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5 Money Questions to Ask Before Marriage
Money may not be the most romantic topic of conversation for couples sampling wedding cake and planning honeymoon adventures, but the way a couple approaches it can be a strong predictor of a marriage’s long-term success. Several studies have actually found that money is a top cause of stress in relationships.
But finances don’t have to cause friction for you and your soon-to-be spouse. A survey conducted by MONEY Magazine found that individuals who trust their partner with finances reported feeling more secure and having fewer arguments. Learning how to talk about money before you get married can be key to developing that financial confidence in your own relationship.
How do I talk about money before getting married, you ask? As you prepare to tie the knot, consider these five money questions to ask before marriage:
1. Do we understand our debt, assets and expenses?
One helpful way to talk about money before marriage is to sit down as a couple and take inventory of all the debt and assets you’re each bringing into your long-term commitment. This includes everything from student loans and mortgages to savings and retirement accounts. You may also want to get into the nitty gritty of your salaries and monthly expenses. Putting all of the details into a spreadsheet or an app that helps you manage your money can allow you to see your full financial picture.
While using this exercise as a way to talk about money before marriage may feel like a lot of work, it will come in handy when it’s time to make financial decisions, such as deciding what percentage of your joint income should go toward building an emergency fund, saving for retirement and paying down debt, explains financial expert Ginita Wall, co-founder of the nonprofit Women’s Institute for Financial Education.
“If one person in the relationship is maxing out her 401(k) contributions but eventually learns her husband is putting nothing toward retirement, it could become an issue,” she says. “An open dialogue that ensures that there will be no surprises about money, or any other topics for that matter, is important for a great relationship.”
2. Will we have joint or separate bank accounts?
Another way to talk about money before marriage is to consider whether you want to combine bank accounts, keep them separate or do a combination of both. The decision depends on each person’s preferences and the needs of the couple.
Dr. Bonnie Eaker Weil, a relationship therapist based in New York City, believes that having one joint account, but also guilt-free separate accounts for spending, can be helpful for many couples.
Keeping a joint account, she says, can provide a clear window into a family’s complete financial situation so the couple can make financial decisions accordingly. “This demonstrates that the couple is working together toward long-term financial goals,” she says.
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The guilt-free separate accounts, on the other hand, give both individuals “freedom to make small purchases as needed,” Weil adds.
As you’re addressing this money question to ask before marriage, know that in some cases, couples could benefit from keeping their investments separate.
“If two people have wildly different investment styles,” Wall says, “they just might decide to invest their money in their own ways.”
3. How has money impacted our upbringing?
When deciding how to talk about money before you get married, consider having an open discussion about how your parents handled moneyâincluding what you think they did well and what they could have done betterâand how this has influenced your financial expectations and goals, Weil says. This is a valuable, but often overlooked, component of how to talk about money before you get married.
In many cases, an adult’s upbringing shapes his or her financial goals.
“If you grew up vacationing at the shore, chances are you might aspire to own a shore house as an adult,” Weil says. “This can become problematic if your spouse would much rather have a mountain house. Talk about where your goals originate from and then work toward making compromises.”
Individuals who trust their partner with finances reported feeling more secure and having fewer arguments.
4. How could our financial dynamic shift over time?
Your financial situation today may be significantly different from your financial situation tomorrow. While it’s impossible to predict exactly what the future holds for your finances and lifestyle, there are ways to talk about money before marriage to lay the groundwork for decisions you may ultimately face. If you plan to have children, for example, you may want to discuss how career and financial priorities may shift. Will both spouses maintain their working arrangements? Will someone pick up more work or scale back?
Weil says other money questions to ask before marriage that could impact your long-term financial plans include:
- Will you save for your children’s college education?
- Do you plan to take care of aging parents?
- How will you respond to family members who ask for financial support?
- What measures do you want to put in place for disability and life insurance?
- If there are children from a previous relationship, who will be responsible for their college or wedding expenses?
While the answers to these types of questions are personal and will vary from couple to couple, Weil says the most important rule is ensuring couples address them early on so there’s a clear understanding of how to handle each situation when it arises.
5. When will we sit down to regularly talk finances?
While determining how to talk about money before you get married is an important milestone, ongoing communication is necessary. Weil believes it’s constructive to have a weekly money dialogue, while other experts, like Wall, say sitting down for a casual money meeting once a month is a good rule of thumb.
