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According to Car & Driver, the average transaction price for a new car tops $48,000 in spring of 2023. And Kelley Blue Book says that the average used car price tops $26,000.

Whichever option you may be pursuing to get yourself some wheels, that’s not an insignificant amount. You likely know that the more money you put down, the lower your monthly payments will be. That’s even more incentive to save up as much as you can for a car.

There are a few simple steps that can jumpstart the process and help you get your funds together for a car. These can include researching your options, then setting a budget for a new vehicle, and putting systems in place so it’s faster and easier to save.

Here’s how to make saving up for a car as quick and easy as possible.

Researching Your Options

If your plan is to buy a new car, you can start getting a sense of costs by researching car options that might fit your needs and budget.

Some questions to consider when buying a car include:

•   Do you want a compact, sedan, wagon, minivan, truck or SUV?

•   Will you use it for work, travel or school?

•   What features are important, and which can you live without?

You can read articles, peruse car review sites, visit dealerships in person, and/or review manufacturers’ websites to research car models that appeal to you.

You may also want to look into purchasing a used or preowned vehicle, and seeing exactly how much this could save you. You can get a sense of costs by reviewing the used car market for the makes and models you are considering.

Calculating Your Down Payment

Once you have a rough idea of how much it will cost to get the car you want, you can start figuring out how much you may need for a downpayment.

Parting with a solid chunk of cash is never fun, but an appropriate down payment can help to make your car repayment process more manageable.

A 20% down payment is often recommended when purchasing a new car, and a downpayment of 10 percent is a general guideline for a used car.

But this is not a set rule.

A higher down payment can lead to lower monthly car payments. For one reason there’s less money to finance. For another, a lender might extend better terms, such as a lower interest rate, when you make a substantial downpayment.

Your down payment can include cash, the trade-in value of the vehicle you drive now, or a mix of the two.

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Calculating Your Monthly Payments

If you believe you can save up enough to buy the car outright, way to go! That means you will ultimately pay less for the car because you’ll avoid paying any interest.

But if, like many people, you plan to get an auto loan, you may next want to determine how much your monthly car payments will be.

You can sit down and crunch the numbers, or you can let an online car loan calculator do the work. These calculators are designed to help you estimate what your monthly car loan payments will be throughout the life of your auto loan.

Steps to Saving up for a Car

Once you have a general idea of how much you need to save up for a downpayment, and how much money you’ll need to budget each month after you purchase your vehicle, you can set the saving money process in motion.

Here are some smart steps to help you get to the finish line.

Figuring Out How Much to Save Each Month for a Car

You can come up with a monthly savings goal by taking the amount you’ve determined you’ll need for a car upfront (subtracting any money that may come from selling or trading in your current car), and then dividing it by however many months you have left until your ideal purchase date.

The number you get after doing this equation is how much money you ideally want to save each month to meet your goal. You might also think about saving more than that per month so you can prepare for your monthly payments.

And if you’re currently driving an older vehicle that is prone to issues, you may want to save a little extra as a cushion for any necessary maintenance or repair costs.

Remember, saving for a car isn’t an overnight process and it may take longer than you initially expected, and that’s okay–the key is to get started.

Finding the Right Savings Account to Save Up for a Car

If you haven’t set up a savings account yet, this may be a good time to do so.

Good options for a short-term saving goal like buying for a car include: a high-yield savings account, money market account, online savings account, or a checking and savings account.

These options can offer a higher interest rate than a standard bank account, yet allow you to access your money when you’re ready to buy your car.

Having a savings account that is separate from your spending account can help you keep track of your progress, and allow you to know exactly how much money you have for a down payment for your car.

Making Saving for a Car Automatic

Once you have a good place to start and build your car savings, consider setting up automatic contributions to this account. You may hear this referred to as automating your savings.

You can time these transfers to happen on the same day each month, maybe right after you get your paycheck.

This makes sure the savings happens (since you won’t have to remember to transfer the money), and also ensures that you don’t accidentally spend the money you want to put aside each month to save up for your car.

Cutting Back on Extras

If your current budget doesn’t give you much room to save for a car, you may want to see if you can pair back some of your monthly expenses.

For instance, if you’re paying a high price for cable each month, but primarily watch streaming services, you may be able to cut that line item right out of your budget for a significant savings.

Or, if you seldom use your gym membership, you might want to pause or cancel it and jog around the neighborhood and/or stream workout videos at home for free instead.

