diff --git a/docs/my-website/docs/proxy/virtual_keys.md b/docs/my-website/docs/proxy/virtual_keys.md
index e350ce9d57b..70fd6e6a8d9 100644
--- a/docs/my-website/docs/proxy/virtual_keys.md
+++ b/docs/my-website/docs/proxy/virtual_keys.md
@@ -79,6 +79,7 @@ curl 'http://0.0.0.0:8000/key/generate' \
   "metadata": {"user": "ishaan@berri.ai"},
   "team_id": "core-infra",
   "max_budget": 10,
+  "soft_budget": 5,
 }'
 ```
 
@@ -93,6 +94,7 @@ Request Params:
 - `config`: *Optional[dict]* - any key-specific configs, overrides config in config.yaml
 - `spend`: *Optional[int]* - Amount spent by key. Default is 0. Will be updated by proxy whenever key is used. https://docs.litellm.ai/docs/proxy/virtual_keys#managing-auth---tracking-spend
 - `max_budget`: *Optional[float]* - Specify max budget for a given key.
+- `soft_budget`: *Optional[float]* - Specify soft limit budget for a given key. Get Alerts when key hits its soft budget
 - `model_max_budget`: *Optional[dict[str, float]]* - Specify max budget for each model, `model_max_budget={"gpt4": 0.5, "gpt-5": 0.01}`
 - `max_parallel_requests`: *Optional[int]* - Rate limit a user based on the number of parallel requests. Raises 429 error, if user's parallel requests > x.
 - `metadata`: *Optional[dict]* - Metadata for key, store information for key. Example metadata = {"team": "core-infra", "app": "app2", "email": "ishaan@berri.ai" }
diff --git a/litellm/__init__.py b/litellm/__init__.py
index cd639ddb9b7..f218fe036e9 100644
--- a/litellm/__init__.py
+++ b/litellm/__init__.py
@@ -79,6 +79,9 @@ max_budget: float = 0.0  # set the max budget across all providers
 budget_duration: Optional[str] = (
     None  # proxy only - resets budget after fixed duration. You can set duration as seconds ("30s"), minutes ("30m"), hours ("30h"), days ("30d").
 )
+default_soft_budget: float = (
+    50.0  # by default all litellm proxy keys have a soft budget of 50.0
+)
 _openai_finish_reasons = ["stop", "length", "function_call", "content_filter", "null"]
 _openai_completion_params = [
     "functions",
diff --git a/litellm/proxy/_types.py b/litellm/proxy/_types.py
index 175f801dac1..6196f18a2ee 100644
--- a/litellm/proxy/_types.py
+++ b/litellm/proxy/_types.py
@@ -151,6 +151,7 @@ class GenerateRequestBase(LiteLLMBase):
     rpm_limit: Optional[int] = None
     budget_duration: Optional[str] = None
     allowed_cache_controls: Optional[list] = []
+    soft_budget: Optional[float] = None
 
 
 class GenerateKeyRequest(GenerateRequestBase):
@@ -324,6 +325,21 @@ class TeamRequest(LiteLLMBase):
     teams: List[str]
 
 
+class LiteLLM_BudgetTable(LiteLLMBase):
+    """Represents user-controllable params for a LiteLLM_BudgetTable record"""
+
+    max_budget: Optional[float] = None
+    soft_budget: Optional[float] = None
+    max_parallel_requests: Optional[int] = None
+    tpm_limit: Optional[int] = None
+    rpm_limit: Optional[int] = None
+    model_max_budget: dict
+    budget_duration: Optional[str] = None
+    budget_reset_at: Optional[datetime] = None
+    created_by: str
+    updated_by: str
+
+
 class KeyManagementSystem(enum.Enum):
     GOOGLE_KMS = "google_kms"
     AZURE_KEY_VAULT = "azure_key_vault"
diff --git a/litellm/proxy/proxy_server.py b/litellm/proxy/proxy_server.py
index 17db8c3ab4f..482397b86e5 100644
--- a/litellm/proxy/proxy_server.py
+++ b/litellm/proxy/proxy_server.py
@@ -1810,6 +1810,9 @@ async def generate_key_helper_fn(
     spend: float,
     key_max_budget: Optional[float] = None,  # key_max_budget is used to Budget Per key
     key_budget_duration: Optional[str] = None,
+    key_soft_budget: Optional[
+        float
+    ] = None,  # key_soft_budget is used to Budget Per key
