Women and Investing in 2024: Breaking Down the Barriers

Women have more financial power than ever before — 45% of them earn more or as much as their husbands, they currently control more than $10 trillion of the total U.S. household financial assets, and they may control trillions more in the ongoing transfer of wealth between generations. In 2023, women’s purchasing power added billions to the economy — or “she-conomy,” as it was dubbed. Women ages 25 to 54 also made historic gains in the labor market in 2023, and they were primary contributors to its strength, according to research from the Brookings Institution.

Yet there’s one thing many women aren’t doing with all their monetary might: investing. An eye-opening 64% percent of women have never invested, SoFi’s 2024 Women and Finances Survey found. That’s 17% more than the number of men (47%) who have never invested.

This investment gender gap could have serious repercussions for women now and in the future. Investing can be an important tool to help build wealth. The sooner an individual begins investing, the more time their money has the potential to grow. Almost half (48%) of female investors say their biggest regret is not investing sooner, according to another 2024 survey by SoFi. And because women outlive men by about six years, their money needs to last longer.

So why aren’t women investing? And what can be done to reverse this troubling trend? Read on to learn about the obstacles holding women back, and ways they can break through and start investing (literally!) in their future.

Women’s Financial Priorities vs Financial Realities

short-term financial priorities: women vs men

*Priorities for next two-to-three months.

Source: SoFi 2024 Women and Finances Survey

First, let’s be clear: It’s not that women aren’t interested in investing. They are! In fact for 2024, their financial priorities are similar to men’s, per the Women and Finances Survey findings. The desire to save for retirement and invest more money is nearly equal between the two genders.

And when they do invest, women tend to employ longer-term strategies and therefore tend to get better returns.

Where the difference between the two genders comes into play is what men and women are actually doing with their money. In the short-term, women are focused on keeping up with their living expenses, while men are more likely to invest and save for retirement.

Financial Priorities for the Next Year

Women

Men

Keeping up with living expenses 50% 41%
Saving for retirement 44% 42%
Investing more of my money 41% 45%

Source: SoFi 2024 Women and Finances Survey

There are a number of reasons women aren’t investing, no matter how much they might want to.

1. The Confidence Conundrum

For many women, uncertainty about investing, and how good they might be at it, is holding them back. Women worry they don’t know enough about investing to get started. Nor do they feel confident about making investments — 43% say they don’t have the confidence to do it “right.”

Women’s Top Reasons for Not Investing

Lack of funds

53%

Lack of investing knowledge 46%
Lack of confidence to do it “right” 43%

Source: SoFi Survey, March 2024

Even when women do take the plunge and start investing, they still feel unsure of themselves. Only 57% of female investors think of themselves as investors. The rest believe they don’t have the experience to be considered investors.

That may be because women have a very specific view of what an investor is — typically as finance professionals or individuals who are extremely experienced and savvy about the investing process and the stock market.

How Women Describe an Investor:

“A finance bro. Very inaccessible to someone who doesn’t know all the terminology and ins and outs of the stock market.”

“A person who is well-educated and knows the tricks of the trade of investing.”

Source: SoFi 2024 Women and Finances Survey

Women’s lack of confidence extends beyond investing. They also have doubts about how well they’re managing their money overall compared to men.

Confidence in Managing Money

Women

40%

Men 54%

Source: SoFi 2024 Women and Finances Survey

💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.

2. The Wage Gap Still Exists

Another investment obstacle for women: Having the money to invest. While their financial power has grown, especially in the last few years, women continue to earn less than men do. For every $1 men earn, women earn just 82 cents — and this number has barely budged in 20 years, according to an analysis by the Pew Research Center.

Year

Women’s earnings on the dollar

Men’s earnings on the dollar
2022 $0.82 $1
2002 $0.80 $1

Source: Pew Research Center

It stands to reason that when you’re not earning as much, you may not have extra money to invest. As noted above, in a March 2024 SoFi Survey, 53% of women said they aren’t investing because they don’t have the funds to do so.

How Women Describe an Investor:

“I think of myself and how I’m late to the investing world. I am now as of the last 3 years able to invest because my income exceeds my expenses.”

Source: SoFi 2024 Women and Finances Survey

3. Women Worry About the Future More, But Still Invest Less

Financial worries about the future weigh on women’s minds. For many, achieving their goals feels like a long-shot. For example, 58% of women worry their money won’t last through their retirement.

Yet women are less likely than men to understand how investing now could help them reach those goals, and they don’t invest as much in the stock market and for retirement as men do. For instance, while men invest 28% of their income for retirement, women invest just 19%.

worries about their future: women vs men

Source: SoFi 2024 Women and Finances Survey

4. The Fear Factor

It’s tough to invest money if you’re worried you’re going to lose it, and that’s a very real financial fear women grapple with. Thirty-two percent say the reason they don’t invest is the concern that they’ll lose their money or make a bad investment.

