How to Stop Being Broke

How to Stop Being Broke.

If you're sick of being broke, it's time to take control of your finances! Whether you need to work on your spending habits, learn how to save, or find ways to earn more money, you can find a way to stop being broke. Follow these steps to start working towards financial freedom and better peace of mind.

Part 1 Getting into the Right Mindset.
1. Set goals. If you want to change your financial situation, you need to get specific about want you want to accomplish. Think about exactly what you want your finances to look like and what you can do to achieve those goals.
Setting short-term goals in addition to long-term goals can help keep you motivated by providing you with a sense of accomplishment.
Create a budget for non-essential items and hold yourself accountable for it each month. If you go over-budget one month, tell yourself that your budget for the next month is reduced as a result.
2. Stop comparing yourself to others. If you're spending beyond your means because you feel that you need to keep up with your friends or show others that you can afford a certain lifestyle, you're not doing yourself any favors. Stop worrying about what others can afford and think about how you can live within your means.
Stop equating your self-worth with your ability to buy things. This kind of thinking will make you extremely unhappy in the long run and will probably get you stuck in debt forever.
3. Track your expenses. To understand exactly where all your money is going, keep careful track of every dollar you spend. You can do this with a pen and paper or electronically if you use a card for everything, but make sure to account for everything. This simple habit will help you spend more wisely.
Try categorizing your expenses and adding them up on a monthly basis. For example, you could create categories for food, housing, transportation, utilities, insurance, entertainment, and clothing. Then calculate what percentage of your income you are spending on each category. You might realize that your expenses in some of these categories are way too high.
To understand how much you can afford to spend each day, subtract your fixed expenses from your monthly income and divide the remaining amount by 31.
4. Make a plan for getting out of debt. If you are broke because you have credit card debt, a car payment, or student loans, think about what you can do to pay off these debts faster.
Making even a few extra payments each year can help you pay off your debts much faster.
5. Start saving. This may seem impossible if you are always broke, but planning for the future will help you get out of this cycle. Start small by just putting $50 in an emergency fund each month.
Don't forget to save for retirement! Take advantage of the 401k offerings at your company or open an IRA account.

Part 2 Avoiding Money Traps.
1. Avoid lending to others. While you may want to help out your loved ones who are in need, you really shouldn't be lending money if you can't afford to pay your own bills.
2. Avoid payday loans. While they may seem like a good solution if you're strapped for cash, the interest rates are ridiculously high, so they will only get you further into debt.
3. Understand how much it will really cost. Before you take out any kind of loan or finance any purchase, be sure to calculate what your monthly payments will be, how long it will take you to repay the debt, and how much you will be paying in interest.
In some cases, paying interest may be worth it. For example, most people cannot afford to purchase a house without taking out a mortgage, but depending on the price of the house and the average cost of rent in your area, you might still be saving a significant amount of money by choosing to buy with a mortgage instead of renting.
Be especially wary of high interest rates for depreciating assets like vehicles. If you decide to sell your vehicle after you have owned it for several years, it may be worth less than what you owe on it. This can also happen with real estate when the market conditions are poor.
4. Avoid impulse buys. If you always have a plan for what you will buy, you will have a much easier time managing your finances.
If you have a hard time controlling your purchases when you go to the mall, try to avoid going to the mall at all.
Write out a list when you go shopping so you will always know exactly what you need to buy.
5. Use credit cards wisely. If you have a harder time keeping track of your expenses and sticking to your budget when you use a credit card, stop using it.
Paying with cash instead of a credit card will allow you to visualize how much of your available funds you are spending on a given purchase.
If you are able to stick to your budget when using a credit card, look for one that has no annual fee and will reward you with cash back or other incentives. Just make sure you always pay your bill on time or these incentives will not be worth the price you are paying in interest.

