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For those looking to trade big-city life for backyards and gardens, more square footage, home office space, and parks, the suburbs may be the perfect spot to call home.

Let’s not forget great public schools, a hallmark of a high-ranking suburb.

Top 50 Suburbs in the US

Although the country teems with ’burbs, here’s a look at the 50 best suburbs according to Niche, using government data and community reviews.

If safety is a big priority, also take a look at the 50 safest cities in America.

1. Chesterbrook, Pennsylvania

Chesterbrook was crowned first among U.S. suburbs. With highly rated public schools and an intimate feel (under 6,000 residents), this Philadelphia suburb is leafy and cozy. Chesterbrook is among eight Keystone State suburbs on this list.

2. Penn Wynne, Pennsylvania

Real estate can get pricey in Penn Wynne (also known as Wynnewood), a small Philly suburb where about half of the population of 6,650 has at least a master’s degree and where locals are passionate about the arts. Bars, coffee shops, and parks lend an urban-suburban feel.

3. Ardmore, Pennsylvania

Those looking to put down roots in a suburban neighborhood that also has an urban feel will like Ardmore, yet another Philadelphia ’burb, with about 13,800 residents. It has plenty of restaurants, bars, coffee shops, and parks to choose from and excellent schools.

4. Los Alamos, New Mexico

This historic suburb of 13,400 denizens is the birthplace of the atomic bomb, but it also happens to be known as a great place to live with a top-notch public school system and nature all around.

5. Carmel, Indiana

Carmel, north of Indianapolis, features neighborhoods rich in architectural diversity and low in crime. This spot is home to more than 103,000 people.

6. Great Neck Plaza, New York

With eateries, parks, and superlative public schools, this village on the North Shore of Long Island is walkable, dog friendly, and commutable to Manhattan by train. The burg of 7,640 has a strong contingent of retirees and home prices below the national average. If this New York suburb isn’t the right fit, maybe one of the other nine will be.

7. Okemos, Michigan

The east side of East Lansing is beloved because of its low crime rates, lower-than-average cost of living, and the amenities at Michigan State University. With a population of about 25,870, Okemos has stellar public schools, a college town vibe, and a small base of tech employment.

8. Richmond Heights, Missouri

This St. Louis suburb, home to about 9,400 people, offers amenities for both families and young professionals. With highly rated public schools, Richmond Heights also has a vibrant nightlife scene and good housing options.

9. Holly Hills, Colorado

For a small-town feel and great public schools, hop on over to Holly Hills. This Denver suburb is home to about 2,700, so you’re likely to know a lot of your neighbors.

10. Brookline, Massachusetts

This Boston suburb’s public schools constantly receive high marks and welcome families from around the globe. With about 64,000 residents, Brookline is attractive but not cheap: Its median home sale price is more than double the national median.

11. Great Neck Gardens, New York

With fewer than 1,300 residents, this New York City suburb has the usual perks of a coveted hamlet, and a relatively gigantic housing cost.

12. Clarendon Hills, Illinois

This community southwest of Chicago (pop. 8,760) offers top-notch public education for children, a safe environment, and a vibrant downtown. The median home sale price is a bit above the national median.

13. Swarthmore, Pennsylvania

Swarthmore has small-town charm but is only a 20-minute train ride to Philadelphia’s museums, theaters, and restaurants. The suburb of about 6,600 offers more than two dozen forested trails for those looking to connect with nature.

14. Clayton, Missouri

Those looking to give their career a boost may find opportunity in Clayton. This St. Louis suburb of 17,600 employs over 7,300 people. Clayton is also considered green and safe. The median home price tends to be above the U.S. median price.

15. Brentwood, Missouri

This affordable St. Louis suburb is home to nearly 8,300, many of whom are young professionals. Highly rated schools, a high homeownership rate, and a variety of parks and dining establishments make Brentwood one of the best suburbs in the Show-Me State and the country.

16. Brighton, New York

Brighton is overflowing with historic charm. This Rochester suburb of 37,200 was established in 1814 and features well-preserved 19th-century brick homes.