That may explain why women are investing significantly less than men in the stock market — 38% of women have invested less than $2,000, compared to 27% of men. And 25% of men have $50,000 or more invested in the markets vs. 14% of women.

How Women Describe an Investor:

“How women describe an investor: “A unicorn.”

Source: SoFi 2024 Women and Finances Survey

amount invested in the stock market: women vs men

Source: SoFi 2024 Women and Finances Survey

When women do invest, they are typically more conservative in their investment choices, and their portfolios are not as diversified as men’s are.

investment strategy: women vs men

Source: SoFi 2024 Women and Finances Survey

💡 Quick Tip: It’s smart to invest in a range of assets so that you’re not overly reliant on any one company or market to do well. For example, by investing in different sectors you can add diversification to your portfolio, which may help mitigate some risk factors over time.

Closing the Investment Gap

Now for the good news: Women have strengths and innate advantages that can be harnessed to work in their favor. We know that female investors are great investors. For instance, as noted above, women tend to get better returns on their investments as a result of leveraging longer-term strategies.

Plus, the fact that women are more conservative in their investing strategies than men is not necessarily a bad thing. It typically means they are less likely to act impulsively or to exceed their risk tolerance.

The trick is for them to get started with investing. And investing for women begins, of course, with money. Almost half of women say the biggest investment motivator is not wanting to live paycheck to paycheck, which is true of men, as well.

motivations to invest: women vs men

Source: SoFi 2024 Women and Finances Survey

How You Can Start Investing

Tapping into your personal motivation is key. Whether it’s building up your savings, putting together enough money for a house, or building your retirement nest egg, make that your North Star and begin working toward that goal. And remember, it’s never too late (or too early) to start. Here’s how to do it:

Make a plan.

Setting your financial goals can help you determine when you might need the money, which in turn can affect how you invest and what you invest in. This is the foundation of your plan: a goal, a timeline, and your initial questions about which investments are best for your situation.

Get smart.

Understanding how the market works can help women feel more confident about investing. But women can’t do it alone. One of the most important things in your investing journey is finding like-minded people who can have those “let’s figure it out” conversations with you. It’s also an easier way to learn the language around investing, and become familiar with how to buy stocks and other investment options. You can also talk to a financial advisor if you feel it would be helpful. Knowledge is power.

Save more.

Having enough money to invest is a major impediment for women. But know this: No amount is too small to invest. If your employer offers a 401(k), enroll in it and contribute as much as you can. Aim to contribute at least enough to get your employer’s matching contribution, which is, essentially, “free” or extra money. Many investment options will allow you to contribute smaller amounts if you set up an automatic transfer or contribution to the investment account.

Make your first investment.

Open a brokerage account and/or an IRA if you’re saving for retirement choose what to invest in, whether it’s stocks, mutual funds, or exchange-traded funds (ETF).

Commit to the plan.

Once you’ve started investing, keep at it. The more you do it, the more confident and capable you’re likely to feel. And you’ll also have the satisfaction of knowing you’re taking concrete steps to help secure your financial future.

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

Invest with as little as $5 with a SoFi Active Investing account.


For the SoFi 2024 Women and Finances Survey we surveyed 636 SoFi paid product members across the U.S. A paid product member is anyone with an open account with SoFi. Gender was self-identified through the survey. 314 women, 280 men, 13 gender non-conforming, and 29 preferred not to identify.

For the March 2024 SoFi Survey, we surveyed 1,500 women with a household income of $100K+ and at least some college completed.

Photo credit: iStock/Hiraman

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.

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SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.


Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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What Is the Average Pay in the United States Per Year?

Whether you’re deciding on a new career path or wondering if you’re being paid enough, it can help to know what the typical American worker earns per year.

Based on the latest data available from the Social Security Administration (SSA), the average annual pay in the U.S. in 2022 was $63,795 — a 5.32% jump from the previous year. The U.S. Bureau of Labor Statistics (BLS) estimates the average worker made closer to $69,986 that same year. The amount you make may depend on a number of factors, including your occupation, where you live, your gender, and your level of education.

Key Findings

Let’s take a closer look at how the average annual pay in the U.S. has changed over a three-year period based on data from both the SSA and BLS.

Year

Average Annual Salary per SSA

Average Annual Salary per BLS

2020 $55,628.60 $64,021
2021 $60,575.07 $67,610
2022 $63,795 $69,986

It can also be helpful to look at median earnings, which represent the midpoint of salaries in the U.S. In other words, half of the salaries fall below the median, and half are higher than the median.

The following table shows the median annual salary for a three-year period.

Year

Median Annual Salary

2021 $51,896
2022 $54,132
2023 $59,540

Source: BLS

As you can see, average and median incomes have risen each year. However, average salaries can be affected by various factors such as your occupation, age, and gender. Note that the numbers above also don’t include unearned income.


