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If you’re like most Americans, your paycheck turns up in your bank account automatically, without any check to sign and then make a trip to the bank to deposit.

With direct deposit, funds are electronically transferred out of one bank account and deposited into another. It’s a convenient way to automate one’s finances, and it’s not limited to paychecks. It can streamline other financial transactions as well.

Here, you’ll learn more about this process, the pros and cons of direct deposit, and ways you might want to put it to work for you.

What Is Direct Deposit?

As mentioned above, direct deposit is a way of electronically transferring funds between bank accounts.

It was pioneered more than 50 years ago. In 1972, the first automated clearing house (ACH) network formed to manage electronic payments, with other networks quickly following. In 1975, the Social Security Administration (SSA) decided to test the system of direct deposit for payments they issued. Today, nearly 99% of SSA’s payments are directly deposited.

According to a 2024 survey, approximately 92% of employed people in the United States receive their salaries or wages this way.

What’s more, these automatic bank transfers are used today in ways beyond having paychecks directly deposited, including bill pay, retirement account contributions, and more.

💡 Quick Tip: Did you know online banking can help you get paid sooner? Feel the magic of payday up to two days earlier when you set up direct deposit with SoFi.^

How Does Direct Deposit Work?

You’ve now learned a bit about what direct deposit is and how the ACH system facilitates direct deposit, allowing funds to flow seamlessly and quickly from one account to another.

Here, a bit more intel on how this process can be put to work for you and how to set up direct deposit.

Direct Deposit for Payroll

Let’s say that an individual is ready to start a new job. The human resources department explains how the company either requires direct deposit or offers the option.

•  If that employee wants to set up direct deposit, they would need to share bank information with their new employer, including the bank’s name, the routing number that identifies the financial institution, and the employee’s bank account number. Sometimes, a voided check is requested.

•  This information would then be entered into the company’s payroll system and, whenever payroll rolls around, the company would send an electronic file to this employee’s financial institute. The file would share how much money should be transferred from the company’s (the “originator’s”) bank account to accounts for each of the employees whose direct deposit accounts are located at that particular financial institution.

•  If, for example, three employees of a company all share Bank A, then let’s say this bank receives an electronic transfer of $4,345. Bank A would then distribute the money appropriately into the proper bank accounts, such as:

◦  $2,000 in Person A’s checking account and $500 into their savings account

◦  $1,350 in Person B’s account

◦  $445 in Person C’s checking account and $50 into their savings account.

•  Then, if the employees (known as “receivers”) check their bank balances, they’ll see the deposits made through this direct deposit process. As noted in this example, money may be directly deposited to a checking account or into a savings account. Or some money can be put into a savings account with the rest in a checking account.

•  How long does direct deposit take? Typically, the funds go through like clockwork and are there waiting on payday. Some banks may offer the ability to access your direct deposit up to two days sooner.

What Are the Uses of Direct Deposit?

There are several uses for direct deposit:

•  Payroll. As noted, the vast majority of Americans get paid this way.

•  Tax refund. This can be among the quickest ways to get your tax refund. The IRS can process a direct deposit refund for an electronically filed return in as little as seven to 10 days of receipt; however, most refunds are issued in less than 21 days.

•  Government benefits. Social Security and Supplemental Security Income benefits, VA, unemployment, and other benefits can be paid via direct deposit.

•  Commissions, rental income, vendor payments and other earnings can be automated with direct deposit.

•  Dividends. Shareholders may receive dividends by direct deposit.

•  Child support. This may also be automated.

Benefits of Payroll Direct Deposits

Direct deposit of paychecks has many benefits. Here’s a closer look:

•  Convenience: With a direct deposit of their paycheck, employees can skip the step of physically depositing a paycheck into their accounts, which can be a timesaver.

This can be especially true if the employee telecommutes from home, is on vacation, or is otherwise out of the office when payday comes, because that employee doesn’t have to go into the office to retrieve the paper check.

•  Speed: With direct deposit, the money is typically in an employee’s bank account at the start of the designated payment date, which gives them access to the funds that day. No waiting for checks to clear.

•  Security: With paper checks, there’s always the possibility that they will get lost or stolen. Payroll direct deposit can add a layer of security to the process.

Many times banks will waive fees for customers who have direct deposits set up.

•  Savings: Many banks will waive fees for customers who have direct deposits set up, although there may be a minimum deposit amount required for this to happen.

•  Better money management: If an employee puts a percentage of each paycheck automatically into a savings account, this can help get them into a regular savings habit.

Downsides of Payroll Direct Deposit

Now, for the other side of the coin, these are the cons of direct deposit:

•  Inconvenience: When people receiving direct deposits decide to change banks, it may be a hassle. It may take workplaces a period of time to change where paychecks are sent, which means that the old account might need to be kept open longer to make sure all paychecks are received.