Choose a meeting frequency that works for you and stay committed to your schedule. This signals to your partner that your finances are important and that you’re willing to set aside the time to talk about joint objectives, Wall says.
When it’s time to meet, run through any financial concerns that may have popped up since your last conversation, as well as any financial goals or factors that could have an impact on financial planning for young families.
When differences arise during these talks, Weil suggests trying to walk in the other person’s shoes to understand his or her perspective. Being mindful and polite, as well as listening, are among the best ways to talk about money before marriage and beyond.
“An open dialogue that ensures that there will be no surprises about money, or any other topics for that matter, is important for a great relationship.”
Why talk money before saying ‘I do’
Money can carry a lot of emotions, and Wall says that a lot of financial arguments aren’t actually about money.
“It’s often about equality, being respected, being listened to or being loved,” she says.
If the same types of arguments seem to resurface, it could indicate underlying issues about power and cooperation that couples should handle together, Wall explains.
While every marriage is bound to have some financial conflict now and then, starting a partnership off with these money questions to ask before marriage could help you get off on the right foot. Learning how to talk about money before you get married can also help align your financial hopes and dreams for your happily ever after.
The post 5 Money Questions to Ask Before Marriage appeared first on Discover Bank – Banking Topics Blog.
Source: discover.com
Relationships Archives – Money Crashers
Source: moneycrashers.com
How to Choose the Best Healthcare Plan for Your Budget
Healthcare expenses can take a huge chunk out of any familyâs budget so I want to break down how a family can weigh the pros and cons of a traditional health plan vs a high deductible one.
Health Insurance Getting Too Expensive
If I asked you whatâs are your biggest expenses each month, what would you say? If youâre like most families, youâd probably mention rent (or mortgage), food, or transportation. And yes, those are huge expenses for the typical family.
However, one of the largest can be healthcare. The crazy thing is how much it can drain from your budget even if youâre a relatively healthy family.
We found out firsthand a few years ago when my husbandâs employer had open enrollment. Each year we review the health insurance options and it seemed to us that the costs kept rising. After having kids, we went with the âbasicâ family plan and the monthly premiums still rose pretty fast. Finally, we hit our limit.
With the latest update, our monthly premiums would pretty much be the same as our mortgage. Considering we only visit the doctors for the girlsâ annual well visits, we knew we needed to change things up. We know weâre not the only family dealing with this.
Right now for a family of four, the average monthly premium paid is $833 or $9,996 annually. Add in the costs of the average deductible and you can see what a huge chunk of money health insurance can be.
However, this year when you get ready to review your options during open-enrollment, you may want to look into whether a high deductible health plan is a practical and affordable solution for your family.
How High Deductible Health Plans Work
As the name suggests, a High Deductible Health Plan (HDHP) comes with a larger deductible than a typical health insurance plan. The appeal for employers and insurance companies to offer this is that youâre taking on more financial responsibility for your health care costs.
The upside for you is that you should see a drop in the monthly premiums. For us, we saw a difference of a few hundred dollars for each month for premiums. Using a $300/month in savings, thatâs like an extra $3,600/year that can be used for other financial goals that you may have.
Huge Tax Wins with a Health Savings Accounts
Another reason why a high deductible plan may be appealing for families is the ability to have a Health Savings Account (HSA). Itâs an extremely tax-advantaged account that you can use to pay for medical expenses.
If this sounds familiar, it may be because youâve heard of or used a Flexible Spending Account (FSA). Thatâs whatâs typically offered with the âmore standardâ health plans. Basically you put money in there before taxes.
We used an FSA for years and it helped us to pay for regular expenses like my glasses and contacts. The problem was making sure we calculated enough to go into the account because if we didnât use it by the end of the year, weâd lose it.
With a Health Savings Account, however, whatever you donât use you keep. It can then grow in the account over the years. After saving enough to cover things like the deductible, you may decide to invest a portion to improve growth over the long term.
Making it even better is the fact that your HSA contributions are tax-deductible. Depending on your employer, they may also offer contributions to your HSA. Thatâs a fantastic bonus!