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Examples of High-Salary Jobs in the US

Some industries tend to pay more than others, which means the career you choose may affect how much you earn. Here’s a sampling of high-paying jobs and their average annual salary, according to the BLS:

•   Cardiologist, $421,330

•   Dentist, $172,290

•   Aircraft pilots and flight engineer, $225,740

•   Lawyer and judicial law clerk, $161,680

•   Public relations manager, $150,030

•   Air traffic controller, $130,840

Recommended: How to Reduce Taxable Income for High Earners

Average American Income by Occupation

While salaries tend to vary based on geography, seeing how much certain types of jobs pay can be informative. Let’s take a look at different occupations and how much they typically pay.

Occupation (Type)

Average annual salary

Management $131,200
Legal $124,540
Computer and Mathematical Operations $108,130
Architecture and Engineering $94,670
Healthcare Practitioners and Technical $96,770
Business and Financial Operations $86,080
Life, Physical, and Social Science $83,640
Arts, Design, Entertainment, Sports, and Media $76,500
Educational Instruction and Library $63,240
Construction and Extraction $58,400
Community and Social Service $55,760
Protective Service $54,010
Installation, Maintenance, and Repair $55,680
Sales (and Related) $50,370
Office and Administrative Support $45,550
Transportation and Material Moving $37,920
Farming, Fishing, and Forestry $37,870
Building and Grounds Cleaning and Maintenance $35,900
Personal Care and Service $36,210
Healthcare support $35,560
Food Preparation and Serving Related $28,130

Source: BLS, May 2022 data

Keep in mind that average salaries may differ depending on the specific occupation you have. For example, although claims adjusters fall under the business and financial operations category, their average salary is around $72,040.

US Income by Gender

Demographics, specifically gender, are another factor to consider. By and large, men tend to outearn women throughout their career. The median annual salary for a 16- to 24-year-old man is $38,688; a woman of the same age earns $36,088, per the latest data available from the BLS. Likewise, the median annual salary for a man aged 25 and older is $64,376; a woman of the same age earns $52,520.

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Median Income by State

Wages often vary based on where you live. In many cases, states with higher costs of living also have higher wages. For example, the median annual income in Hawaii is $104,704 — much higher than Mississippi’s median annual income of $70,950.

Below is the median income by state for a household of three people, according to data compiled by the Census Bureau between April 1 and May 14, 2023.

State

Median annual income

Alabama $77,419
Alaska $113,035
Arizona $90,193
Arkansas $74,475
California $104,785
Colorado $113,822
Connecticut $121,958
Delaware $103,598
District of Columbia $146,440
Florida $83,396
Georgia $87,742
Hawaii $104,704
Idaho $87,960
Illinois $101,951
Indiana $89,800
Iowa $95,739
Kansas $88,271
Kentucky $75,700
Louisiana $73,393
Maine $95,531
Maryland $122,385
Massachusetts $127,172
Michigan $93,873
Minnesota $114,267
Mississippi $70,950
Missouri $89,515
Montana $84,019
Nebraska $99,845
Nevada $86,618
New Hampshire $136,886
New Jersey $122,540
New Mexico $71,283
New York $103,444
North Carolina $87,369
North Dakota $93,240
Ohio $90,912
Oklahoma $77,166
Oregon $101,989
Pennsylvania $100,888
Rhode Island $109,514
South Carolina $82,114
South Dakota $92,794
Tennessee $85,014
Texas $87,228
Utah $102,941
Vermont $103,763
Virginia $111,017
Washington $116,345
West Virginia $81,964
Wisconsin $99,261
Wyoming $93,651

US Income by Race

As the BLS data below shows, there is often a pay disparity among workers of different races and ethnicities.

•   Asian, $79,456 per year

•   White, $60,164

•   Black or African American, $50,284

•   Hispanic or Latino, $45,968

How Does Your Income Stack Up?

Now that you’ve seen some of the average and median annual salaries by occupation, location, gender, and race or ethnicity, how does yours compare? If you’re not making as much as you’d like, you may want to research wages in your industry and region, and use that information to help you negotiate a higher salary. If you’re ready to make a bigger change, you can use this data as you consider whether to switch to a more lucrative field or relocate to a higher-paying region.

Recommended: Cost of Living by State

How to Stretch Your Income

Here are some different strategies to help you make the most of the money you make:

Track Your Spending

Understanding exactly where your money is going can help you keep tabs on where your money is going and identify areas where you can cut back. Consider using a spending app to track your spending and saving.

Negotiate Bills

Want to lower monthly expenses, such as your cell phone or internet services? Consider calling up various providers to see if you’re able to get a better deal or if there are promotions you can take advantage of.

Cut Back on Large Expenses

Housing, food, and transportation tend to be the largest line budget items. Explore ways to trim your biggest costs. Examples include refinancing your mortgage, negotiating your rent, shopping at discount grocery stores, and taking public transportation when possible.

Sharpen Your Marketable Skills

Accepting networking opportunities and taking professional development courses could help you become more marketable as an employee. This in turn could set you up to earn more in the long run. If you’re on a tight budget, look into no- or low-cost ways to cultivate high-income skills, and ask your employer if there are any free resources available.