Part 3 Spending Less.
1. Assess your daily or weekly spending habits. Once you have a solid grasp on what you are spending your money on, you can start cutting out expensive habits.
2. Buy used items. You can save on everything from your next car to furnishings for your home by buying gently used items.
You can sometimes find really great clothes that have barely been worn at thrift shops for a fraction of the price.
3. Look for monthly expenses that can be cut. If you pay for monthly memberships or subscriptions, carefully assess how much they cost, how much you use them, and whether you could give them up.
Make sure you're not paying for services that you never use. For example, if you have premium cable channels that you never watch, you can cancel them without feeling like you are making any sacrifices. The same goes for your cell phone bill if you are paying for more data than you ever use.
4. Compare items or brands when shopping. If you're on a tight budget, you want to make sure you're always getting the best deal on absolutely everything. Take some time to compare prices for items you purchase regularly and for large purchases.
If you've had the same auto insurance carrier or cable company for a long time, there might be better deals out there, so be sure to comparison shop regularly.
Shopping for necessities online can be cheaper in some instances, but make sure you take shipping charges into account.
Use coupons to save some extra cash. Keep in mind that many retailers accept competitors' coupons.
5. Ask for a better deal. You can always ask your service providers for better deals, especially if you've been a loyal customer. The worst they can say is no.
Try this with your cable and internet providers, insurance companies, and cell phone carriers.
6. Spend less on entertainment or at restaurants. Whether it's dining out or going to amusement parks, entertainment can eat up a big chunk of your budget. Look for less expensive ways to have fun.
Learn to cook at home and keep the fridge well stocked with ingredients for things that you know you can cook from scratch when you come home late and don't have much time to whip up a grand meal.
Instead of going out to eat with friends, invite them over for a potluck.
7. Do more yourself. It may be convenient to use a laundry service or to have someone else shovel your driveway, but if you're physically capable of doing these things yourself. Think about the money you can save.
If you're not very handy, try to teach yourself to do more around the house. If you need a simple repair done, you may be able to watch a video online or take a class at a local home improvement store to learn how to do it yourself.
8. Save money on energy. Go green around the house to save money on your utility bills each month.
Sealing up air gaps can reduce your heating and cooling bills. If you own your home, investing in a properly insulated attic can make a huge difference.
Turning your heat down just a few degrees in the winter can make a big difference in your energy bills as well. A programmable thermostat will let you automate the temperature of your house so you won't spend money on heating the place to a comfortable level when you're not at home.
9. Avoid bank and credit card fees. Choose your bank and credit card providers wisely in order to avoid unnecessary fees.
Make sure to only use the ATM at your bank if you will get charged for using outside ATMs.
10. Aim to have a few no-spend days a month. After a while, it becomes a game: "How can I run my life today without writing anything down in my little blue book?" "How ingenious can I be to make do with the things, food, and resources I already have at my disposal?" See how often you can turn this into a habit.

Part 4 Earning More.
1. Get a better job. If spending less is just not enough, it may be time to get a better job that will allow you to make more money. Start by updating your resume, searching for listings online, and networking with other professionals in your field.
Don't forget to look for advancement opportunities within your company.
2. Do something else on the side. Using your skills to provide freelance or consulting services is a great way to earn additional income. If this won't work with your profession, get a part-time job or find creative ways to make some extra cash on the side.
You can make some extra money by performing jobs like mowing lawns, cleaning houses, or even walking dogs for people in your neighborhood.
3. Sell stuff you don't need. You probably have at least a few possessions that you no longer need or want, and you can turn those items into extra cash by selling them to people who do want them.
If you have lots of unwanted items, try having a yard sale.

Community Q&A.

Question : My family barely has any money. My dad has his own company, but it hasn't gotten any business in a long time. I have some money saved up, and I was think of leaving a little in my dad's wallet. What do you think?
Answer : Definitely do. Work as much as you can and give and much as you can. Also putting your family's money in a good, interest-bearing account can help a lot.

Tips.

To always have money in the bank to pay regular bills, add them up for the past year and divide by 52. Round up to the next 25, 50, or 100 dollars. Remember to add in quarterly or annual bills, too.
Buy clothes that can be used for several different occasions instead of only one-time events.
Use coupons on items whenever you can.
Start a Christmas Club account, but put in more than you expect to spend on gifts. The excess is great for a mini-vacation or special purchase.
Get a jar to collect your spare change. When it's full, take it to the bank. (Don't take it to one of those coin counters, as they charge for counting your change.)
Take it a day at a time. Start small, set goals, reward yourself (not with any type of shopping, of course) and enjoy playing the game.