Or, you might be able to save money on food by cooking more and eating out/getting takeout less often. You might also decide to only use your credit card for essentials for the next few months.

Any changes you make don’t necessarily have to be permanent. You may decide that you can go back to certain spending habits once you have a sufficient down payment to buy a car.

Finding a Extra Stream of Income

If your current income is only enough to cover your current bills, you may want to look into taking on a low-cost side hustle to help you save up for a car.

You might be able to get some extra work delivering people’s groceries, mowing lawns, babysitting, cleaning houses, driving for a ride-share service, selling homemade goods online, or working as a virtual assistant.

Or you might be able to turn one of your talents into some freelance work, such as designing websites or managing social media for a local business.

Earning a little extra cash can go a long way, giving you the chance to put more toward a car, borrow less money, and lower your monthly payment.

Trading in or Selling Your Old Car

Trading in your old car to help fund your next car purchase, and is often a good option to lower the overall amount you’ll owe on your new vehicle.

To get the most money, it’s a good idea to compare what different dealers will offer you for the car.

You can also research what your car may be worth on sites like Edmunds and Kelley Blue Book to see if your trade-in offer seems reasonable.

You may also want to look into selling the car yourself to a private party since it could yield a higher price than trading in. The tradeoff is that this typically requires a little more work.

Recommended: How to Switch Banks

Getting the Best Deal on a Car

When you’re ready to start seriously shopping for a car, you’ll want to take advantage of any deals you can find, such as rebates and special dealership offers.

You can receive quotes from multiple dealerships; it’s a good idea to ask them if the price quoted includes deducted rebates. This process may feel tedious, but it can help you learn which make and model you can afford.

If you’ll be financing the car, you may also want to shop around for auto loans. You can check with various lenders, including banks and credit unions, to see who might offer the best lending terms.

With that information in hand, you can ask the car dealership whether it can offer a better financing deal.

If you do decide to go the used car route, it’s a good idea to follow the steps recommended by consumer.gov, such as finding out if the car has any recalls, researching if the warranty is still in effect, and having a mechanic inspect the vehicle before making a purchase, for your financial (and physical) protection.

The Takeaway

A car is a major purchase, and it’s a good idea to save up as much as you can before you take the plunge.

For one reason, you may be able to buy the car outright, and avoid taking a loan (and paying interest). For another, the higher your down payment, the lower your monthly car payments may be once you purchase the car.

Learning how to save money for a car can take a little trial and error. You may need to rejigger some of your expenses and find ways to cut back and/or bring some extra money, at least temporarily.

Ready to start saving up for that car? You may want to consider signing up for a SoFi Checking and Savings account.

With SoFi Checking and Savings’s Vaults feature, you can separate your spending from your savings (even create a Vault specifically for car savings) while still earning competitive interest on all your money.

Plus, you’ll earn a competitive annual percentage yield (APY), and there are no account fees.

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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As nice as a spa day or yoga class is, sometimes the best form of self-care doesn’t cost anything at all. It’s financial self care, and practicing it may help you manage your money.

Financial self-care involves taking steps to avoid financial stress and meet financial goals. Given that 73% of Americans say money is their number-one stressor in life, practicing financial self-care can be a very good thing.

But what exactly does financial self-care mean and how do you do it? Read on to find out.

What Is Financial Self-Care?

Financial self-care is a form of self-care that focuses on financial wellness. Essentially, instead of more traditional self-care activities (like getting massages or enjoying dinners out), you learn the best way to manage your finances and improve your financial situation. This may not sound fun, but worrying about debt, paying the bills, and falling short of savings goals can all lead to a lot of stress that can be draining both physically and mentally. Self-care and money can go hand in hand.

Here’s another perk: Once you get your financial life under control, you’ll have more money to put towards the more exciting areas of self-care. Whether that means finally splurging on that cleaning service or a new puppy is up to you.

Tips for Practicing Financial Self-Care

Self-care and money can combine in the pursuit of financial self-care. Here are some strategies to help incorporate this form of self-care into daily life.

Creating Realistic Financial Goals

To make strides in the area of financial self-care, it’s important to set reasonable goals. That way, you can make progress and feel a positive boost when you finally do reach a goal. Here’s an example: Paying off your student debt in a single year would likely be hard even on a high salary. Instead, having a goal of paying off your highest-interest debt (perhaps a credit card balance) in a year may be more obtainable. Look at your income versus your monthly necessary expenses (the “musts” in your life), and see if you can begin funneling some of the funds left over after bill-paying towards your debt.