How long that period of time may be can vary. But, before you close your old account, ensure that all direct deposits are being put into the new account. Also make sure that all withdrawals and checks have cleared at your old bank and that any automated payments are coming out of the new bank.

•  Scheduling: With direct deposit, it’s important to make sure the correct deposit dates and amounts are recorded. Otherwise, account holders could write checks beyond what’s available, which could trigger overdraft or non-sufficient fund (NSF) fees — which can be costly, especially when they add up.

•  Lack of access: Not everyone in the U.S. has a bank account (this is often referred to as being “unbanked”). If an employee doesn’t but their employer requires direct deposit (more about that next), then employees without a bank account would likely receive their paychecks through a prepaid debit card. These can come with fees and, like paper checks, can be lost or stolen.

Here are the pros and cons in chart form for easy comparison:

Employers Requiring Direct Deposit

Just as there are benefits to payroll direct deposit for employees, there are also benefits for employers. For instance, it’s cheaper to manage payroll payments this way, versus physical checks.

Plus, employers have a record of accounts, which makes it easier for companies when they’re reviewing expenses — and they don’t have to reissue a check if an employee loses one.

And, after a person’s payroll information has been entered into the system, paying employees can be faster and easier with direct deposit.

Laws governing payroll direct deposit vary by state and, if a state has no specific laws on this subject, it defaults to federal regulations. Federal law states that employers must give each employee using direct deposit a summary of rights and liabilities and must get their signature on an authorization form along with relevant banking information.

Some states allow employers to actually require direct deposit for payroll, as long as the program is administered in a way that’s consistent with federal regulations. (In some cases, the rule only applies to public sector workers.) Most states, however, still give employees the choice between direct deposit and receiving a physical check.

A handful of states have laws that are unique to them, ones that don’t fit into any of the broad categories already described.

Automating Your Finances

The concept of electronic funds transfers is at the heart of payroll direct deposits, but goes beyond that. Here are additional ways to benefit from automating your finances.

•  Automation is a tool that can also help people to build an emergency savings fund. In general, traditional wisdom says this account should contain three to six months’ worth of living expenses.

That way, if an emergency arises (whether that’s a job loss, an unanticipated repair, or unexpected medical expenses), a financial cushion exists. By setting up a regular funds transfer to a savings account, this can make it easier to build up that emergency fund.

•  Another way to streamline your financial life: paying bills through autopay. In some instances, lenders may offer a discounted interest rate for borrowers who use automated payments to pay their bills. Autopay can help borrowers make their payments on time, rather than forgetting them when life gets hectic. This can mean fewer or no late fees.

•  Because payment history plays a key role (35%) in a person’s FICO® Score, autopay can help you establish and maintain your credit score. By automating payments (as long as enough money is in your checking or savings account when the payment is due) you can optimize this aspect of your cash management.

•  Autopay helps to reduce the number of paper bills that need to be sent out and the number of paper checks that may be written to pay those bills. This means that automated funds transfers can therefore be an eco-friendly choice to make.

•  Whenever funds are electronically transferred, either in or out of a bank account, a digital record is automatically created. This can be helpful when balancing accounts, creating a budget, looking for tax deductible items, searching for ways to trim discretionary spending, and more.

•  Autopay might also be a good strategy to use to contribute to a retirement account. Employers may automatically deduct an amount from employee paychecks to transfer it into a retirement account that’s set up by the company, such as a 401(k). That can make saving easy.

Types of Accounts for Direct Deposits

For people who decide to use automated funds transfers, here are some options to consider for receiving direct deposit:

•  Checking accounts

•  Savings accounts

•  Money market account

•  Investment accounts

•  Some prepaid debit cards

•  Some payment apps, such as PayPal or Cash App.

Getting Direct Deposit With SoFi

If you’re interested in opening a bank account to receive direct deposits, take a look at what SoFI offers and see if SoFi direct deposit is a good fit for you.

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

What is the meaning of direct deposit?

Direct deposit refers to the automated transfer of funds from one bank account to another. This means cash doesn’t need to change hands, nor does a check need to be written and then deposited.

How do you get direct deposit?

Typically, signing up for direct deposit involves sharing your bank account and routing number with, say, your employer or the government so they can direct deposit funds in your account. In some cases, you may be asked to share a voided check.

Is direct deposit only for paychecks?

Direct deposit is not only for paychecks. It can also be used for government benefits (such as Social Security), commissions, tax refunds, investment dividends, and other forms of payment.

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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.

