How to Budget a $45K Salary to Save Money and Pay Off Student Debt

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If you’re looking for strategies on how to budget with a $45,000 salary, you have options. Living on $45,000 a year can be tough, especially since wages haven’t kept up with the increasing cost of housing, health insurance, child care and more.

While the average hourly wage in the U.S. rose between 1978 and 2018, purchasing power has stayed nearly the same after adjusting for inflation, according to the Pew Research Center. That means that even though paychecks increased over that period, workers weren’t able to afford much more in goods or services in 2018 than they could in 1978.

How to budget a $45K salary: 11 ways to save and pay off debt

You can use the following tips as you try to make your money work for you, whether you’re looking to find freedom from debt or to gain budgeting tools.

1. Understand how much money you’re bringing home
2. Automate your savings
3. Use an app to help you budget
4. Evaluate how much rent you can afford
5. Take stock of monthly costs and bills
6. Use retirement planning tools to save for your future
7. Take a balanced approach to debt and avoid taking on more
8. Consider refinancing or consolidating student loans
9. Look into income-driven repayment plans
10. Keep an eye on discounts and free activities
11. Think of ways to grow your income

1. Understand how much money you’re bringing home

A $45,000 salary — before taxes are taken out — equates to $3,750 a month, about $1,730 biweekly or $21.63 an hour based on a 40-hour workweek.

But you won’t see all that money in your paycheck. Most states collect individual income taxes, and so do several counties, districts or municipalities. Plus, you’ll make Medicare and Social Security contributions from each paycheck. Your employer might also withhold some of your pay for health insurance, life insurance, retirement contributions or other workplace benefits.

Your net, or take-home pay will vary depending on:

  • Your location
  • Your tax filing status
  • Your number of dependents
  • Your contributions to employer-sponsored health and retirement plans

But, in all cases, understanding your take-home pay is a crucial step in setting up a budget.

Add up your paychecks and calculate your monthly net income to see how much you’re paid. Consider using a guideline like the 50/30/20 rule to allocate a certain amount of your pay to wants, needs and savings each month.

This strategy suggests spending:

  • No more than 50% of your income on necessities, such as housing and groceries
  • No more than 30% on wants like entertainment and travel
  • At least 20% on emergency savings, retirement savings and extra payments toward outstanding debt

2. Automate your savings

Setting up automatic transfers from your checking to your savings account each month will help you build a savings habit. First, prioritize creating an emergency fund, which you can draw on instead of relying on credit cards when an unexpected expense arises.

Ideally, you’ll have at least three months’ worth of expenses saved in your emergency fund. But it’ll take some time to get there. If you can only set aside $50 or $75 a month for emergencies to start, that’s perfectly OK. Make your initial goal to grow your account to $500. From there, continue saving automatically, and consider boosting your emergency fund with a portion of tax refunds or work bonuses when possible.

3. Use an app to help you budget

To help you stay on track while both spending and saving on a $45,000 income, try using one of the many free or low-cost budgeting apps that are available.

Popular options include Mint and YNAB. The Personal Capital app provides a snapshot of your net worth — including your retirement accounts — and a spending tracker.

If you regularly use a debit card or credit card, your bank or credit card company might also provide a spending breakdown for free on its online portal. And if you’re particularly focused on saving or paying off debt, the app Digit will analyze your spending and automatically save a certain amount each month that it determines you won’t miss.

4. Evaluate how much rent you can afford

Experts often recommend spending no more than 30% of your gross income per month on housing, whether that’s rent or a mortgage payment. But 30% might be an unrealistically low number, depending on where you live.

Instead of focusing on the 30% rule, consider how your housing costs fit into your overall financial picture. The 50/30/20 budgeting guideline can be helpful, since it offers a way to adjust your housing expenses depending on your other bills. For instance, if you aim to spend less than half your monthly income on necessities — and your necessities include minimum debt payments — a high monthly student loan payment would cut the amount you can put toward housing.

5. Take stock of monthly costs and bills

To decide how much of your $45,000 salary you can comfortably afford on rent or mortgage payments, you’ll need to understand how much you’re spending on other expenses and bills. Try tracking your spending closely for a month, taking note not just of fixed costs but of those that fluctuate, too.

Consider using a budgeting app or a budgeting worksheet like the one available from the Consumer Financial Protection Bureau. Make sure to include expenses that you pay automatically from your checking account or credit card. Seeing all your expenses in one place can help you identify patterns like:

  • You order takeout more often than you realized
  • You subscribe to services that you no longer use
  • You spend more while shopping online than anticipated

6. Use retirement planning tools to save for your future

While it may feel difficult to save for retirement while earning $45,000 a year, doing so early will help you save more over time, thanks to compound interest. Use a retirement calculator from companies like Vanguard or AARP to analyze how much you’ll need in retirement — above and beyond Social Security income — which can motivate you to save now.