Tracking Your Expenses Daily

Impulse spending can feel good in the moment, but it can do a lot of harm. You can be more mindful about your spending by reviewing your personal finances daily, focusing on where your cash was spent. You may not realize just how much money flows away from you on a typical day. Expense tracking will reveal that. On days that you don’t spend much or anything at all, give yourself a big pat on the back. You’ve just taken care of yourself financially.

Checking Your Banking Accounts Frequently

Good cash management is an important part of hitting your financial goals. Alongside tracking your daily spending, it can be helpful to check bank account balances daily or at least a couple of times a week. You’ll see where you stand financially and won’t be caught unaware by a low balance. This process will also give you a deeper look at how any automatic bill payments are impacting your cash flow.

After all, most of us don’t see the money we earn or spend in cold hard cash, so it can feel less tangible. Your paycheck may be directly deposited into your checking account, for example. When you know exactly where you stand financially, it can empower you and help better inform your purchasing decisions.

Making Any Needed Changes to Budgets

After keeping an eye on spending habits and account balances, it’s a good idea to review your monthly budget goals and see how you’re doing. Perhaps you put a reminder in your calendar to do a quick check-in on the last day of every month and see how things look. Maybe eating lunch out on weekdays has made it hard to stick to your food budget for the month. Perhaps having too many subscription services left no wiggle room in the entertainment section of the budget.

The end of the month is the perfect time to reevaluate spending habits, to see where you can cut back on spending, and to figure out how to increase savings.

Focusing On Getting Rid of Debt

Debt is likely part of your life, but it can also cause a lot of worry. Thanks to interest charges, debt can mount and be hard to pay off. So when you have some extra money, sure, you might spend it on a new outfit or a weekend getaway and lift your spirits that way. Or you could pay down your debt instead.

By prioritizing debt, you’d be a step closer to eliminating some money stress from your life. Getting rid of debt can be a key aspect of financial self-care and can boost your peace of mind.

Improving Your Mindset on Money

Self-care has just as much to do with our mental health as our physical health. Feeling negative about money can really drag a person down. That’s why it can be helpful to focus on what you have instead of what you don’t have.

If you are feeling as if you can’t compete with other people’s lifestyles, it may be that your comparison framework is skewed. It may be beneficial to take a break from social media (or unfollow certain luxury accounts), stop watching reality TV, or skip hanging out with that friend who earns and spends big.

Recognizing what your money can do for you rather than feeling deprived is an important step. It can be a very empowering mindset to adopt.

Improving Financial Literacy

Money can be intimidating in part because most of us lack a basic financial education. While you may not have learned about money management in school, you can teach yourself the financial basics and beyond. Knowledge is power, after all.

From learning about how credit scores work to the investing basics, take some time to read up on the financial topics that seem confusing. Also look into apps that help you with budgeting, saving, and tracking your spending. These tools can be part of financial self-care, helping to boost your financial literacy and wellness.

Visualizing Retirement and Investing in It

Financial self-care means taking care of today’s and tomorrow’s needs. Retirement can seem like a distant concept, so try picturing your future self at retirement age and how you’d want to live then. That way, you may feel more motivated to save even though retirement is far away. Look at your budget again to see if there is room to improve your retirement savings. Even saving an extra 1% a month can make a major impact.

Respecting Money

Money is a tool and a very valuable one at that. Embracing financial self-care means recognizing that money isn’t just about buying things. That may be the easy and fun part, but saving and investing it is what really makes the most of your cash. Educating yourself on saving and investing or seeking professional advice may help you harness the full power of the money you make. Money is a force to be reckoned with; respecting its importance could help you achieve your financial and lifestyle goals.

Why Financial Self-Care Is Important

Financial self-care is equally important, if not more so, than more traditional forms of self-care like heading to the spa or taking a personal day off of work. When you prioritize financial self-care, you can work to reduce money stress and move closer to your short- and long-term goals.

Banking With SoFi

Financial self-care can be a way to help reduce money stress and make the most of what you earn. Being smart about your cash and building your savings can unlock the good things in life today and in the future. Try practicing some financial self-care ideas, and see if you don’t feel more in control of your money and less stressed about it.