¹SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

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.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q325-051

Money problems are pretty common. In fact, 73% of Americans say finances are their top source of stress in life, according to a 2025 survey by Capital One.^[1] So if you are feeling the pinch and worrying, you are not alone.

But that doesn’t mean you should live with the anxiety that a mountain of debt or low credit score can bring. Here, you’ll learn about the most common financial issues you may face, how to avoid money problems, and how to resolve them if and when they strike.

Why Are Money Problems Common?

There are many factors that contribute to money problems. Depending on your situation, you might be dealing with, among other factors:

7 Common Money Issues

Financial challenges can happen to anyone — whether you are younger or older, rich or living paycheck to paycheck. Here are some of the most common money issues that people come up against.

1. High Credit Card Debt

Credit cards can be a useful tool for disciplined consumers who are trying to build good credit. And there are several perks to paying with a card instead of cash, including convenience, purchase protections, and rewards programs.

But many Americans aren’t able to pay off their account balance every month. According to Transunion, the average household carried $6,580 in credit card debt at the end of 2024.^[2]

Thanks to high interest rates, items you charge on a credit card and don’t pay off right away end up costing quite a bit more. As of March 2025, the average annual percentage rate (APR) for credit cards was 28.70%.^[3]

The interest you’re charged on a credit card also compounds, which means interest is calculated not only on the principal amount owed but also the accumulated interest from previous pay periods.

While this kind of compounding is a positive thing for a high-yield savings account, it can be a real issue with your plastic. It means a credit card balance can grow exponentially, even if you pay the minimum every month. Add in late charges and the possibility that the interest rate could be increased on an overdue account, and it’s easy to see how consumers get into trouble.

2. A Low Credit Score

Carrying too much debt or failing to make credit card or loan payments on time may result in a lower credit score. A low credit score can make it harder to get a loan, such as a mortgage or a credit card. And even if an application is approved, the interest rate the lender offers may be higher than what’s available to borrowers with better scores. That higher interest rate can make it harder to make payments and keep up with other bills, which can, in turn, further hurt your credit profile.

A low credit score can also negatively impact your ability to get a job or rent an apartment. And, it can take years before negative factors like late payments, defaults, and collections are removed from credit reports.

3. Not Having an Emergency Fund

Setting money aside in an emergency fund may seem like a luxury for those who are struggling to meet everyday expenses. But a solid savings buffer can actually be even more important if you’re living on a tight budget.

Without an emergency fund, any unexpected expense that comes along — whether it’s a high medical bill, a car or home repair, or a temporary job loss — can throw you way off balance. As a result, you might need to use high-interest credit cards, retirement savings (which can trigger penalty charges), or other options that can add even more stress to a challenging situation.

“For the most part, you’ll hear that a healthy emergency fund should cover between three and six months worth of living expenses — which would include rent, mortgage, bills, food, and other essentials,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “And since you never know when an emergency might happen, it’s best to keep your fund relatively liquid.”

4. Spending More Than You Earn

Picking up a morning latte and grabbing lunch out may not seem like it could make or break your bottom line. But just $40 per week spent eating out will cost you $2,080 per year, which is money that could go toward an extra loan payment or a few extra car payments.

If you tend to make spending decisions on the fly (without any type of budget or financial plan in mind), it can be easy to blow through more money than you actually earn, and much harder to achieve your financial goals.

While the causes of overspending are varied, the habit is one of the most common reasons why people get caught in the debt trap. If you don’t have the cash to cover your expenses, you may rely on credit cards to get you through.

Once you start paying interest on your credit card balance, your monthly expenses go up. This can make it even harder to live within your means and, as a result, lead to more debt.

5. Facing Foreclosure

State foreclosure rates vary, but regardless of where you live, it can be a major concern for struggling homeowners, especially in tough economic times.

People can end up in foreclosure for any number of reasons, including financial mismanagement (buying too much house or choosing a loan payment they can’t afford), or uncontrollable events (such as a job loss or expensive medical condition).

The process is typically slow, but it can be daunting to imagine having to move, especially if it means taking children out of a school or neighborhood they love. And there can be long-lasting financial consequences, as well.

A foreclosure can have a significant effect on your credit, and it can stay on your credit record for years.

6. Student Debt

While getting a college degree can improve your earning potential, the cost of getting that degree continues to skyrocket. And so has student loan debt.

Recent statistics reveal that the average federal student loan debt balance is $38,375.^[4] As students leave college and enter the workforce, paying back that money can be a major challenge. Student loan burdens can lead to postponing certain milestones, including homebuying or having children, and saving for retirement.

Recommended: Average Student Loan Debt: Who Owes the Most?

