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As a teenager, you may think you don’t have enough money to worry about coming up with or sticking to any kind of budget. But, in truth, you don’t need a lot of money to benefit from budgeting. In fact, coming up with a plan for how to spend your money (which is what budgeting is) can be particularly helpful for teens who don’t have much in the way of income or savings.

While creating a teen budget might sound intimidating or complicated, it simply involves looking at what you have coming in and going out, setting aside some money for future goals (say, getting a new phone), while also allocating funds for having fun right now.

Whether all you have is allowance and odd jobs or you earn steady income from a part-time job, here’s how to do more with the money you have.

How to Build a Budget for Teens

Learning how to budget as a teen helps set the foundation for financial success later in life. It includes tracking income and expenses, setting savings goals, and making wise spending decisions. Below we break it all down.

1. Determine How Much You Earn

The first step in creating a budget is figuring out your income. As a teenager, your income might come from various sources, such as a part-time job, an allowance from your parents, or occasional gigs like babysitting or mowing lawns. If you have a checking account, all of your deposits represent your income.

List all of your regular income sources and calculate the total amount you receive each month. If your income fluctuates, you can estimate a monthly average. Alternatively, you might find it easier to break up your budget on a weekly cycle. If you have a job where you’re paid every two weeks, just divide that amount in half.

This step will give you a clear picture of how much money you have to work with.

2. Figure Out How Much You Usually Spend

So where does all your money go? To find out, come up with a list of spending categories and roughly how much you spend weekly or monthly on each.

If you typically make purchases using a debit card or payment app, you can see your spending by looking at your transactions for the past month. If you normally spend cash, however, you may need to track your spending for a few weeks or a month. You can do this by keeping every receipt and jotting down your spending at the end of each day.

Next, you’ll want to categorize your spending into different areas, such as food, clothing, transportation, entertainment, etc. This exercise will help you understand your spending habits and identify where you might be overspending.

3. Divide Spending Into “Needs” and “Wants”

Once you have a clear idea of your spending, it’s time to differentiate your spending categories into “needs” vs. “wants.”

Needs are required or necessary spending like your cell phone bill, car insurance, gas money, and any other expenses that your parents have asked you to be responsible for. Wants are nonessential items like eating out, video games, and trendy clothes.

By dividing your expenses into these two categories, you can prioritize your spending. This can help ensure that your needs are met before you start spending money on your wants.

4. Set Some Money Goals

Saving money is a crucial part of budgeting. Whether you want to save for a new pair of sneakers, a car, or college, having a goal in mind can motivate you to save consistently.

It’s helpful to set specific, achievable savings goals. For example, if you want to save $300 to make a purchase in six months, you’ll need to save $50 each month. Having clear goals helps you stay focused and disciplined. When you make your monthly or weekly budget, you can make sure to set aside money for your short-term and long-term goals, whatever they may be.

If you don’t have a savings account, now may be a good time to open one. Even if you open an account with a very small amount, your balance will grow as you add funds over time and earn compound interest (which is when the interest you earn on your balance also earns interest). Many banks and credit unions offer teen savings accounts that are designed to help young people earn a competitive yield on their money, while avoiding maintenance fees and minimum balance requirements.

5. Make Your Teen Budget

Now that you have a clear understanding of your income, expenses, and savings goals, you can create your budget. You can do this using a budgeting app, pen and paper, or simply the “notes” app on your phone.

Start by putting your income at the top. Next, you’ll want to list your fixed expenses (needs), variable expenses (wants), and savings goals and what you will spend on each.

Once you have a list of all your spending categories, it’s time to figure out how much money to use for each one. You’ll want to make sure that your total expenses and savings do not exceed your income. If they do, you’ll need to adjust your spending habits by cutting down on spending in the “wants” categories or finding ways to increase your income.

6. Start Using Your Budget

Creating a budget is only the first step; sticking to it is where the real challenge lies. It helps if you start tracking your spending. You can do this by collecting receipts and writing down what you spend at the end of each day. Or, if you use a debit card or payment app, you can just look at your bank account or app transaction history to see how much you’re spending in a given day or week.

Recording your expenses daily or weekly can help you stay within your budget and prevent you from overspending. If you’re not able to meet your savings goals, you may need to make some adjustments in your spending.