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

Why is financial self-care important?

Financial self-care can help reduce the financial stress in your life. Specifically, prioritizing financial self-care may make it easier to reach financial goals like paying down debt or saving for retirement.

How do you take care of yourself and your money?

Budgeting, focusing on debt repayment, and setting clear savings goals are all good ways to take care of yourself and your money. Not having to worry about too much debt or overdue bills are other potential benefits of financial self-care.

How do I respect my money?

Respecting money involves not wasting it and instead looking for ways to make the most of it. Being mindful about purchases, sticking to savings goals, and not taking on high-interest debt are all ways someone can respect their money.

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.

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.

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.

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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.

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Having credit card debt of any amount can feel overwhelming, but this is especially true with a steep amount like $20,000. Not sure how to pay off $20,000 in credit card debt? There are a number of options to consider to get your credit card debt under control and paid off.

For one, you might consolidate the debt using a balance transfer credit card or debt consolidation loan. Or, it might come down to adjusting your monthly budget or simply choosing the repayment method that works for you. Another option is pursuing a debt management program. Really, once you understand the potential solutions at your fingertips, paying off $20,000 in credit card debt can start to sound more doable.

Tips on Paying Off $20,000 in Credit Card Debt

Having $20,000 in credit card debt does present a challenge to the borrower working to pay that amount off, but it is possible to make progress and become debt-free. Let’s look at some ways you can make progress on paying off your debt.

Open a Balance Transfer Credit Card

Paying off credit card debt can be more difficult when you’re juggling multiple credit card balances. To help simplify the debt repayment process, you might consider opening a balance transfer card.

It’s possible to transfer just one credit card balance or multiple to a balance transfer card. This can be a good move to make if you can qualify for a balance transfer card with an introductory annual percentage rate (APR) of 0%.

While this 0% APR period is temporary, it can last at least six months and sometimes longer than a year. Not having to pay interest during that time period means all payments go toward the principal balance. This makes it a lot easier to pay down credit card debt faster, and it can save a lot of money in the process.

The trick here though is to pay off the entire balance before that introductory period ends and the interest rate shoots up.

Use a Debt Consolidation Loan

If someone has multiple sources of credit card debt, they might also consider consolidating that debt using a debt consolidation loan. This will lead to taking out a $20,000 loan, but it can help streamline the debt repayment process. In fact, debt consolidation is one of the common uses for personal loans.

After you apply for and get your personal loan approved, the way a debt consolidation loan works is that you’ll then use the loan funds to pay off your other sources of debt. This could be multiple credit cards or other types of debt, like personal loans mixed with credit cards.

Ideally, when someone applies for this new loan, they’ll be able to qualify for a lower interest rate than they’re currently paying on their other sources of debt. That way, they’ll spend less on interest and can afford to put more money each month toward repaying their debt. This can make it easier to pay the debt off faster and save on interest (you can even determine your exact savings with a personal loan calculator).

Another benefit of a debt consolidation loan is that it takes multiple sources of debt and turns them into just one source, with a single interest rate, minimum monthly payment, and payment due date.

Choose the Right Repayment Method

Paying down debt takes a lot of work and discipline, and sometimes you need the right type of motivation to stay on track with debt repayment. This is where the debt snowball and debt avalanche repayment methods can come into play, with some consumers finding one method helps them make more progress than the other.

•   Debt snowball. With this method, the borrower makes the minimum payments on all credit cards each month, but focuses on making extra payments on the card with the lowest balance. Once they pay that one off (it will be the fastest to pay off), they’ll move onto focusing on the card with the next lowest balance. Making progress quickly like this can be really motivating for some people.

•   Debt avalanche. Again, the borrower will continue to make all minimum debt payments each month. With this strategy though, any extra payments go toward the debt with the highest interest rate first. This method saves the most money, which can free up room in someone’s budget to make more debt payments each month.

Debt Management Program

Another option consumers have for getting help paying down their $20,000 credit card debt is to join a debt management program. This can be a good path forward for consumers who can’t afford to make extra debt payments each month or whose credit score doesn’t make it possible for them to qualify for a balance transfer card or a personal loan for debt consolidation.

Debt management plans are offered by credit counseling agencies. During the course of these programs, the credit counselor will alert the borrower’s creditors that they’re working with a debt management plan. From there, the counselor will attempt to negotiate a lower interest rate or lower monthly payments.