Pros and Cons of a High Salary

A high income can be great, but it does come with some downsides.

Pros:

•   Improved quality of life: With more money, you can afford a higher standard of living and be able to afford different amenities such as better access to healthcare and food.

•   Financial security: The more you earn, the more you can feel secure you have enough money to afford the things you want and need.

•   Ability to achieve financial goals faster: Having more disposable income could mean you can set more money aside for long- and short-term savings goals, like retirement or going on a family vacation.

Cons:

•   Higher taxes: Earning more can put you in a higher tax bracket. However, there are ways to reduce your taxable income.

•   Pressure to maintain income: If you’re accustomed to a certain living standard, you may feel like you need to keep earning the same amount or more to maintain it.

•   More work stress: In many cases, higher-paying jobs come with more responsibilities and, at times, longer hours.


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

The Takeaway

Understanding what the average American worker makes in a year can come in handy, especially if you’re considering a new career path, negotiating a higher salary, or looking for a new place to live. According to the latest data from the Social Security Administration, the average annual pay in the U.S. is $63,795. But the amount you earn may depend on a wide range of factors, such as the industry you work in, where you live, your gender, and your race or ethnicity.

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

With SoFi, you can keep tabs on how your money comes and goes.

FAQ

What is a good salary in the US?

There’s no one set amount that would be considered a good salary in the U.S. However, the average salary is around $63,795, according to the Social Security Administration.

What is the real average wage in the US?

The average wage in the U.S. is $69,986 according to the most recent data available from the U.S. Bureau of Labor Statistics.

What is the top 10 percent income in the US?

According to the Economic Policy Institute, the top 10% of workers in the U.S. earn $135,605.

How much should you be making at 30?

While there is no definitive amount you should earn by the time you’re 30, the average salary for U.S. workers aged 25 to 34 is $56,160, according to data from the U.S. Bureau of Labor Statistics.


Photo credit: iStock/VAKSMANV

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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.

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

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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16 Common Tax Filing Mistakes People Make

Most people who live and work in the U.S. need to file an annual tax return. Depending on your financial situation, your tax return may be simple or complex. If your tax return or financial situation is complicated, with many forms of income, deductions, or credits, you may end up making mistakes on your tax return. Even with a simple return, it’s possible that you might make a mistake that could cause the Internal Revenue Service (IRS) to impose fees, interest, or additional payments.

What follows are 15 of the most common tax filing mistakes — and how to avoid making them.

How Common Are Mistakes on Tax Returns?

The IRS does not release detailed statistics about how common mistakes on tax returns are, but they do say that mistakes are much more common when filing paper returns. The agency suggests that taxpayers use software to prepare their returns or work with a reputable tax preparer. This can help eliminate some of the common mistakes that occur with tax returns.

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Does the IRS Care About Small Mistakes?

Yes, the IRS definitely cares about small mistakes on tax returns, though the penalties may not be as large as they are for substantial mistakes. The IRS potentially levies two different kinds of accuracy-related penalties:

•   Negligence or disregard of the rules or regulations penalty

•   Substantial understatement of income tax penalty

In cases of negligence or disregard of the rules or regulations, the penalty is 20% of the amount that was underpaid due to negligence or disregard. For a substantial understatement, the penalty is 20% of the amount that was underpaid due to the understatement on the return.

These potential penalties are on top of still having to pay the tax that you owe.

Recommended: How to File Taxes for Beginners

16 Common Tax Mistakes

Here are a few of the most common tax mistakes.

1. Not Filing Your Taxes on Time

Each year, the IRS sets the deadline for filing your federal income tax return. This date is usually April 15, though it can be extended sometimes if April 15 falls on a weekend or holiday. Not postmarking or e-filing your return by the tax filing deadline can lead to a penalty.

2. Not Putting in the Right Social Security Number

The IRS uses Social Security numbers to match up information it receives from you with information it receives about you from your employer, bank, and other entities. Messing up even a single digit in your Social Security number will disrupt this process and could cause the IRS to reject your return.

Be sure to enter your Social Security number exactly as it is shown on your Social Security card. Do the same with your spouse and anyone else listed on your tax return.

Recommended: Guide to Understanding Your Taxes

3. Not Filing Your Taxes at All

Generally, most people who work in the U.S. and have income over the filing threshold are required to file an annual income tax return. The penalty for not filing is 5% of the unpaid taxes for each month that a tax return is late, not to exceed 25% of your unpaid taxes.

4. Filing Too Early

While you don’t want to file your taxes too late (after the deadline), you also don’t want to file them too early. You want to make sure that you have received all the W-2, 1099, and other tax forms that are due to you. If you get additional forms after you’ve already filed your taxes, you may need to file an amended return.

5. Inputting the Wrong Bank Information

The IRS encourages people to e-file and choose to have their refund sent via direct deposit. But if you put in the wrong bank routing and account information when filing your tax return, you may delay your refund.