Using the 50/30/20 budget, you’ll aim to put at least 20% of your income toward multiple savings goals and debt repayment. While that might seem like a lot to juggle, any employer match your company offers on your 401(k) will ease your own savings burden.

For example, if your company will put a maximum of 3% of your income toward your retirement savings, save at least that 3% to capture the full match. Aim to save as close to 10% of your income as possible for retirement, including your employer match if it’s offered.

7. Take a balanced approach to paying off debt — and avoid taking on more

A priority goal, if you haven’t done so yet, should be to start an emergency fund — even if you have debt you want to pay off, too. That’s because without emergency savings, you may be tempted to add to your debt if you need to pay for car repairs or sudden medical bills.

Once you have a solid amount saved for emergencies — $500, say, or $1,000 — you can focus on getting rid of debt. In general, it’s best to put extra funds toward your highest-interest debt first. That will slow the growth of interest charges that make it harder to put a dent in your balance.

Don’t worry about quickly paying off low-interest debt, such as federal student loans, if you have credit cards or personal loans that are accruing more interest per month. Concentrate on prioritizing and tackling those.

8. Consider refinancing or consolidating student loans

You may be able to pay less on student loans, though, by refinancing or consolidating them. Each approach has a different goal.

Refinancing student loans may be best for borrowers with good or excellent credit scores who can benefit from getting a lower interest rate now than they originally received on their loans. Private student loans you borrowed at high rates are good candidates for refinancing. But in addition to strong credit, you’ll generally need a low debt-to-income (DTI) ratio to qualify, meaning your income is meaningfully higher than the amount of debt you carry.

Student loan consolidation is available for federal student loans only. It doesn’t lower your interest rate, but it can lower your monthly federal loan bill by stretching out your repayment term. You’ll likely pay more in interest over time, but you’ll have just one monthly payment, which can make it easier to track your bills and pay them on time.

9. Look into income-driven repayment plans

Student loan consolidation can also mean certain federal student loans qualify for income-driven repayment plans. These plans tie your monthly payment to your income and provide forgiveness on the remaining balance after 20 or 25 years. On a $45,000 annual salary, that could make your monthly payment significantly more affordable if your loan balance is overwhelming.

But choosing an income-driven repayment plan means paying more in interest, since your payments likely won’t cover all the interest on your balance as it accrues. You’ll also have to pay taxes on the forgiven balance at the end of your repayment term.

10. Keep an eye on discounts and free activities

Even when living on a budget, it’s important to enjoy yourself rather than severely restricting all your hobbies or activities. That could cause you to feel deprived, making it more likely to splurge on items or experiences in moments of frustration or resentment.

Instead, use your budget as an opportunity to explore free activities in your area that can connect you with others who share your interests. Hosting potluck dinners, clothing swaps, music-listening parties and art nights at home can bring the entertainment to you for minimal costs. Look into discounts on museums, movies and theater events through your job, school or other organizations of which you’re a member. You can also try out free or cheap online workout classes as a way of replacing your gym membership.

11. Think of ways to grow your income

If you’re eager to hit certain goals that feel out of reach with your current $45,000 salary — buying a house, for instance, or going on a special vacation — add to your income. You can do so in the short term by selling furniture, clothing, books and household items you no longer need, perhaps on online platforms, such as Facebook Marketplace or Poshmark.

To make ongoing extra income, sell services you already enjoy doing for others for free. Maybe you love animals and can start a pet-sitting service, or you’re an ace proofreader and you can help others refine their resumes, cover letters or college application essays. Or, if you’re crafty, start an Etsy shop or sell items at local events, which gives you the chance to spend more time on a hobby that gives others joy, too.

Elyssa Kirkham contributed to this report.

Interested in refinancing student loans?

Here are the top 6 lenders of 2020!
LenderVariable APREligible Degrees 
1.89% – 6.66%1Undergrad
& Graduate

Visit Splash

1.89% – 5.90%2Undergrad
& Graduate

Visit Laurel Road

2.25% – 6.09%3Undergrad
& Graduate

Visit SoFi

1.99% – 5.34%4Undergrad
& Graduate

Visit Earnest

1.97% – 8.54%5Undergrad
& Graduate

Visit Lendkey

2.39% – 6.01%Undergrad
& Graduate

Visit Elfi

Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of October 1, 2020.

2 Important Disclosures for Laurel Road.

Laurel Road Disclosures

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.


This information is current as of September 9, 2020. Information and rates are subject to change without notice.

3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 2.99% APR to 6.09% APR (with AutoPay). Variable rates from 2.25% APR to 6.09% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.18% plus 2.32% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. 

4 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.

5 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 11/13/2020 student loan refinancing rates range from 1.97% to 8.54% Variable APR with AutoPay and 2.95% to 8.77% Fixed APR with AutoPay.