7. Revisit Your Budget

Your financial situation and priorities can change, so it’s important to reevaluate your budget regularly. You may want to review your income and expenses at least once every few months to ensure your budget still aligns with your goals.

If you find there are certain areas where you are consistently overspending or underspending, you can adjust your budget accordingly. If you no longer ride the bus or you have a new source of income, for example, you may be able to spend more on “wants” or put more toward saving (aka, future “wants”).

Regularly updating your budget helps you stay in control of your finances and ensures that you’re always working toward your goals.

Recommended: 50/30/20 Budget Rule: What It Is and Tips on Using It

Why Getting Started Young Is Important

Budgeting is a key financial literacy skill, and starting to budget as a teenager sets you up for lifelong financial success. Here are some reasons why it’s crucial to develop good money habits early on.

•   Builds discipline: Learning to manage money requires discipline and a sense of responsibility. These traits are beneficial not just for financial management but for all aspects of life.

•   Prepares for future financial independence: The skills you develop now will help you manage larger sums of money in the future. Whether it’s paying for college, buying a car, or renting an apartment, budgeting will always be essential.

•   Helps achieve long-term goals: Starting early allows you to develop a habit of saving, which can help you achieve long-term financial goals like buying a house or starting a business.

•   Builds an appreciation for money: When you budget, you become more aware of the value of money and the effort it takes to earn it. This awareness can lead to more mindful spending and better financial decisions.

The Takeaway

Budgeting for teens might sound intimidating or even pointless if you don’t have much money to work with. But doing the simple steps listed above can help you take control of your finances and build better money habits.

By determining your income, tracking your expenses, setting savings goals, and regularly reevaluating your budget, you’ll be able to make your money go farther and be well on your way to financial success.

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

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

FAQ

What should I spend money on at 15?

At 15, you’ll want to focus on spending money wisely, balancing things you need to spend money on, things you want to spend money on, and saving up for things you want to buy or do in the future. Common teens expenses include:

•   Transportation (bus / train fare, gas)

•   School supplies

•   Extracurricular / sports supplies or equipment

•   Clothing

•   Takeout

•   Entertainment

•   Saving for a car

•   Saving for college

What is a good budget for kids?

A good budget for kids is simple and easy to manage, ensuring a balance between spending, saving, and sharing/giving. Here’s one framework to consider:

•   Income: Allowance, gifts, and earnings from small jobs.

•   Expenses: Essentials (school supplies, clothing), savings, and fun spending.

•   Breakdown: 50% for essentials, 20% for savings, 20% for fun, and 10% for giving/charity.

This budget helps teach kids to manage money wisely, save for future needs, and understand the importance of generosity.

What is the savings rule for kids?

You can apply the general guideline for adults — which is to save around 20% of your income/paycheck — to kids. Whether a child/teen earns money through an allowance, doing chores, or a part-time job, they can start putting 20% of their weeking income toward saving. This gives them money for the unexpected, as well as things they want to buy or do in the future. It also builds a great habit that can serve them well throughout their lives.

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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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.

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SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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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Most people know that after an accident, they’ll likely need to use the car insurance they’ve been diligently paying for. Car insurance can protect you from financial liability that has the potential to be devastating.

Being protected by a car insurance policy that is appropriate for your needs — and your budget — is vital.

What Is Car Insurance?

A car insurance policy is an agreement between you and your insurance company. At regular intervals — typically once a month, every six months, or annually — you pay the cost of the policy. In return, the car insurance pays for damages that occur when an accident happens, whether that damage is to your car or someone else’s car. What and how much the insurance will pay depends on the type of car insurance coverage you purchase.

💡 Recommended: Average Cost of Car Insurance in Arizona

How Does a Car Insurance Deductible Work?

If the time comes to put in a claim, you’ll most likely have to pay a deductible first. The deductible for car insurance works in a similar way to that for medical insurance. It’s the amount of money you will pay out of pocket on a claim before your policy picks up the rest — up to the limit you agreed to.

If you sign up for a high deductible, then your policy payments will be lower. A policy with a $1,000 deductible will not cost as much every month as a policy with a lower deductible. But if you find you need to put in a big claim to have your car fixed, you’ll have to come up with that $1,000 up front. If that is too big a hit for your bank account, then you may want to consider a lower deductible.

