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Thinking about taking a road trip? The rising cost of gas might put a dent in your budget if you’re not careful. But how much will you spend on gas for a trip? What should your budget be?

Using a trip cost calculator can help you determine what you are likely to spend filling up your tank on a longer trip. Then you can use that information to decide whether it’s more cost-effective to drive, take a train or bus, or fly.

Let’s look not only at a gasoline cost trip calculator table, but also why you should calculate how much you’ll spend on gas and how you can save money filling up at the pump.

Why Use a Gas Cost Trip Estimator

You may think nothing of filling up your gas tank every few weeks when you’re only driving to work and the store. But consider how much gas you’d use for a trip from, let’s say, San Diego to New York City. With gas prices on the rise, understanding what it will cost you to fuel up for an entire trip can help you better budget your expenses.

Using a gas trip cost calculator can help you figure out how much of your entire trip budget will be dedicated to fueling up.


💡 Quick Tip: Online tools make tracking your spending a breeze: You can easily set up budgets, then get instant updates on your progress, spot upcoming bills, analyze your spending habits, and more.

How to Calculate Your Gas Cost Trip

To figure out how much gas will cost for a road trip, you can, of course, use a trip cost calculator. You’ll need to input basic details, like your type of car (different sizes and types of cars burn gas at different rates) and your route, and the calculator can estimate with real-time gas prices.

But a simple method is to look at your route and the total distance in miles, and divide this number by the number of miles per gallon your vehicle gets. (You can check your owner’s manual to find this out if you don’t already know). This will tell you the number of gallons of gas you’ll need for the entire trip.

Now you’ll need to know the price of gas so you can multiply it times the number of gallons you need. Since gas prices by state may vary wildly, you might take an average of prices found in five places along the way. Tools like Gas Buddy let you search for gas prices in a given city, so you can use this for research.

Gas Cost Trip Calculator Table
Let’s use the process I outlined above to illustrate how you can be your own gas calculator for trip costs.

As you can see, it would cost about $410 for gas for the entire trip. Of course, this is based on an average cost of gas, and prices will fluctuate over time and in different towns and cities.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Examples of Gas Cost Trips

Let’s look at a few other examples of trips and how much they would cost in gas.

Reasons to Calculate Your Gas Cost

So why should you bother using a road trip cost calculator? Well, most people don’t have unlimited funds when it comes to taking a road trip, so for starters, it can help you see how much you’d spend. You might decide it’s not worth driving if the cost exceeds what you’d pay for a flight, bus, or train ride.

Even if you’re not planning a big trip, looking at how much it costs to drive on a tank of gas can be helpful for maintaining your month-to-month budget. Once you understand how much you’re spending on gas, you might explore how to improve gas mileage to get more bang for your buck or you might limit how often you drive to save money.

Tips on How to Save on Gas Money

Speaking of saving money, let’s look at how to save money on gas.

Plan Where You’ll Fuel Up

If you’re planning a road trip, use a tool that shows you exactly where the cheapest gas can be found. You might be able to save $.10 or more a gallon simply by planning ahead. There are even some trip fuel cost calculators that will help you plan where to stop based on gas prices.

Consider How You Pay

There are different types of credit cards that can help you save at the pump. Branded gas credit cards often offer rewards that will shave off a few cents per gallon or give you a bonus after you’ve charged a certain amount of purchases.

You might also consider a cash back credit card that gives you cash or credits for your purchases once you’ve hit a certain threshold.

Look into Alternative Transportation

You may be quick to rely on cars to get around, but there are often other overlooked methods of transportation to consider. Whether it’s a bus, train, Uber, or plane, you might be able to save money by leaving your car at home.

You can also cut your gas costs by splitting them with a friend.

Another way to stick to your travel budget? A money tracker app, which can help you keep tabs on where your money is going while you’re on the road.

Only Use Premium if Necessary

Most cars run just fine on regular unleaded gas, which can be significantly cheaper per gallon than premium versions, especially if you’re on a long trip. Check your car manufacturer’s recommendations to see if you can use regular unleaded gas.

Drive an Empty Car

The heavier your car is, the more gas it burns. So if you’ve been lugging around something heavy unnecessarily, consider leaving the load at home before you drive.

Who Should Save Money on Gas

The real question is, who shouldn’t save money on gas? We could all benefit by keeping a little extra cash in our pockets.

That said, if you’re planning a long road trip, you’ll probably want to explore ways to improve gas mileage and to save on gas. Also if you have a long commute to work, you might be spending more on gas than necessary.

The Takeaway

Paying attention to how much gas costs, particularly for a road trip or long commute, is just smart financial planning. Whether you use an online version or crunch the numbers on a piece of paper, a gas trip cost calculator can help you figure out how much you may want to budget for fill-ups.

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

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

FAQ

How do I calculate gas cost for a trip?