17. Manhasset Hills, New York

About 3,660 people call this New York City suburb home. Manhasset Hills has a rural feel and an average home sale price topping $1 million.

18. Mount Lebanon Township, Pennsylvania

Architecture lovers will fall head over heels for this neighborhood (lovingly known by locals as Lebo). This Pittsburgh suburb of about 33,600 people blends sophistication and small-town charm. Take your pick from American Craftsman, stone Colonials, Prairie, and English Tudor style homes.

19. Oakwood, Ohio

With about 9,500 residents, this Dayton suburb has a sparse suburban feel and an abundance of parks, bars, restaurants, and coffee shops. Most residents own their homes, and the public schools are, well, you know, above par.

20. North Potomac, Maryland

North Potomac, only about 20 miles from Washington, D.C., earned a spot on this list, thanks to awesome public schools and family amenities, not to mention a walkable and diverse environment. It’s home to about 23,700 people.

21. Narberth, Pennsylvania

You won’t get lost in the crowd in this friendly Philadelphia suburb of 4,500, which has an urban-suburban feel with historic homes, shops, restaurants, a train station, and the requisite good public schools.

22. Syosset, New York

Yet another New York City suburb makes the list. Syosset, with over 19,000 residents, has a rural vibe and all the bells and whistles of an attractive suburb. It also has a housing cost of more than twice the national median.

23. Wayland, Massachusetts

This Boston ’burb hosts 13,800 people, including a good number of retirees. People consider it safe, pretty, pricey, and calm.

24. Jericho, New York

Families will appreciate Jericho’s highly rated public schools, parks, and other amenities. The affluent Long Island hamlet of 15,000 is within reach of Manhattan.

25. Greenville, New York

Greenville, often called Edgemont, is a bedroom community of 4,700 residents north of Manhattan. It’s a magnet for parents who want good public schools.

26. Morrisville, North Carolina

Those who are moving to the Raleigh area may find Morrisville appealing, thanks to proximity to amenities and career opportunities like Raleigh-Durham International Airport, Research Triangle Park, and the Lenovo headquarters. The average home price in this community of 31,840 is around the national average.

27. Williamsville, New York

This little Buffalo village has great schools, several parks, historic landmarks, and a relatively low cost of living.

28. Long Grove, Illinois

Another Chicago suburb makes the list. Long Grove, pop. 8,400, is considered a great place to raise a family, thanks to highly rated public schools and low crime rates.

29. Mountain Lakes, New Jersey

This tiny suburb 31 miles from Manhattan is considered safe, charming, and green. It’s a wealthy pocket with a strong sense of community.

30. Chesterfield, Missouri

This sizable St. Louis suburb of 50,500 is partly situated on the floodplains of the Missouri River. There is no shortage of attractions here, including historical houses, conservation areas, and dining options.

31. East Williston, New York

Here’s another Manhattan bedroom community, this time 20 or so miles from the big city. The tiny Long Island suburb has great schools and a hometown feel. Household income and education level skew high, as they do in most of the ’burbs on this list.

32. Cascades, Virginia

Cascades is the first Old Dominion ’burb on the list of the top 50 suburbs in the U.S. The neighborhood of about 12,500 is within driving distance to Washington, D.C., and has good public schools, parks, playgrounds, and great housing options.

33. Kensington, New York

This tiny Manhattan suburb attracts families and retirees for all the reasons a ’burb bursts into the top 50. This is a highly educated, high-income enclave.

34. Ridgewood, New Jersey

This New York City suburb offers residents a sparse suburban feel, and most residents own their homes. The focus in this family-friendly village of over 26,000 is education. Home prices skew high.

35. Cary, North Carolina

Cary, with over 182,000 residents, affords fun, from outdoor concerts and movies to the annual Beer, Bourbon & BBQ Festival. Stop by the quaint downtown of this Raleigh suburb during the holiday season for a charming experience.