Most deductibles range from $100 to $2,000.

Recommended: 5 Steps to Switching Your Car Insurance

Types Of Car Insurance Coverage Options

Car insurance coverage varies by type of coverage, amount of coverage, and amount of deductible. Some drivers may want to purchase specialty coverage that will be priced separately — for example, coverage for antique automobiles or vehicles driven for commercial purposes, or ride-share insurance.

Insurance companies will pay up to the limits of the policy, after any deductible.

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Liability Coverage

A basic car insurance policy is liability coverage that will pay if there are bodily injuries to people in the other car or vehicular damage to the other car, and you are at fault.

Uninsured or Underinsured Motorist Coverage

Sometimes included in a liability policy package, but also available as a separate part of a policy, is uninsured or underinsured motorist coverage. If someone without their own liability insurance coverage hits your car, this type of insurance pays for your bodily injuries and physical damage to your car.

Emergency Road Service Coverage

If your car breaks down, your battery dies, you lock your keys in your car, or other types of emergencies that might leave you stranded, emergency road service coverage can be helpful to have. This type of coverage, sometimes called roadside assistance coverage, may pay for a tow truck, a locksmith, or even bring gas to you so you can make it to the next gas station. This is generally very affordable coverage to add to a policy.

Comprehensive and Collision Coverage

Comprehensive insurance covers repairs to a car that is damaged — outside of an accident — or stolen. Damage could be things like vandalism, a broken windshield, a fallen tree on your car, or other occurrences out of your control.

Collision coverage will pay to repair or replace your car if it’s damaged in an accident with another car or even an object such as a fence or tree.

These two coverages are sometimes listed together as “comp and collision” on a policy, but they are available as separate purchases in most cases. Both may be required by a lender if you’re leasing a car or still paying on an auto loan. They’re the most common types of car insurance to include in a deductible.

Personal Injury Insurance

Personal injury insurance, or medical payments coverage, will pay for your and your passengers’ medical expenses after an accident, no matter which driver was at fault.

Gap Insurance

If you are still making auto loan payments or you’re leasing a car, gap insurance might be something to consider. This type of coverage will pay the difference between the amount the car insurance company pays and what you still owe on the purchase or lease in the case of a total loss after an accident.

Understanding car insurance terms will help you make a smart decision about what types and amounts of coverage to purchase.

💡 Recommended: Average Cost of Car Insurance in California

Do You Need Car Insurance?

In most states, you must have at least some form of liability coverage. In fact, to legally register and drive your car, you’ll have to establish and maintain a minimum level of coverage.

New Hampshire is the exception. New Hampshire drivers are not required to carry any automobile insurance unless they have been convicted of driving while intoxicated, have had their driver’s license revoked, or were at fault in a car accident and were uninsured, among other stipulations.

In all U.S. states, driving without at least minimum liability coverage may result in being fined and even losing your driver’s license.

How Much Car Insurance Do You Need?

After you’ve purchased liability coverage, other coverage may be optional. But just how much auto insurance do you need? Older cars whose value is lower than the coverage costs, including any deductible, might just need liability coverage, instead of comprehensive and collision coverage.

Some things to consider when purchasing insurance are the value of your car, your driving history, how far and how often you drive the car, and how much you could afford to pay out of pocket if you are in an accident.

Recommended: Electric Vehicle Insurance: Everything EV Drivers Need to Know

How Much Does Car Insurance Cost?

According to Bankrate.com, the average full-coverage car insurance policy costs $2,685 per year or about $223 a month. However, these averages vary widely by state. New York, Louisiana, Florida, Colorado, and Nevada reportedly have the most expensive car insurance policies.

Other factors that go into car insurance policy prices are what kind of driving record you have, your age and gender, and the type of car you’re insuring, among others. If you get a speeding ticket or you’re at fault in an accident, your insurance policy is most likely going to go up in cost.

Car insurance is highly competitive, so comparison shopping can be a wise move.

💡 Recommended: Average Cost of Car Insurance in Florida

How to File a Car Insurance Claim

It’s recommended that claim filing should happen as soon as possible after an accident. Call your insurance company and be ready to inform your insurer which vehicle was involved, who was driving, the exact location and time of the accident, the description of the damage, and the name and insurance of the other driver.