     max_budget: Optional[float] = None,  # max_budget is used to Budget Per user
     budget_duration: Optional[str] = None,  # max_budget is used to Budget Per user
     token: Optional[str] = None,
@@ -1869,6 +1872,19 @@ async def generate_key_helper_fn(
     rpm_limit = rpm_limit
     allowed_cache_controls = allowed_cache_controls
 
+    # TODO: @ishaan-jaff: Migrate all budget tracking to use LiteLLM_BudgetTable
+    if prisma_client is not None:
+        # create the Budget Row for the LiteLLM Verification Token
+        budget_row = LiteLLM_BudgetTable(
+            soft_budget=key_soft_budget or litellm.default_soft_budget,
+            model_max_budget=model_max_budget or {},
+            created_by=user_id,
+            updated_by=user_id,
+        )
+        new_budget = prisma_client.jsonify_object(budget_row.json(exclude_none=True))
+        _budget = await prisma_client.db.litellm_budgettable.create(data={**new_budget})  # type: ignore
+        _budget_id = getattr(_budget, "id", None)
+
     try:
         # Create a new verification token (you may want to enhance this logic based on your needs)
         user_data = {
@@ -1906,6 +1922,7 @@ async def generate_key_helper_fn(
             "allowed_cache_controls": allowed_cache_controls,
             "permissions": permissions_json,
             "model_max_budget": model_max_budget_json,
+            "budget_id": _budget_id,
         }
         if (
             general_settings.get("allow_user_auth", False) == True
@@ -1978,6 +1995,9 @@ async def generate_key_helper_fn(
     except Exception as e:
         traceback.print_exc()
         raise HTTPException(status_code=status.HTTP_500_INTERNAL_SERVER_ERROR)
+
+    # Add budget related info in key_data - this ensures it's returned
+    key_data["soft_budget"] = key_soft_budget
     return key_data
 
 
@@ -3333,6 +3353,8 @@ async def generate_key_fn(
         # if we get max_budget passed to /key/generate, then use it as key_max_budget. Since generate_key_helper_fn is used to make new users
         if "max_budget" in data_json:
             data_json["key_max_budget"] = data_json.pop("max_budget", None)
+        if "soft_budget" in data_json:
+            data_json["key_soft_budget"] = data_json.pop("soft_budget", None)
 
         if "budget_duration" in data_json:
             data_json["key_budget_duration"] = data_json.pop("budget_duration", None)
diff --git a/litellm/proxy/schema.prisma b/litellm/proxy/schema.prisma
index 7eb59ee4839..1fe55f24e34 100644
--- a/litellm/proxy/schema.prisma
+++ b/litellm/proxy/schema.prisma
@@ -11,6 +11,7 @@ generator client {
 model LiteLLM_BudgetTable {
   budget_id String @id @default(uuid())
   max_budget Float?
+  soft_budget Float?
   max_parallel_requests Int?
   tpm_limit     BigInt?
   rpm_limit     BigInt?
@@ -107,6 +108,7 @@ model LiteLLM_VerificationToken {
     allowed_cache_controls String[] @default([])
     model_spend      Json @default("{}")
     model_max_budget Json @default("{}")
+    budget_id String?
 }
 
 // store proxy config.yaml
diff --git a/schema.prisma b/schema.prisma
index 7eb59ee4839..1fe55f24e34 100644
--- a/schema.prisma
+++ b/schema.prisma
@@ -11,6 +11,7 @@ generator client {
 model LiteLLM_BudgetTable {
   budget_id String @id @default(uuid())
   max_budget Float?
+  soft_budget Float?
   max_parallel_requests Int?
   tpm_limit     BigInt?
   rpm_limit     BigInt?
@@ -107,6 +108,7 @@ model LiteLLM_VerificationToken {
     allowed_cache_controls String[] @default([])
     model_spend      Json @default("{}")
     model_max_budget Json @default("{}")
+    budget_id String?
 }
 
 // store proxy config.yaml