July 02, 2020

How to Manage Your Money as a Newly Married Couple.

How to Manage Your Money as a Newly Married Couple.

Getting married is an exciting first stride into a new era of adulthood. What was one ‘you’ and ‘I’ now becomes ‘we’ and there is just so much to plan for the rest of your lives. It’s essential to see your life together as a partnership where you and your spouse will work together to overcome obstacles and achieve happiness for the years to come.



Steps.

1. Realize why financial matters are going to change. First of all, congratulations on this big step! Getting married is an exciting first stride into a new era of adulthood. What was one ‘you’ and ‘I’ now becomes ‘we’ and there is just so much to plan for the rest of your lives.

It’s essential to see your life together as a partnership where you and your spouse will work together to overcome obstacles and achieve happiness for the years to come. One of the most important factors most of newlywed couples will have to deal with is how to go about handling the finances after getting married.

2. Talk about your finances. If you haven’t yet discussed on how to manage your finances before the wedding, now is the best time to do so.

Don’t forget to make a list of all your incomes, debts and assets including loans and credit cards. This will help you out in comparing your spending habits and decide where you and your spouse’s priorities lie.

3. Get insurance coverage. There can’t be enough stress on the fact as to how important an insurance plan can be. They not only cover you financially, but also prove a savior at critical emergency situations. You may want life insurance to help repay the mortgage and take care of your children, should one of you die unexpectedly. Choose an insurance plan with low premiums for high coverage benefits.

What could be worse than any one of you suffering from critical health problem? Be sure you and your spouse are covered at all times with an insurance plan that takes care of your health especially if any one of you is working for hours that involves travelling for long durations.

4. Set common objectives. Whether its buying a car, renovating your home or even saving for your to-be child’s future, set the goals both of you would like to achieve together. Now try figuring out what you can realistically afford and start making disciplined savings. Also consider looking into making deposits in your savings account to keep you on track.

5. Avoid overspending. Keep track of every penny you and your partner spends. It’s easy to believe that two people who live together can live on a low budget too. Combining all the household incomes and expenses can help you save lots of money for your necessary expenses.

Image titled Manage Your Money as a Newly Married Couple Step 6

6. Avoid debts. Nothing can be more damaging than living on an overburdened debt. Taking mandatory debt like car loans, etc. is one thing but compiling credit card debt or personal loans can turn problematic for both of you. Ensure you will be able to pay for all your unsecured debts without jeopardising your savings.

7. Be smart about a shared bank account. Opening up a joint bank account would be ideal if you have common goals. But in a case where you would each one of you handle your own expenses, then it would be best to open up separate accounts. But be aware and honest as to where your money is being spent.



Question : What can I do if my wife thinks that I should be responsible for her, causing a financial stress leading to a dent in the relationship? As always, I am blamed for it.

Answer : If I think one thing and you think another, then just because your opinion is different than mine doesn't mean you're wrong. And neither is your wife. If her opinion is that you pay for everything, then that is a valid opinion. You don't have to agree with it, but she's not necessarily wrong. It's a negotiation. List your expenses and list your incomes, negotiate who pays what until you both agree. If you disagree with her point of view that "husband pays all", then you must negotiate - and she must compromise too - until you reach an agreement, any agreement, that you can both agree to.

February 25, 2020

how to manage your money as a newly married couple

How to Manage Your Money as a Newly Married Couple.

Getting married is an exciting first stride into a new era of adulthood. What was one ‘you’ and ‘I’ now becomes ‘we’ and there is just so much to plan for the rest of your lives. It’s essential to see your life together as a partnership where you and your spouse will work together to overcome obstacles and achieve happiness for the years to come.



Steps.

1. Realize why financial matters are going to change. First of all, congratulations on this big step! Getting married is an exciting first stride into a new era of adulthood. What was one ‘you’ and ‘I’ now becomes ‘we’ and there is just so much to plan for the rest of your lives.

