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When you’re a renter, it can feel like all the transformative DIY projects are reserved for homeowners. But just because you rent doesn’t mean you can’t spruce up your space.

That’s right: Rental-friendly upgrades exist. And the best part? Many improvements can have a major impact on your space without blowing your budget.

1. Create an Accent Wall

Spicing up your walls doesn’t have to cost a fortune, nor must it require gallons of paint. For just a few bucks a roll, you can buy washi tape and create a custom accent wall that won’t ruin the paint job. Or, if you’re able to spend a few extra dollars, you could also invest in removable wallpaper.

2. Update Light Fixtures

Light fixtures in rentals are notoriously drab and tend to provide uneven lighting. Fortunately, there is no shortage of lighting options to help you brighten up your space. A recessed lighting conversion kit, for instance, is fairly inexpensive, easy to install, and allows you to hang a pendant or other light fixture. Not sure your landlord would approve? You can always buy some decorative lamps or even string lights to help amp up the brightness and style of any room.

3. Install Radiator Shelving

In older units, rusty radiators can be a renter’s nightmare. But luckily, there are some rental upgrades — like installing radiator shelving — that can disguise even the most unattractive units. You can DIY a custom shelving unit to work around your radiator, upgrade some shelving from a local thrift store, or even order one online.

4. Buy Matching Bookshelves

Bookshelves are a simple way to upgrade the decor and add much-needed storage space. Placing tall, matching shelves on either side of a TV, couch, or even a bed could bring some serious style (and space) to a small room, plus allow you to display photos or art without putting holes in the wall.

5. Apply Contact Paper

Do you have older appliances you’d like to freshen up? For just a couple bucks, you can invest in some stainless steel contact paper to make them at least look shiny and new again! Contact paper also comes in a wide variety of colors and styles that you can use to liven up your cabinets and refresh your countertops.

6. Replace Pulls & Knobs

This is another budget-savvy, rental-friendly upgrade that can add some flair to your home. Replace your door handles, kitchen cabinet knobs, and any other pulls with something more your style. Affordable, stylish knobs can be found on sites (like Etsy and Amazon) and in stores like Lowe’s and Home Depot. Be sure to hang on to the original knobs so you can swap them back in before you move out.

7. Install a Bike Mount

If you own a bike but are short on storage, install a bike mount or other bike storage solution. Just make sure your landlord is okay with the installation since it may require some drilling.

8. Try Large Floor Mirrors

Sometimes more is more. Exhibit A: an oversized leaning mirror (don’t worry; it’s mounted securely though it looks casually propped against a wall). It can serve double-duty as a luxe decoration that brightens a room and a functional mirror.

9. Invest in Houseplants

Want to add some life to your rental — literally? Look no further than a houseplant. If you don’t have a green thumb, explore hardy varieties, like air plants, or even artificial plants.

10. Upgrade Your Showerhead

Installing a new showerhead is a quick, effective way to upgrade your bathroom. You could start reaping the rewards the very first time you turn on the faucet. Make sure to hang on to that original showerhead so you can reinstall it when you move out.

Recommended: How Much Does a Shower Remodel Cost?

11. Set Up Room Dividers

Need to carve out space for a home office? Or maybe even make room for a closet? Buying or creating stylish room dividers can provide an instant rental update. And when you need a larger space, simply close the dividers.

12. Use a Pantry Organization System

Help bring order to the busiest spot in your home: the kitchen. Pantry organization systems come in a variety of shapes, sizes, and varieties, so you should be able to find one that suits your home and the budget you’re working with.

13. Update Your Blinds

It can be easy to forget about window coverings. But freshening up your blinds or curtains can add a new visual element to the room, frame a window, or help brighten the space.

14. Install Sticker Flooring

When you’re considering places to upgrade, don’t forget to look down. Changing up the flooring — even temporarily — can make a room feel brand-new. One option to consider if you have a tile floor: removable tile stickers, which come in a variety of styles, sizes, and price points.

15. Create a Kitchen Backsplash

You can also use removable stickers to freshen up a kitchen backsplash, which is a much easier and cheaper option than replacing the tiles. New to this type of project? There are online video tutorials you can watch that will show you how to get the job done.

Recommended: Renovation vs. Remodel: What’s the Difference?

