person with no dependents or major financial obligations can likely afford the necessities, with money left over for entertainment and savings. Ideally, you should spend no more than a third of your income on housing (usually the biggest line item in a budget). That means if you earn $80,000 a year, you could spend roughly $26,000 per year on housing.

How much is $80K a year hourly?

An annual salary of $80,000 works out to around $38.46 per hour.

How much is $80K a year monthly?

A worker who earns $80,000 a year can expect to make $6,666 a month before taxes.

How much is $80K a year daily?

An annual salary of $80K equals approximately $307.70 a day.

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Photo credit: iStock/LumiNola

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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.

SORL-Q126-046

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Contrary to what you might think, a person’s starting credit score doesn’t begin at zero. In fact, no one’s credit score is zero. The lowest credit score is 300, but that doesn’t necessarily mean that’s a person’s starting score. If a person is just starting and doesn’t yet have any credit history, they’re more likely to have no score at all.

So, for a person just beginning their credit journey, what is the starting credit score? Read on to learn the factors that impact this from the start and the habits that can help ensure a better credit score.

How Your Credit Score Is Calculated

There’s no standardized starting credit score. That may be partly due to certain factors that influence how a score is calculated. A person’s young credit history will impact their starting FICO® score.

The FICO® Score is a numerical scoring system widely used in the U.S. to help determine a person’s creditworthiness. The FICO company calculates the score, which ranges between 300 and 850, using the following data:

Payment History

Payment history is the most important factor for any credit score, including a starting credit score. Paying on time and avoiding missed payments account for 35% of a person’s credit score. That’s why it’s important to pay everything from credit card bills to rent on time — even one single late payment can harm a starting credit score.

Credit Utilization or Amount Owed

The second most important factor, making up 30% of a credit score, is credit utilization. Credit utilization is the percentage of available credit a person actually uses, and it should ideally be kept at 30% or under, as higher credit utilization can cause your score to decrease.

Length of Credit History

How long someone’s accounts have been open makes up around 15% of their credit score. The longer an account has been open, the higher the credit score.

While it’s out of their hands, consumers who are just beginning to establish credit will likely be negatively impacted by this factor, lowering their starting credit score.

Recommended: How to Get a Personal Loan With No Credit History

Credit Mix

Making up around 10% of a person’s credit score, credit mix refers to the different types of credit a person has. Generally, the two types of credit are:

•   Installment loans: Think car loans, student loans, and mortgages.

•   Revolving credit: Includes credit cards and home equity lines of credit.

If an individual can manage different types of credit without late or missed payments, it reflects well on their score.

New Credit

Opening multiple new accounts at a time? This factor accounts for 10% of a credit score. As well as the action of opening new accounts, this includes the application of hard inquiries to your accounts.

A person with a starting credit score may have all, none, or some of these factors on their credit history. The mix varies from person to person, making it hard to predict one starting credit score for everyone.

What Is a Good First Credit Score?

Unfortunately, a starting credit score won’t be the perfect 850. More likely, it’s somewhere within the fair-credit-score range (580-669).

That’s mostly due to limited payment history. If a person just opened a credit card or started paying off their student loans, the credit bureaus can’t see an established history of timely repayment. Even if the consumer has never missed a payment, payment history is limited.

Similarly, a credit history of just a few months doesn’t give lenders enough data to judge a consumer as low- or high-risk.

Ways to Establish Good Credit

While it can be discouraging that your starting credit score is penalized just for being new, by following these tips on establishing credit, it shouldn’t take you too long to build it up:

•   Paying bills on time will continue to be important, as payment history is a major factor in your credit score.

•   Keeping accounts open and in good standing, even if they’re no longer used, can help lengthen a person’s history.

•   Adding to the credit mix with a personal loan, credit-builder loan, or other types of credit can help boost your credit score.

•   Paying bills in full can help keep the credit utilization ratio balanced at 30% or below.

•   Not applying for too much at once will help you avoid the pitfall of too many hard inquiries and new accounts, which can have a negative impact.

While an individual can try to build their score proactively, a substantial portion of it will come from paying bills consistently over time.

Establishing and continuing these good habits will likely lead to a higher credit score.

Why Your Credit Score Is Important

It may be just a three-digit number, but a good credit score is a gateway to better financial opportunities. With a very good (740-799) or exceptional (800-850) credit score, borrowers have better odds of being approved for loans and may even have better repayment terms or more favorable interest rates.