It’s essential to see your life together as a partnership where you and your spouse will work together to overcome obstacles and achieve happiness for the years to come. One of the most important factors most of newlywed couples will have to deal with is how to go about handling the finances after getting married.

2. Talk about your finances. If you haven’t yet discussed on how to manage your finances before the wedding, now is the best time to do so.

Don’t forget to make a list of all your incomes, debts and assets including loans and credit cards. This will help you out in comparing your spending habits and decide where you and your spouse’s priorities lie.

3. Get insurance coverage. There can’t be enough stress on the fact as to how important an insurance plan can be. They not only cover you financially, but also prove a savior at critical emergency situations. You may want life insurance to help repay the mortgage and take care of your children, should one of you die unexpectedly. Choose an insurance plan with low premiums for high coverage benefits.

What could be worse than any one of you suffering from critical health problem? Be sure you and your spouse are covered at all times with an insurance plan that takes care of your health especially if any one of you is working for hours that involves travelling for long durations.

4. Set common objectives. Whether its buying a car, renovating your home or even saving for your to-be child’s future, set the goals both of you would like to achieve together. Now try figuring out what you can realistically afford and start making disciplined savings. Also consider looking into making deposits in your savings account to keep you on track.

5. Avoid overspending. Keep track of every penny you and your partner spends. It’s easy to believe that two people who live together can live on a low budget too. Combining all the household incomes and expenses can help you save lots of money for your necessary expenses.

Image titled Manage Your Money as a Newly Married Couple Step 6

6. Avoid debts. Nothing can be more damaging than living on an overburdened debt. Taking mandatory debt like car loans, etc. is one thing but compiling credit card debt or personal loans can turn problematic for both of you. Ensure you will be able to pay for all your unsecured debts without jeopardising your savings.

7. Be smart about a shared bank account. Opening up a joint bank account would be ideal if you have common goals. But in a case where you would each one of you handle your own expenses, then it would be best to open up separate accounts. But be aware and honest as to where your money is being spent.



Question : What can I do if my wife thinks that I should be responsible for her, causing a financial stress leading to a dent in the relationship? As always, I am blamed for it.

Answer : If I think one thing and you think another, then just because your opinion is different than mine doesn't mean you're wrong. And neither is your wife. If her opinion is that you pay for everything, then that is a valid opinion. You don't have to agree with it, but she's not necessarily wrong. It's a negotiation. List your expenses and list your incomes, negotiate who pays what until you both agree. If you disagree with her point of view that "husband pays all", then you must negotiate - and she must compromise too - until you reach an agreement, any agreement, that you can both agree to.

February 25, 2020

How to Avoid Probate in Canada

How to Avoid Probate in Canada.

Probate is the legal process of collecting and distributing a person's assets after his or her death. As attorney fees, court costs, probate fees, or taxes can be expensive, many choose to plan their estate in order to avoid probate. Avoiding probate generally means ensuring that certain assets do not become a part of your probate estate. To prevent assets from becoming a part of your estate and avoid probate in Canada, follow the steps below.