16. Replace Light Switch Covers

Don’t sleep on the small details — sometimes, they can have a major impact. One example of this is swapping out basic light switch covers with ones that match the decor of your rental. Plus, new covers are generally affordable and easy to install.

17. Buy a New Kitchen Faucet

There’s something to be said for upgrading the items in your rental that you use every day, such as the kitchen faucet. Installing a new faucet is a fairly simple DIY project, provided you know how to shut off the water to your sink and use a wrench. If you’re unsure how to do either, though, you can enlist the help of a plumber. Just be sure to put the old faucet in storage so you can swap it back before moving.

18. Find a Stylish Toilet Seat

Let’s be honest: Most rentals come with a basic toilet seat. When yours just won’t do anymore, it may be time to upgrade to something more modern and comfy. You can find a wide variety of options online or in stores.

19. Paint the Molding and Trim

Before selecting color swatches, you may want to double-check with your landlord that painting is allowed. Many landlords welcome you painting your molding and trim, since it’s an easy, affordable way to update a rental.

20. Invest in Good Rugs

Quality rugs can run well into the thousands of dollars. But there are less expensive options that are also durable and stylish. Besides protecting your flooring, a good rug can also visually anchor a room and help absorb sound.

No matter the price of your rug, you may want to consider purchasing renters insurance to protect it and your other valuables against losses.

Financing Your Home Updates

Some of these home updates may be easily paid for out of your checking or savings account. But others can add up. If you need a quick infusion of cash, you might consider taking out a small home improvement loan.

This is basically an unsecured personal loan, which is typically available at a lower interest rate than a credit card. It gives you a lump sum of cash (perhaps just $1,000 or so, depending on your needs) that is then paid back with interest over a term of one to seven years.

Recommended: How to Apply for a Personal Loan

The Takeaway

When you’re a renter, you may not be able to rip out walls or change out kitchen cabinets. But there are still simple, effective ways to transform your space without breaking the terms of your lease. While these sorts of jobs tend to be affordable, you can easily rack up quite the bill if you plan on tackling several home improvement projects at once. In that case, a personal loan could be a wise move.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What is a good way to update a rental?

Small, temporary changes can work well. You might choose to create an accent wall with removable wallpaper, or add a floor mirror, which you can take with you when you move.

How can I update a rental home?

Some small moves that will have a big impact include adding new window treatments, lighting, showheads, and toilet seats. Painting or adding peel-and-stick wallpaper are other ways to freshen up a rental home.

What can make rental cabinets look better?

If you want to make cabinets in a rental residence look better, consider putting up vinyl or contact paper to give them a new look. This can be removed when you move out.

Photo credit: iStock/CreativaStudio

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.

SOPL-Q225-090

Updating your home can be done without a full (and expensive) renovation. There are a number of light lift projects that can give your home a whole new look and feel, and even increase its resale value. Exterior upgrades, like fresh paint, a new front door, and better landscaping or outdoor lighting, can add to your home’s curb appeal. Indoor improvements, such as updated lighting fixtures, paint, or wallpaper, can give the interior of your home a more up-to-date, high-end look. Here are four ways you can upgrade your home without breaking the bank.

Exterior Improvements

A home’s front door is the focal point of the exterior. To upgrade its appearance, you might replace the door, or paint it and add new hardware. Decorating the door with a seasonal wreath or another personalized touch can also add to its charm.

Besides a front door refresh or upgrade, other exterior improvements you might consider include a new mailbox, a new porch light fixture, and perhaps some window boxes with plants and fresh flowers that add a bright contrast to your home’s exterior color.

Front door styles that are currently trending include bold colors (from fire engine red to deep greens and bright blues), natural wood stains, and more glass (such as custom inserts and floor-to-ceiling sidelights).

How you landscape your front yard will depend upon where you live and the climate there. In general, though, modern trends include:

•   Natural landscaping using native plants, creating landscaping that’s eco-friendly and easy to maintain.

•   Pollinator gardens that attract butterflies, bees, and other insects that help pollinate.

•   Edible gardens, including lettuce, peppers, tomatoes, and more. Creativity is key!

Recommended: 15 Ways to Boost Your Curb Appeal for a Winter Open House

Lovely Lighting

Outdoor lighting doesn’t need to be white — filters can add a range of colors. These lights can spotlight key areas of landscaping, highlight where you like to entertain, or look attractive for even more curb appeal while providing illumination.