7. Not Saving Enough for Retirement

According to a 2024 AARP survey, 20% of adults ages 50-plus have no retirement savings at all.^[5] While having no money in the bank for later life can make some people feel like, “Why even bother trying to save,” know that financial advisors stress that saving something is better than nothing.

Thanks to the magic of compounding interest (when the interest earned on your money gets reinvested and earns interest of its own), even putting just a small percent of your paycheck into a 401K or IRA each month can add up over time.

Recommended: How to Manage Your Money Better

Money Problem Solving

If you recognize that you have money problems brewing or in full force, here are some steps to solve the problem:

Identify the Issue

Though it may be tempting to hide from what is going on, digging in and exploring where your money is going (or isn’t going) is an important move. Is your credit card debt feeling insurmountable? Are your housing and food costs rising too steeply? Did a job loss or medical bill force you into a difficult financial position?

Figure out and face the facts so you can move forward.

Develop and Implement a Plan

Once you know the source (or sources) of your money stress, you are in a position to take action. In a moment, you’ll learn some important ways to take control of financial issues. These include budgeting and paying down debt.

But other specific moves may suit your situation, such as debt consolidation or refinancing student loans.

Seek Help

If despite digging into your money issues, you are feeling unclear of how to proceed or as if there isn’t a feasible solution, reach out for help. There are an array of experts who might be appropriate, from a Certified Financial Planner® professional to a low- or no-cost debt counselor.

How to Cope with Money Issues

If you’re dealing with money problems (or hoping to avoid any future setbacks), here are some money management strategies you may want to put into place.

Setting a Budget

People tend to cringe at the word “budget” because it sounds like work, but having a budget in place can help simplify your finances and improve your money mindset.

To create a monthly budget, you simply need to gather up the last several months of financial statements and receipts and then use them to figure out how much you’re bringing in (after taxes) each month, as well as how much you are spending on average each month.

If the latter exceeds the former, or is so close there’s nothing left over for saving, you may want to drill down deeper.

To see exactly where your money is going you may need to track your expenses for a month or two and then determine exactly how much is going towards nonessential (or discretionary) purchases, where you may be able to cut back.

You may also want to consider adopting the 50-30-20 budget rule. With this type of budget, half your take-home income goes towards needs (or essential expenses), 30% goes towards wants (nonessentials), and 20% goes towards your financial goals — such as debt repayment beyond the minimum, building an emergency fund, and saving for a home or retirement.

Knocking Down Debt

Reducing debt may seem like a tall mountain to climb, but using a systematic approach can help make the process more manageable.

One method you might consider is the snowball method. This involves paying as much as you can each month toward your smallest balance while making the minimum payment on all your other debts so your accounts remain in good standing. Once you’ve paid off that smallest debt, you move on to the new smallest balance and continue this process until you’ve paid off all your accounts.

Another approach you may want to consider is the avalanche method. With this strategy, you start by paying as much as possible toward the debt with the highest interest rate, while making minimum payments on all the others. Once that debt is paid off, you move to the balance with the next-highest interest rate, and so on.

As briefly noted above, debt consolidation is an option as well, perhaps with a personal loan or a student loan refinance.

The Takeaway

It’s common to face money issues throughout your life, particularly when you are just starting out. Some of the most common include overspending, being burdened by debt, not having a financial cushion for emergencies, and not putting enough away for retirement.

Whatever financial challenges you are facing, you may want to clearly assess the issue and then come up with a spending, saving, and debt repayment plan that can help you get back onto solid ground.

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

What are common money problems?

Common money problems include high-interest credit card debt, lower income, student loan debt, a low credit score, and overspending.

What do people struggle with most financially?

What people struggle with financially will vary from person to person, but debt, inflation, high cost of living, and lack of savings for emergencies and retirement are common issues.

What are 4 common investment mistakes?

Four common investment mistakes include not establishing a long-term plan, letting emotions guide your decisions, attempting to time the market, and not diversifying your portfolio.

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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Who is eligible for a Direct Deposit Bonus?

SOBNK-Q225-027

The average cost of estate planning varies widely, and the amount you pay will depend on several factors, such as the complexity of your estate and where you live. But the benefits of having a proper estate plan in place — from peace of mind to knowing your family is financially protected — are often worth the price.

Learn how to determine the average cost for will and estate planning for your specific needs so you can choose the option that’s right for you.

Understanding Estate Planning Costs

The cost of estate planning partially depends on location, but also a few other variables.

Key Factors Affecting Cost

How much does estate planning cost? Here’s what you need to take into consideration.

•   DIY vs. professional help: It’s possible to handle your estate plan on your own, provided you follow your state laws regarding signatures, notaries, and witnesses. Hiring an attorney may be ideal if you need more than a simple will, but of course the costs will be higher.