Steps.
1. Name beneficiaries on your life insurance policies. Life insurance is paid directly to the named beneficiary, so the funds never become a part of the probate estate, therefore not subject to probate taxes and fees. You may also wish to name a secondary beneficiary, in case the primary beneficiary predeceases you.
2. Hold your assets in cash and/or bearer certificates. Assets held in cash or bearer certificates, such as stock, may be excluded from the probate estate, reducing the amount of fees and taxes charged to it. A bearer certificate is a financial instrument, such as a check payable to ‘cash', which may be redeemed by any party possessing it.
3. Add a Pay on Death (“POD”) or Transfer on Death (“TOD”) designation to your accounts. This can only be done in the USA. Canada does not have such a law for non-registered investment accounts. Only registered accounts such as an RRSP, RRIF, TFSA accounts can have named beneficiaries. Joint ownership is the only way to avoid probate for non-registered accounts.
A POD or TOD designation allows you to decide to whom the property will transfer or be paid upon your death. As it will be paid or transferred directly to the designated party, it will not be subject to probate taxes. To name a POD or TOD, contact the bank or investment firm where the account is held. The procedure will vary from company to company and will most often involve filling out and returning a simple form.
4. Title your assets to a joint owner. Assets, which are held jointly with rights of survivorship, pass directly to the surviving joint owner, and never become subject to probate. Joint ownership is not right in all circumstances. You may wish to consider the following, before naming a joint owner of any of your assets.
A joint owner can clean out your accounts or otherwise encumber your property. Once a party owns an interest in your property, he or she may take out loans against it, or in the case of a bank or investment account, empty it. This can be done without your knowledge or consent.
You will need the cooperation of the joint owner in order to sell or mortgage the property. Once you name a joint owner, he or she will need to consent to any sale of the property, or any mortgage taken against it.
Naming a joint owner, when he or she is not the only beneficiary of the estate, may cause discontentment between heirs. The other beneficiaries may believe that the joint owner was only meant to hold the property in trust for all of the beneficiaries, and a dispute as to who should inherit the property can easily arise.
There may be tax consequences, such as capital gains property transfer tax, when naming joint owners of certain property. You may want to consult with a Certified General Account (“CGA”) or tax attorney before doing anything that may affect your obligation to pay taxes.
Just as a joint owner has a claim to the joint property, so does his or her creditors. Titling your property with another as a joint owner may subject it to the claims of the joint owner's creditors and/or his or her spouse.
5. Give gifts. Gifting your property now will reduce the value of the estate at your death, thereby reducing the amount of taxes and/or fees due. Be aware that certain legal requirements and/or obligations may apply when making inter-vivos gifts or to those made while you are alive, for the purpose of reducing probate taxes. These considerations include:
You must actually give up control of the gift to the giftee. For example, if you make a gift of an antique piece of furniture, you must deliver the piece to the giftee, and discontinue your possession of it. Another example is if you bestow a bank account upon another, you must add their name and remove yours from the title.
There may be tax consequences for the one who receives the gift. For example, if the fair market value (“FMV”) of the gift exceeds its cost, the accrued gain may be taxable as a capital gain. The Canadian Revenue Agency (“CRA”) defines FMV as “the highest price, expressed in dollars, that a property would bring in an open and unrestricted market, between a willing buyer and a willing seller who are both knowledgeable, informed, and prudent, and who are acting independently of each other.”
Property tax transfer and other fees may be due when gifting real estate to another. You may wish to consult with a CGA, tax attorney, or probate lawyer before transferring any real property to another party, in order to ensure that your legal and financial rights are protected.
6. Set up a trust. A trust allows you to title your property to it, to be held by an appointed trustee, on your behalf. You may appoint yourself as trustee if you choose. The trust will provide for the distribution of the property after your death. Since the property is owned by the trust, it never becomes a part of your probate estate and is not subject to probate taxes.
7. Title assets to your company. If you have outstanding debt other than a mortgage, that debt will not be subtracted from your assets when the value of your estate at the time of your death is determined. This will increase the value of your estate, causing a higher probate tax to apply. Transferring the loan and the asset purchased with it to a limited company will reduce the gross value of your estate, which in turn will reduce the amount of probate tax due.
8. Make two wills. Parties who hold certain assets may decide to make two wills. A Primary Will, which deals with those assets that are required to be subject to probate, and a Secondary Will, which provides direction as to the distribution of all other assets. While this is not a widely known practice, the Court in Ontario recently approved of this estate planning approach in Granovsky Estate v. Ontario.

Community Q&A.