These plans tend to last three to five years, but they can help consumers make progress on their debt and avoid bankruptcy.

Credit Card Debt Forgiveness

Unfortunately, it can be very difficult to negotiate credit card debt forgiveness and it rarely happens. When someone opens a credit card, they agree to repay the money they borrow.

It can, however, be possible to negotiate a new payment plan that is easier on the borrower’s budget, especially if some kind of hardship occurred that’s making repayment challenging.

Additional Options for Paying Off Debt

One of the best ways to make progress on paying off debt is simply to make repayment a priority. To stay on track, consumers need to make their minimum required debt payments a fixed part of their monthly budget. By budgeting for debt payments and prioritizing them over other spending temptations, it’s more likely to make faster progress.

Another way to make progress on paying off $20,000 in credit card debt is to work on making additional room in your budget for extra credit card payments. Finding ways to lower expenses and other bills can leave more money each month to pay off debt. Remember — the faster you pay off your debt, the less you’ll spend on interest.

It may be necessary to make some spending sacrifices until you’re debt free, but once you are, you’ll have a lot more room in your monthly budget to add fun spending back in. Cutting back on dining out, shopping, traveling, and entertainment now can really pay off in the future.

The Takeaway

It is possible to pay off $20,000 worth of credit card debt, but it will take time. Patience is key here, as is assessing which approach for tackling $20,000 in credit card debt will be right for you. For some, a debt consolidation loan (one of the types of personal loans) may make sense, while others may opt for the debt snowball or avalanche method. Spending time focusing on paying off credit card debt can really help improve your financial outlook though, and it’s very much worth the effort.

If someone decides that consolidating their debt would really help them streamline repayment and possibly even save them money on interest, they may want to research their personal loan options. SoFi makes personal loans easy — it’s possible to check your rates in 60 seconds, and you can borrow up to $100,000.

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.

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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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.

It’s not a secret that the cost of attending college is more expensive than most people can afford to pay for in cash. Many students turn to federal student loans to help pay for college. But what can someone do if they’ve already tapped out their federal student loan resources or don’t want to take on any federal loans?

Thankfully, there are a variety of resources available to help students pay for their education. From scholarships to savings, continue reading for 14 ways to make college tuition more affordable. It may even be possible to figure out how to pay for college without loans.

14 Ways to Make College Tuition More Affordable

The key to figuring out how to pay for college without loans or financial aid is to make the overall cost of college a lot less expensive. Here are a few ways someone can make the cost of college more affordable.

1. Apply for FAFSA

It’s always a good idea to apply for federal financial aid — even if you don’t think you’ll qualify. That’s because the Free Application for Federal Student Aid (FAFSA®), is absolutely free to fill out. This form helps determine the type and amount of aid a student qualifies for. While it’s not a guarantee that students will get financial aid granted to them, it’s worth applying to try to lower the overall cost of pursuing higher education.

Federal financial aid includes both need-based aid, like Direct Subsidized Loans or Pell Grants and non-need based aid, like Direct Unsubsidized Loans. After submitting the FAFSA, schools will use the information to determine your financial aid package. This will detail the aid you qualify to receive for the school year. The FAFSA must be completed annually.

Sometimes, federal financial aid isn’t enough to allow a student to pay for the full cost of college. Keep reading for ways to lower the costs of attending college in the event you don’t receive enough financial aid to make it easy to pay for school.

2. Qualify for Merit Scholarships

Because scholarship funds don’t need to be paid back, they can be a valuable tool to help pay for school. While there are need-based scholarship opportunities, there are also merit-based scholarships that focus on giving money to students that meet or exceed certain standards set by the person or organization issuing the scholarship. These can include such factors as academic excellence, musical talent, or athletic ability.

Merit scholarships may be available from your college or university. Contact your school’s financial aid office for information on scholarships available at your academic institution.

3. Apply for Private Scholarships

While colleges often offer scholarship opportunities, so do private companies, nonprofits, and other organizations such as religious groups. Both school-based and private scholarship opportunities are worth looking into. You can find information on private scholarships from both your school’s financial aid office and by searching online databases, like Scholarships.com, that aggregate information on available scholarships.


💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

4. Apply for ROTC Scholarships

If someone is considering joining the military, they may be able to receive up to 100% in tuition assistance if they do so. College’s may have ROTC (Reserve Officers’ Training Corps) programs that make it possible to qualify for scholarships before joining the military — unlike the GI Bill which gives education money to those already enrolled in the military.