36. Aspinwall, Pennsylvania

This little borough on the Allegheny River is near downtown Pittsburgh. It’s historic and picturesque, with high education levels and average home prices below the national average.

37. South Kensington, Maryland

This little ’burb is near Washington, D.C., and has not-tiny home prices. With fewer than 9,000 residents, South Kensington has great public schools, a family-friendly vibe, and a nightlife scene. It looks like Mom and Dad need to book a babysitter.

38. North Bethesda, Maryland

Here’s another pocket of tranquility in the Old Line State. There are so many benefits of living in North Bethesda that it’s hard to keep track. Situated close to Washington, D.C., this suburb has its own dining, shopping, and entertainment scene.

39. Santa Monica, California

Santa Monica residents are lucky enough to live a stone’s throw from the Pacific Ocean, and many live within walking distance of the famed Third Street Promenade and its many restaurants, shops, and other amenities. Bring your wallet, of course, if you plan to live here.

40. Cave Springs, Arkansas

Move over, Hot Springs. Cave Springs made the list. Named for two caves and the water source that flows from one of them, this suburb of about 6,250 people has a small-town feel, home prices in line with the national average, and A-rated public schools.

Recommended: Home Affordability Calculator: How Much House Can You Afford?

41. Innsbrook, Virginia

Innsbrook is a thoughtfully planned community that is an ideal place to live, work, and play. Fortune 500 companies, startups, and small businesses are attracted to this Richmond bedroom community of 9,250 people.

42. Cinco Ranch, Texas

Cinco Ranch’s public schools, housing options, and job market put it on the map. A lot of house for the money combined with great outdoor and nightlife activities make this suburban swath of over 16,000 outside Houston a hot spot.

43. Fishers, Indiana

This Indianapolis suburb has an average of 187 clear days every year and an average high of 85 degrees in the summer. Many families and young professionals live in Fishers, pop. 37,835, where the average home price is below the national average.

44. Ottawa Hills, Ohio

The second Ohio suburb to make the list of the most popular suburbs in the U.S. is Ottawa Hills. This village outside Toledo is safe, well educated, affordable, and good for families.

45. Short Pump, Virginia

Short Pump, named for a short-handled water pump for horses at an 1800s tavern there, has a population of 27,500 and is home to lots of families and young professionals who own their own homes. This dense suburban neighborhood outside Richmond has good schools, great housing options, and nightlife to pursue.

46. Frontenac, Missouri

This tiny, affluent St. Louis neighborhood has a rural feel and all the things that make a suburb stand out.

47. White Rock, New Mexico

This community of 5,880 in Los Alamos County has a rural vibe, great schools, hiking trails, lots of parks, and home prices in line with the national average.

48. Stone Ridge, Virginia

Good public schools, housing options, and diversity all helped Stone Ridge land the 48th spot on this list of top U.S. suburbs. The Washington, D.C., bedroom community has about 16,600 residents.

49. The Woodlands, Texas

This sounds like a good kind of sprawl, y’all. The Woodlands, a 29,000-acre master-planned home to 118,500 people and over 2,000 businesses, has a natural forest and 140 parks and is linked by more than 220 miles of hiking and biking trails. With top schools, home prices just a bit above the national average, and nightlife, this Houston suburb scores.

50. Berwyn, Pennsylvania

This pricey Philadelphia suburb of just 3,800 residents offers an urban-suburban feel. Most residents own their own homes, and there are charming coffee shops, restaurants, and parks to visit.

Financing a Fresh Start

You might have a fave or two among the best suburbs in the U.S. Is it time to fund the dream for your family and start anew in a place you hadn’t considered?

When you’re ready to look for a mortgage, know that SoFi offers home loans with low rates, low down payments, flexible term options, and a closing time guarantee.

Applying for a home mortgage loan doesn’t have to be complicated. Start by getting a quick, no-obligation rate quote.

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

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You may have heard that the better your credit score, the better your potential loan rates and offers may be. Why is that? That’s because your credit score determines your creditworthiness. A good credit score may qualify you for what’s known as a prime loan.