•   Estate complexity: Owning large investment accounts, businesses, or properties beyond your primary residence could lead to higher costs because you may need additional documentation and accounts to administer your wishes.

•   Location: Estate attorneys in lower cost of living areas typically charge less than in those in large cities. You usually need to work with a lawyer licensed to practice your state in order for the will to be compliant with state law.

Average Cost Ranges for Wills and Trusts

While there’s no way to assign an exact price tag to any estate plan, you can get an idea of what you’ll spend based on different scenarios. Here are some average cost ranges for wills vs. trusts.

The cost of a will depends on how you’re creating it. You may be able to find a free template online that you can fill out on your own, then follow your state’s laws on how to finalize it (such as signing in front of witnesses and/or getting the document notarized).

But if you want state-specific documents or more details on things like healthcare directives, you may need to upgrade to a paid version. Online estate planning services offer more specific templates and can cost anywhere from $40 to over $100. If you opt for a lawyer to help you draft a will, you could pay at least $1,000, if not more.

The process can cost even more if you want to open one or more trusts. You can find online options for living trusts, which cost between $500 and $1,500 to get started. The cost jumps to $1,000 to $3,500 for hiring a lawyer to draft your trust. You’ll incur ongoing management fees, which are usually charged as 0.5% to 1% of the trust’s assets each year.

Recommended: What Is Estate Planning?

Finding Affordable Estate Planning Solutions

You can create key estate planning documents without breaking the bank. Keep an eye out for balancing cost and value to make sure you’re spending the right amount on the right services.

Comparing DIY Online Services vs. Hiring an Attorney

As you figure out which estate planning process is best for you, consider the pros and cons of doing it yourself versus hiring an attorney.

Understanding Attorney Fee Structures

Not all estate attorneys charge in the same way. You may encounter hourly rates or flat fees, which can impact your final bill. Both rates vary depending on where you live. An attorney could charge several hundred dollars an hour as they work on your estate plan or several thousand dollars for set deliverables.

Hourly billing may seem like the cheaper option, but you’re typically charged for every phone call and email — making that final number add up fast. You may not know what the actual budget will end up being until the estate plan is finalized. So, if something requires more time and attention, you’ll pay for it.

A flat fee may seem costly at first, but the benefit is that there’s no financial sticker shock at the end. Plus, you can reach out to your attorney as needed without worrying about charging up the bill. Just be sure to find that balance between value and budget so you’re not paying the cheapest lawyer for subpar service.

Tips for Managing Professional Fees

How do you find the best estate planning attorney for your needs? Follow these three steps before you sign any contract.

•   Schedule introductory meetings with multiple attorneys. These are usually free, and you can compare recommendations as well as cost structures.

•   Ask upfront about rates and variables that could impact the cost beyond the initial estimate.

•   Sign a contract with all of the details you agreed upon so there’s no question or disagreement later on. If you have questions, ask before signing.

Why Planning Is a Smart Investment

Estate planning is an important process to undertake regardless of your age or net worth. Let’s take a closer look at reasons to consider it.

Protecting Family, Assets, and Your Wishes

Estate planning serves as a financial and legal safety net for your family so that your assets are protected after your death and distributed according to your own wishes. With a solid estate plan in place, you minimize the risk of a lawsuit of someone trying to claim part of your estate for themselves because you have clear intentions in a legal document.

On top of that, you may also wish to move some assets into a trust or LLC. They can protect personal assets from being collected by creditors. Finally, estate planning can help minimize family conflict. Even if someone is upset about the directions in your will, your executor and the court will ensure your wishes are carried out.

Minimizing Future Taxes and Probate Headaches

Having a strategic estate plan in place can help you reduce future taxes. An estate attorney in particular can help you navigate both federal estate taxes and any potential state estate or inheritance taxes. They’ll factor in gifts while you’re alive as well as potential high property values that could impact your estate’s tax exemptions.

While you may not be able to completely avoid your estate going through probate, having the right plan can reduce the time and money spent in court. You can incorporate life insurance policies and account beneficiaries into your estate plan, both of which go directly to the beneficiary rather than waiting for the probate process.

An attorney may also recommend one or more trusts, such as revocable living trust, which also doesn’t go through the probate process.

Recommended: New Parent’s Guide to Setting Up a Will

The Takeaway

There are estate planning options at every price point, from free online will makers to experienced attorneys who can help navigate a complex portfolio of assets. Find the budget that works best for you to make sure you have everything in place for your family or other beneficiaries.

When you want to make things easier on your loved ones in the future, SoFi can help. We partnered with Trust & Will, the leading online estate planning platform, to give our members 20% off their trust, will, or guardianship. The forms are fast, secure, and easy to use.