6. Incorrect Information

It’s not only your bank account and routing information that needs to be correct — you need to make sure that all of your other numbers and details are correct. This includes any information from your W-2 or 1099 forms you manually input into your tax return. Using software or a reputable tax preparer can help to minimize the chances you enter incorrect information.

7. Missing Information

If you have more than one bank account and/or a number of investment accounts, you may forget to report income (or losses) from one, or more, of these financial accounts. This is an immediate red flag to the IRS. Keeping track of all your financial paperwork throughout the year can help avoid this problem.

8. Forgetting to Sign the Forms

The IRS says that your return is not valid unless it is signed. If you file a paper return, you (and your spouse, if you’re filing a joint return) must sign the return. E-filed returns can be signed electronically by selecting an electronic PIN.

Recommended: The Fastest Ways to Get Your Tax Refund

9. Forgetting Important Paperwork

If you are working with a tax preparer, make sure to bring, or electronically send, all of your tax-related paperwork. This includes all income statements (such as W-2s and 1099s) and all tax deduction documents (such as Form 1098 for mortgage interest and Form 1098-T for college tuition paid). This will help prevent errors stemming from missing information.

10. Not Taking Advantage of Tax Breaks

You are legally allowed but not required to take any tax deductions or tax credits that you are eligible for. The IRS generally does not care if you pay more tax than necessary. But not taking advantage of tax breaks you’re eligible for can cost you money.

11. Writing the Check to the Wrong Entity

If you owe money to Uncle Sam, be sure to make the check out to the U.S. Treasury. If the check isn’t filled out correctly, the IRS likely won’t cash it. This can result in a late payment — and a penalty. Keep in mind that you can also pay any owed taxes online via IRS Direct Pay or use the electronic payment options in your tax software.

12. Math Errors

The IRS says that math errors are among the most common tax filing mistakes. This is especially true when filling out your tax return on paper, since tax software will generally do all the math for you.

13. Not Claiming All Streams of Your Income

Even if you are paid in cash or don’t receive a W-2 or 1099 form, you are legally required to report all income received in a tax year. Not claiming an income stream, even if it was part-time or “gig work,” may open you up to additional taxes, interest, and/or penalties.

14. Filing Your Taxes Under the Wrong Status

There are requirements that come with the different filing statuses that are available to you, and filing under the wrong status is a common tax filing mistake. For example, you can’t use the “head of household” status just because you make the most money in your family — this tax filing status is only for unmarried people who have to support others. If you’re married, you have a choice of two different types of filing status, and one will likely be more advantageous to you than the other.

15. Not Getting Help When You Need It

If you have a relatively simple tax return, you may feel comfortable filing your tax return on your own. But as your taxes get more complicated, it may make sense to work with a reputable tax professional. Not getting help when you need it may end up costing you a significant amount of money.

💡 Quick Tip: Are you paying pointless bank fees? Open a checking account with no account fees and avoid monthly charges (and likely earn a higher rate, too).

16. Name/Misspelling Errors

Our final tax filing mistake that is common is, yes, name spelling errors. Make sure that you are checking and double checking all of the names entered into your tax return. Misspelling a name may cause the processing of your return to be delayed.

Tips on Avoiding Tax Mistakes

If you’re looking to avoid tax mistakes, here are a few things to keep in mind:

•   Consider using tax software that can do the math for you and automatically select the right forms for your situation.

•   If your financial situation becomes even more complicated, consider working with a tax professional.

•   Include all the information and tax documents you’ve received from all sources.

•   Make sure to wait to file until you’ve received all your documents, but early enough that you don’t go past the April filing deadline.

The Takeaway

In life, mistakes happen. However, you generally want to avoid them when you’re filling your tax return. Even a small misstep could hold up your return, delay any refund, and lead to interest and penalties. It’s wise to take time to understand your taxes or rely on a tax professional for help. Getting it right the first time around can help you save time — and money.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with 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.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

Does the IRS penalize you for tax filing mistakes?

The Internal Revenue Service (IRS) charges penalties for certain — though not all — tax filing mistakes. Mistakes that can lead to penalties include:

•   Not filing your return and paying your tax by the due date

•   Failure to pay proper estimated tax

•   Substantially understating your tax liability

•   Understating a reportable transaction

•   Filing an erroneous claim for a refund or credit

Even if you don’t get hit with a penalty, you may still get an unexpected (and unwelcome) tax bill, either right away or possible years later.

How often does the IRS make mistakes with tax returns?

The IRS does not release statistics about how often they make mistakes, but it is almost certainly less often than taxpayers make mistakes. If you think that the IRS has made a mistake when processing your return, you can either contact the IRS directly or work with a reputable tax professional to rectify the situation.

How do I know if I filed my taxes right?

The IRS generally will accept your tax return within a few days. This means they’ve received it and scanned it for basic errors, like missing information or major red flags.

Once your return is accepted, the agency will begin a more detailed process of examining your return — they’ll check your income reports, verify the deductions and credits you’ve claimed, and ensure everything aligns with the tax laws.