If the incident you report is covered, your insurer will pay, up to the policy limits, for the cost of the damage you caused, or the damage to your car, minus the deductible if you have one. Your insurer may pay you directly. Or payment may be made to the other driver or to the repair shop working on your car.

Some insurers request a copy of the police report filed on an accident. If you didn’t call the police at the scene, you can still go to the local police precinct to file a report.

Recommended: Car Insurance Guide for New Drivers and 3 Ways to Save

The Takeaway

Car insurance pays a claim when there are injuries to people and damages to a vehicle when an accident has occurred. Types of coverage vary from minimal liability coverage to more broad-spectrum comprehensive and collision coverage, in addition to some coverage for special situations.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

SoFi brings you real rates, with no bait and switch.

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Photo credit: iStock/Melena-Nsk

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

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.

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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Should you get into a car accident and harm someone else or yourself with your car, your car insurance may cover the costs of medical bills. Depending on the coverage included in your policy, car insurance could also cover damage to your car while it’s parked, like if a large tree branch were to fall on it.

Ultimately, what your auto insurance will cover — and how much — depends on what type of car insurance you have and the amount of coverage you select. Read on to learn more about how exactly auto insurance works.

How Car Insurance Works

When you purchase auto insurance, you can choose different types of insurance and policy amounts. Depending on the state where you live, there are certain car insurance requirements you’ll need to meet — more about this later on.

Adding more types of insurance and higher coverage limits provides greater coverage, but it also raises your premiums. Having a lower deductible can also bump up your rates. On the other hand, a higher deductible can lower your rates.

A deductible is a common auto insurance term that means how much you would need to pay upfront before insurance coverage kicks in.

Recommended: How Does Car Insurance Work?

Car Insurance Requirements

Most states require car insurance, with the type of insurance and minimum coverage amounts depending on the state.

The only state that does not require car insurance is New Hampshire. While auto insurance is not mandatory in New Hampshire, if you’re at fault in an accident, you would need to show that you have enough funds to meet the state’s motor vehicle financial responsibility requirements.

If you’re not sure what the minimum requirements for car insurance are where you live, you can check your state’s DMV site. Keep in mind that while you can squeak by with the minimum coverage, how much car insurance you need varies. Depending on your situation, it may be a good idea to get more coverage.

Types of Car Insurance

When comparing car insurance, there are six main types to keep in mind.

Bodily Injury Liability

If you get into a car accident and are found to be at fault, bodily injury liability coverage can help cover medical bills and wages lost for taking time off of work because of bodily harm. It can also cover named drivers, such as family members on your policy or drivers who are using your car with your permission.

Bodily injury liability is typically must-have coverage. According to the most recent data available from the Insurance Information Institute (III), the average claim for bodily injury was $26,501 in 2022. Having enough coverage could help protect your property, assets and home.

Collision

If you crash into another car or an object, or your car gets damaged from driving over a pothole, collision coverage can pay for the costs to repair any damages to your car. It can also cover damages should your car flip over. Once your deductible is paid, the coverage will kick in.

If the other driver is the one at fault, then typically a claim can be filed with their insurance company and they’ll cover the costs. In the case the other driver’s coverage amounts aren’t enough, and you don’t have uninsured motorist coverage (sometimes called underinsured coverage), then your own collision policy can step in.

If you’re taking out a loan and still paying off your car, lenders likely require you to have full coverage, which includes liability, collision, and comprehensive insurance.

Recommended: How Much Does Insurance Go Up After an Accident?

Comprehensive

While collision coverage can cover the costs of damage during a car crash, comprehensive liability includes everything else — like a deer running into the front of your car, riots and vandalism, a tree branch falling on your car, hail damage, or other natural disaster. Comprehensive coverage can also pay for a broken windshield (though whether it makes sense to file a claim depends on your policy and deductible). It can also cover theft, of either your entire car or a piece of your car, such as a hood ornament.

Recommended: Does Car Insurance Cover Theft of Personal Items?

As mentioned before, if you’re still making payments on your car, you most likely are required to have both comprehensive and collision insurance in addition to liability coverage.