Size-wise, both tiny and boldly large lights are in vogue and, although lanterns aren’t a new trend, they’re still considered stylish. Updating recessed lighting is another popular home improvement project.

After a period of all-white being a hot trend for interior lighting, table lamps and hanging lighting fixtures are appearing more often as dark neutrals in brown, black, or gray. They can be used to update the white, cream, or gray choices in a home.

Paying attention to texture in lighting fixtures can add interest and variety. Materials can range from wood to wicker and rattan, and can be crafted in contemporary shapes to avoid an overly rustic look. Also still trending are geometrically designed lighting fixtures, from simple to more complex shapes.

Painting and Wallpapering

Painting rooms in a home can transform their appearance. What colors are trending? Currently, homeowners are favoring dusty pink, cinnamon brown, cool grays, and bright purples. However, unless you’re planning to sell some time soon, personal taste is what matters most when picking paint colors.

Wallpaper trends also run the gamut, including those with a texture and colors often inspired by landscapes. In this style of wallpaper, expect to see some blues, greens and neutral shades. Some people like to have one pictorial wallpaper wall, which looks like a mural in a room.

Wow Factor on Windows

In-style curtains often have hues found in nature, from green to ochre, and can also feature flowers, landscapes, and more. Geometric prints or two-tone materials may also appeal to some people. Velvet can be used to create a more intimate space.

Consider using double or triple curtain rods to add layers of window coverings. Then you can add a layer that filters light and enhances privacy, while also selecting curtains with the appearance you enjoy. Many designers recommend placing your curtain rod close to ceiling height vs. at the top of the window for a more dramatic and chic effect.

Recommended: How Much Does It Cost to Replace Windows?

Costs of a House Upgrade

The type of house upgrades listed here might be considered low-cost or low-end renovations, and can cost as little as $3,000 for a 1,250 to 1,600 square foot home. If, once momentum gets going, the low-end house upgrade turns into a middle-end one, the average cost could be closer to $5,200, according to the home improvement site Angi.

Another cost-related factor is where the home is located. Pricing in urban areas might be twice as high as in rural areas, depending on the area’s cost of living.

Plus, upgrades in older homes may take more time and attention to complete. If the home is officially considered to be historic, there may be guidelines about what changes can be made.

Recommended: Renovation vs. Remodel: What’s the Difference?

Financing a House Upgrade

Here are some options for financing a home upgrade.

•   Sometimes, homeowners are able to pay for these upgrades out of pocket. This can be true when the costs are relatively small or when money has been saved for the costs of the renovation. This can be the smart choice when possible: no debt, no interest to pay.

A downside to paying for home upgrades with cash may be that the homeowner empties a savings account or cuts corners on the renovations to avoid needing to borrow funds. Or, if, say, a big medical bill pops up and the emergency fund was used to renovate, then high-interest credit cards might need to be used to pay that debt.

•   You might consider a home equity line of credit (HELOC) to finance a house upgrade. This type of loan allows you to borrow against the equity in the home to pay for renovations. How much is available to borrow will depend upon how much equity is available and the loan-to-value ratio (LTV) that a lender permits. For example, if a lender has an 80% LTV ratio, that means the institution would:

◦   Appraise the home (e.g., $250,000).

◦   Calculate 80% of that ($200,000).

◦   Subtract current mortgage balances (e.g., $125,000).

◦   Consider what’s left over ($200,000-$125,000 = $75,000) to be equity in the home.

The lender would also consider the financial profile of the borrower when reviewing the loan application. HELOCs often have a low initial interest rate and, usually, the homeowner can choose to pay interest only during the draw period. However, there may be upfront fees and the rate is often variable with high lifetime caps.

•   Another option might be a home improvement loan, which is an unsecured personal loan and not attached to the home’s equity. Funding can usually be granted more quickly with fewer, or sometimes no, fees. This may be a good option for people who don’t have enough equity in their homes for their project or who don’t want to use their home as collateral.

Recommended: How to Apply for a Personal Loan

The Takeaway

There are a number of ways you can upgrade your home that don’t involve tearing down walls or putting on an $150,000 addition. Lower-cost upgrades, ranging from $3,000 to $50,000 or more, may still require spending more cash than you have just sitting in the bank, however. Plus, you may not want to deplete your savings in order to upgrade your home. A personal loan could be a good option.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How do you update your home?