Question : If a partial distribution was made as a part of the deceased mother's will and the son dies before final distribution, how is the balance handled?
Answer :  In most cases, the balance will be given to the next person listed in the document.
Question : Can a person's RRIF be allocated in a will to someone prior to death and avoid having to be a part of any probate?
Answer :  Registered accounts with named beneficiaries are not subject to probate calculation as it is not part of a taxable estate. If the named beneficiary is "Estate," then it will be subject to probate.
Question : Without a named beneficiary, does life insurance and RRSP go to the probate?
Answer :  Yes, without a named beneficiary any life insurance or RRSPs become part of the deceased's estate and are therefore subject to Estate Administration Tax.
Question : A wife, as beneficiary of a life insurance policy, predeceases the husband. Upon the husband's death, how can their children receive the proceeds of the policy?
Answer :  You must put the children down now as contingent beneficiaries. Contact the insurance provider of the policy.
Question : How do I avoid probate in Canada if everything the deceased has is cash in a bank?
Answer :  You will be able to avoid probate, but you will need to be cautious about how the cash is divided up afterwards. A huge addition of cash will probably put you in a different tax bracket, and you will have to pay more income tax as a result. You will need to find out what the tax burden will be on the amount you receive, if it's purely cash.
Question : What happens when probate is started on a will and then another will is found?
Answer :  The dates the documents were signed will determine the legitimacy. The later one should be the one that is used.
Question : How do I keep my family home from probate? I would like it to continue to be a family home for my children and to let them decide what to do with it in the future.
Answer :  Add their names to the title.Then it will automatically be their property and you will avoid probate, and also, depending on where you live, estate taxes.
Question : Can a financial institution make a claim for the beneficiary's share of an estate?
Answer :  All life insurance products such as deferred annuities or segregated funds are creditor-proof.
Question : Is there a waiver of probate form or a waiver for banks to release bank funds in Canada?
Answer :  In Canada, if the estate size is small, the beneficiary is the spouse and the strength of the relationship of the deceased and the beneficiary is know to be strong by staff of the bank, the financial institution can offer a waiver of probate on a case-by-case basis.
Question : How do I know how much tax I will pay in Ontario?
Answer :  Ontario's official government website has an estate administration tax calculator.

Tips.
If you wish to control when a beneficiary inherits the property, you may want to consider creating a trust instead of naming TODs and PODs.
Talk to your friends and family about how you wish for your personal property to be distributed upon your death. If you really want a specific person to have an item, and are unsure if your loved one's will abide by your wishes, simply give it to them now.

Warnings.

Naming a joint account owner on an account will allow the joint owner to withdraw all of your money or cause a lien to be placed on the account if they are sued and a judgment is entered against them. Naming a POD or TOD may be the safest way to ensure that your property passes to whom you wish, without giving up interest in it until after your death.
Before taking an action, which may affect your legal or financial rights and/or obligations, you should consult with a qualified barrister.
Avoiding probate is not right for everyone. You may wish to consult with a barrister in order to determine if taking steps to avoid probate is appropriate in your particular situation.

June 02, 2020

How to Discuss Finances Together in a Marriage

How to Discuss Finances Together in a Marriage.

Finances are a hot topic when it comes to all relationships, especially marriages. Saying “I do” means more than just sharing a life together, it also means sharing financial responsibility for that life. Whether good or bad, each spouse needs to be open and honest about his or her current financial standing. What’s more, the couple must work together to decide on important financial decisions for the future. Learn the basics for discussing money with your spouse.



Part 1 Communicating Effectively

1. Broach the subject casually with your spouse. The time to start talking about merging your finances is before the wedding, but at least 40% of couples avoid doing so.

Start the conversation with your action items first. This could mean starting off by talking to your spouse about your desire to look at your own credit score as you prepare to buy a house and suggest that he or she does the same. Say something like “Have you checked your credit report lately? I’ve been wanting to get a good picture of my financial standing. Maybe we can do it together?”

Things like credit scores for both of you may change how you approach buying a home, for example. You may find if one of you has a higher score than the other, it may be better to buy without both of you on the mortgage. However, things line up, remember you are on the same “team”.

2. Gather data to support your decisions. Print your credit reports and any supporting documentation, such as account balances and credit card debt. Financial choices need to be based on numbers not emotion. Make sure you both have a clear idea of what debts came into the union and how you can work to pay those down.