Businesses and lenders may pull your credit history to confirm your qualification for any of the following:

•   Credit cards

•   Mortgages

•   Rental apartments

•   Job applications

•   Car loans

•   Personal loans

•   Student loans

With a low credit score or no credit score, getting favorable terms or qualifying for any of the above could be challenging.

How to Check Your Credit Score

Checking a credit score isn’t just a good way to track progress. It can also highlight any incorrect or fraudulent activity tied to a person’s name.

You can check your credit score for free through your card issuer, your bank, or a nonprofit credit counseling agency. Also, anyone can get their free credit report, which is not the same as a credit score, from three nationwide consumer credit reporting companies using AnnualCreditReport.com. The site allows visitors three free reports annually, one from each credit bureau.

In addition, lenders often offer free credit score reporting on their portals.

Recommended: The Difference Between Transunion and Equifax

The Takeaway

Having a starting credit score doesn’t mean starting from zero or with a perfect 850. Establishing healthy credit habits, such as paying bills on time and in full, is important because it can help you build a solid credit score. The higher your credit score, the more financial opportunities you’ll have.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

What are the FICO credit score ranges?

FICO credit scores range from 300 to 850. Under 580 is considered a poor score, 580 to 669 is fair, 670 to 739 is good, 740 to 799 is very good, and 800 is considered exceptional.

Can you have a credit score without a credit card?

Yes. Credit scores aren’t based solely on credit cards. The score takes into account student loans, rent, utility payments, and more.

What are the differences between FICO, Experian, and Equifax?

Experian and Equifax are credit bureaus that collect and compile credit histories for lenders and financial institutions based on data from consumers’ borrowing habits. FICO then uses that data to create a numerical credit-scoring system that measures consumers’ creditworthiness.

Do you start with a specific credit score?

There’s no standardized starting credit score. You’ll likely start with no credit score until you have an active credit history, after which your habits will determine your credit score based on factors such as payment history, the length of that history, and how much you owe.

Do I have to pay to get my credit report?

You can get a free copy of your credit report online via the website AnnualCreditReport.com. This detail of your credit history is prepared by the three major credit bureaus — Experian, Equifax, and TransUnion — and you can request your report from one or all three of these agencies.

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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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

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

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

SORL-Q126-062

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Sinking funds are tools that people or businesses can use to set aside money for a planned expense. For example, if you want to take a vacation next year, you may start putting cash in an envelope to save up for the trip.

Sinking fund categories can vary by person, depending on their relevant expenses. They can include auto repairs, health care costs, gifts, insurance payments, vacation funds, and more.

You can think of sinking funds as a way of “sinking” your money into an account for later use. It’s basically a savings strategy. Find out more below.

General Definition of Sinking Funds

The term sinking fund has its roots in the world of corporate finance, but it mainly refers to setting aside money for a future expense.

Sinking funds are smaller offshoots of an overall budget. Putting together a sinking fund entails stashing your money away to spend it on a predefined purpose later on.

For instance, some people like to pay their car insurance in six-month installments. They may set aside money each month in anticipation of the next six-month installment payment so that they’re not hit with a big expense all at once.

Examples of Sinking Funds Categories

When it comes to sinking fund categories, there are no hard-and-fast rules. Different individuals have different financial needs and planned expenditures. Some common sinking fund categories are:

•   Vacations

•   Gifts and holiday-related expenses

•   A new car or regular maintenance and insurance costs

•   A home purchase or home maintenance expenses

•   Medical and dental costs

•   Child care costs

•   Tuition fees

•   Pet expenses, such as veterinarian visits

A sinking fund can help you save for just about anything.

Recommended: How to Set Your Financial Goals

Sinking Fund Category Calculations

Setting up a sinking fund is simple enough: You can set cash aside or choose a more formal option like a savings account. The difficulty for most people is regularly contributing to it. The trickiest part, though, may be figuring out how much to put away.

A budget planner app can come in handy, allowing you to assess how much money you have left to put toward your sinking fund categories once you’ve taken care of your monthly expenses.

Similarly, sticking to a certain budget type — such as the 50/30/20 rule — may help determine what you can contribute. You could also structure your sinking fund contributions as a biweekly savings challenge.

To calculate how much you can contribute to a sinking fund, you’ll need to decide which categories are the most important. Another consideration is which fund to use first — perhaps an auto insurance payment is due before a vacation. Your priorities will affect your sinking fund calculations.