Personal Injury Protection (PIP)

Should you, the driver, or your passengers get harmed in a car accident, personal injury protection (PIP), also known as medical payments coverage, can help pay for medical bills, lost wages and sometimes funeral costs. It can cover these costs no matter who is at fault, hence why it’s sometimes called no-fault insurance.

Depending on your policy, PIP can also help pay for bodily harm should you get injured while walking or riding a scooter or a bike.

Property Damage

Like bodily injury liability, property damage coverage is also usually required in most states. Let’s say you or a named driver on your policy damages another vehicle or property, such as the side of a building. In these situations, property damage can reimburse the cost of repairs.

Uninsured or Underinsured Motorist

In the case of a hit-and-run, uninsured or underinsured motorist coverage can foot the bill for covered damages. Or, should someone who hits you not have adequate insurance, this type of policy can help pay for any shortfalls.

Special Considerations When Choosing a Policy

Besides the standard types of policies, there are some additional considerations to keep in mind when it comes to choosing an auto insurance policy.

Roadside Assistance

While not a type of insurance, roadside assistance can come in handy should you get a flat tire or your battery dies while on the road. While you can usually attach this to your existing auto policy as an add-on, what exactly is covered might vary by carrier.

Outside of purchasing roadside assistance as an add-on to your car policy, you can also shop around for companies that offer roadside assistance as a standalone service.

Recommended: Does Car Insurance Cover Towing?

New Car Replacement Coverage

If your new car gets totaled, new car replacement coverage can replace the vehicle in its entirety. This is usually available as an add-on if you purchased a policy with collision and comprehensive insurance.

Depending on the insurance company and carrier, this might cover cars that are no more than two years old. Plus, restrictions and limitations might differ.

Rental Reimbursement Coverage

If your car is getting repaired and those repairs are covered under a car insurance claim, a policy might include an add-on to cover the fees for getting a rental car or other transportation while your vehicle is in the shop. Whether you take public transit, rent a car, or take a rideshare, what exactly is covered depends on your specific policy and limits.

Rideshare Coverage

If you’re a rideshare driver for a company like Uber or Lyft, you’ll need to meet the minimum coverage amounts for that particular company. Some insurance companies provide rideshare coverage in their policies. If not, you might need to get a rideshare endorsement or a separate rideshare insurance policy.

Car Rental Coverage

If you have liability and comprehensive coverage on your car, then that coverage can typically carry over to when you rent a car within the country. As mentioned before, depending on the particulars of the policy and car insurance company, this might not be applicable in every state, and the amount of coverage can also vary.

What Does Car Insurance NOT Cover?

While auto insurance can cover a lot of things, it doesn’t cover normal wear and tear or routine maintenance. And unless it’s a rental car, it doesn’t provide coverage when you’re driving someone else’s car.

A policy also doesn’t pay for lost personal belongings in your car, such as headphones or gym gear. This could be covered by a homeowners or renters insurance policy.

At the end of the day, not all policies are alike nor are they created equally. It’s important to check to see what your policy will cover.

💡 Recommended: How Much Is Sports Car Insurance

The Takeaway

There are six main types of insurance: bodily injury liability, collision, comprehensive, personal injury protection, property damage and uninsured or underinsured motorist coverage. The type of coverage and limits required vary by state. When choosing a policy, you’ll also want to consider whether additional coverage like roadside assistance, car rental coverage, or new car replacement coverage is right for you.

Taking the opportunity to compare car insurance companies before committing to a policy can be a smart move that might save you money on your insurance rate.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

SoFi brings you real rates, with no bait and switch.

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Photo credit: iStock/tommaso79

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

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.

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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Budgeting can be challenging even with a stable income, but it becomes much more complex when your income fluctuates. Many freelancers, gig workers, seasonal employees, and commission-based professionals are familiar with the uncertainty of irregular compensation. With the right strategies, however, you can come up with a budget that allows you to manage your expenses, save for future goals, and feel less stressed about money — even during those lean months. Here’s a basic guide to budgeting with a variable income.

Tips for Budgeting With an Irregular Income

Just because you don’t get a regular paycheck doesn’t mean you can’t build wealth and achieve your financial goals. These tips can help you manage your up-and-down paychecks and feel more in control of your finances.

1. Determine Your Average Monthly Income

The first step in budgeting with an irregular income is to determine your average monthly take-home income. This can be tricky since your earnings vary, but you can get a reasonable estimate by looking at your income over the past six to 12 months.

