father and son desk and tablet

Tips for Teaching Your Kids About Investing

Policymakers and educators talk about improving financial literacy for kids, but so far, few school systems seem ready to do much about it. According to the Council for Economic Education’s 2020 “Survey of States,” only 21 states require high school students to take a personal finance class.

So parents, it’s up to you. You can make saving more interesting for your kids, instead of it feeling like an obligation and a chore. And you can show them how to invest for the future, instead of just telling them that they should.

In short, you can set them on the right path by teaching them the investment basics you wish you’d learned when you were young. Here are some actionable, age-appropriate tips for teaching your kids about investing.

Set the Stage: From Saving to Investing

If your children have their own savings accounts, or even a piggy bank, you’re off to a good start. But at some point, you can start introducing more advanced financial topics (with examples whenever possible). Every kid is different, so you’ll have to gauge your children’s interest and comprehension. These are some concepts to discuss.

Risk vs. Reward

Conventional wisdom says that the riskier the investment, the higher the payout. But the opposite is also true. The riskier the investment, the more you can lose. Explain to kids that unlike a savings account, which is safe but grows money slowly, an investment account usually carries more risk, so it may grow faster but it also may lose money.

Diversifying Investments

Even a young child should be able to understand diversification by the phrase “Don’t put all your eggs in one basket.” When talking to older kids, you can give examples of different types of investments—stocks, bonds, mutual funds, real estate and other alternative investments—and explain the role each might play in a portfolio.

Supply and Demand

The stock market is generally driven by supply and demand. If more investors demand to own stocks, the market rises. If there are more sellers than buyers, the market falls. As an example, you might be able to talk about how the price of a hard-to get toy drops over time, or how clothes get cheaper when they’re out of season.

Researching Investments

If you have children who love to look up things online, why not make the most of that interest and skill set? Ask them about the companies they think might be a good investment, and then check out the reality. (Some of their favorite brands may be privately traded, so that’s another conversation you can have.) Older kids can look for news stories that summarize analysts’ reports on Google Finance, Yahoo Finance, or MarketWatch, where the writers typically decipher analysts’ jargon.

”Computer Game” the Market

Another way to get older kids interested in investing? Let them learn and practice trading with an online game or app. There are a few options out there, including Wall Street Survivor, which encourages beginners to learn about the stock market with free courses and a $100,000 virtual portfolio. Users can create or join a league to compete against other traders.

Sneak in Some Business Basics

If your kids like cartoons, you might want to check out Warren Buffet’s Secret Millionaires Club to inspire the investing and entrepreneurial spirit. While there aren’t any juicy stock tips from Buffet, an animated version of the “Oracle of Omaha” does serve as a mentor on the show. The series includes 26 four-to-five-minute webisodes, and there are parent guides to download for each one (in English and Spanish).

Play Follow the Market

Once your kids understand a little bit about how the stock market works, you can begin following the markets together and track how they’d do if they were actually invested. Older kids might like to create an online watch list of their favorites on several sites, including Google Finance or Yahoo Finance. This way, you can teach your kids how the markets work without any actual losses.

Go Buy the Book

It might sound like a pretty old-school way to explain investing to kids, but there are books out there that include plenty of illustrations, fun language, and important lessons, including these titles:

What All Kids (and adults too) Should Know About … Savings and Investing, by Rob Pivnick, covers saving, budgeting and investing.

Go! Stock! Go!: A Stock Market Guide for Enterprising Children and Their Curious Parents, by Bennett Zimmerman, follows the Johnson family as they learn the fundamentals of stocks and bonds, the mechanics of investing, and the ups and downs of risk and reward.

I’m a Shareholder Kit: The Basics About Stocks—For Kids/Teens, by Rick Roman, is a spiral-bound book that was last updated in May 2018 and is designed to appeal to kids who want to know about investing and managing their money.

Make It Real with a Custodial Account

If you want to give kids a taste of what investing is like, you can open a custodial account and either make some picks yourself or let your children do the choosing.