In corporate finance, the sinking fund formula helps a company figure out how much it needs to put away to pay off a long-term debt in a lump sum. The formula takes the amount of money already accumulated, multiplies it by any applicable interest, and then divides it by the remaining number of payments.

For individuals, however, the calculation can be as simple as looking at your monthly income and putting extra cash into each of your sinking fund categories.

Types of Sinking Funds

What type of vehicle can you use to save up for a sinking fund? There are a few to choose from.

The most obvious, and probably the simplest, is to keep the sinking fund in cash and store it somewhere safe. Of course, that money won’t earn any interest and will likely lose value due to inflation.

Perhaps the ideal option is to open up individual savings accounts at your financial institution for each of your sinking fund categories. This beats cash because your sinking fund is protected (and insured up to $250,000 by the Federal Deposit Insurance Corporation or the National Credit Union Administration), and you might also earn some interest on it.

Recommended: Money Market Account vs Savings Account

Best Time to Take Advantage of Sinking Funds Categories

Sinking funds are all about taking advantage of saving up for a planned or known expense well in advance. As such, the ideal time to use your saved money is when it’s time to make the payment, be it a fancy vacation, a new car, or paying your child’s college tuition fees.

There may be times during the year when it’s more advantageous to save than others. For instance, most people experience a financial crunch during the holiday season — with gifts to buy, parties to attend, and other demands on income. That may not be the best time to sink money into a fund.

Instead, think about when you may have some extra money to put into your sinking funds, such as when you get your tax refund or receive a cash gift for your birthday.

The Takeaway

Sinking funds are designated cash reserves for future expenses. Corporations and businesses also use sinking funds. Having this type of fund means that you’re stashing money away for an upcoming, known expense and relieving some of the financial pressure ahead of time. Sinking fund categories can vary depending on your individual situation.

Sinking funds are a way to get ahead of your planned expenses and give yourself some financial wiggle room. A money tracker app can help you do the same.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

What to put in sinking funds?

You put cash into a sinking fund to use later for an upcoming expense. What that expense is (i.e., the sinking fund’s category) depends on your specific financial needs.

What is a sinking fund leasehold?

In property management, a sinking fund leasehold contains funds for repairs or renovations to a rental property. The leaseholder or landlord sets aside a small percentage of the monthly rental money to continue adding to the fund.

What is the difference between a reserve fund and a sinking fund?

The two are similar, but a sinking fund’s contents are designated for a specific purpose or expense, while a reserve fund contains funds used for general future expenses.

What is the difference between an emergency fund and a sinking fund?

An emergency fund is a general fund set aside for sudden, unexpected expenses, such as job loss and medical bills. In contrast, sinking funds are meant to finance expenses that you plan for.

What is a common sinking fund mistake?

People may sometimes split their sinking funds into too many categories and find it overwhelming to put money into each. The right number of sinking funds for you will depend on your finances and your individual needs.

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Photo credit: iStock/Delmaine Donson

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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.

SORL-Q126-056

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A common rule of thumb for renters states that no more than 30% of your income should go to rent and utility payments each month. This guideline dates back to housing initiatives introduced by the federal government in the 1960s via the Brooke Amendment.

Deciding what percentage of your income should go to rent and utilities is central to making a realistic budget as a renter. The less you can spend on these items each month, the more money you’ll have to fund your financial goals. Read on for more about calculating a housing budget that’s right for you as well as creative ways to cut your housing costs.

What Is the 30% Rule?

The 30% rule says that households should spend no more than 30% of their income on housing costs, including rent and utilities. This housing affordability advice dates back to the 1969 Brooke Amendment, which was passed in response to rental price increases and complaints about public housing services.

The Brooke Amendment capped rent for public housing at 25% of residents’ income. This measure was designed to offer financial relief to low-income households participating in public housing programs. In 1981, Congress increased the 25% threshold to 30%, where it has remained to the present day.

Recommended: Should I Sell My House Now or Wait

What Is 30% Based On?

The 30% rule for housing affordability considers two distinct cost categories: housing and utilities. For renters, this generally means rental payments and basic utilities such as electricity, water, and heating. Collectively, these expenses should total no more than 30% of a renter’s gross monthly income.

Gross income is what someone earns before taxes and other deductions are taken out. Net income, on the other hand, is what they actually take home in their paychecks. Basing the 30% rule on someone’s gross income versus their net income will result in a higher dollar amount to allocate to rent and utilities.

It’s also important to remember that the 30% rule isn’t set in stone. The average monthly expenses for one person will vary depending on your location’s cost of living, optional costs such as renters insurance, and whether you have a very low or high income.