To calculate gas for a long road trip, divide the number of miles of the route by the miles per gallon your car gets. This is the number of gallons you’ll need to drive the distance. Then, average the cost of gas on your route and multiply this times the number of gallons to get the total cost of gas for your trip.

How much would 1 mile of gas cost?

Divide the cost per gallon by the number of miles per gallon your car will go. For example, if you pay $3.99 per gallon and your car gets 22 miles per gallon, driving one mile would cost about $.18.

How do you calculate fuel to destination?

To calculate how much fuel you’ll need to get to your destination, divide the number of miles of the remaining route by the miles per gallon your car gets. Then, average the cost of gas on your route and multiply this times the number of gallons to get the total cost of gas for your trip.

Photo credit: iStock/georgeclerk

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

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


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

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.

SORL1023021

Whether you’re purchasing a new pair of eyeglasses, stocking up on over-the-counter medications, or paying for your child’s daycare, there may be certain expenses your health insurance plan doesn’t cover.

In those cases, having a flexible spending account, or FSA, could help you save money. This special savings account lets you set aside pretax dollars to pay for eligible out-of-pocket healthcare expenses, which in turn can lower your taxable income.

Let’s take a look at how these accounts work.

What Is an FSA?

An FSA is an employer-sponsored savings account you can use to pay for certain health care and dependent costs. It’s commonly included as part of a benefits package, so if you purchased a plan on the Health Insurance Marketplace, or have Medicaid or Medicare, you may no longer qualify for a FSA.
There are three types of FSA accounts:

•   Health care FSAs, which can be used to pay for eligible medical and dental expenses.

•   Dependent care FSAs, which can be used to pay for eligible child and adult care expenses, such as preschool, summer camp, and home health care.

•   Limited expense health care FSA, which can be used to pay for dental and vision expenses. This type of account is available to those who have a high-deductible health plan with a health savings account.

How Do You Fund an FSA?

If you opt into an FSA, you’ll need to decide on how much to regularly contribute throughout the year. Those contribution amounts will be automatically deducted from your paychecks and placed into the account. Whatever money you put into an FSA isn’t taxed, which means you can keep more of what you earn.

Your employer may also throw some money into your FSA account, but they are under no legal obligation to do so.

You can use your FSA throughout the year to either reimburse yourself or to help pay for eligible expenses for you, your spouse, and your dependents (more on that in a minute). Typically, you’ll be required to submit a claim through your employer and include proof of the expense (usually a receipt), along with a statement that says that your regular health insurance does not cover that cost.

Some employers offer an FSA debit card or checkbook, which you can use to pay for qualifying medical purchases without having to file a reimbursement claim through your employer.


💡 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.

What Items Qualify for FSA Reimbursement?

The IRS decides which expenses qualify for FSA reimbursement, and the list is extensive. Here’s a look at some of what’s included — you can see the full list on the IRS’ website.

•   Health plan co-payments and deductibles (but not insurance premiums)

•   Prescription eyeglasses or contact lenses

•   Dental and vision expenses

•   Prescription medications

•   Over-the-counter medicines

•   First aid supplies

•   Menstrual care items

•   Birth control

•   Sunscreen

•   Home health care items, like thermometers, crutches, and medical alert devices

•   Medical diagnostic products, like cholesterol monitors, home EKG devices, and home blood pressure monitors

•   Home health care

•   Day care

•   Summer camp

Are There Any FSA Limits?

For 2023, health care FSA and limited health care FSA contributions are limited to $3,050 per year, per employer. Your spouse can also contribute $3,050 to their FSA account as well.

Meanwhile, dependent care FSA contributions are limited to $5,000 per household, or $2,500 if you’re married and filing separately.

Does an FSA Roll Over Each Year?

In general, you’ll need to use the money in an FSA within a plan year. Any unspent money will be lost. However, the IRS has changed the use-it-or-lose-it rule to allow a little more flexibility.

Now, your employer may be able to offer you a couple of options to use up any unspent money in an FSA:

•   A “grace period” of no more than 2½ extra months to spend whatever is left in your account

•   Rolling over up to $610 to use in the following plan year. (In 2024, that amount increases to $640.)

Note that your employer may be able to offer one of these options, but not both.

One way to avoid scrambling to spend down your FSA before the end of the year or the grace period is to plan ahead. Calculate all deductibles, copayments, coinsurance, prescription drugs, and other possible costs for the coming year, and only contribute what you think you’ll actually need.

Recommended: Flexible Spending Accounts: Rules, Regulations, and Uses

How Can You Use Up Your FSA?

You can consider some of these strategies to get the most out of your FSA:

•   Buy non-prescription items. Certain items are FSA-eligible without needing a prescription (but save your receipt for the paperwork!). These items may include first-aid kits, bandages, thermometers, blood pressure monitors, ice packs, and heating pads. Check out the FSA Store to find out which items may be covered.