One way to make the lesson more meaningful might be to think about the things that are important to the kids at each stage of life and pick a stock that represents it. (The company that makes their favorite snacks, for example, a top toy brand, or a clothing label.)

As your children get older, they can have more input, and you can talk about how dividends work, the power of compounding returns, and what it means to buy and hold. If your kiddos can’t decide between two companies, they can work together to research the better choice.

It’s important to note that there are pros and cons to creating investing ps for minors, so you’ll likely want to check out any consequences related to future taxes and when the child applies for financial aid for college.

Grow Their Interest with Compound Interest

Want to show your kids the magic of compounding interest? The Compound Interest Calculator on the U.S. Securities and Exchange Commission’s investor.gov website is easy to use and understand. Just plug in an initial investment, how much you expect to add each month, and the interest rate you expect to earn. The calculator will chart out an estimate of how much your child’s initial investment would grow over time.

To take it a step further, you can teach your children to use the “Rule of 72” to compare different types of investments. According to this rule, money doubles at a rate where 72 is divided by the percentage gain. So, if your child is looking at an investment that makes 4% annually, it will double in 18 years, or 72 divided by 4.

Share Your Own Family’s Adventures in Investing

Whether it’s a success story or a cautionary tale, kids can learn a lot from their family history.

For example, in a conversation about the value of investing and goal-setting, you could talk about how your parents and grandparents made and saved their money vs. how it’s done today.

Focus on storytelling instead of lecturing, and encourage questions to keep kids involved.

The Takeaway

There are many ways to introduce kids of all ages to the concept of investing. The simplest one is to share with them your own investing history and perspectives. Beyond that, use websites, videos, books and other tools—including a custodial account, if you want—to illustrate the how-tos, dos, and don’ts of investing.

Keep it fun and keep the effort going, and someday your adult children might be telling tales around the dinner table about how your lessons helped advance their financial savvy.

If you’re looking to open an account, SoFi Invest® offers options that let investors be as hands-on or hands-off as suits your needs, with both active and automated investing options.

Find out how to get started with SoFi Invest.

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
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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What Is A Conventional Home Loan?

Nothing compares to scrolling through listings until you find the home with the perfect garden, garage, and floors. Then comes the less fun part: figuring out how to finance your home purchase.

For the vast majority of people, acquiring a new home means taking out a mortgage, a loan for the part of the house cost that isn’t covered by the down payment.

U.S. homeownership hovers near 66%, and millennials continue to be the biggest share of buyers. What kind of loan do most go for? The 30-year fixed-rate mortgage. But conventional loan requirements vary, and some may find that a government-sponsored loan is a better fit.

Let’s take a closer look at conventional loan requirements and the difference between FHA and conventional loans.

Conventional Mortgages Explained

Conventional mortgages are insured by private lenders, not a government agency, and are the most common type of home loan.

Then there are government-guaranteed home loans. FHA loans are more commonly used than VA loans (for service members, veterans, and eligible surviving spouses) and USDA loans (rural housing). Government loans are often easier to qualify for.

Taking out a conventional home loan means that you are making an agreement with a lender to pay back what you borrowed, with interest.

And unlike with an FHA loan, the government does not offer any assurances to the lender that you will pay back that loan. That’s why lenders look at things like your credit score and down payment when deciding whether to offer you a conventional mortgage and at what rate.

See how SoFi can help make your
dream home a reality.

Two Main Types of Conventional Loans

Fixed Rate

A conventional loan with a fixed interest rate is one in which the rate won’t change over the life of the loan. If you have a “fully amortized conventional loan,” your monthly principal and interest payment will stay the same each month.

Although fixed-rate loans can provide predictability when it comes to payments, they may initially have higher interest rates than adjustable-rate mortgages.

Fixed-rate conventional loans can be a great option for homebuyers during periods of low rates because they can lock in a rate and it won’t rise, even decades from now.

Recommended: Adjustable Rate Mortgage (ARM) vs. Fixed Rate Mortgage

Adjustable Rate

Adjustable-rate mortgages have the same interest rate for a set period of time, and then the rate will adjust for the rest of the loan term.