FAQ

What’s the biggest factor affecting estate planning cost?

The biggest factor affecting estate planning cost is the size and complexity of your assets. If you have a high net worth, businesses, and/or multiple properties, you’re likely to spend more than someone who primarily has savings and retirement accounts to pass on.

Is DIY estate planning safe or reliable?

Yes, DIY estate planning can be safe and reliable. If choosing an online will maker, be sure the service is reputable and takes the highest security measures. Also check your state laws to make sure you take the necessary steps to make your will legally binding.

How do I know if I need a simple will or a more complex trust?

A will is a solid foundation for any estate plan. Adding a trust transfers ownership of the assets to a third party in order to avoid going through probate. Upon your death, the assets will be distributed based on the rules of the trust.

What questions should I ask an estate planning attorney about fees?

Ask the estate planning attorney whether they charge hourly or as a flat fee. If it’s hourly, get an estimate of how many hours they anticipate your estate plan to take. If it’s a flat fee, ask for a clear outline of all the services included and not included.

Can good estate planning actually save money in the long run?

Yes, good estate planning can save you money, particularly if you have a larger estate with more complex assets. You could save your family money on taxes, probate fees, and even potential litigation.

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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.

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As a parent, learning how to communicate with college students can be a challenge. Adjusting to college is an emotional transition for the whole family, but keep in mind that this is an important phase in a young adult’s life that helps to prepare them for the real world.

To help keep the lines of communication open, it can be a good idea to set up regular calls and do your best to support your child without nagging. If you maintain a strong connection without overdoing it, they might even divulge more of the good times, and you’ll be able to share in the full experience of their new adventure.

Here are some tips for parents on how to stay close with college students, even if they now live many miles away from home.

Tips for Communicating with College Kids

Be Their Ally

It’s tempting to want to make sure your kid is taking care of themselves: Are they eating enough vegetables? Are they making friends? Are they partying too much?

Your parental instincts are inevitable, but you’ll want to avoid nagging. Try to be their ally instead. Of course, it’s important to check in on them and make sure everything’s okay, but you’d be surprised to find that the more freedom you give them to make their own decisions, the more they may share with you.

Recommended: College Freshman Checklist for the Upcoming School Year

Let Them Know They Can Talk to You

Along with being their ally, it’s also important for them to feel comfortable talking to you about more serious things. College is a major transition and many incoming students struggle with the adjustment.

If they are unhappy at their new school, they may be considering the possibility of transferring schools. It can be a good idea to make sure your child knows that they can talk to you about anything. That’s what parents are for, after all.


💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

Utilize Technology

Video chat is an incredible tool that wasn’t around back when parents were in college. These days, there are seemingly endless options to connect via video from FaceTime to Zoom to Google Hangouts and more. Video calls can be especially helpful for students who are far away from home.

If your child is not one to call you every day, you could set up a time once a week to catch up.

What to Talk About

Talking to your child will, of course, come naturally. However, it’s always nice to have some topics in your back pocket to refer to.

Academics

While it may be forgotten among all the exciting aspects of college, taking advantage of the incredible educational resources on campus, studying, and getting a solid education are some of the main reasons for attending university.

Without overwhelming your student, remind them that grades could have an impact on their plans after graduation.

Play to Your Strengths

While we’re on the topic of academics, you can also get involved in your child’s studies, if they ask for help. Aside from reminding them to focus, you can help them choose classes for their first semester, reread some Nietzsche or Aristotle along with them, or offer to be a second set of eyes for their papers. When they are choosing their major, you could help them realize what it is they’re passionate about.

Finances and Budgeting

There are some things you may want to periodically bring up with your student that they likely won’t enjoy talking about, which involves money management, including student loans and budgeting. While these might not be on anyone’s list of the best ways to communicate with college students, it’s your duty as the parent to remind them.

It can be a good idea to have an ongoing dialogue about student loans — including both federal student loans and private student loans — and educate them on how not to make their debt even higher.

This is a conversation that can begin in high school when making the decision on which college to attend and what the financial impact will be for them and for you in the years to come.

As for budgeting, know that many young adults make financial mistakes in their early twenties. It’s okay — mistakes allow students to learn and adjust their habits moving forward.

However, if you can teach your student good spending habits, especially if this is their first time with a credit card, they’ll be thankful to you in the long run.

Recommended: How Do Student Loans Work?

Future Plans

You may have a son or daughter who has dreamed of going to med school since they were little, but most students are unsure of what they want to do with their futures or what life after graduation will look like. This might be a common thread throughout their four years in college.