•   Get your glasses (or contacts). You may be able to use your FSA to cover the cost of prescription eyeglasses, contact lenses, and sunglasses as well as reading glasses. Contact lens solution and eye drops may also be covered.

•   Keep family planning in mind. FSA-eligible items can include condoms, pregnancy tests, baby monitors, fertility kits. If you have a prescription for them, female contraceptives may also be covered.

•   Don’t forget your dentist. Unfortunately, toothpaste and cosmetic procedures are not covered by your FSA, but dental checkups and associated costs might be. These could include copays, deductibles, cleanings, fillings, X-rays, and even braces. Mouthguards and cleaning solutions for your retainers and dentures may be FSA-eligible as well.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Flexible Savings Account (FSA) vs. Health Savings Account (HSA)

You may have heard of a health savings account (HSA). It’s easy to confuse it with an FSA, as they share some similarities.

Both types of accounts:

•   Offer some tax advantages

•   Can be used to pay for co-payments, deductibles, and eligible medical expenses

•   Can be funded through employee-payroll deductions, employer contributions, or individual deductions

•   Have a maximum contribution amount. In 2023, people with individual coverage can contribute up to $3,850 per year, while those with family coverage can cset aside up to $7,750 per year.

That said, there are some key differences between HSAs and FSAs:

•   You must be enrolled in a high deductible health plan in order to qualify for an HSA.

•   HSAs do not have a use-it-or-lose-it rule. Once you put money in the account, it’s yours.

•   If you quit or are fired from your job, your HSA can go with you. This happens even if your employer contributed money to the account.

•   If you’re 55 or older, you can contribute an additional $1,000 to your HSA as a catch-up contribution — similar to the catch-up contributions allowed with an IRA.

•   If you withdraw money from your HSA for a non-qualified expense before the age of 65, you’ll pay taxes on it plus a 20% penalty.

•   If you withdraw money from your HSA for any type of expense after age 65, you don’t pay a penalty. However, the withdrawal will be taxed like regular income.

Recommended: Benefits of Health Savings Accounts

The Takeaway

Flexible spending accounts are offered by employers and can be a useful tool for paying for health care- or dependent-related expenses. Notably, you fund the account with pretax dollars taken from your paycheck, which can lower your taxable income and help you save money.

You typically need to spend your FSA money within a plan year, though your employer may give you the option to either roll over a portion of the balance into the next year or use it during a grace period. There are also guidelines around what you can spend the FSA funds on and how much you can contribute to your account.

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

SoFi helps you stay on top of your finances.

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

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


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

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.


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.


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

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.

SORL1023031

High-frequency trading (HFT) firms use ultrafast computer algorithms to conduct big trades of stocks, options, and futures in fractions of a second. HFT firms also rely on sophisticated data networks to get price information and detect trends in markets.

A key characteristic of HFT trading — in addition to high speed, high-volume transactions — is the ultra-short time time horizon.

How high-frequency trading impacts markets is a controversial topic. Proponents of HFT say that these firms add liquidity to markets, helping bring down trading costs for everyone. HFT critics argue such firms are an example of how bigger, better-funded players have an advantage over smaller retail investors, and that HFT technology can be used for illegal purposes like front-running and spoofing.

What is High Frequency Trading?

Ultrafast speeds are paramount for high-frequency trading firms. Executing these automated trades at nanoseconds faster can mean the difference between profits and losses for HFT firms.

There are broadly two types of HFT strategies. The first is looking for trading opportunities that depend on market conditions. For instance, HFT firms may try to arbitrage price differences between exchange-traded funds (ETFs) and futures that track the same underlying index.

Futures contracts based on the S&P 500 Index may experience a price change nanoseconds faster than an ETF that tracks the same index. An HFT firm may capitalize on this price difference by using the futures price data to anticipate a price move in the ETF.

Another type of HFT is market making. Not all market makers are HFT firms, but market making is one of the businesses some HFT firms engage in.

A big market-making business for HFT firms is payment for order flow (PFOF). This is when retail brokerage firms send their client orders to HFT firms to execute. The HFT firms then make a payment to the retail brokerage firm.


💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).

How HFT Works and Makes Money

High-frequency trading enables traders to profit from miniscule price fluctuations, and permits institutions to gain significant returns on bid-ask spreads. HFT algorithms can scan exchanges and multiple markets simultaneously, allowing traders to arbitrage slight price differences for the same asset.

Bid-Ask Spreads 101

High-frequency trading firms often profit from bid-ask spreads — the difference between the price at which a security is bought and the price at which it’s sold.

For instance, an HFT may provide a price quote for a stock that looks like this: $5-$5.01, 500×600. That means the HFT firm is willing to buy 500 shares at $5 each — the bid — while offering to sell 600 shares at $5.01 — the ask. The 1 cent difference is how the market maker makes a profit. While this seems small, with millions of trades, the profits can be sizable.