A good plan for updating your home can be to start with changes that can shift the mood of a room. This includes paint and/or wallpaper, carpets and rugs, window treatments, and lighting, among other features.

How to update a home without renovation?

To update a home without a major renovation, make changes to surfaces, such as repainting in a different color, swapping in new curtains or blinds, and adding fresh rugs or refinishing the floors.

How much do home updates cost?

The price of home updates can range considerably depending on the cost of living in your area, how much you DIY vs. calling in professionals, and your taste level and the changes you actually make. A small update can start at $3,000, but prices in the five figures can be common.

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.

SOPL-Q225-045

Whether trying to consolidate debt with a personal loan or thinking about a loan to pay for a major life event (like a wedding), taking on debt is a financial move that warrants some consideration.

It’s important to recognize the financial commitment that taking on a personal loan — or any other debt — entails. This includes understanding interest rates you might qualify for, how a loan term affects the total interest charged, fees that might be charged by different lenders, and, finally, comparing offers you might receive.

Shopping around and comparing loans can increase your confidence that you’re getting the best interest rate on a loan. Learn more here.

What’s a Good Interest Rate on a Loan?

You may see advertisements for loan interest rates, but when you get around to checking your personal loan interest rate, what you’re offered may be different than rates you’ve seen. Why is that? A lender may have interest rate ranges, but the lowest, most competitive rates may only be available to people who have excellent credit, as well as other factors.

When shopping around for a loan, you can generally check your rate without affecting your credit score. This loan prequalification rate is just an estimate of the interest rate you would likely be offered if you were to apply for a loan, but it can give you a good estimate of what sort of rate you might be offered. You can compare rates to begin to filter potential companies to use to apply for a loan.

Getting a Favorable Interest Rate on a Loan

The potential interest rate on a loan depends on a few factors. These may include:

•   The amount of money borrowed.

•   The length of the loan.

•   The type of interest on your loan. Some loans may have variable interest (interest rates can fluctuate throughout the life of the loan) or a fixed interest rate. Typically, starting interest rates may be lower on a variable-rate loan.

•   Your credit score, which consists of several components.

•   Being a current customer of the company.

For example, your credit history, reflected in your credit score, can give a lender an idea of how much a risk you may be. Late payments, a high balance, or recently opened lines of credit or existing loans may make it seem like you could be a risky potential borrower.

If your credit score is not where you’d like it to be, it may make sense to take some time to focus on building your credit score. Some ways to do this are:

•   Analyzing your credit report and correcting any errors. If you haven’t checked your credit report, doing so before you apply for a loan is a good first step to making sure your credit information is correct. Then you’ll have a chance to correct any errors that may be bringing down your credit score.

•   Work on building your credit score, if necessary. Making sure you pay bills on time and keeping your credit utilization ratio at a healthy level can help positively impact your credit score.

•   Minimize opening new accounts. Opening new accounts may temporarily decrease your credit score. If you’re planning to apply for a loan, it may be good to hold off on opening any new accounts for a few months leading up to your application.

•   Consider a cosigner or co-applicant for a loan. If you have someone close to you — a parent or a partner — with excellent credit, having a loan cosigner may strengthen your application. Keep in mind, though, that a cosigner will be responsible for the loan if the main borrower does not make payments.

Recommended: Personal Loan Calculator

Comparing Interest Rates on Personal Loans

When you compare personal loan options, it can be easy to focus exclusively on interest rates, choosing the company that may potentially offer you the lowest rate. But it can also be important to look at some other factors. Here are some to consider.

•   What are the fees? Some companies may charge fees such as origination fees or prepayment penalties. Before you commit to a loan, know what fees may be applicable so you won’t be surprised.

•   What sort of hardship terms do they have? Life happens, and it’s helpful to know if there are any alternative payment options if you were not able to make a payment during a month. It can be helpful to know in advance the steps one would take if they were experiencing financial hardship.

•   What is customer service like? If you have questions, how do you access the company?

•   Does your current bank offer “bundled” options? Current customers with active accounts may be offered lower personal loan interest rates than brand-new customers.

💡 Quick Tip: Fixed-interest-rate personal loans from SoFi make payments easy to track and give you a target payoff date to work toward.