The major upside to choosing an ARM is that the initial rate is usually set below prevailing interest rates and remains constant for six months to 10 years.

A 7/6 ARM of 30 years will have a fixed rate for the first seven years, and then the rate will adjust once every six months over the remaining 23 years. A 5/1 ARM will have a fixed rate for five years, followed by a variable rate that adjusts every year.

An ARM may be a good option if you’re not planning on staying in the home long term. The downside, of course, is that if you are, your interest rate could end up higher than you want it to be.

Most adjustable-rate conventional mortgages have limits on how much the interest rate can increase over time. These caps protect a borrower from facing an unexpectedly steep rate hike.

Conventional Home Loan Requirements

Conventional mortgage requirements vary by lender, but almost all private lenders will require you to have a cash down payment, a good credit score, and sufficient income to make the monthly payments.

Many lenders that offer conventional loans require that you have enough cash to make a decent down payment. Even if you can manage it, is 20% down always best? It might be more beneficial to put down less than 20% on your dream house.

You’ll also need to demonstrate a good credit history. For example, you’ll want to show that you make loan payments on time every month.

Each conventional loan lender sets its own requirements when it comes to credit scores, but generally, the higher your credit score, the easier it will be to secure a conventional mortgage at a competitive interest rate.

Most lenders will require you to show that you have a sufficient monthly income to meet the mortgage payments. They will also require information about your employment and bank accounts.

Recommended: Mortgage Calculator

How Do FHA and Conventional Loans Differ?

One of the main differences between FHA loans and conventional loans is that the latter are not insured by a federal agency.

FHA loans are insured by the Federal Housing Administration, so lenders take on less risk. If a borrower defaults, the FHA will help the lender recoup some of the lost costs.

FHA loans are easier to qualify for, and are geared toward lower- and middle-income homebuyers. They require at least 3.5% down.

Additionally, the loans are limited to a certain amount of money, depending on the geographic location of the house you’re buying. The lender administering the FHA loan can impose its own requirements as well.

An FHA loan can be a good option for a buyer with a lower credit score, but it also will require a more rigorous home appraisal and possibly a longer approval process than a conventional loan.

Conventional loans require private mortgage insurance if the down payment is less than 20%, but PMI will automatically terminate when the loan balance reaches 78% of the original value of the mortgaged property, unless the borrower asked to stop paying PMI once the balance reached 80% of the original property value.

FHA loans require mortgage insurance, no matter the down payment amount, and it cannot be canceled unless you refinance into a conventional loan.

Recommended: Guide to Buying, Selling, and Updating Your Home

The Takeaway

A conventional home loan and FHA loan differ in key ways, such as credit score requirements. If you’re ready to make your dream house a reality, you’ll want to size up your eligibility and your mortgage options.

SoFi offers fixed-rate home loans with as little as 5% down and terms of 10, 15, 20, and 30 years.

It takes just two minutes to get prequalified online.

SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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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How Much Does it Cost to Adopt a Child?

Growing your family is a huge decision, and adopting a child will change your life forever. And while making the decision to open up your home and your heart to a new child seems like a natural next step for you and your family, the process can actually be pretty complicated—and costly.

There are a few different adoption methods and each comes with its own unique costs and fees. Read on for a breakdown of some expenses you might run into in the adoption process.

Cost of Adoption from Foster Care

Adopting a child from foster care tends to be less expensive than other options. According to a 2017 survey from Adoptive Families , the average cost of a foster care adoption was about $3,000.

Home Study

One of the most important costs to account for is the home study, which is when the prospective parents’ home is screened such that the adoption agency can get a sense of their day-to-day life. While the cost of a home study might be included in the overall adoption fee from an agency, the fees can range from a few hundred dollars to several thousand dollars.

Foster care adoptions will also generally have a home study where a social worker observes the interaction between the potential adoptive parents and the child. In some cases, there may be state or federal programs to offset

Tax Credits for Foster Care Adoptions

The good news is there are also plenty of government resources for foster care adoptions—The Children’s Bureau, part of the U.S. Department of Health and Human Services (HHS), has a wealth of resources available discussing the ins and outs of adoption.