Here, what a prime loan is and how it works.

Understanding a Prime Loan

To understand a prime loan, it’s important to understand the prime rate. The prime rate is established by banks as the interest rate given to prime customers. This number is based on the federal funds rate set by the Federal Reserve.

When interest rates are low, the prime rate across banks will be low. But if the Fed raises interest rates, rates across banks — even for prime borrowers — will also increase.

This matters when you’re considering a fixed-rate loan, like a mortgage or a personal loan. Lower interest rates now mean that you will lock in a lower rate for the life of your loan. But prime rates also extend to variable-rate debt, like credit card debt or a home equity line of credit (HELOC).

Prime Loan Borrowers

When the bank sets its rates, they set a prime rate as the basis of their loan rates, which may be higher or lower based on the creditworthiness of each applicant. The prime rate is set considering the Federal Reserve rates, as well as other factors including the bank’s own desired return on the loan. But in general, prime rates are very similar, if not identical, between major banks.

According to the Consumer Finance Protection Bureau (CFPB), borrowers with a credit score of 660 to 719 generally receive prime rates. Borrowers with scores above 720 are considered “super-prime” borrowers, and will receive even more favorable interest rates. The interest rates for super-prime borrowers will be lower than the prime rate.

Here are the rate categories for borrowers:

Category	Credit Score
Deep subprime	Below 580
Near prime	620 to 659
Prime	660 to 719
Super prime	Above 720

Knowing your credit score can help you assess the category you will fit in.

Prime Loan Rates

As mentioned above, prime loan rates are set by the bank and change based on the federal fund rate. When the federal fund rate moves, so will the prime rate. As of this writing, the prime rate is 4.75%, according to the Wall Street Journal.

So does this mean that any loan you apply for will have a 4.75% interest rate? No. APR rates will vary based on the type of loan you apply for. Banks may have their own formula but there are some rules of thumb.

For example, credit card interest rates are generally set at “prime + 13.99%.” As the prime rate changes, so will your interest rate. But in general, the higher your credit score, the lower your interest rates will be.

Prime Loan Example

How Does the Prime Loan Rate Affect You?

The prime loan rate affects everyone. From buying a car to buying a house to opening a credit card, the prime loan rate will determine how much interest you’ll pay. You may be more vulnerable to prime loan rate fluctuations if you have a lot of variable interest loans, like credit card debt. As the prime rate climbs, so too might the APR of your cards. When you see a prime rate hike, it can mean that your APR will quickly rise as well.

Conversely, when the prime rate falls, some people use that time to refinance a mortgage or lock in a rate for a loan, like a personal loan or an auto loan.

Because the prime rate affects credit cards, some people who carry a high credit card balance who have good credit may consider using a personal loan to consolidate their credit card debt. This is one way to use a personal loan to pay less overall interest, depending on the rates offered.

What Is the Difference Between a Prime Loan and Subprime Loan?

There are a few differences between a prime loan and subprime loan. Not only do prime loans have the most favorable interest rates, but they also may affect how large a loan you can take, among other things. Here, some differences between a prime loan vs. a subprime loan.

Interest Rates

Interest rates are one of the most obvious differences between a prime and subprime loan. But even within categories, like a prime borrower, there may be subcategories that receive different interest rate offers. For example, a prime borrower with a credit score near super-prime territory may receive more favorable rates than a borrower whose credit is close to subprime.

Repayment Periods

A subprime borrower may also have fewer options when it comes to repayment periods. They may have a shorter repayment period at a higher interest rate than a prime borrower.

Down Payments

A prime borrower may have a low, or no, down payment required for a loan. But subprime borrowers may have to make a larger down payment to qualify for a loan. This is especially true for loans like car loans or mortgages.

Loan Amounts

Prime borrowers may have access to greater loan amounts than subprime borrowers.