Choosing a Personal Loan For Your Financial Situation

Interest rates and terms aside, before you apply for a personal loan, it’s a good idea to understand how the loan will fit into your life and how you’ll budget for loan payments in the future. The best personal loan is one that feels like it can comfortably mesh with your budget.

But it also may be a good idea to assess whether you need a personal loan or whether there may be another financial option that fits your goals. For example:

•   Using a buy now, pay later service to cover the cost of a purchase. These services may offer 0% interest for a set amount of time.

•   Transferring high-interest credit card debt to a 0% or low-interest credit and making a plan to pay the balance before the end of the promotional rate.

•   Taking on a side hustle or decreasing monthly expenses to be able to cover the cost of a major purchase or renovation.

•   Researching other loan options, such as a home equity loan, depending on your needs.

Recommended: Avoiding Loan Origination Fees

The Takeaway

A loan is likely to play a big part in your financial life for months or years, so it’s important to take your time and figure out which loan option is right for you. And it’s also important to remember that interest rate is just one aspect of the loan. Paying attention to details like potential fees, hardship clauses, and other factors you may find in the small print may save you money and stress over time.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How to get a loan at a low interest rate?

Ways to get a loan at a low interest rate include positively impacting your credit score, applying with a cosigner who has a strong credit score, or choosing a shorter loan term (though that may increase your monthly payment).

How can I get a low rate on a personal loan?

To get a low rate on a personal loan, consider building your credit score, having a cosigner with a strong score, comparing lenders, looking for discounts, and seeing if the financial institution where you currently bank can offer you favorable terms.

Can you ask a lender for a lower interest rate than offered?

Yes, you can ask your lender if they can offer a lower rate. While there’s no guarantee that they will lower the rate, they might do so to get or retain your business. It can be wise to have other offers, so you can let them know if you were offered a better rate elsewhere.

Photo credit: iStock/Prostock-Studio

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.

SOPL-Q225-087

A hospitalization or medical treatment can carry a price tag that packs a serious punch, with Americans owing an estimated $220 billion in healthcare debt.

If you’re among those unable to pay medical bills, insult can get added to injury in the form of damage to your credit score. That’s because once a medical bill becomes delinquent, many hospitals and individual medical providers will send it to collections.

Even though unpaid medical bills might affect your credit report, there are steps to take to potentially lessen the impact.

Do Medical Bills Hurt Your Credit?

Unpaid doctor or hospital bills typically don’t automatically hurt your credit score. Because most health care providers do not report to the credit bureaus, medical debt would have to get sent to collections in order to eventually appear on your credit report and have a potential effect on your credit score. The point at which medical providers will sell the debt to a collection agency is after it’s 60 to 120 days past due, depending on the provider.

The Consumer Financial Protection Bureau (CFPB) has been working to lessen the impact of medical debt on credit. As things currently stand, the three credit bureaus — Experian®, Equifax®, and TransUnion® — have set a one-year waiting period from the date of service until the medical debt is included on a consumer’s credit report. This is intended to make sure there’s enough time to solve any disputes with insurers and allow for delays in payment.

The three major credit bureaus also no longer include unpaid medical bills in collections on a person’s credit report if the amount owed is less than $500. And in even better news, medical debt that was in collections but is now paid off isn’t included on credit report (usually, collections accounts take seven years to drop off a report).

On top of all that, some scoring models don’t weigh medical debt as heavily as they do other types of debt when calculating credit scores. In fact, some models may exclude unpaid medical debt entirely. So while medical bills can affect your credit, the effect might not be as drastic as other types of unpaid debt.

As of mid-2025, the courts were weighing whether other guidelines about medical debt and credit would be enacted. It can be wise to research whether new rules have gone into effect if you are dealing with this kind of debt.

Can Medical Bills Be Removed From My Credit Report?

Unlike other types of debt, medical collections debt will no longer appear on your credit report once it is paid. Unpaid medical debt, however, can appear on your credit report for up to seven years if it remains unpaid. Fortunately, as time goes by, the account in collections counts less toward your credit scores.

If your bill was sent to collections by mistake, you may be able to have it removed by proving the error. Collect as much evidence as you can to make your case, such as credit card or checking account statements. You also might ask for payment records from your medical provider’s billing office.