If you need help managing your finances, online tools such as a money tracker can help you monitor spending, set budgets, and keep tabs on your credit score.

Calculating the Percentage to Go to Rent and Utilities

Figuring out what percentage of income should go to rent and utilities using the 30% rule is a fairly simple calculation. You multiply your gross monthly income by 0.30 to figure out the maximum amount you should be budgeting for rent and utility costs. How complicated this calculation is can depend on how often you’re paid and whether your paychecks are always the same amount.

If You Are Paid the Same Amount Every Two Weeks

If you’re paid biweekly and your paychecks are the same, you can calculate your target rent and utilities in one of two ways. First, you take the gross amount reported on one of your paychecks and multiply it by 0.30. You then double that result to find the monthly amount.

So, say your biweekly gross income is $2,500. Thirty percent of that number is $750 ($2,500 x 0.30). If you double it, then your rent and utilities budget should be no more than $1,500 per month.

However, this strategy doesn’t take into account the two months each year when there are three biweekly paychecks. If you want to find the average amount to spend on rent and utilities each month, you can multiply your biweekly gross paycheck amount by 26 (for 26 paychecks in one year), divide by 12 (for 12 months), then find 30% of that amount.

Using the $2,500 figure once again, if you multiply that by 26, you’d get $65,000. Divide that by 12 to get $5,417 (rounded up), your monthly pay. Thirty percent of that is $1,625, the amount you’d allocate to rent and utilities per month.

If You Are Paid Varying Amounts Every Paycheck

Pinpointing what percentage of income should go to rent and utilities can be a little more challenging if your paychecks aren’t the same from one pay period to the next. That might happen if you’re paid hourly and work different hours each week, receive vacation or sick pay, or part of your income is based on commission.

In that scenario, you’d want to look at your annual income in its entirety. You can do that by looking at all of your pay stubs for the previous 12 months or checking your most recent W-2 form. Again, you’re looking at gross income, not net pay.

You’d take the gross income for the year, then multiply it by 0.30 to figure out how much of your pay should go to rent and utilities overall. If your gross annual income were $70,000, then your target number would be $21,000 for the year. Divide that by 12 and you’ll find that you should be spending no more than $1,750 per month on rent and utilities using the 30% rule.

How to Reduce Your Rent to 30% or Less of Your Income

If you’ve done the calculations and you’re spending more than 30% of your income on rent and utilities, there are some things you may be able to do to reduce those costs.

Split the Rent With Roommates

Taking on one or more roommates could ease some of the financial load. Remember, it’s important to have a written agreement in place specifying what percentage of rent and utilities each roommate is responsible for.

Also, determine who will pay the rent and utility bills when everyone is chipping in. For example, one person may volunteer to collect payments from everyone else and then cut a check to the landlord or utility company. Consider using a budget planner app to keep track of household bills and payments.

Recommended: 25 Tips for Sharing Expenses With Roommates

Consider a New Location

Moving is another way to decrease rent and utility costs if you’re relocating to an area with a lower cost of living. Rent in rural areas may be cheaper than in a trendy urban center, for example. There can even be significant variation in rents in different neighborhoods within the same city.

Keep in mind that relocating can have its trade-offs. For instance, living in a less expensive area may mean giving up certain amenities you enjoyed in your old neighborhood, such as walkability or convenient access to stores and restaurants. And of course, you’ll also have to budget for the cost of moving, which can average $1,400 for a local move or $5,450 for a long-distance move.

Work Remotely

Working remotely can have its advantages, including saving money on certain expenses. For example, you may spend less on gas, meals out with coworkers, or office attire.

That said, if you are on a computer all day, you’ll want to take steps to lower your energy bill, such as by unplugging at the end of the day and buying energy-efficient lights.

Opting for remote work could also save you money on rent if you’re able to become location-independent. When you’re not tied to a particular city, that frees you up to seek out cheaper areas to live. You could even forgo renting altogether and become a digital nomad. That has its own costs, such as short-term accommodation or travel expenses, but you’re not locked in to paying rent to a landlord or utility payments long-term.

Negotiate With Your Landlord

The most effective way to reduce your rent may be to go straight to the landlord and negotiate your rent. Your landlord may be willing to offer a discount or reduced rental rate under certain conditions.

For example, your landlord might agree to reduce your rent by 10% or 15% if you pay six months in advance or agree to a longer lease term. The prospect of guaranteed rental income might be attractive enough for them to offer you a better deal.