Fees

Non-prime borrowers may also have to pay more loan fees than a prime borrower. This may be due to the types of loans they can access. If they can’t get a loan from a traditional bank, a subprime borrower may seek payday loans or other loans that require fees. Different types of personal loans besides loans offered by traditional banks may include payday loans, hard money loans, and other loans that may require collateral, or have high fees and interest rates.

What Do You Need To Qualify for a Prime Loan?

Your credit score will determine what type of loan is offered to you. But a lender will take other details into consideration, including your credit history and employment status. But a good rule of thumb is to make sure your credit score is as high as possible before you apply for a loan to receive the most favorable terms.

The Takeaway

The prime rate is out of your control. But so much of your interest rate is under your control, including your credit score. Building your credit score can help you have the most competitive loan options, whether you’re researching personal loans, credit card offers, mortgages, or refinancing your student loans.

If you’re applying for a personal loan, personal loan approval tips include assessing your credit score. If it’s not where you’d like it to be, you might want to consider building your credit before applying for a personal loan. Subprime personal loans may exist, but they may be for lower amounts at higher interest rates than ones offered for prime borrowers.

Rates may be different across banks so it’s worth comparing personal loan interest rates. You can check your rate for personal loans without it affecting your credit score. Doing so can help you determine the types of loan rates, as well as amounts, you may be eligible for.

Check your personal loan rate from SoFi here.

FAQ

What does prime mean in loans?

Prime in loans means the borrower is considered a low lending risk. The bank will set a prime rate that will then be the basis for interest rates across lending products, including mortgages, car loans, personal loans, and credit card offers.

Is there a difference between prime loans and subprime loans?

Yes. Prime loans are given to people whose credit scores generally fall into a 660 to 719 range. (Borrowers with credit scores above that are considered superprime borrowers and may be given even more favorable rates.) But there are also categories within the prime range — people with higher credit scores may get a lower rate than people with lower scores, even if their scores fall into the “prime” category.

In addition to interest rates, prime borrowers may also have longer repayment period options, more access to credit, lower fees, and a smaller down payment obligation than subprime borrowers.

What is the current loan prime rate?

The current loan prime rate is 4.75%.

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

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 .

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Labels like prime and subprime help denote loans that are designed for people with different credit scores. Prime loans are built for borrowers with good credit, while subprime loans are designed for those with less-than-perfect credit. While subprime loans can help this group finance big purchases like a home or a car, they also come with potentially significant downsides.

Here’s a look at what you need to know about prime and subprime loans to help you make better borrowing decisions.

Prime Loan vs Subprime Loan

When you’re shopping for a loan, lenders will consider your credit history to help them determine how much default risk they’d be taking on were they to loan you money.

Your credit score is a three-digit representation of your credit history that lenders use to understand your creditworthiness. While there are different credit scoring models, the FICO® score is one of the most commonly used. Lenders and other institutions may have varying models for which credit scores determine prime vs subprime loans.

For example, Experian, one of the three major credit reporting bureaus, defines a prime loan as requiring a FICO score of 670 to 739. With a score of 740 or above, you’re in super prime territory. Borrowers with a FICO score of 580 to 669 will likely only qualify for subprime loans.

Here are some key differences between the two that borrowers should be aware of.

Interest Rates

Borrowers with lower credit scores are seen as a greater lending risk. To offset some of that risk, lenders may charge higher interest rates on subprime loans than on prime loans.

What’s more, many subprime loans have adjustable interest rates, which may be locked in for a short period of time after which they may readjust on a regular basis, such as every year. If interest rates are on the rise, this can mean your subprime loan becomes increasingly more expensive.

Down Payments

Again, because subprime borrowers may be at a higher risk of default, lenders may protect themselves by requiring a higher down payment. That way, the borrower has more skin in the game, and their bank doesn’t need to lend as much money.

Loan Amounts

Subprime borrowers may not be able to borrow as much as their prime counterparts.

Higher Fees

Fees, such as late-payment penalties or origination fees, may be higher for subprime borrowers.