The Children’s Bureau further explains that thanks to amendments to the Social Security Act in 1994, families adopting children from foster care could qualify for federal assistance depending on the child’s eligibility. This assistance includes:

•   A one-time, non-recurring reimbursement for adoption transaction costs
•   Recurring monthly maintenance payments for the child’s care (Not to exceed what the state would have paid to keep the child in foster care)

Families contending with medical expenses for the birth mother or child, attorney’s fees, or those who need extra travel for visits before placement might experience higher expenses than average with a foster care adoption.

Children adopted through foster care may also be eligible for health insurance coverage under Medicaid, and other medical assistance to cover some or all of the child’s needs like special education or therapy.

Planning for Private Agency Adoption

Private adoption costs in the U.S. can vary from state to state. According to the Children’s Bureau, the cost of a private, agency-assisted adoption can range anywhere from $20,000 to $45,000 on average .

Agency Fees

Court Documentation Fees

U.S. domestic adoptions must also be finalized in a court. Court documentation fees can be in the range of $500 to $2,000 , in addition to the cost of legal representation for the adoptive parents, which can range from $1,500 to $4,000 . Depending on the state, these fees may or may not be covered as part of an agency’s overall pricing.

Independent Adoption Costs

Some families choose to adopt a child without the assistance of an adoption agency and instead work directly through an attorney. It might seem like a cost-saving measure at first, but pricing can still vary. Expenses might be low if you match with a birth parent through word of mouth, or if the birth mother’s expenses are minimal.

However, these adoption costs can still range from around $15,000 to $40,000 . This typically includes most of the same costs of any other domestic adoption, including the home study, the birth mom’s medical expenses, and legal and court fees for the adoptive parents and birth parents.

Expenses for Intercountry Adoption

Adoption fees will differ depending on which country you plan to adopt a child from. Intercountry adoption costs tend to be higher than a U.S.-based adoption because there is usually foreign travel and immigration processing to factor into the equation, in addition to other higher court costs, mandatory adoption education, and other documentation. The U.S. government says the average cost can range from $20,000 to $50,000 for a foreign adoption.

Costs can depend on the organization managing the adoption as well: whether it’s the government, private agency, orphanage, non-profit organization, private attorney, or some combination of the above. Some intercountry adoptions are finalized in the child’s home country, while others must be finalized in the United States. Finalizing an adoption in U.S. court can come with extra costs, but also provides additional legal protections and documentation.

Other costs to adopt a child from another country can include:

• Escort fees for when/if parents can’t travel to accompany the child to the U.S.
• Medical care and treatment for the child
• Translation fees
• Foreign attorney or foreign agency fees
• Passport and visa processing
• Counseling and support after placement

Financing the Cost of Adoption

So, with costs ranging from at least a few thousand dollars to up to $50,000 or more, financing an adoption may require some planning. Financially preparing for a child typically means looking into all associated costs, including raising your new child and tackling your own debt.

Some employers may offer financial and other support to help with the adoption process. According to the Dave Thomas Foundation for Adoption , the average policy offers a reimbursement of around $10,000.

Additionally, companies with 50 or more employees are required by federal law to grant parental leave to employees who have adopted a child. Mothers and fathers are eligible for up to 12 weeks of unpaid leave after the birth or adoption of a new child.

To offset some of the high costs of adoption, there are currently also federal adoption tax credits. The actual amount depends on family income, tax year, and employer adoption benefits, so it’s a good idea to talk to your tax attorney if you’re interested.

Grants and loans also exist to help with the cost of adoption and can help with any type of legal adoption, whether a foster care adoption, private agency or overseas adoption. Most grants and loans have their own eligibility criteria based on things like marital status, income level, or even specifics like religion.

You can also consider taking out a private loan from a lender like SoFi to cover the adoption costs. If you qualify for an adoption loan, you can use it for whatever qualifying personal financial need arises. Or perhaps you want to pay down your credit card debt, or build a new bedroom before the baby arrives, which a personal loan can help with as well.