You may also be able to get a rate discount by offering to take care of certain maintenance and upkeep tasks yourself. If your landlord normally pays for lawn care, for example, they may be willing to let you pay less in rent if you’re working off the difference by cutting the grass and maintaining the property’s landscaping.

Ask for a Promotion or Find a New Job

Instead of attempting to reduce your costs, you could try a different tactic: Making more money means you can budget more for rent and utility costs.

Asking your boss for a raise or promotion might boost your paycheck. If you hit a dead end, you may consider a more drastic move and look for a higher-paying job. Taking on a part-time job or starting a side hustle can also help you bring in more money to cover rent and utility payments.

What to Consider if 30% Doesn’t Work for You

As noted above, the 30% rule for housing is a somewhat arbitrary number and may not work for everyone. Spending more than 30% of your income on rent and utilities doesn’t automatically mean that you’re living beyond your means, for a variety of reasons.

There are, however, a few actions you can take to streamline your finances and determine what percentage of your income should go to rent and utilities.

Try the 50/30/20 Rule

The 50/30/20 budget rule recommends spending 50% of your income on needs, 30% on wants, and the remaining 20% on savings and debt repayment. This budgeting method doesn’t specify an exact percentage or dollar amount to spend on rent and utilities. Instead, those expenses get grouped into the 50% of income allocated to needs.

You still need to keep track of your spending to make sure you’re staying within the 50% limit. Using an online budget planner can help you figure out if the 50/30/20 rule is realistic based on your income and expenses.

Pay Down Loans and Debt

Total U.S. household debt reached $18.59 trillion in the third quarter of 2025, according to Federal Reserve data. While a big chunk of that is mortgage debt, Americans also pay a sizable amount of money to credit cards, student loans, personal loans, auto loans, and other debts.

Working to pay off debts can free up more money to allocate to rent and utilities. There are different methods you can use, including the debt snowball method and the debt avalanche method.

Look for Cost Savings in Recurring Expenses

One more way to make shouldering higher rent costs easier is to lower your other expenses. Making small changes at home can lead to lower electricity and water bills. Cutting out subscriptions you don’t use, looking for a better deal on car insurance, and eating more meals at home instead of dining out are all simple ways to lower your expenses.

The Takeaway

If you’re spending 30% or less of your gross (before tax) income on rent and utilities, pat yourself on the back. You can spend up to 50% of your income on housing if you have no debt and a healthy savings balance. The important thing is to look at your entire financial picture, including your income, debts, and goals, to decide the figure that’s right for you.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

SoFi helps you stay on top of your finances.

FAQ

What is a good percentage of income to spend on rent?

The 30% rule says that renters should spend no more than a third of their gross income on rent and utility payments. The less you spend on rent and utilities, the more money you’ll have to fund other financial goals, such as saving for emergencies, paying off debt, and planning for retirement.

Is 30% of income on rent too much?

Spending 30% of income on rent may be too much if a significant part of your income is also going toward debt repayment. That may leave you with little money to cover other necessary expenses or discretionary spending.

How much of your monthly income should go to rent?

A common rule of thumb says that roughly one-third of your monthly gross income can go to rent. But if you have substantial savings and no debt, you may be okay with spending a larger percentage of income on rent. On the other hand, if you’re trying to pay off debt or build savings, you may prefer to spend less on rent payments.

Does the 30% rule include utilities?

The 30% housing rule generally includes both rent and basic utilities. Utilities may include electricity, water, heating, and sometimes trash or sewer services. Because utility costs vary by location and season, renters may want to estimate an average monthly cost and include it when calculating whether their housing expenses fall within the 30% guideline.

What happens if you spend more than 30% of your income on housing?

Spending more than 30% of income on housing is often described as being cost-burdened, but it doesn’t automatically mean your finances are in trouble. Some households choose to spend a larger share of income on housing because of location preferences, career opportunities, or access to amenities. The key is ensuring that other financial priorities, such as saving and paying down debt, can still be met.

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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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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When a refund goes to a canceled credit card, it may seem like your cash is lost for good. However, getting your money back only requires a few calls to the credit card company and the merchant, as well as a little patience.

There are ways to avoid a refund going to a canceled credit card and methods to recover the cash if it’s stuck in limbo between the retailer and the credit card company. Keep reading to learn how to avoid this situation and what your options are.

Can You Stop a Refund From Going to a Canceled Credit Card?