What really sweetens the deal is that families can contribute up to $6,900 each year, that money grows tax-free, and if we use the money for qualified medical expenses, what we pull out is tax-free.
Sounds amazing, right?
Itâs enough to make you want to jump in and switch right now, but a high deductible and HSA may not be the best solution for your family.
The Pros and Cons of High Deductible Health Plans
A high deductible plan sounds great, but there are some costs to consider. With the higher deductible, you need to be aware of what your typical annual expenses would be to make sure youâre coming out ahead.
For example, if you have chronic health issues that require regular visits and perhaps medication, then youâd be paying a lot of money upfront before you hit your deductible and have your insurance cover their portion.
One way you can review your expenses is by using Mint to pull the numbers quickly. You can then easily see how much youâve paid out of pocket.
When we looked at a few years of expenses, it confirmed that our visits were pretty much limited to annual well-visits (which are covered by HDHP plans), meaning we can save a significant amount of money.
When I spoke to a certified financial planner about what families need to consider, he pointed out families should also be aware of their out of pocket maximums with the plan they are looking into.
You want to have enough stashed away (either with your general savings or with your HSA) to cover those expenses.
A relative of mine recently had a procedure done. Even with insurance, her portion came out to be $3,000!
Thankfully she has some savings she can tap into, but still, thatâs quite a bit of money.
So please run the numbers to make sure you could absorb a medical problem, especially during that first year of switching plans.
Choose the Best Plan for Your Family
So after weighing the costs and benefits, took the leap and switched over to a high deductible health plan and opened an HSA. Years later, we feel it was the best decision for our situation.
I hope you now have a better understanding of your options when it comes to health insurance. Having that knowledge can assist you in making the best decision for your family and finances.
Iâd love to hear from you – what plan are using now? Do you have any plans on switching?
The post How to Choose the Best Healthcare Plan for Your Budget appeared first on MintLife Blog.
Source: mint.intuit.com
4 Smart Things to Do When You Get an Inheritance
You just learned of the passing of a loved one. During this stressful and emotionally taxing time, you also find out that you’re receiving an inheritance. While you’re grateful for the unexpected windfall, knowing what to do with an inheritance can bring its own share of stress.
While the amounts vary greatly, the Federal Reserve Board’s Survey of Consumer Finances reports that an average of roughly 1.7 million households receive an inheritance each year. First words of wisdomâresist the urge to spend it all at once. According to a study funded by the Bureau of Labor Statistics, one-third of people who receive an inheritance spend all of itâand even dip into other savingsâin the first two years.
Not me, you say? Still, you might be asking, “What should I do with my inheritance money?” Follow these four steps to help you make smart decisions with your newfound wealth:
1. Take time to grieve your loss
Deciding what to do with an inheritance can bring with it mixed emotions: a sense of reprieve for this unexpected financial gain and sadness for the loss of a loved one, says Robert Pagliarini, certified financial planner and president of Pacifica Wealth Advisors.
During this time, you might feel confused, upset and overwhelmed. âA large inheritance that pushes you out of your financial comfort zone can create anxiety about how to best manage the money,” Pagliarini says. As an inheritor, Pagliarini adds that you may feel the need to be extra careful with the funds; even though you know it is your money, it could feel borrowed.
The last thing you want to do when deciding what to do with an inheritance is make financial decisions under an emotional haze. Avoid making any drastic moves right away, such as quitting your job or selling your home. Some experts suggest giving yourself a six-month buffer before using any of your inheritance, using the time instead to develop a financial plan. While you are thinking about things to do with an inheritance, you can park any funds in a high-yield savings account or certificate of deposit.
âA large inheritance that pushes you out of your financial comfort zone can create anxiety about how to best manage the money.â
2. Know what you’re inheriting
Before you determine the things to do with an inheritance, you need to know what you’re getting. Certified financial planner and wealth manager Alex Caswell says how you use your inheritance will largely depend on its source. Typically, Caswell says an inheritance will come in the form of assets from one of three places:
- Real estate, such as a house or property. As Caswell explains, if you receive assets from real estate, you will transfer them into your name. As the inheritor, you can choose what to do with the assetsâtypically sell, rent or live in them.