Recommended: 5 Tips for Saving for a Baby

The Takeaway

The cost of adopting a child can vary widely, from a few thousand dollars to $50,000. Foster care adoptions tend to be less expensive than private agency or intercountry adoptions. There are state or federal tax credits that may help offset the cost of adoption. Other resources to pay for adoption include grants and loans.

Use our personal loan calculator to see how an unsecured personal loan with SoFi could help you prepare for the anticipated costs of adopting a child.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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

Moving can be stressful. Making sure your breakables are packed so they don’t actually break, deciding on a DIY move or hiring professional movers, managing security deposits or down payments on both ends of the move—moving cross country could stress even the most relaxed people. There are some things to keep in mind, though, to make the process go as smooth as possible.

Reduce, Reuse, Recycle

The three Rs aren’t just good environmental stewardship, they’re essential for planning a big move. Think of it this way: Is it really necessary to pack up and ship the six half-empty conditioner bottles under the bathroom sink?

Moving is a great time to embrace your inner minimalist and get rid of absolutely everything that’s no longer needed. Not only does minimizing now help cut down on moving costs, but it also helps avoid filling up the new place with meaningless stuff.

Instead of just throwing away unwanted goods, trying to find them a new home might give them a second life. Big-ticket furniture items can be sold online or in consignment stores to raise a bit of extra money for the moving fund, or they can be donated to a thrift store.

Professional clothes that are no longer worn could help someone if donated to a job readiness program. Animal shelters often take donations of old sheets and blankets to make cuddly beds for their charges.

Local freecycle or buy-nothing groups can also be great places to unload unwanted home goods—you never know who has a use for those five dish strainers you’ve somehow accumulated.

Pack Like a Pro

Once you’ve decluttered, it’s time to get packing. Resist the urge to throw everything into a medium-sized box and call it a day. Taking the time to pack up your home like a professional will make moving—and the subsequent unpacking—a whole lot easier.

First, gather your packing supplies. You’ll want to make sure you have plenty of boxes of varying sizes, several rolls of packing tape, large black markers, scissors, a utility knife, and several types of packing materials, like old newspaper, bubble wrap, and even old rags or sheets.

To pack like a pro, start with non-essentials. The last thing you want is to realize that you accidentally packed all your clean underwear two weeks before you plan on leaving. Seasonal home goods, out-of-season clothes, and rarely used kitchen goods are a good place to start.

Make sure to wrap all fragile items in paper or bubble wrap before putting them in boxes. Plates should be packed next to each other vertically, which helps prevent breaking . Likewise, adding a layer of crumbled newsprint or packing paper on the bottom of your box can also help prevent breakage.

Aim to keep each box light enough to lift alone, with heavy items on the bottom and lighter items on top. Don’t forget to pack like items together—no one wants to arrive at their new home and find their dishes somehow got packed next to the cat litter box.

Choose Your Mode of Transportation

One of the most challenging parts of planning a cross-country move can be planning the actual transportation. Will you fly, and ship your cargo? Hire a moving company to pack everything up and unpack it at your new place? Rent a cargo trailer and make it into a cross-country road trip?

Each option has its benefits and its drawbacks, but choosing the right mode of transportation can help keep your move as stress-free as possible and, depending on the mode you choose, could help you keep your budget intact.

The easiest, and usually the most expensive, option is to hire a moving company and let them take care of the details. Using a moving company for a cross-country move can cost almost $5,000 on average, and that can increase with the addition of fuel costs, fees, and insurance.

The benefit to paying more upfront is that you are only responsible for getting yourself and your family to your new home. The moving company takes care of the rest, which can be a significant relief if you’re short on time or are looking at the prospect of trying to maneuver your couch up three flights of stairs in your new apartment building.

Some moving companies will send someone out to take a look at how much stuff you plan to move to give a more accurate cost estimate. They may also estimate the weight of the load and calculate how far you plan on moving when giving you the final estimate.

If you’re hiring movers, one way to cut down on cost is to pack and unpack your stuff yourself. Asking for personal recommendations, reading online reviews, and getting a few different quotes before deciding on a moving company can help you get the best company for your needs.