To avoid a refund being issued to a canceled credit card, the simplest approach is to reach out to the merchant before starting the refund process.

Ask the business if it’s willing to refund the purchase in a different way, which will likely be store credit or a gift card. In some instances, it could mean receiving cash back or refunding the purchase to a different credit card.

This may involve calling customer service or visiting the brick-and-mortar location. If the business is willing to refund the purchase differently, you’ll avoid the lengthy process of receiving a refund that had been issued to a canceled credit card.

Recommended: Common Credit Report Errors and How to Dispute Them

Steps for Getting a Refund on a Canceled Credit Card

When a refund goes to a canceled credit card, there are a few options to ensure you don’t lose the credit. It can help to know a little about how credit cards work, but it’s not essential.

1. Check if Your Canceled Card Account Is Still Open

If your credit card was lost or stolen and you had to cancel it, don’t worry. If the account is still open under a new card number, the refund from the merchant will be credited back to the new card.

Recommended: How to Report Identity Theft

2. See if the Refund Was Accepted by the Card Issuer

When there’s no longer a credit card associated with the account, things get trickier. What happens next depends on when you closed the account.

If you can still log in to your account online, you may see the refund. But if you closed the account long ago and can’t access it online, you should first reach out to the merchant and ask for the Acquirer Reference Number (ARN).

3. Request the Refund

If the merchant tells you they posted your refund to the old account, call the credit card company and request a refund via check. This is when the ARN can come in handy. In some cases, the credit card company or bank may ask for a written request.

4. Be Patient

A standard credit card refund usually takes a week, but getting a refund from a canceled credit card can take longer, depending on merchant policy, credit card company policy, and even the returned item or service. You can typically expect a refund in 7-14 business days after your request.

5. Return Directly to the Merchant for the Refund

If several weeks pass without a refund, it may be time to return to the store to track it down. In some cases, the card issuer may reject a refund to a closed account and send it back to the store. Reach out to the store’s customer service and ask if they received a bounce-back from the credit card issuer. If so, you might be able to request a refund in the form of store credit or cash.

This process can be complicated and tedious, depending on the retailer’s size and bookkeeping system. An independent retailer is unlikely to have a customer service department, so going to the store with receipts and reference numbers could speed up the process.

How to Avoid a Refund Going to a Canceled Card

Asking for an alternative refund method is one way to avoid a refund going to a canceled card, but here are a few other options to avoid a lengthy process.

•   Conduct an audit of transactions before canceling a credit card. Are there any purchases you plan to return? Keeping the card open until the refund is processed could make sense.

•   Keep an eye on finances. A money-tracking app can help you keep tabs on your spending, avoiding the confusion of which refund goes on what card. Some services also offer credit score monitoring at no cost and a debt payoff planner.

•   Think long and hard before canceling a credit card. Canceling a credit card can harm your credit score, and canceling one out of the blue may lead to more issues than benefits. Closing a card without thinking it through could lead to refunds on a canceled card.

Recommended: What Is The Difference Between TransUnion and Equifax

The Takeaway

The simplest way to prevent a refund from going to a canceled card is to go straight to the merchant and ask them to refund the amount using alternative means. That could mean getting store credit, which will sidestep the credit card company and allow you to get your money back faster. If a refund does go to a canceled card, it’s not lost for good, but it involves taking a few steps to recover it.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Can I get a refund that was sent to a closed credit card?

Yes, but getting the refund will depend on whether the account is still open, how long the card has been closed, and the credit card company’s policies. Often, the issuer will either apply the refund to the account or send the funds to the cardholder by check or another payment method.

What happens if the credit card issuer rejects the refund to a closed account?

If the card issuer rejects the refund because the account is fully closed, the funds are typically returned to the merchant. In that case, you’ll need to contact the merchant directly to request the refund again.

What is an ARN?

An Acquirer Reference Number (ARN) is a unique tracking number assigned to a credit card transaction once a refund is processed. The merchant or payment processor can provide this number, and the credit card issuer can use it to locate the refund in the payment network and track its status.

How long does it take to get a refund from a canceled credit card?

Refunds to a canceled credit card can take longer than normal, depending on the merchant’s policies and the credit card issuer. Following up with both parties can help speed up the process.

Can I request a refund in a different form if my card is canceled?

Yes. Merchants may offer alternative refund methods, such as store credit, a gift card, cash, or a refund to a different credit card. Contact the merchant before the refund is processed to arrange this.

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Photo credit: iStock/MBezvodinskikh

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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

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

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