5. Attend a Community College

Attending a community college before transferring to a four-year university is another option to cut tuition costs. Some community colleges even offer tuition-free programs. Not to mention, when attending a local community college, it may be easier to remain living at home with mom and dad which can cut down living expenses massively.

6. Earn College Credit in High School for Free

Some community colleges partner with local school districts to give high school students the opportunity to take college classes for free which allows them to earn college credits in high school. Taking advantage of free college classes while in high school can make the cost of attending college later cheaper — especially if the student can graduate early as a result. Advanced placement (AP) classes in high school can have a similar benefit.

7. Ask for Family Donations

While there’s no guarantee that a family will be able or willing to help pay for someone to go to college, it can be worth asking grandparents and other close family members for assistance (in addition to parents, as you might assume). Together, their contributions may help lighten the overall load of attending college.

8. Consider Private Student Loans

If someone wants to take out loans but didn’t receive enough federal student loans to fully cover their education and living expenses while in college, they can apply for private student loans to help make up the difference. Unlike federal student loans which are awarded based on the FAFSA, private student loans are awarded from individual lenders and require their own application.

Because private student loans can be more expensive than federal loans, it may be a good idea to exhaust any potential federal options before applying for private student loans. In addition, it’s important to recognize that private student loans don’t offer the benefits that federal student loans can, such as forgiveness. In addition, with loans, a longer term loan can mean paying more in interest over the life of the loan.

9. Choose an Affordable School

Usually, attending an in-state public school is more affordable than attending an out-of-state public school. Additionally, private universities tend to cost more to attend than public universities. If a student can go to an in-state public university, that is likely the most affordable route they can pursue. Especially if they attend community college first to get some general education classes out of the way.

While public schools are generally more affordable than private institutions, financial aid packages can potentially even the playing field. When evaluating colleges, be sure to factor in the actual costs after any scholarships or grants and other aid.

10. Work During School

It can be challenging, but if a student can work part-time while enrolled in college, they can pay some if not all of their way as they go. If they took out loans, they may be able to use their earnings to start paying them down early so they can avoid paying interest after they graduate.

11. Budget for College With Parent’s 529 Plan

If a student’s parents set up a 529 plan (which is a tax-advantaged investment account that can be used to pay for qualifying educational costs), they can budget out those savings to see how much of their education they can pay for; a budgeting app could help with this.

Some students may not have the benefit of parents who can support their education in this way. Students figuring out how to pay for college without their parents’ help may want to focus on finding an affordable school, filling out the FAFSA, applying for private scholarships, working while in college, and using student loans wisely.

12. Complete College Earlier Than Four Years

If a student hustles, even shaving off one semester of college can save them a decent chunk of change in tuition, fees, and room and board. If they can take an extra class each semester, they may be able to graduate early and save a lot of money. Another path is to try to complete college credit-worthy classes in high school, as noted above.

13. Live Off Campus and Commute

As convenient as living on a college campus is, it can also be expensive. The cheapest living option is to live at home with parents if that’s possible and commute to school. If a student does need to live on their own, renting an apartment or a room in a house off campus may still be more affordable than living on campus. Price the different options to see which is most affordable and in line with your budget.

Recommended: Does Net Worth Include Home Equity

14. Opt for a Payment Plan

Some colleges offer tuition payment plans that distribute costs over several months. These don’t necessarily reduce expenses but can make it easier to pay for tuition by spreading payments out instead of expecting one upfront lump sum payment. This can be an especially good option for students working to pay for school.

The Takeaway

Paying for college is a big endeavor, but one that can be made easier if a student takes certain steps to reduce the overall costs of college. Figuring out how to pay for college without loans is challenging, but starting by applying for scholarships and financial aid can help.

To make it easier to reach major financial goals, including paying for college, SoFi can help you budget well.

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

FAQ

What can I do if my parents won’t pay for college?

Students can apply for financial aid by filling out the Free Application for Federal Student Aid (FAFSA), look for scholarships, take out federal or private student loans, or work their way through school. It may be challenging, but students do have options outside of their parents for financing higher education.

How can I pay for college by myself?