If you’re due a refund, the IRS will approve it once they are satisfied your return is accurate. Typically, you can expect a refund within 21 days after you’ve e-filed.

Keep in mind, though, that the IRS has three years from the date you filed your return (or April 15, whichever is later) to perform an audit and potentially charge you additional taxes. That’s why it’s a good idea to keep your tax records around for at least three years.


Photo credit: iStock/kynesher

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.


SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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Our account fee policy is subject to change at any time.
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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Fee or No Fee? How to Figure Out Which Loan Option Saves You the Most

Personal loans are useful tools because you can use them for just about anything. From covering emergency car repairs to paying for home renovations to consolidating high-interest credit card debt, personal loans can be a game-changer for your finances. But, as with any kind of loan, personal loans typically come with fees.

But are loan fees bad? Not always. In fact, you may be able to secure a lower interest rate on your personal loan by paying a fee upfront — which will save you money in the long run.

Here, you’ll learn about personal loan options and the impact each can make on your finances so you can decide what suits you best.

Personal Loan Origination Fees, Explained

Personal loan origination fees serve as startup costs for initiating a loan. These are one-time fees that lenders charge to cover costs such as applications and underwriting. These fees often range from 1% to 6% but may go as high as 10%.

Not every personal loan has an origination fee, however. Often, borrowers with an excellent credit score can qualify for personal loans without fees (or at least much lower fees).

Some lenders make origination fees optional. At first glance, this might seem like a no-brainer. You might think, “Why should I pay a loan fee if I don’t have to?” But often, lenders may offer you a lower interest rate if you pay an origination fee upfront. This can save you money in the long run.

•   A smart strategy: Look at the loan annual percentage rate (APR), which represents the true cost of the loan. The origination fee and interest rate are both bundled into this rate. This makes it easier to compare loans with and without origination fees to determine which is actually the better deal.



💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.

Personal Loan Origination Fee Example

To see how an origination fee affects your loan, here’s an example — one loan with an origination fee and one without.

In this scenario, your personal loan terms are as follows:

•   Amount borrowed: $50,000

•   Interest rate: 10%

•   Loan term: 5 years

With an origination fee of 0%, you’d pay a total of $63,741.13 over the next 60 months, which is the term of the loan.

But what if there’s a 5% origination fee? You’ll still pay $63,741.13, but you’ll either pay $2,500 out of pocket upfront or have $2,500 deducted from the loan amount — borrowing only $47,500.

But remember, some lenders may offer you a lower interest rate in exchange for paying an origination fee. In this instance, in the scenario above, the lender may drop the interest rate from 10% to 7%. In that case, your total loan would look like:

•   Amount borrowed: $50,000

•   Interest rate: 7%

•   Loan term: 5 years

The total payments over 60 months would be $59,403.60, or $4,337.53 less by paying the $2,500 origination fee. So that equals a savings of $1,837.53 once you deduct the fee. In this way, you can see why the answer to “Are loan fees bad?” may be “Not necessarily.”

Recommended: Personal Loan Terminology

How Are Loan Fees Determined?

Lenders consider a number of factors when calculating origination fees for personal loans, including:

•   Credit score: Unsurprisingly, your credit score plays a big role in determining your origination fee. Lenders see borrowers with strong credit as less of a risk, so fees are generally lower.

•   Debt-to-income ratio: The amount of debt you have compared to the amount of money you make is your debt-to-income ratio (DTI). This helps lenders determine how capable you are of meeting your monthly loan repayment commitment. The higher your DTI, the larger risk you are perceived to be — and that may be reflected in your origination fees.

•   Cosigner: Even if your credit isn’t in great shape, you can still potentially lower your origination fee (and interest rate) by having a cosigner with stronger credit.

•   Loan details: The amount you’re borrowing and the length of the loan can also impact personal loan origination fees.



💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

How Are Loan Fees Paid?

If you choose a personal loan with an origination fee, you usually pay in one of two ways:

Taken Out of the Funds You Receive

In this scenario, you pay the whole amount of the origination fee at the start of the loan. Rather than dig in your pockets to come up with the cash, it’s usually subtracted from the amount you borrow.

For instance, if you borrow $20,000 and there’s a 5% origination fee, you’d owe $1,000. Lenders will typically instead give you $19,000, because they’ve taken the fee out of the funds they are lending you. However, you’ll have to pay back the full $20,000, plus interest.

Keep this in mind when taking out the loan. If you need the full $20,000, you should actually request a slightly larger loan so that, after the origination fee, you walk away with $20K.

Note: In some instances, a lender may require an out-of-pocket payment for the origination fee.

Rolled Into the Loan

Alternatively, lenders may simply roll the origination fee into the loan. In the example above, you’d receive $20,000 at the start of the loan, but with a 5% origination fee built into the loan, the personal loan principal (the amount you have to pay back) is $21,000.