If hiring movers isn’t in the budget, there are still plenty of options to ensure your beloved record collection arrives safely across the country. If you don’t have any big furniture to move, you may be able to get away with shipping your goods and hopping on a plane with just your essentials.

Shipping your goods as freight can be a budget-friendly option, whether you send them via mail, train, or even take a few boxes as checked baggage on the flight.

The downside is that unless the boxes are traveling on your flight with you, you may end up waiting a while for them at your destination, and, like all mail, there is always a chance things could be lost or damaged during the journey.

Many movers choose to take the DIY route and rent a cargo truck or trailer to haul their worldly possessions. This can be a budget-friendly option, but remember that for all the cost savings, you’ll be putting in a lot more hard work.

You’ll need to pack and load all your boxes and furniture into the trailer yourself. On top of packing, you’ll also have to be comfortable driving the cargo truck or trailer the thousands of miles that lie between you and your destination.

Budgeting for Your Move

Still wondering how to move across the country without going broke? There’s no doubt about it—moving is expensive. And don’t forget to include the additional costs of moving, like a down payment on your new place, or first and last month’s rent, and the cost of setting up your new home with all the essentials.

On top of that, moving often coincides with changing jobs, which may mean that you have a few weeks where you are sorely missing your paycheck. All of this makes moving across the country financially draining for many people.

If you know you’ll be moving in the future, saving up now and using any money you make selling unwanted goods can be a good way to build up your moving fund.

Some people, however, realize they need a little more help in covering the upfront costs of moving across the country. A personal loan might be able to help cover that cost without affecting the rest of your finances.

The Takeaway

For some people, there may be a few potential benefits of using an unsecured personal loan rather than a credit card to fund moving costs. A personal loan may offer lower interest rates than many credit cards do and, unlike a credit card, a personal loan is not revolving credit. That means the loan is for a set amount of money and paid back over a fixed period of time.

Lenders usually review an applicant’s credit report, among other personal financial factors, to determine the loan term and rates they qualify for. Some lenders disburse loan funds within a few days. This means that you can spend more time exploring your new home base and less time stressing about paying for your move.

About to embark on a major move? Look into a relocation loan with SoFi to help finance your new adventure!

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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


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Does Everyone Need an Estate Plan?

Does Everyone Need an Estate Plan?

The short answer is, yes, estate planning can be a smart move for everyone.

Though it’s not much fun to think about what will happen to your loved ones after you are gone, doing some estate planning early on, and readjusting it as needed throughout your lifetime, can help you prepare for the future and protect the people you care about.

One of the biggest reasons why is that without an estate plan, any assets you have may not go to the people you would have wanted to have them. And, if you have children, you won’t have a say in who becomes their guardian.

Not having an estate plan can also create a lot of legal and administrative headaches for your family members and friends.

Contrary to what many people assume, you don’t have to be old, rich, or have children to benefit from making a financial plan for after you are gone.

Read on to learn what estate planning is all about and what you can do to get started.

What is an Estate Plan?

Estate planning is deciding in advance and in writing who will get your assets and money after your death or in the event that you become incapacitated.

It can be as simple as designating certain people as your beneficiaries on your financial accounts. Estate planning also typically includes creating a will. It can also include setting up trusts and creating a living will that can be used should you ever become incapacitated.

Your “estate” is simply everything you own—money and assets, including your home and your car—at the time of your death.

Your debts are also part of your estate—anything you owe on credit cards and loans may have to be paid off first by your estate before any further money or assets are distributed to your heirs.

Estate planning is not entirely about money, though. It may also leave instructions for how your incapacitation or death may be handled.

For instance, you may not want to be kept on a life-support system if you were in a coma. You may want to be cremated instead of buried. These instructions can be included in your estate planning.

An estate plan may also include choosing a guardian for your children and any specific wishes regarding how you want them to be raised.

The Importance of an Estate Plan

An estate plan can be beneficial no matter what your age, income, assets, or family status. Below are some key reasons why you may want to consider estate planning.