How wide bid-ask spreads are is also a marker of market liquidity. Bigger chunkier spreads are a sign of less liquid assets, while smaller, tighter spreads can indicate higher liquidity.

Recommended: What Is Quantitative Trading?

Payment For Order Flow 101

When it comes to payment for order flow, high-frequency traders can make money by seeing millions of retail trades that are bundled together.

This can be valuable data that gives HFT firms a sense of which way the market is headed in the short-term. HFT firms can trade on that information, taking the other side of the order and make money.

Background on High-Frequency Trading

High-frequency trading became popular when different stock exchanges started offering incentives to firms to add liquidity to the market. Liquidity is the ease with which trades can be done without affecting market prices.

Like momentum trading, the HFT industry grew rapidly as technology in the financial space began to take off in the mid-2000s.

Adding liquidity means being willing to take the other sides of trades and not needing to get trades filled immediately. In other words, you’re willing to sit and wait. Meanwhile, taking liquidity is when you’re seeking to get trades done as soon as possible.

During 2009, about 60% of the market was said to be HFT. Since then, that percentage has declined to about 50% as some HFT firms have struggled to make money due to ever-increasing technology costs and a lack of volatility in some markets. These days the HFT industry is dominated by a handful of trading firms.

Pros and Cons of High-Frequency Trading

HFT comes with certain pros and cons.

Pros of HFT

High-frequency trading is automated and efficient, thanks to its use of complex algorithms to identify and leverage opportunities.

HFT may create some liquidity in the markets.

Cons of HFT

Because high-frequency trades are conducted by institutional investors, like investment banks and hedge funds, these firms and their clientele tend to benefit more than retail investors.

Because high-frequency trades are made in seconds, HFT may only add a kind of “ghost liquidity” to the market.

Some HFT firms may also engage in illegal practices such as front-running or spoofing trades. Spoofing is where traders place market orders and then cancel them before the order is ever fulfilled, simply to create price movements.

The Debate Over High Frequency Trading

High-frequency trading is a controversial topic, and HFT firms have been involved in lawsuits alleging that they create an unfair advantage and potentially create volatility.

Criticism of HFT

One complaint about HFT is that it’s giving institutional investors an advantage because they can afford to develop rapid-speed computer algorithms and purchase extensive data networks.

Critics argue that HFT can add volatility to the market, since algorithms can make quick decisions without the judgment of humans to weigh on different situations that come up in markets.

For instance, after the so-called “Flash Crash” on May 6, 2010, when the S&P 500 dropped dramatically in a matter of minutes, critics argued that HFT firms exacerbated the selloff.

HFT critics also argue that such traders only provide a very temporary kind of liquidity that benefits their own trades, but not retail investors. A December 2020 paper published by the European Central Bank also argued that too much competition in the HFT industry can cause firms to engage in more speculative trading, which can harm market liquidity.


💡 Quick Tip: Before opening any investment account, consider what level of risk you are comfortable with. If you’re not sure, start with more conservative investments, and then adjust your portfolio as you learn more.

Defense of HFT

Defenders of high-frequency trading argue that it has improved liquidity and decreased the cost of trading for small, retail investors. In other words, it made markets more efficient.

This can be particularly important in markets like options trading, where there are thousands of different types of contracts that brokerages may have trouble finding buyers and sellers for. HFT can be helpful liquidity providers in such markets.

When it comes to payment for order flow, defenders of HFT also argue that retail investors have enjoyed price improvement, when they get better prices than they would on a public stock exchange.

The Takeaway

It’s tough to be an investor in many markets today without being affected by high-frequency trading. HFT firms are proprietary trading firms that rely on ultrafast computers and data networks to execute large orders, primarily in the stocks, options, and futures markets.

HFT proponents argue that their participation helps markets be more efficient. Critics argue that they have a big advantage over smaller investors, given how much they pay for information and data networks.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

FAQ

Is high-frequency trading profitable?

High-frequency trading aims to profit from micro changes in price movements through the use of highly sophisticated, ultrafast technology. That said, HFT investors are subject to losses as well as gains.

Is high-frequency trading illegal?

High-frequency trading has been the subject of lawsuits alleging that HFT firms have an unfair advantage over retail investors, but HFT is still allowed. That said, HFT firms have been linked to illegal practices such as front-running.

What is an example of high-frequency trading?

High-frequency trading can be used with a variety of strategies. One of the most common is arbitrage, which is a way of buying and selling securities to take advantage of (often) miniscule price differences between exchanges. A very simple example could be buying 100 shares of a stock at $75 per share on the Nasdaq stock exchange, and selling those shares on the NYSE for $75.20.

Photo credit: iStock/wacomka

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