You can file a dispute with the credit bureau that’s reporting the error. The credit bureau will then investigate and respond to you within 30 days. You may also receive email updates from the credit bureau regarding the status of your dispute.

Does Paying Off Medical Collections Improve Credit?

If you pay off medical collections debt, it will get removed from your credit report, which will have a positive impact on your credit score, and potentially a significant one. This is a recent change — previously, paid medical collections debt remained on credit reports for up to seven years.

One option to explore if you’re seeking to pay off your medical collections debt and thus get it removed from your credit report is to get your health insurance company to pay the debt. If you have reason to believe your insurance company should have paid a medical bill, ask your insurer to reconsider your insurance claims.

What to Do if You Can’t Pay Your Medical Bills

If the balance on your medical bill is your financial responsibility, but you’re unable to pay it, there may be ways to relieve your medical debt. Here are some options to consider:

•   Ask the medical provider to set up a payment plan. Discuss this option with your medical provider to find a plan that is manageable with your monthly budget.

•   Review your explanation of benefits the insurance company provides. Look out for billing errors or consider negotiating some of the medical charges, both of which could lower the total amount due.

•   Consider getting a temporary part-time job. This may help bring in extra income that you can put toward the medical debt.

•   Get assistance from a patient advocate. This might be an option worth considering if you can’t get the provider to budge on the payment.

•   Apply for a personal loan. Medical debt is one of the common uses for personal loans. If you can secure a personal loan that has a lower interest rate than credit cards, this may offer another option for payment.

   You may see these loans called medical loans. And note that your personal loan approval and the interest rate you’re offered on the loan will depend on your credit record and other factors.

Recommended: How to Get Approved for a Personal Loan

Being Proactive About Medical Bills

Just because you made your copay at the doctor’s office doesn’t necessarily mean the bill is settled. Additionally, the fact that the provider has billed your health insurance company doesn’t automatically mean the amount will be accurate or even paid.

•   If you haven’t received a statement from your medical provider’s billing office within a few weeks of your appointment or hospital stay, it might be a good idea to call for a billing update. Catching errors early in the billing process can help keep medical bills off your credit report and in turn, prevent medical bills from affecting your credit score.

•   If you know ahead of time that you won’t be able to pay the entire amount owed, contacting the provider’s billing office and trying to negotiate a payment plan may be a good first step. If you can come to an agreement, it’s a good idea to get it in writing. If you can’t reach an agreement, start exploring other options, making sure to weigh the pros and cons and crunch the numbers, such as with a personal loan calculator.

•   Should a collection agency employee contact you about a bill that you think has been paid or should have been paid by insurance, stay calm. Ask if you can call back with information that shows there’s no open balance.

The Takeaway

If you have unpaid medical bills on your credit report, focusing on getting them paid has the potential to make a real difference in your financial future. Staying on top of medical bills can mean extra vigilance, but the effort is worth it to keep medical debt from affecting your credit. You might work out a payment plan or take out a personal loan when medical debt is too high to pay out of pocket.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Can medical debt ruin your credit?

Yes, medical bills can negatively impact your credit if they are turned over to collections, but there are recent changes to how they’re reported. While unpaid medical bills can be sent to collections and potentially affect your credit score, once paid, they come off your report. Also, the three major credit bureaus no longer include medical debt under $500 on credit reports.

Do medical bills fall off after 7 years?

Unpaid debts that are in collection typically stay on your credit report for seven years. However, if you pay medical debt that’s gone to collection, it is treated differently. It comes off your credit report.

Can you ignore medical debt?

It’s not wise to ignore medical debt or any debt, for that matter. Unpaid debt can accrue interest and penalties and can be put into collection, which can harm your credit score. It can be a good idea to talk to your medical provider about negotiating your bill or setting up a payment plan if you cannot pay your debt. Or you might consider a personal loan.

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.

SOPL-Q225-106

Budgeting is key to financial success, but with so many strategies available, it can feel overwhelming. One of the most powerful and simplest approaches is the pay-yourself-first method. This system turns traditional budgeting upside down by prioritizing saving and financial goals before addressing everyday expenses. Instead of saving what’s left over at the end of the month, you save first — and spend what’s left after.

If you tend to live paycheck to paycheck, adopting a pay-yourself-first mindset could help you break free from that cycle and start getting ahead. Whether you’re working toward building an emergency fund, saving for a house, or investing for retirement, this strategy can help you get there faster. Here’s a closer look at why this method works so well and how to put it into practice.