Start by gathering your bank statements for the last six to 12 months, or if you get e-statements, log into your online checking account. Next, add up all of your income for the time period you choose, then divide by the number of months. This gives you an average monthly income, which will serve as a baseline for your budget.

Something to keep in mind: If you earn money from side gigs or freelancing, you’ll want to subtract anything that reduces it, such as taxes and business expenses.

2. Analyze Your Spending

Once you know how much money you have coming in, the next step is to figure out where it’s all going. You can do this by looking at your bank and credit card statements over the past six months, then listing and categorizing your expenses. This will show you what you are spending the most money on and where it might be easiest to save. Some tips that can help:

•   Begin by listing your fixed expenses. These are regular monthly bills such as rent or mortgage, utilities and car payments.

•   Next list your variable expenses. These are the expenses that may change from month to month, such as groceries, gas, and entertainment. This is an area where you might find opportunities to cut back.

•   Consider tracking your spending. To get a better sense of your spending, you may want to track it for a month. Simply record your daily spending with whatever is easiest — pen and paper, an app or your smartphone, or a budgeting spreadsheet found online.

3. Set Some Goals

Before you begin analyzing the data you’ve gathered, it’s a good idea to jot down your short- and long-term financial goals.

Short-term goals are things you want to accomplish within the next few years. This might include establishing an emergency fund (more on that below), reducing credit card debt, going on vacation, or putting a down payment on a home. Long-term goals, like saving for retirement or funding your child’s education, may take decades to accomplish.

Identifying these objectives can inspire you to stick to your budget. For instance, it might be easier to reduce expenses when you’re aware that you’re saving for a new car or a tropical vacation.

4. Consider Using the Zero Sum Budget

There are many different types of budgets but the zero sum budgeting approach can work particularly well for people with fluctuating income.

With this method, every dollar of your income is assigned a specific purpose, including saving and paying off debt. You’ll treat your short- and long-term financial goals as “expenses,” just like rent, utilities, and any other monthly expense. So if you make an average of $5,000 a month with your variable income, everything you spend or save during a month should add up to $5,000.

To make this budget work with a fluctuating income, you may want to take your average monthly income and use it as a salary for yourself. During months when your salary is higher than the average, you’ll put the surplus into a separate savings account. During months where your income is lower than the average, you’ll draw the additional funds from that account. In this fashion, you end up with the same salary every month.

Recommended: 7 Different Types of Budgeting Methods

5. Start Building An Emergency Fund

An emergency fund is important for everyone but particularly for people with inconsistent income. This is an account you can turn to should you get hit with an unexpected expense (like a big home or car repair) or to cover your essential expenses should your income take a hit. While the general rule of thumb is to keep three to six months’ worth of living expenses in a separate savings account for emergencies, those with fluctuating income may want to aim higher.

Once you come up with a goal amount for your emergency savings, consider these ways to fund it:

•   Open a separate account. To ensure you don’t actually spend the money on something else — and to allow your money to grow while it’s sitting around — consider opening a high-yield savings account specifically earmarked for your emergency fund. You can generally find the best rates at online banks.

•   Automate saving. Once you determine how much you can put toward your emergency fund each month and factor it into your budget, consider setting up an automatic monthly transfer into your emergency account. It’s fine to start small. Regular deposits will build over time.

•   Take advantage of windfalls. Consider allocating any windfalls that come your way, such as a tax refund, cash gift, or bonus, to your emergency fund to accelerate your progress.

Once you build your emergency fund, you can put your monthly transfer toward other savings goals.

The Takeaway

The foundation of any budget is your net (take-home) monthly income. To come up with that number on a fluctuating income, you’ll need to look at the last six to 12 months of income and come up with an average. You can then determine how you want to divvy up that money up so you’re able to cover your necessities, work toward your goals, and also enjoy your life.

The zero sum budget is one option you can try, but there are many other types of budgets. The goal is to get to a place where you won’t overspend during the high times or worry during the low times because it’s all factored into your budget.

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

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

FAQ

Will budgeting work if you have an irregular income?