If someone needs to pay for college on their own, they’ll want to fill out the FAFSA each year to see how much financial aid they qualify for and how much federal student loan coverage they can get. If they need more money to pay for school, they may consider applying for private student loans and/or scholarships, as well as working part-time during college.

Is Sallie Mae a federal loan?

Sallie Mae student loans are no longer federal student loans. They are a kind of private student loan.

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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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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Gap years are less popular in the U.S. than in many other countries, but still, data shows that 3% of students take a gap year between high school and college. The idea of taking a break before, during, or after college is likely one that many students can relate to.

Obtaining an education involves a lot of hard work. From long days in the classroom to late-night study sessions, the rigors of academia can take their toll. And college can carry a hefty price tag. It’s understandable that someone might want to take a gap year before they start college or after they finish college to regroup before they begin working.

There are a lot of benefits associated with taking a gap year, but getting ready for a year off requires quite a lot of financial planning to make this choice sustainable.

What Is a Gap Year?

Before diving into how much to save in your bank account for a gap year, it’s helpful to understand exactly what a gap year is. Essentially, a gap year involves taking a year off from school or work to travel, do an internship, take on a temporary job, volunteer, develop a skill, or do a combination of those activities. Some students design their own program; others sign up with an organization that, say, leads them on travel or volunteer projects.

More often than not, people take a gap year between when they graduate high school and start college, but it is possible to take a gap year during college or after graduation but before starting a job or going to graduate school.

A gap year can give someone the time they need to discover what they want their next move to be, to rest, to learn about an area of interest, or to simply get out of their comfort zone.

What Are the Benefits of Taking a Gap Year?

Some parents may look down on the idea of a gap year, fearing that their child won’t get “back on track” with their studies or post-grad life. But there are many benefits associated with taking a gap year.

•   Time to rest and recharge. After many years of academic pressure, some students need a year off to recover from burnout before they start their next big endeavor.

•   Room for discovery. Students who aren’t sure what path they want to take next may find that taking a gap year gives them the opportunity to discover or deepen their interests and formulate next steps.

•   Can explore passions. If a person knows they’re interested in a certain industry or job role, they can spend some time interning, pursuing a fellowship, or researching that career path before they pursue a degree toward that job.

•   Develops independence. A gap year can provide the opportunities young adults need to become more self-sufficient. That could mean traveling solo or taking on a job in a new town, not to mention getting better with money.

Is a Gap Year Beneficial Financially?

If you’re contemplating taking a gap year, it’s natural to wonder how much to save to make it a reality. You may also be curious if a gap year could be a boost or a bust for your finances. In truth, a gap year can be beneficial financially and in other cases it can be financially damaging — it just depends on how the person chooses to spend that year. For instance, if you are working at a local business while living at home, you might open a high-yield savings account and really plump it up with your earnings. If, on the other hand, you go on a gap-year guided tour of another continent, that could cost $10,000, $20,000, or more.

There is some concern that gap years can hurt someone’s overall lifetime earnings. By pushing off entering the working world with a college degree in hand by a year, they can lose a year’s earnings as well as a year’s progress towards a higher paying job.

That being said, someone may spend their gap year interning, working as a fellow, or finding other ways to earn income or boost their resume. They may find their efforts propel them forward financially or at least help them break even. On the other hand, if a person spends the year traveling and relaxing, their finances might take a major hit if they don’t plan and budget appropriately.

Typical Expenses to Prepare for During a Gap Year

Parents may not be able to (or eager to) fund a child’s gap year, so a student can benefit from preparing to pay some or all of their expenses. Saving in advance or working part-time during the gap year can help make it a reality. (Planning for a gap year can actually be a great way to get your finances in order and learn how to budget.)

Here are some of the expenses to consider:

•   Rent and utilities or other housing (say, youth hostels if you are traveling)

•   Transportation

•   Travel costs

•   Food

•   Entertainment (movies, concerts)

•   Clothing

•   Personal-care products

•   Health insurance

•   Medical costs

•   Car insurance

•   Cell phone/data plan; internet access

•   Student loan payments, if applicable

•   Credit card debt payments

•   Gym membership/fitness costs

Financial Tips to Save for a Gap Year

The very act of planning and saving for a gap year can be a great exercise in money management for college students; it will definitely give you a new perspective on saving and spending.

Budgeting While Planning a Gap Year

Budgeting for a gap year takes quite a bit of forethought and planning regarding your personal finances. It’s a good idea to plan for a gap year a full 365 days in advance to make it easier to build up a savings fund. It can be helpful to put your cash into either a savings account, money market account, or CD to gain interest and help build your funds.