Repayment Periods

Subprime loans typically carry longer terms than prime loans. That means they take longer to pay back. While a longer term can mean a smaller monthly payment, it also means that you may end up paying more in interest over the life of the loan.

Prime Loan vs Subprime Loan: What Type of Loans Are They?

Prime and subprime options are available for a variety of loan types. For example, different types of personal loans come as prime personal loans or subprime personal loans \. When you’re comparing personal loan interest rates, you’ll see that prime loans offer lower rates than subprime. Common uses for personal loans include consolidating debt, paying off medical bills, and home repairs.

You can also apply for prime and subprime mortgages and auto loans. What is considered a prime or subprime score varies depending on the type of loan and the lender.

Recommend: How to Get Approved for a Personal Loan

Prime Loan vs Subprime Loan: How to Get One

By checking your credit score, you can get a pretty good idea of whether you’ll qualify for a prime or subprime loan. That said, as mentioned above, the categories will vary by lender.

The process for applying for a prime or subprime loan is similar.

Get Prepared

Lenders may ask for all sorts of documentation when you apply for a loan, such as recent paystubs, employer contact information, and bank statements. Gather this information ahead of time, so you can move swiftly when researching and applying for loans.

Research Lenders

Banks, credit unions, and online lenders all offer prime and subprime loans. You may want to start with the bank you already have a relationship with, but it’s important to explore other options too. You may even want to approach lenders who specialize in subprime loans.

To shop around for the best loan, you may want to apply for a few. That way you can see which lender can offer you the best terms and interest rates. Applying for credit will trigger a hard inquiry on your credit report, which will temporarily lower your credit score.

Consider a Cosigner

If you’re having trouble getting a subprime loan, you may consider a cosigner with better credit, often a close family member. They will be on the hook for paying off your loan if you miss any payments, so be sure you are both aware of the risk.

Subprime Loan Alternatives

There are alternatives to subprime loans that also carry a fair amount of risk. Some, like credit cards, are legitimate options when used responsibly. Others, like payday loans, should be avoided whenever possible.

Credit Cards

Credit cards allow you to borrow relatively small amounts of money on a revolving basis. If you pay off your credit card bill each month, you will owe no interest. However, if you carry a balance from month to month, you will owe interest, which can compound and send you deeper into debt.

Predatory Loans

Payday loans are a type of predatory loan that usually must be paid off when you receive your next paycheck. These lenders often charge high fees and extremely high interest rates — as high as 400%, or more. If you cannot pay off the loan within the designated period, you may be allowed to roll it over. However, you will be charged a fee again, potentially trapping you in a cycle of debt.

The Takeaway

Subprime loans can be a relatively expensive way to take on debt, especially compared to their prime counterparts. If you can, you may want to wait to increase your credit score before taking on a subprime loan. You can do so by always paying your bills on time and by paying down debt. That said, in some cases, taking on a subprime loan is unavoidable — you may need a new car now to get you to work, for example — so shop around for the best rates you can get.

If you’re paying more than 20% interest on your credit cards, a personal loan could be a great way to consolidate that high-interest debt. Borrow up to $100K with fixed rates and low APRs for those who qualify, and you could start paying a lower fixed monthly payment.

Explore personal loans of $5,000 to $100,000 from SoFi with no hidden fees.

FAQ

Why are subprime loans bad?

Subprime loans are not necessarily bad. However, these loans charge higher interest rates and fees than their prime counterparts. Borrowers may also be asked to put down a higher down payment, and they may be able to borrow less.

What is the difference between subprime and nonprime?

Nonprime borrowers have credit scores that are higher than subprime but lower than prime.

What type of loan is a subprime loan?

A variety of loan types may include a subprime category, including mortgages, auto loans, and personal loans. All loans in the subprime category likely have higher interest rates and fees.

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Photo credit: iStock/Nikola Stojadinovic

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

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.

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Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.


The member’s experience below is not a typical member representation. While their story is extraordinary and inspirational, not all members should expect the same results.