Find ways to make this conversation exciting and optimistic without asking the question they’ve heard a million times: “What do you want to do with your life?” The truth is, they might not know, even upon graduation, and that’s okay.

If they are considering graduate school, it could be useful to discuss what’s involved financially. Will they need additional student loans for grad school? Will you be able to help with any costs?

While these are just some guidelines on how to communicate with college students, ultimately, the best approach for you and your child depends on your relationship and your personality.

It’s recommended for a parent to find a healthy balance between staying involved and being overbearing. You can watch with pride from a healthy distance and still experience this exciting time in your child’s journey through young adulthood.

The Takeaway

The transition to college can be an overwhelming one for both students and their parents. While your student is building their new life at school, you may find it challenging to keep in touch with them. Try setting a time for a weekly catch-up session with your child. Be open and honest with them and make sure they know that they can come to you with any questions, concerns, or issues they may be facing at school.

In addition to providing advice and guidance, you may also be helping your child pay for school. If your financial aid package (which may include grants, work-study, and federal loans) isn’t enough to cover the costs, you might also consider private student loans. If your child hasn’t yet established much credit, you will likely need to be a cosigner. Or, you might consider a private parent student loan.

Just keep in mind that private loans don’t offer government-sponsored protections, like forgiveness or forbearance, that come with federal student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

What are some ways I can maintain a relationship with my college-aged child?

To maintain a relationship with your child in college, stay connected through regular check-ins, use technology like video calls and messaging apps, be a supportive listener, encourage their independence, and respect their need for space and new experiences.

How often should you call your child in college?

You can aim to call your college-aged child once or twice a week to stay connected without being overbearing. This allows you to check in and offer support while respecting their newfound independence and busy schedule.

What is the best way to communicate with college students?

The best way to communicate with college students is through a mix of video calls, text messages, and emails. Use their preferred method, be flexible, and keep conversations brief and supportive to respect their busy schedule.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOISL-Q325-002

Going to college is an exciting adventure, but it can also be incredibly nerve wracking, especially as a college freshman. With so much new and unknown ahead of you, it’s easy to let the stress build.

Being prepared for what’s ahead could help alleviate some of the first-year worries. This checklist is filled with things that you can do to prepare for your freshman year, starting with things like filling out the FAFSA, getting your packing list and school supplies together, and preparing financially for your life on campus.

Checklist for Preparing for Freshman Year

Acclimating to life on campus can be a big transition. Fortunately, there are things you can do to smooth the way before you even arrive.

Registering for Classes

Registration will likely take place before you get to campus for the school year. Some schools have freshman register during orientation, which gives them the opportunity to connect with an on-campus advisor. Once enrolled, check out the syllabus for each class to help you gauge expectations and determine what books and supplies you’ll need.

Recommended: 5 Ways to Start Preparing For College

Order Books and Other Supplies

Once you’re registered for classes, you’ll likely have a good idea of the books and supplies you’ll need. Cut costs on college textbooks by ordering used copies or renting the book.

Touching Base With Your Roommate

If you’re going to be living with a roommate, it’s a good idea to reach out to them before you get to campus. Open the lines of communication so you can discuss things like who’ll bring what. This is someone you’ll probably be spending a lot of time with, so establishing a friendly relationship, setting roommate guidelines, and discussing how you’ll share expenses with your roommate are important.

Packing for College

Making your college feel like home may take some careful preparation. To create the ultimate college packing list, think of things you use regularly that you’ll need on-campus. This might include clothes, bedding for your mattress, towels, toiletries, and more. Some schools may have restrictions on certain items, such as candles, so read any guidelines provided by the residential life office at your school.

Don’t forget to pack the supplies you’ll need for classes — depending on your course of study, this may include things like books, a computer, a calculator, and lab safety equipment.

Preparing Important Documents

Make sure you have identification information like your driver’s license or passport. Make a copy of your health insurance card so you’re prepared in the event of any issues.

Filling Out the FAFSA

The Free Application for Federal Student Aid, better known as the FAFSA®, is the application students fill out each year to apply for federal financial aid, including grants, scholarships, work-study, and federal student loans. If you are a dependent student, the FAFSA will also generally require your parent’s financial information as well.

Some aid is awarded on a first-come-first-served basis, so it may be beneficial to submit your application as early as possible. Schools may use information from the FAFSA to determine awards for school-specific scholarships, too.

Understanding how much aid, and what types of aid you can expect, will be important as you craft a plan to pay for college. Some students may consider private student loans in the event that other funding streams, like savings, federal student loans, and scholarships aren’t enough to cover their tuition. While private student loans can help fill in any financial gaps, they don’t always offer the same borrower protections — like deferment or the option to pursue Public Service Loan Forgiveness — as federal student loans. As a result, they are generally only considered after all other sources of aid have been exhausted.