You might want to determine how much you need to save over the next year, divide that amount by 12, and then add that amount into your budget so you can set the money aside each month. This can be a great time to familiarize yourself with different budgeting techniques (like the envelope system or the 50/30/20 budget rule) and see which one suits you best.

Getting a Job or Internship

Getting a part-time job or a paid internship while in school can make it easier to save for a gap year. Your school may have an online board where you can scan for opportunities. You might also consider a side-hustle, whether that means selling photographs you took while hiking or doing a weekend shift at a local coffee shop.

Cutting Unnecessary Expenses

As mentioned, it’s a good idea to budget for a gap year. Now it’s time to up the ante. You can take a cold, hard look at your budget to see where you can cut your spending (hello, subscription services and those pricey daily smoothies). The money you save can be put towards your gap year fund.

Selling Items You No Longer Use

From clothes to workout equipment to electronics, most of us have things we simply no longer use. If you’re trying to fund a gap year, you can cut the clutter and make some extra cash by selling this stuff. You might offer items up online (eBay and the like) or organize a yard or stoop sale.

Reduce Credit Card Spending

Credit card debt has a way of snowballing and getting very expensive. With credit card interest rates at 24.62% as of mid June 2024, owing money on your plastic can be an expensive thing. Aim to only use your credit card for purchases you can afford to pay off right away. That way, you can use any cash-back and travel-point bonuses to help fund your gap year without carrying a balance. It’s wise to focus on managing your money in a way that doesn’t require relying on a credit card.

Consolidate Credit Card Debt

The above strategy may not be possible if you’ve already racked up a good deal of credit card debt and are feeling as if you are in financial trouble. (Yes, this can happen quickly, even if you’re a student who’s only had a card for a short time.) You may find that consolidating multiple sources of credit card debt can help you get a lower interest rate (which could save money) and streamline your debt, making it easier to pay off.

For instance, you might find a balance-transfer card that offers breathing room thanks to an introductory, interest-free period. Or perhaps you would do better with a credit card consolidation loan that lets you pay off the debt and then pay back the funds at a lower interest rate. If you need guidance, consider talking with a debt counselor at the non-profit National Foundation for Credit Counseling (NFCC).

Cook at Home

Eating out will almost always cost more than eating at home. To save extra cash, get comfortable in the kitchen and build your meal-prep repertoire. In addition, you might start making your own lunch; those popular salad bars can be a budget-breaker if you go often.

Recycle, Reuse, Rewear

One way to save big is to be planet-friendly. Did you know the average American spends about $100 per year on bottled water? Buy yourself an insulated reusable water bottle in a color or design you love, and use it.

Also consider that each of us typically spends almost $2,000 on clothes per year. Commit to wearing what you own or perhaps shopping second-hand (there are plenty of cool things to be found at thrift and vintage stores) to whittle that expense way down.

Think Carefully About Big Purchases

If you’re planning for a gap year, you may want to slow your roll when it comes to making big purchases. Upgrading to the latest mobile phone or buying a premium mattress as you enter adult life may seem enticing right now. However, if you delay gratification, you may be closer to making your gap year dreams a reality. Better money management can sometimes mean knowing how to say “no” to things you think you have to have.

The Takeaway

A gap year can be a great way to intern, explore, volunteer, destress, and more. But it typically isn’t free. If you want to enjoy this kind of experience, you likely need to save more in your bank account and spend less. Yes, this can help your gap year become a reality, but it has another bonus: It teaches you money management skills that can last a lifetime.

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

How much money is needed for a gap year?

How much money you need for a gap year depends on your goals. For instance, if you want to travel the world during that year, you will require a lot more money than if you plan to live at home and intern in an industry you’re interested in.

Can taking a gap year help you save money?

Usually a gap year doesn’t help students save money, other than the fact that no tuition will be due that year. The exception would be if you live with your parents during your gap year and work during that time.

How can a gap year hurt?

A gap year can potentially hurt someone’s lifetime earning potential. By delaying entering the working world for a year, the individual misses out on a year’s salary and career growth that can lead to a higher salary down the road. However, a gap year could also be a positive: It could involve an internship or connections that eventually lead to a dream job.

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.

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.

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.

3.60% APY
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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.

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