Yes, budgeting can work with an irregular income. Most budgeting approaches start with your net (after tax) monthly income. To come up with that figure with a fluctuating income, you’ll want to look at the past six to 12 months of your income and come up with an average monthly income. You can then determine what your average monthly spending is, see how it compares, and make any necessary adjustments to your spending.

What are examples of irregular income?

Irregular income refers to earnings that vary in amount and frequency. Examples include:

•   Freelance work

•   Seasonal jobs

•   Commission-based sales

•   Side gigs

•   Bonuses and tips

What is the difference between regular income and irregular income?

Regular income is a set amount of money received at regular intervals, such as weekly, biweekly, or monthly. Examples include earnings from a salaried job or a passive income source like rental income.

Irregular income, on the other hand, varies in amount and frequency. It includes freelance payments, seasonal work, commissions, and gig economy earnings. The key difference lies in the stability and predictability of the income stream.

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
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.

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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You thought you had your college costs covered. Then something unexpected happened — a sudden job loss, unplanned expense, family emergency — and now you’re short on funds and wondering how you’ll make ends meet.

Fortunately, some schools offer emergency student loans to help students rebound from a financial set-back and manage the unexpected. While these tend to be smaller amounts, an emergency loan can help you get through a rough financial patch, allowing you to stay in school and complete your degree.

However, not every college and university offers emergency student loans, and those that do may have limited funds for emergency student loans and varying eligibility requirements.

Here are key things to know about emergency or fast student loans, plus other ways to access quick funds when you hit a set-back or unexpected college expense.

The Basics of Emergency Student Loans

The term emergency student loan generally refers to a loan offered to actively enrolled students in dire financial situations, typically by colleges and universities. If you have experienced an unexpected financial hardship, whether due to a job loss, a death in the family, or any life circumstance that results in immediate financial need, you may be eligible to apply.

Emergency loans are generally disbursed and repaid on rapid schedules. Repayment terms may be as short as 30 to 90 days. The amount you can borrow varies by school but the cap is typically between $500 to $1,500. Some emergency student loans are interest-free, while others charge a low interest rate.

Typically, you cannot use an emergency student loan to cover your tuition for the semester. However, you can use it to cover other expenses, like food, housing, childcare, and medical expenses.


💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

How to Get Emergency Student Loans

If you need an emergency or instant student loan, a good first step is to contact your school’s financial aid office. If your school offers emergency loans, you will likely need to:

•   Find out if you are eligible. You’ll want to check your school’s eligibility requirements to make sure you qualify before you go through the application process.

•   Fill out the emergency student loan application. You may be able to do this online or you might need to do it in person at the financial aid office. You’ll likely need to have your student ID and enrollment information. Your school may also ask for documentation of your financial emergency before it will approve the loan.

•   Make a plan to repay your loan on time. You may need to repay the loan within just a few months, so you’ll want to determine how you will make those payments. If you miss a payment, the school might charge fees and/or hold your academic records.

Are Emergency Student Loans a Good Idea?

While emergency student loans can be helpful, they may not be the right solution for everyone. For one, the loan might not offer enough money to help you out. For another, schools typically have strict qualification criteria for emergency student loans. For example, you typically need to have experienced an unexpected event that triggered a dire and sudden financial need, such as:

•   Loss of a parent

•   Dismissal from a job or unexpected reduction in income

•   Natural disaster

•   Significant crime or theft

Also keep in mind that an emergency loan is still a loan, so you’ll want to make sure you can handle more debt before you tap a fast student loan. Also be sure you can manage the short repayment period. Having a loan go into default may jeopardize your education and your eligibility for future financial aid. In other words, it’s a good idea to establish a plan before you borrow money.

Emergency Student Loan Alternatives

Emergency student loans can be a great resource for some students. However, they aren’t right for everyone. You may not qualify for your school’s emergency student loan program. Or, you might need a larger sum of money or a longer repayment timeline. Also, not all schools offer emergency loans. Luckily, there are other options on the table to help you through a cash crunch during college. Here are five you may want to explore.

1. Unused Federal Student Loans

If you’ve already submitted your Free Application for Federal Student Aid (FAFSA) but turned down some or all of the federal student loans you were offered, there is good news: It’s possible to change your mind. Once you have filed a FAFSA, you are allowed to accept the funds at any time during the academic year.