Recommended: How to Complete the FAFSA

Getting Your Finances in Order

As a college student, this may be one of your first steps toward financial independence. Here are a few tips to help you prepare for the financial responsibilities that await you on campus.

Opening a Checking Account

As a college student, you may be living away from home for the first time. Now that you’re starting to be independent, you may find the need to open a checking account of your own (if you don’t have one already).

Some colleges have banks on campus that make it easy and convenient for you to open a checking account. It’s worth comparing different banks and credit unions before you make your final decision. Look at fees, minimum balance requirements, ease of online or app use, and branch locations.

Tracking Your Spending

Creating a budget can help you stay on top of your spending. If you’ve never stuck to a budget before, there’s no time like the present. Begin by listing all your monthly income, whether it comes from a job, helpful parents, or both. Then list your expenses, like car insurance, a phone bill, or books for school.

Also include your “fun” money for things like dining out, shopping, or travel. If your expenses are more than your income, you’ll need to make adjustments. You can find budget spreadsheets online or convenient apps to keep track of your spending if you don’t want to start from scratch.

And remember, a budget isn’t set in stone. It’s a living document that is always changing based on your financial situation. Try your best and always look to improve it.

Looking Into Getting a Credit Card (and Handling It Responsibly)

Now that you’re on your way to adulthood, it may be worth starting to build your credit history. If you can be responsible with the credit card, having one in college is one way to help you establish a baseline for your credit history.

If you do open a credit card, it’s important to make an effort to pay your bills on time and in full every month. Once credit card debt starts to build, it can be difficult to get out from under it, so it’s wise to take steps to avoid it in the first place.

Responsibly using a credit card is one thing that can help you establish and build credit history. Whether it’s to buy a home or a new car, a better credit score could help potential borrowers secure more favorable loan terms.

When You Get to Campus

Hopefully, all your preparation will help streamline your college transition. These final few tips could help you find your footing at school.

Exploring Campus and the Surrounding Area

College is a whole new world. Take some time to walk around and explore the campus, and make sure to know where the dining halls and libraries are in relation to your dorm. As you explore the campus, map out where each of your classes are located. This may help mitigate some of your college nerves.

Venture off campus and check out the town. You may just find a cute cafe perfect for study sessions.

Connecting with Professors and Advisors

Your professors are there to teach and want you to succeed. Take a few minutes to get to know them and don’t shy away from office hours. Go often and early with any questions or concerns.

Finding Extracurriculars

Colleges usually have a variety of extracurricular activities and clubs for students to join. Visit any activity fairs and find the clubs that interest you. Maybe it’s working for the school TV or radio station, intramural soccer, or an acapella club. Getting involved on campus can be a great way to get to know new people and make friends.

Establishing a Routine

As a college student, you’re likely experiencing a ton of newfound freedom. While all this autonomy is exciting, establishing a routine that works for you is important. For example, if you find you are most productive in the morning, block that time for classes and any top priority assignments. Then a break for a quick workout or lunch, followed by some studying. In addition to studying and classwork, it’s important to create healthy habits and space for self-care.

Checking Your List and Following Your Needs

College is a time to get out of your comfort zone and challenge yourself. It’s a learning experience in every sense of the word. This college freshman checklist is just a starting point to help you get acclimated.

Don’t forget to check in on — and add to — your college checklist as you continue your education. It can be easy to get swept up in the excitement of college, but it’s important not to lose sight of your financial and professional goals. Committing to your financial health and literacy now will help you even after graduation. Skills like budgeting and networking will always be applicable.

The Takeaway

With these tips in mind, you can put together a personalized freshman year checklist. This may include things like filling out the FAFSA, registering for classes, connecting with your roommate, and packing for the move to college. Getting ready for freshman year might seem overwhelming at first, but breaking down to digestible action items may make it feel more manageable.

Part of preparing for freshman year is figuring out how you’re going to pay for college. Once you fill out your FAFSA and receive your award letter, you’ll know where you stand, and whether you need to seek out any additional sources of funding.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

What should I pack for freshman year of college?

For freshman year, pack essentials like bedding, towels, toiletries, a laptop, textbooks, a planner, comfortable clothing, a first-aid kit, and basic kitchen supplies. Don’t forget a few sentimental items to make your dorm feel like home.

How many towels does a college freshman need?

A college freshman typically needs two to three towels: one for daily use, one for backup, and an extra for guests or emergencies.

How much should I budget for college freshman supplies?

Budget around $500 to $1,000 for college freshman supplies, including dorm essentials and personal items. This can vary based on your specific needs and the cost of living at your college.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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