- A trust account, a legal arrangement through which funds are held by a third party (the trustee) for the benefit of another party (the beneficiary), which may be an individual or a group. The creator of the trust is known as a grantor. âIf someone inherits assets through a trust, the trust documents will stipulate how these assets will be distributed and who ultimately decides how they are to be invested,” Caswell says. In some cases, the assets get distributed outright to you; in other instances, the trust stays intact and you get paid in installments.
- A retirement account, such as an IRA, Roth IRA or 401(k). These accounts can be distributed in one lump sum, however, there may be requirements related to the amount of a distribution and the cadence of distributions.
When considering things to do with an inheritance, know that inherited assets can be designated as Transfer on Death (TOD) or beneficiary deeds (in the case of real estate), which means the assets can be transferred to beneficiaries without the often lengthy probate process. An individual may also bequeath cash or valuables, like jewelry or family heirlooms, as well as life insurance or stock certificates.
Caswell says if your inheritance comes in the form of investment assets, such as stocks or mutual funds, you’ll want to think of them as part of your own financial picture. âAll too often, we see individuals end up treating inherited assets as a living extension of their passed relative,” Caswell says. Consider how the investments can be used to support your financial goals when thinking about things to do when you get an inheritance.
An average of roughly 1.7 million households receive an inheritance each year.
3. Plan what to do with your financial gain
Just like doing your household budgeting, it’s important to “assign” your inheritance to specific purposes or goals, says Pacifica Wealth Advisors’ Pagliarini. Depending on your financial situation, the simple concepts of save, spend and give may be a good place to start when deciding on things to do when you get an inheritance:
SAVE:
- Bolster your emergency fund: You should have at least three to six months of living expenses saved up to avoid unexpected financial shocks, such as job loss, car repairs or medical expenses. If you don’t and you’re deciding what things to do with an inheritance, consider parking some cash in this bucket.
- Save for big goals: Now could be a good time to boost your long-term savings goals and pay it forward. Things to do when you get an inheritance could include putting money toward a child’s college fund or getting your retirement savings on track.
SPEND:
- Tackle debt: If you’re evaluating what to do with an inheritance, high-interest debt is something you could consider paying off. Spending on debt repayment can help you save on hefty interest charges.
- Reduce or pay off your mortgage: Getting closer to paying off your homeâor paying it off entirelyâcan also save you in interest and significantly lower your monthly expenses. Allocating cash here is a win-win.
- Enjoy a little bit of it: It’s okay to use a portion of your inheritance on something you enjoy or find rewarding. Planning a vacation, investing in more education or paying for a big purchase could be good moves.
GIVE:
- Donate funds to charity: Thinking about your loved one’s causes or your own can continue legacy goals and provide tax benefits.
4. Don’t get tripped up on taxes
When deciding what to do with an inheritance, taxes will need to be considered. “It is extremely important to be aware of all tax ramifications of any decision around inherited assets,” Caswell says. You could be required to pay a capital gains tax if you sell the gift (like property) that was passed down to you, for example. Also, depending on where you live, your inherited money could be taxed. In addition to federal estate taxes, several U.S. states impose an inheritance tax and/or an estate tax.
Since every situation is unique and tax laws can change, when considering things to do with an inheritance, consult a financial advisor or tax professional for guidance.
Make your windfall count
Receiving an inheritance has the potential to change your financial picture for good. When thinking about the things to do when you get an inheritance, be sure to give yourself ample time to grieve and to understand all of your options. Don’t be afraid to lean on the experts to get up to speed on any tax and legal implications you need to consider.
Planning can go a long way toward making the right decisions concerning your newfound wealth. Being responsible with your inheritance not only helps ensure your financial future, but will also honor your loved one’s legacy.
The post 4 Smart Things to Do When You Get an Inheritance appeared first on Discover Bank – Banking Topics Blog.
Source: discover.com
Family & Home Archives – Money Crashers
Source: moneycrashers.com
Gratitude in a Difficult Year
This year took so many twists and turns we havenât been able to keep countâ often leaving us in complete overwhelm with a whirlwind of thoughts and emotions. Grief, anxiety, and sheer disappointment are just a handful that comes to mind when we reflect on the endless amount of curveballs life has thrown over the past year. Tragedy and loss plagued the entire world, leaving us speechless day after day. Despite the darkness that loomed for what seems like an eternity there has been an outpour of positives that we canât forget to remember. As 2020 quickly comes to a close, letâs take the time to decompress and reflect on the happier moments we were lucky enough to live through and witness. Even though Thanksgiving may look less traditional than previous years, we still can readily name some things that shift our hearts to a place of gratitude.