Early on you are doing this to get on the same page about your individual financial pictures. However, in the future, it may be nice to take time each month to sit down together and look over the numbers. Viewing credit card statements and account balances can be a way to keep you accountable as far as goals and also open the floor for an ongoing discussion with your spouse.

3. Be candid about any bad habits. Before you get started, you must be forthright with your spouse about any habits you happen to have that are not apparent on your credit reports.

An example of a bad habit would include not taking the time to write down purchases made on your debit card so you can balance your check book. When you were single, this may have not seemed like a huge deal, but with two people sharing accounts it can quickly become a problem.

Other bad habits you need to bring to your spouse would include past blemishes on your credit like having too many credit cards open, being in default on student loans or having bills in collection. All of these issues can impact credit, but they can also be addressed and resolved.

4. Refrain from pointing the finger. Placing blame and arguing over money will not make any issues better. If you ask your spouse to be honest about credit challenges and then start the blame game you will probably not get that same level of honesty in the future.

5. Listen to understand, not to reply. This means looking at your spouse as he or she is speaking, listening carefully to fully get his or her point of view, and then taking that one step further by confirming what you have heard.

When you sit down to have a tough conversation with your spouse, you will break the trust if you are not willing to listen. Don’t ask the tough questions unless you are ready to handle any answer.

The exchange of information should be fair and equal.



Part 2 Setting Ground Rules.

1. Decide if you will merge all the money or maintain separate accounts. Even after getting married there are no laws that say you have to merge all your accounts. Having separate accounts does not mean neither of you knows what the other is doing. Both partners should have access to the records of the other since you are sharing a household.

Depending on the credit scores for both spouses, it may make more sense to keep separate accounts especially if you want to buy a home soon. One spouse alone on a mortgage is going to have a higher chance of getting the loan than two people with mixed credit scores.

2. Determine who will be the primary overseer of your money. This will include how you make decisions about both small and large purchases. The person who is most organized and financially savvy may be the best choice for managing the finances. However, both partners should take on the responsibility in some way. So, choose duties according to your individual strengths.

For example, one of you may be better at saving, so you will be in charge of building an emergency fund and overseeing retirement savings. The other may be in charge of paying monthly bills and balancing the checkbook. Decide based on what’s best for you and your spouse.

3. Agree about which of you will handle certain expenses. You will need to know who is writing the check for rent, paying the electric bill and other household bills. You do not want to get into a situation where both of you thought the other paid the electric bill and you learn that it wasn’t paid when the lights are turned off. You also don’t want to pay bills twice and be short money.

Being upfront about how much both of you make and how you will divide the bills will make things much easier. Some families divide everything I half while others just pool their money regardless of who makes what.

The use of credit cards versus cash should also be explored as one partner may be used to always using a card and then paying it off once a month while the other only uses cash. This needs to be talked about.

4. Don’t make big purchases without your spouse’s blessing. Regardless of who makes more money, a big ticket item should be bought together. This is a good time to set boundaries about how much either of you can spend without talking to your spouse. This can be as simple as saying you have a spending limit of $100 without checking in since that is a low amount in your budget and won’t overdraw the account.



Part 3 Overcoming Money Troubles.

1. Build a household budget. This budget should include all the household bills, ongoing needs and bills that were outstanding from before you got married. The budget needs to be realistic and something you both commit to. Consider these tips:

Tally up every single monthly expense and plan for them in advance.

Include separate and joint goals.

Include long-term goals like saving for a down payment on a house.

Negotiate with ongoing bills to cut down interest rates or get rid of fees.

Automate whatever you can so that you don’t miss paying bills and acquire late fees.

Go back and revise your budget as needed.

2. Start building an emergency fund. If you didn’t already have an emergency fund before getting married, now is the time to build one. An emergency fund acts as a cushion in times when unexpected expenses pop up or one of you is out of work.

How big your emergency account is will depend on you and your spouse. Many families tuck away enough money for at least 3 to 6 months of expenses. This provides greater security over the long haul.

This savings account would be for true emergencies only, not impulse buys. Take the time to set boundaries as to what qualifies as an emergency.