Recommended: Where to Get a Personal Loan

How to Compare Loan Terms

No matter what you plan to use a personal loan for, it’s wise to comparison-shop carefully. Simply because one loan comes with an origination fee and another one doesn’t, that doesn’t mean you should go with the fee-free option. In fact, in the long run, a personal loan with an origination fee could be cheaper. Here’s how to find the best personal loan offer for you:

1. Shop Around

First and foremost, it’s a good idea to get quotes from multiple lenders. Most lenders allow you to get prequalified online, without impacting your credit score. Having a handful of offers allows you to weigh your options and make an informed decision.

2. Compare APRs

It can be tempting to see that one loan has a high origination fee, one has a moderate fee, and one has no fee at all — and simply choose the loan without the fee. However, origination fees are a part of a loan’s APR, which also includes the interest rate and gives you a better idea of the true cost of the loan.

To truly compare apples to apples, focusing on APR is your best bet.

3. Think about Loan Length

Shorter loan terms tend to have lower interest rates, but because you’re paying off the loan in a shorter amount of time, monthly payments will be higher. Conversely, you may find a lower monthly payment with an extended term, but then you’ll likely be paying more interest over the life of the loan.

It’s a good idea to play around with each loan you’re considering to see how various loan lengths will affect your monthly payments and the total amount you’ll spend over the life of the loan.

Other Types of Loan Fees

Origination fees may be the most common type of personal loan fee we consider, but there are other fees to review in the terms and conditions from a lender before signing on the dotted line. These fees may include:

•   Prepayment penalties: Some lenders charge you for paying off the loan early. Why? When you pay it off early, the lender makes less money from interest, so it’s in their best interest to keep the loan active as long as possible. Many lenders, however, do not charge prepayment penalties, so shop around.

•   Late fees: You have a monthly obligation to make your fixed payment on a personal loan. Just as with credit cards and student loans, you may be charged a late fee if you miss your payment date.

•   Monthly service fee: Some lenders charge a service or payment processing fee, depending on how you pay each month.

The Takeaway

While the thought of paying fees on top of interest when borrowing money can be overwhelming, personal loan origination fees aren’t always a bad thing. In fact, many lenders with origination fees can offer you lower interest rates, meaning you may spend less money in the long run by choosing a personal loan with an origination fee. Experts suggest comparing multiple loans and their APRs, which reflect the total cost of the loan, to get a better idea of the right loan for you. That can help you answer the question, “Should I pay a loan fee?” by focusing on the big-picture cost of your loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.


SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.


Photo credit: iStock/milorad kravic

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.


Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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

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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Are There Loans for 18-Year-Olds With No Credit History?

If you’re an 18-year-old with no credit history, you can get a loan, but your choices may be more limited. You may have to tap into alternative options and sources, such as loans with a cosigner.

That’s because lenders like to lend to people with a history of borrowing and on-time payments. Oftentimes, young people just starting out have no credit history. This means they have no credit accounts in their name or haven’t used credit for a long period of time and the information has been removed from their credit history. Without credit, it can be difficult to access loans or credit cards, rent an apartment or buy a house, and obtain certain subscriptions.

Let’s take a closer look at loans for 18-year-olds.

Benefits of Loans for 18-Year-Olds

Two important benefits of getting a loan as an 18-year-old include gaining access to funds and building up credit history.

Access to Funds

The obvious benefit of getting loans as a young person is that you will have access to the money you need. Depending on the type of loan you get, you may be able to use the funds for a variety of purposes, including:

•   Education

•   Purchasing big-ticket items, such as a car

•   Personal expenses, such as medical or wedding expenses

Build Up Your Credit History

Loans allow you to start building up your credit history, which can help you meet goals such as:

•   Getting a cellphone

•   Accessing utilities in your name

•   Qualifying for a credit card

•   Getting good rates on insurance, a mortgage, or auto loan

Plus, establishing a strong record of borrowing and repayment can position you well for future borrowing.



💡 Quick Tip: Need help covering the cost of a wedding, honeymoon, or new baby? A SoFi personal loan can help you fund major life events — without the high interest rates of credit cards.

Cons of Loans for 18-Year-Olds

While there are benefits to getting a loan when you’re 18, there are downsides to consider as well. Let’s take a closer look at a few.

Limited Loan Amounts

You may not be able to borrow a large loan amount when you’re young and just starting out. For example, if you want to purchase a $500,000 home as an 18-year-old and have no credit history, you’ll likely have difficulty qualifying for this type of loan.

Potentially High Rates

It’s possible to get a loan with no credit as a young person, but lenders may charge a higher interest rate than if you had an established credit history.

Why is that the case? Lenders try to assess your risk level when you apply for anything from a personal loan to a credit card. If they can’t see evidence that you have successfully made loan payments, they may not grant you a loan or they may compensate for that risk by charging you a higher interest rate.

Some lenders consider other aspects of your profile beyond credit history, including whether you can comfortably afford your payments.