When Jennifer S. clocked in on her first day of work as a nurse at a major hospital in the South, she remembers thinking, “I’ve got this.” And she did. Nursing school had prepared her well for working in the emergency room.

She felt less confident about navigating her finances, however. Jennifer had to figure out how to balance her living expenses and long-term goals with $40,000 in nursing student loans—while earning $25 an hour.

She cooked meals at home and kept her expenses low. Jennifer also created a monthly nursing budget to help organize her finances. “I saw that I should start saving a little extra during the second half of the month, when I usually had leftover money, in case I needed it for the next month’s bills,” she says.

In addition, Jennifer discovered ways she could make extra money. Consider this nursing budget example: She switched to overnight shifts making an additional $7,000 a year. When a hurricane hit her state, she worked around the clock at the hospital for a week—and earned roughly $6,000, which she put toward a down payment on a home. The hospital paid her an extra $14 per hour during the early days of the pandemic. And she routinely picked up per diem and travel assignments.

Why You Need a Nursing Budget

It’s an interesting time to be a nurse. On one hand, staffing shortages and burnout worsened during the pandemic. The rising cost of higher education, including how to pay for nursing school, has resulted in a growing number of students graduating with debt. According to the latest figures from the American Association of Colleges of Nursing (AACN), roughly 70% of nurses take out loans to pay for school, and the median student loan debt is between $40,000 and $55,000.

On the plus side, nurses have some leverage. The profession is in such high demand right now that some hospitals are offering incentives like sign-on bonuses, relocation costs, and student loan repayments.

And in general, nurses can earn a good salary. According to data from the U.S. Bureau of Labor Statistics, the median income for a registered nurse in 2021 is $77,600. The median income for a licensed practical nurse or licensed vocational nurse is $48,070. The median income for a nurse anesthetist, nurse midwife, or nurse practitioner– fields that typically require a master’s degree–is $123,780 per year. Nurses who are willing and able to take on additional shifts, work overnight, or accept lucrative travel assignments stand to make even more.

If you’re a new nurse who is figuring out your finances, a nursing budget is a good place to start. But there are other steps to take as well. Here’s how to make the most of the money you earn to achieve your financial goals.

Recommended: Budgeting as a New Doctor

Watch Your Spending

With different ways to supplement your income as a nurse, it can be easy to give in to overspending. “When I was doing travel assignments, I just kept working,” Jennifer says. “At the time, I didn’t realize it would stop, so I didn’t think to save as much as I could have.”

In fact, lifestyle creep can be a common pitfall, especially when you start earning more money, says Brian Walsh, CFP, senior manager, financial planning for SoFi. Spending more on nonessentials as your income rises can potentially wreak havoc on your savings goals and financial health. That’s why budgeting for nurses is so important.

While you’re starting to establish your spending habits, Walsh recommends using cash or a debit card for purchases. Automate your finances whenever possible by doing things like pre-scheduling bill payments.

Develop Your Savings Strategy

A sound savings plan can help you make progress toward your short- and long-term goals and provide a sense of security. Walsh suggests nurses set aside 20% of their income for retirement and other savings, like building up an emergency fund that can cover three to six months’ worth of your total living expenses. He recommends placing it in an easy-to-access vehicle, like money market funds, short-term bonds, CDs, or a high-yield savings account. The remaining 80% of your income should go toward lifestyle expenses, including monthly student loan payments.

Jennifer found success by adopting a set-it-and-forget-it approach to saving. “Whenever I worked a per diem shift, I got in the habit of putting $100 or $200 of every check into a savings account,” she says. Before long, she had a decent-sized nest egg and peace of mind.

Explore Different Investments

One simple way to build up savings is to contribute to your employer’s 401(k) or 403(b) retirement plan, if one is available to you, and tap into a matching funds program. There’s a limit to how much you can contribute annually to one of these plans. In 2022, the amount is $20,500; if you’re 50 or older, you can contribute up to an additional $6,500, for a total of $27,000.