3 Reasons to Pay Yourself First

Before we get into what it means to pay yourself first, let’s explore why you might want to adopt the so-called “reverse budgeting” method.

1. To Save Consistently

One of the biggest advantages of the pay-yourself-first budget is that it creates a consistent saving habit. Many people intend to save whatever money remains at the end of the month, only to find that there isn’t much — or anything — left.

By paying yourself first, you’re removing the temptation to spend that money. It becomes a non-negotiable — just like your rent or electric bill. You commit to putting aside a set amount each month into a savings account or investment account, treating your future self as a priority. Over time, these small contributions can accumulate into a sizable savings or investment fund, providing financial stability and peace of mind.

2. To Prepare for the Future

Financial emergencies are almost inevitable. Whether it’s a car repair, medical bill, or trip to the vet, unplanned expenses can derail even the most careful budgets. Paying yourself first ensures you’re building a safety net before life throws a curveball.

Beyond emergencies, the pay-yourself-first strategy also helps you prepare for long-term goals. Whether you’re hoping to buy a home, travel, or fund a child’s education, prioritizing savings makes it easier to achieve big-picture plans without relying on debt. And while retirement may seem a long way off, the sooner you start saving, the more time your money has to grow through compound returns (when your returns start earning returns of their own).

3. To Stay Motivated

Budgeting can feel restrictive and discouraging, particularly when the main focus is on cutting expenses and limiting spending. Paying yourself first changes that mindset. Instead of seeing what you’re giving up, you see what you’re gaining — a growing savings account, a bigger retirement fund, and real progress toward your goals.

Each month that you pay yourself first is another step forward. That sense of progress can inspire you to stay on track, stick with your budget, and look for even more ways to improve your financial well-being.

How to Start Paying Yourself First

If the idea of paying yourself first sounds appealing, here’s a simple step-by-step guide to getting started.

1. Assess Your Income and Spending

Before you can determine how much to pay yourself, you’ll need to get a sense of your overall financial picture. You can do this by gathering up the last several months of financial statements and using them to calculate your average monthly income and average monthly spending. Next, you’ll want to categorize your monthly expenses and divide the list into essential spending (like housing, utilities, groceries, debt payments) and nonessential spending (dining out, entertainment, clothing).

Once you have a clear picture of your income and expenses, you can start identifying how much room there is to pay yourself first. Keep in mind that the goal here is to prioritize saving as if it were an essential bill.

2. Determine How Much to Pay Yourself

How much you should siphon into savings each month depends on your income, expenses, and goals. A good starting point is 10% to 20% of your take-home pay, but don’t be discouraged if that feels out of reach at first. Even saving 5% is better than nothing, and you can gradually increase the percentage as your financial situation improves.

To hone in the right amount to pay yourself, you’ll want to consider your short- and long-term financial goals, how soon you want to reach them, and how much you’ll need to save monthly to meet those goals.

If saving for multiple goals feels too overwhelming, it’s okay to prioritize. For example, If you don’t have a solid emergency fund, you might start there. Once that’s in place, you might bump up your 401(k) contributions and/or start saving for another goal like a downpayment on a home or car or your next vacation. The key is to start somewhere and commit to regular contributions.

3. Trim Unnecessary Expenses

If your current spending habits don’t leave much room for saving, you’ll need to find some places to cut back. The easiest way to find extra money is to look closely at your nonessential spending and consider what you can live without.
Some areas where people tend to overspend include:

•   Eating out or ordering takeout frequently

•   Subscriptions and streaming services

•   Unused gym memberships

•   Impulse purchases or retail therapy

•   Expensive cable or phone plans

Redirecting even $50 or $100 per month from nonessential spending into savings can make a big difference over time. Trimming the fat in your spending not only eliminates waste, but also helps you start spending with more intention, rather than making decisions impulsively or passively. Like other budgeting methods, the pay-yourself-first strategy helps ensure that your spending aligns with your values and goals.

4. Review Your Bank Accounts

To successfully pay yourself first, you need the right banking set-up. It’s a good idea to have multiple accounts to separate your savings from your everyday spending. This prevents the temptation to dip into savings for nonessential expenses.