Risk of Getting Into Debt

According to a consumer debt study conducted by Experian, Generation Z (those aged 18-26) had a non-mortgage debt average of $15,105 in 2023. This includes credit cards, auto debt, personal loans, or student loans.

While carrying any level of debt can be stressful, there are also financial implications to consider. For starters, if you don’t pay off your balance in a timely way, interest can start to build. Credit cards tend to carry higher interest rates than home or auto loans. This means wiping out credit card debt could take a long time if you only pay the minimum amount.

Then there are potential penalties to be mindful of, such as late fees. You may also face collection costs if you don’t pay your bills, which will remain on your credit report and potentially impact your credit score for years.

Recommended: Why Do People Choose a Joint Personal Loan?

Is a Co-Signer Required When Applying for Loans as an 18-Year-Old?

Not all lenders require a cosigner, so be sure to ask if you’ll need one. In most cases, a loan without a cosigner will likely have a lower loan amount and a higher interest rate.

What exactly is a cosigner? Simply put, it’s a person who agrees to take responsibility for a loan alongside the primary borrower. If one person fails to make payments, it will affect the other person’s credit score.

Applying for a loan with a co-borrower or cosigner can be a quick way to get accepted for a loan.

Understanding Your Loan Status

Like many financial processes, applying for a loan involves multiple steps. Here’s a general idea of what’s involved:

•   Pre-approval: Pre-approval means that your lender takes a look at your qualifications (including a soft credit check). A soft credit check is an inquiry of your credit report.

•   Application: In this part of the process, you submit a formal application, and your lender will verify your information.

•   Conditional approval: You may also get conditional approval for your loan, which means the lender may likely approve you to get a loan as long as you meet all the requirements.

•   Approval or denial: Finally, you’ll either get approved or denied for the loan.

Your lender should be clear with you at every step of the application process.

Recommended: How to Get Approved for a Personal Loan

Private Lender Loan Requirements for 18-Year-Olds

There are no hard-and-fast requirements that encompass private lender requirements. However, lenders generally look at an applicant’s credit score, debt, and income.

Credit Score

There’s no universally set minimum credit score requirement for a loan because rules can vary by lender. It’s worth noting that low-to-no-credit borrowers may be able to access a loan.

Debt and Income

Lenders will check to see how much debt you have and calculate your debt-to-income (DTI) ratio, which ideally should be less than 36%. To figure out your DTI, lenders add up your debts and divide that amount by your gross income.

Lenders will also look at your income to ensure you can make monthly payments on your loan. This can include income from your job, a spouse’s income, self-employment, public assistance, investments, alimony, financial aid for school, insurance payments, and an allowance from family members.

Tips for Getting Loans as an 18-Year-Old

If you’re ready to get a loan as a young person, you can take steps to help boost your odds of getting approved.

Show Your Savings

Show the lender what you’ve saved in your accounts, which may include:

•   High-yield savings accounts

•   Certificates of deposit (CDs)

•   Money market account

•   Checking or savings accounts

•   Treasuries

•   Bonds, stocks, real estate, and other investments

Demonstrating savings can help you show that you can repay your loan.

Show Proof of Income

Lenders will likely require you to provide proof of income so they can see how you’ll pay for your loan. But remember, this doesn’t mean just the money you earn from a job. Consider other types of income you receive. For instance, you may not initially think of alimony as a source of income, but a lender might.

Apply for a Lower Amount

Lenders may deny your loan if you choose to borrow more money than you can realistically repay. So if you’re young and have no credit history, you may be able to increase your chances of getting a loan if you apply for a lower amount. You may also want to consider this strategy if you’re denied for a loan and want to reapply.



💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

The Takeaway

While most 18-year-olds don’t have a large income or lengthy credit history, that doesn’t mean you can’t qualify for a personal loan. Just remember that funding choices may be more restricted, and you might not qualify for a large amount. If you’re having trouble getting approved, you may want to consider asking someone to cosign the loan, showing proof of income and savings, or applying for less money.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.


SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Are there loans for 18-year-olds without a job?

You can get a loan without a job. However, you’ll need to show a lender that you have some form of consistent income, such as through investments, alimony, financial aid, or another source of cash flow.

Are there loans for 18-year-olds without credit?

Yes, loans do exist for 18-year-olds with no credit history. But note that even if you qualify for a loan without credit, it may be a lower amount than you could qualify for if you had a lengthy credit history. You may also not be able to get a low interest rate.

Can I get a loan as an 18-year-old?

Yes, 18-year-olds can get a loan. Your age matters less than your credit history and credit score — or the availability of a cosigner. Keep in mind that you may have trouble getting a loan if you don’t meet a lender’s qualifications. Contact a lender to learn more about your options.

How can I build credit as an 18-year-old?

If you want to start building credit, it may be worth exploring a secured credit card. Similar to a debit card, this type of credit card requires you to put down a cash deposit to insure any purchases you make. For example, putting down a $1,000 deposit, and that becomes your starting credit line on your card.


Photo credit: iStock/SeventyFour

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.


Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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.

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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