Family first
Letâs face it â the hustle and bustle of life impact our family and friends more than weâd like to admit. Competing schedules, conflicts, and not making enough time for those that matter are often reasons why we are unable to nurture the people we hold near and dear. Because of restrictions on travel and other entertainment, we were forced to become more creative with our time indoors; in turn, helping us to restore the meaning of family and work-life balance. Quite frankly, it allowed us to hit the pause button on everything that probably was unintentionally too high on the priority list in the past. Our families served as the safety net itâs supposed to be when the weight of the world (and social media) became overbearing with less than desirable news. We utilized technology to a new degree when scheduling virtual happy hours, catch up sessions with our loved ones, and birthday celebrations in other geographic areas. It made us truly appreciate the very thing we took for granted; all the people that make up our family tribe. Â
Curating and developing passions
2020 generated a newfound level of introspection, leaving our minds to really consider what it is that we really cherish the most. Whether it be career-related or new passion projects, this year made room for some much-needed self-reflection, making us reassess where our fulfillment really comes from. Leveraging books, social media outlets, and various streams of consuming knowledge-based information sent us on a path of rediscovery. Remember that âotherâ to-do list thatâs filled with the things you really donât want to do around the house? It even made that list appear fun-filled! Home improvement projects and DIY tasks were done with enjoyment while being budget-friendly. Adulthood can be full of things that arenât as exciting, but mustering up the courage to take ideas from ideation to execution served as a second wind. New business ventures and side hustles were birthed with unmatched creativity, a place many of us havenât been in quite some time. Existing businesses were able to thrive despite the unprecedented events occurring nationally. Funding was also provided to various business owners which granted many small businesses to increase their visibility while positively generating profit.Â
The importance of sustainment
There are a countless number of families that were impacted by job loss and/or unexpected expenses. It doesnât matter if things started off rocky financially â what matters most is youâre still standing. Getting caught up on bills, eliminating some debt and saving are all things to be very proud of. Temporary hardships donât have to turn into permanent problems. Creating a plan of action and sticking to it no matter what arises will always be rewarding. Celebrating the small wins should never be overlooked. Weâve all handled this year in different ways â but whatâs most important is discovering what works for you. Rule of thumb for those that are battling with the ânot enoughâ emotions: donât believe the hype. While there is a multitude of people accomplishing great things, there are also many imposters. Social media is a highlight reel, a virtual platform where people can share whatever information they choose, at their discretion. People are more likely to share their highs versus their lows, so be sure to keep in mind you may only be getting a small piece of the overall story. Donât look at someone elseâs life and fail to recognize what youâve done on your own. Financial progress, no matter how insignificant you may think it is â is still progress. We all make financial missteps and life has a way of making things very difficult that hit us where it really hurts. Keeping your head above water, remaining afloat, maintaining your health, and providing for your family should never be considered a small feat. Grant yourself some grace and reflect on the dedication it took for you to get (and stay) where you currently are.
Back to the basics
This year forced us to really hone in on what matters and prioritize accordingly. This applies to our lives, but most importantly our finances. Pulling back the curtain to really take a look and evaluate where money was going served as a constant reminder that we should be doing this more than the occasional once or twice a year. Itâs never too late (or too early) to create new money habits! Financial stability is essential â and maybe the cushion we imagined should be enough proved itself to be untrue. Our willingness to make changes at a faster rate to ensure the financial security of our families felt less painful and so much more intentional. The uncertainty of everything occurring allowed us to complain less while redefining comfort levels with our contingency plans.
No matter what has transpired this year, what are you most thankful for? As things come to mind be sure to jot them down. Reference them when your days seem laborious or when your feelings try to force you to reflect on things that arenât as positive. Itâs clear we donât know what the future holds, but we do know (and have been reintroduced) to the moments, things, and people that continually keep us hopeful and thankful â no matter what lies ahead.
The post Gratitude in a Difficult Year appeared first on MintLife Blog.
Source: mint.intuit.com