At a minimum, you’ll want to have one checking account that doesn’t charge any monthly fees (bonus if it also earns some interest), along with at least one savings account that pays a competitive annual percentage yield (APY). To help grow your savings faster, you may want to open a high-yield savings account. These accounts offer significantly higher APYs compared to traditional savings accounts. You can often find the best rates at credit unions and online banks.

5. Automate Your Savings

Once you’ve decided how much to pay yourself each month and where to put those payments, automating your finances is key. By setting up automatic transfers from your checking account to your savings accounts, you eliminate the need to make a decision each month. It happens behind the scenes — just like a bill payment.

Consider setting your transfer to occur on the same day you receive your paycheck. This ensures the money is moved before you have a chance to spend it elsewhere. Alternatively, you might see if your employer will do a split direct deposit, where most of your paycheck goes into checking and a certain percentage goes directly into savings.

6. Review and Adjust Based on Your Goals

Life is constantly changing, and your personal budget should reflect that. It’s a good idea to periodically review your financial goals, income, and spending habits to make sure your savings strategy still aligns with your priorities. You might set a reminder in your calendar to review your budget every three to six months. You’ll also want to go over your budget whenever you experience a major life change (like a new job, move, or marriage).

Some questions to consider when doing a budget review:

•   Am I meeting my savings goals?

•   Can I afford to increase how much I pay myself?

•   Are there any expenses I can reduce or eliminate?

•   Have my financial goals changed?

Adjustments are normal and necessary. The key is to remain proactive and intentional with your money. As your income increases and/or debt decreases, look for opportunities to boost your savings rate and pay yourself even more.

The Takeaway

The pay-yourself-first strategy isn’t simply a budgeting method — it’s a shift in mindset that puts your financial well-being front and center. By prioritizing savings before spending, you can build a habit of consistency, prepare for the future, and stay motivated as you work toward your goals.

This approach to budgeting is also easy to implement. To get started, you simply need to assess your income and expenses, decide how much to pay yourself based on your financial goals, cut unnecessary expenses to free up savings, and automate your savings to stay consistent.

Remember that it’s fine to start small. The key is that you start — and stick with it. Over time, you’ll likely gain momentum and confidence, and those early efforts will pay off in the form of more financial flexibility and greater peace of mind.

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

FAQ

Are there any disadvantages to paying yourself first?

While paying yourself first is a powerful savings strategy, it can present challenges if your income is irregular or your monthly expenses are high. Automatically transferring money into savings before covering essentials could cause cash flow issues, especially during emergencies or months with unexpected costs. Prioritizing savings without a flexible plan could also lead to relying on credit cards or loans to make ends meet. It’s important to balance saving with realistic budgeting to avoid financial strain.

What types of accounts are best for paying yourself first?

High-yield savings accounts, retirement accounts, and investment accounts are ideal for paying yourself first. High-yield savings accounts offer easy access and better interest rates than traditional accounts, making them ideal for short-term goals. Retirement accounts often provide tax advantages for long-term saving. For building wealth, automated investments in diversified portfolios can be beneficial. You’ll want to choose your accounts based on your goals, time horizon, and tolerance for risk.

How does paying yourself first help with financial stability?

Paying yourself first builds financial stability by prioritizing savings before spending. This habit ensures you’re consistently setting aside money for emergencies, future goals, and retirement, rather than relying on leftover funds. Over time, it can help you create a financial cushion that reduces stress, prepares you for unexpected expenses, and lessens the need for high-interest debt. This proactive approach also helps you build long-term financial security.

Can I still pay myself first if I have debt?

Yes, you can — and often should — pay yourself first even if you have debt. Building savings, even a small emergency fund, can prevent further debt when unexpected expenses arise. It’s about balance: You might prioritize high-interest debt repayment while also saving a small portion of your income. Over time, having savings can improve your financial flexibility, reduces reliance on credit, and can help you make faster progress toward becoming debt-free.

What are the biggest challenges of paying yourself first?

One of the biggest challenges of paying yourself first is sticking to the habit, especially when money feels tight or unexpected expenses arise. It can be tempting to skip saving in favor of immediate needs or wants. People with irregular incomes may also find it challenging to divert a set amount of money to savings each month. To overcome these hurdles, it’s a good idea to start small, automate your savings, and track your progress to stay committed and motivated.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

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