If you don’t have access to an employer-sponsored retirement plan, there are other ways to save for the future. “Start by figuring out what your targeted savings goal is,” Walsh says. If you’re going to save a few thousand dollars, you can consider a traditional IRA or Roth IRA. Both can offer tax advantages.

Contributions made to a traditional IRA are tax-deductible, and no taxes are due until you withdraw the money. Contributions to a Roth IRA are made with after-tax dollars; your money grows tax-free and you don’t pay taxes when you withdraw the funds. However, there are limits on how much you can contribute each year and on your income.

But ideally, Walsh says, you’re saving more than a few thousand dollars for retirement. If that’s the case, then a Simplified Employee Pension IRA (SEP IRA) may be worth considering. “Depending on how your employment status is set up, a SEP IRA could be a very good vehicle because the total contributions can be just like they are with an employer-sponsored plan, but you control how much to contribute, up to a limit,” he says. What’s more, contributions are tax-deductible, and you won’t pay taxes on growth until you withdraw the money when you retire.

Another option is a health savings account (HSA), which may be available if you have a high deductible health plan. HSAs provide a triple tax benefit: contributions reduce taxable income, earnings are tax-free, and money used for qualified medical expenses is also tax-free.

Depending on your financial goals, you may also want to consider after-tax brokerage accounts. They offer no tax benefits but give you the flexibility to withdraw money at any time without being taxed or penalized.

Recommended: Exploring Different Types of Investments

Take Control of Your Student Loans

Chances are, you have different priorities competing for a piece of your paycheck, and nursing school loans are one of them. You may need to start repaying loans six months after graduation, and options vary based on the type of loan you have.

If you have federal loans and need extra help making payments, for example, you can look into a loan forgiveness program or an income-driven repayment (IDR) plan, which can lower monthly payments for eligible borrowers based on their income and household size. If you’re struggling to make payments, you may qualify for a student loan deferment or a forbearance. Both options temporarily suspend your payments, but interest will continue to accrue and add to your total balance.

You should also be aware that the Biden administration’s new federal student loan forgiveness plan extends the pause on federal loan payments through December 31, 2022. In addition, the program cancels up to $10,000 in federal student loan debt for individuals who make less than $125,000 a year ($250,000 for married couples) and up to $20,000 for Pell Grant recipients who qualify.

Chipping away at a student loan debt can feel overwhelming. And while there’s no one-size-fits-all solution, there are a couple of different approaches you may want to consider. With the avalanche approach, you prioritize debt repayment based on interest rate, from highest to lowest. With the snowball approach, you pay off the smallest balance first and then work your way up to the highest balance.

While both have their benefits, Walsh says he often sees greater success with the snowball approach. “Most people should start with paying off the smallest balance first because then they’ll see progress, and progress leads to persistence,” he explains. But, he adds, the right approach is the one you can stick with.

Consider Whether Student Loan Refinancing Is Right For You

When you refinance, a private lender pays off your existing loans and issues you a new loan. This combines all of your loans into a single monthly bill, potentially reduces your monthly payments, and may give you a chance to lock in a lower interest rate than you’re currently paying. A quarter of a percentage point difference in an interest rate could translate into meaningful savings if you have a big loan balance, Walsh points out.

Still, refinancing your student loans may not be right for everyone. By choosing to refinance federal student loans, you could lose access to benefits and protections, like the current pause on payment and interest or federal loan forgiveness plans. Be sure to weigh all the options and decide what makes sense for you.

The Takeaway

Nursing can be a rewarding career, with flexibility and opportunities to add to your income. However, as a new nurse, you are likely trying to stretch your paycheck to cover student loan debt and everyday expenses. Fortunately, by using a few smart strategies, you can start to pay down your loans—and save for the future.

If refinancing your student loans is one of the strategies you’re considering, SoFi can help. When you refinance with SoFi, you get benefits like flexible terms. And with our medical professional refinancing, you may be able to qualify for special low rates for nurses.

SoFi reserves our lowest interest rates for medical professionals like you.

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Photo credit: iStock/FatCamera

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

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

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

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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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