You Decide Where You Assets Will Go

If you don’t have beneficiaries named in an estate plan, the courts will determine who gets your assets. That might be your closest kin (possibly someone you wouldn’t want to have your inheritance), and if you have none, the state may take those assets.

Likely you have someone who you would prefer to leave assets to, and if not, you can choose a charity.

You Have Children

If you have children, it’s important for you to consider how you want them cared for if you and your spouse were to pass away, and who you would want to be their guardians.

Your estate plan can even outline how you hope to pass on aspects of your life such as religion, education, and other values. You can also set up a trust so that your children receive an inheritance once they are 18.

It Can Help Avoid Legal Headaches

If you have beneficiaries you want to leave your assets to, having an estate plan and/or will can minimize the legal headache your loved ones have to deal with.

Without any kind of estate plan, a probate court may have to determine how assets are divided, and this can take months or years, delaying those assets making it to the people you want to have them.

It Can Help Prevent Family Conflict

Your family members may all get along well, but it’s a good idea to write a will so that things remain harmonious.

Regardless of the size of your estate, some careful estate planning can help prevent your family members from arguing over who gets what, whether it’s a small tiff or a full-on lawsuit.

It Can Ease the Financial Burden of Final Costs

Many people don’t consider planning their own funerals, and that may leave an emotional and financial burden on their loved ones.

A funeral can cost, on average, around $7,000, and a cremation about $6,000. Consider whether your loved ones would be in a financial situation to be able to afford to cover that expense, plus any others involved with your final arrangements.

Taking these final costs into consideration can be a part of your estate plan. You might decide to set aside funds to cover your funeral expenses.

You can do this with a “payable on death” account, which can be set up through your bank and allows the designated beneficiaries to receive the money in the account when you pass away.

Or, you might elect to purchase a prepaid funeral plan, which sends money directly to the funeral home to cover a casket, floral arrangements, service, and other aspects of your funeral. You may want to keep in mind, however, that prepaying for a funeral can lead to a loss of money if the funeral home goes out of business.

What’s Included in an Estate Plan

While your estate plan will be unique to your own situation, there are a few things you might consider including.

A Will

Your will is the actual document that outlines who your beneficiaries are and what they will receive upon your passing. It may also identify a guardian if you have young children.

This is also where you can identify the executor, who will carry out the terms of your will.

Life Insurance Policy

Having this policy information with the rest of your estate plan makes it easy for your family to file a claim with your insurance company upon your death.

A Living Will

Death is not the only situation in which you may be unable to make a decision. You may be alive yet incapacitated, and in this scenario it can be difficult for your loved ones to know what you want them to do.

A living will can be highly valuable because it lays out how you want to be treated during your end-of-life care, including specific treatments to take or refrain from taking.

A living will is often combined with a durable power of attorney, a legal document that can allow a surrogate to make decisions on behalf of the incapacitated individual.

Letter of Intent

This letter is directed to your executor, and provides instructions for carrying out your wishes in regards to your will, and possibly also funeral arrangements.

A Trust

If you have a sizable inheritance for your beneficiaries and don’t want them to have access to all the funds all at once, you can establish a trust with rules about how and when they receive the money.

For example, you could stipulate that your children receive a fixed allowance each month until they graduate college or get married, or that they use the money for college.

Key Account Information

You might also consider providing account numbers and passwords for bank accounts, investment accounts, and other important accounts that your family will need access to. This can make life much simpler for your loved ones.

The Takeaway

Whether you have children and want to ensure they’re taken care of, or you’re single and would like your assets to go to certain people or a charity you care about, it’s wise to have a basic estate plan.

Having a financial plan in place in the event that you pass away or become incapacitated can protect surviving family members from unnecessary financial, legal and emotional stress.

Not sure where or how to start estate planning? SoFi, in partnership with Ladder, now offers estate planning as part of SoFi Protect.

SoFi members can create their will for free and, for a fee, other estate-planning needs, including setting up a living trust and establishing power of attorney—all through Ladder.

See how SoFi can simplify the estate planning process today.

Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal 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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