For example, you might have been offered $5,000 in federal loans but only claimed $2,000 of that money. If you find yourself in financial hardship later in the academic year, you could still claim the unused portion of federal student aid. You can use federal student loans to cover tuition as well as living expenses. Your financial aid office can help you figure out if this is an option for you.

Since you’ve already been approved for the loan, funding time will likely be much faster compared to the regular waiting time for federal aid. It shouldn’t take more than 14 days to receive the funds.

If you’ve had a major change in your financial situation, such as a job loss or the passing of a parent, you may want to resubmit your FAFSA to reflect your new situation. Depending on the changes, you might qualify for more aid.

2. University Grants and Scholarships

Some colleges and universities offer emergency aid in other forms besides loans. Emergency grants and scholarships work in a similar way to emergency student loans in that they’re meant to help cover unexpected financial hardships. However, unlike loans, grants don’t have to be repaid.

For example, some schools offer completion scholarships or grants, which can forgive a portion or all of the outstanding balance that might otherwise keep a student from advancing or graduating. Other schools have voucher programs to help with specific on-campus costs like books and dining hall meals.

You’ll need to get in touch with your financial aid office to see if you qualify for any emergency assistance grants, scholarships, or vouchers under your circumstances. The school may require proof of hardship or emergency.

Recommended: Finding Free Money for College

3. Private Student Loans

If you’ve tapped all of your federal aid options, you might turn to private student loans to help cover emergency expenses. These are loans offered by banks, credit unions, and online lenders.

Private student loans typically come with higher interest rates than federal student loans and don’t offer the same borrower protections (like forbearance and forgiveness programs). However, you can often borrow up to your school’s cost of attendance with a private student loan, giving you more borrowing power than you can get with the federal government. Depending on the lender, you may be able to take advantage of quick student loan approval and disbursement and use the money to pay for your emergency expenses.

Some lenders send the money straight to the school and, once tuition is covered, the school will typically give you the remainder of the loan to cover living expenses. In other cases, lenders will send the funds to you to make the appropriate payments.

4. Tuition Payment Extension

If you’re not sure you can pay your tuition on time due to a sudden emergency, it’s worth asking your financial aid office if they provide temporary payment extensions or payment plans.

Some colleges may be willing to grant you an extension on paying your tuition. For example, they might offer an emergency deferment plan which allows enrolled students to postpone payments through a specific date, such as the 90th day of the term. This might give you a bit of extra breathing room in your budget.

You might also explore tuition payment plans. Many schools allow you to spread out your tuition into affordable monthly or bi-monthly payments. Typically, schools don’t charge interest on thes plans. However, when exploring this alternative, it’s a good idea to ask about any fees or interest charges that might apply.

5. Food Pantries

The cost of food is high these days, and this may be particularly burdensome during an emergency. Your school may have an on-campus food pantry that can help reduce your expenses until you’re back on your feet. Also keep in mind that local churches and other charitable organizations in your area may also offer food at no cost to those in need. Feeding America is a helpful resource to find food banks near you.These food pantries can provide basics like canned foods, pastas, dried breakfast items and more.


💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

Where Can You Look for Other Forms of Emergency Student Aid and Assistance?

Outside of emergency student loans and grants, colleges and universities often offer additional resources that can help with unplanned costs during an emergency. You might find on-campus support in the form of housing opportunities, bus passes, or food pantries. Even if your school doesn’t offer emergency assistance directly, a financial aid administrator may know of off-campus organizations that will offer support.

You might also explore assistance from alumni-funded foundations or other nonprofit scholarships or grants that can provide emergency assistance. For example, the UNCF offers a “Just-in-time” emergency grant of up to $1,000 for students at risk of dropping out of college due to a financial hardship (like medical bills, a car repair, or a trip home to help a sick parent). Students must complete an online application form and show proof of financial hardship.

After You Graduate

If you took out federal or private student loans during college to cover expenses (both planned and unplanned) and you’re now in the repayment stage, you might want to look into refinancing. When you refinance your student loans, a lender pays off your existing loans with a new one, ideally at a lower interest rate. That can potentially save you money in the long run — and from the first payment you make.

Just keep in mind that if you refinance federal student loans with a private lender you forfeit federal protections, such as income-driven repayment plans and forgiveness programs.

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.

Check out what kind of rates and terms you can get in just a few minutes.

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Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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