Some households use a credit card for emergencies like car repairs. Make sure you both agree if this is a good use of your credit cards and leave the available balance for such an emergency. If either of you has problems with managing credit cards, this may not be the best option for your household.

3. Know your debt situation and decide on a strategy to pay it off.[13] Both of you should have a very clear idea of the other person’s debt as well as your own. Don’t fall prey to the idea that it’s your spouse’s problem—it’s not. Both of your debt is usually considered during major purchases, so working together to shrink each person’s debt is ideal.

It can also be helpful to get financial advising or attend a debt reduction course for couples. If you have a significant amount of debt—or have no idea where to start to pay it down—it may be practical to involve a professional who can assist you.

4. Plan for your retirements. Talk to your spouse and come up with a plan that suits both of you for retirement and start saving. Keep in mind, that men and women often have varying opinions when it comes to retirement, so be willing to compromise and consider your spouse’s perspective.

Include payments to 401K and other investments as a part of your budget. Part of this process also includes changing the beneficiaries for each account now that you are married.

If you don’t already, you also need to draw up life insurance policies to secure your spouse and your family in case of a tragedy.



Question : If we get a divorce, will my wife get 50% of my 401K too?

Answer : Honestly, this depends on the state and the county where you are getting divorced. Different locations have different rules of division in a divorce. Some states are equitable division, meaning you split 50/50 while others are not.



Warnings.

Money troubles have ended more than a few marriages. If you are both responsible, open and honest about money, it will make for a stronger marriage.

Be mindful that some people are sensitive about discussing money. To some, money means power and control and these are very volatile subjects. Handle with care.

It can be a difficult and uncomfortable transition going from being a single person in total control of your finances to being part of a couple. If your partner is resistant, give him or her time. If you can show them that you are interested in working as a team with no judgments, your spouse will eventually come around.

February 10, 2020

how to discuss finances together in a marriage

How to Discuss Finances Together in a Marriage.

Finances are a hot topic when it comes to all relationships, especially marriages. Saying “I do” means more than just sharing a life together, it also means sharing financial responsibility for that life. Whether good or bad, each spouse needs to be open and honest about his or her current financial standing. What’s more, the couple must work together to decide on important financial decisions for the future. Learn the basics for discussing money with your spouse.



Part 1 Communicating Effectively

1. Broach the subject casually with your spouse. The time to start talking about merging your finances is before the wedding, but at least 40% of couples avoid doing so.

Start the conversation with your action items first. This could mean starting off by talking to your spouse about your desire to look at your own credit score as you prepare to buy a house and suggest that he or she does the same. Say something like “Have you checked your credit report lately? I’ve been wanting to get a good picture of my financial standing. Maybe we can do it together?”

Things like credit scores for both of you may change how you approach buying a home, for example. You may find if one of you has a higher score than the other, it may be better to buy without both of you on the mortgage. However, things line up, remember you are on the same “team”.

2. Gather data to support your decisions. Print your credit reports and any supporting documentation, such as account balances and credit card debt. Financial choices need to be based on numbers not emotion. Make sure you both have a clear idea of what debts came into the union and how you can work to pay those down.

Early on you are doing this to get on the same page about your individual financial pictures. However, in the future, it may be nice to take time each month to sit down together and look over the numbers. Viewing credit card statements and account balances can be a way to keep you accountable as far as goals and also open the floor for an ongoing discussion with your spouse.

3. Be candid about any bad habits. Before you get started, you must be forthright with your spouse about any habits you happen to have that are not apparent on your credit reports.

An example of a bad habit would include not taking the time to write down purchases made on your debit card so you can balance your check book. When you were single, this may have not seemed like a huge deal, but with two people sharing accounts it can quickly become a problem.

Other bad habits you need to bring to your spouse would include past blemishes on your credit like having too many credit cards open, being in default on student loans or having bills in collection. All of these issues can impact credit, but they can also be addressed and resolved.

4. Refrain from pointing the finger. Placing blame and arguing over money will not make any issues better. If you ask your spouse to be honest about credit challenges and then start the blame game you will probably not get that same level of honesty in the future.

5. Listen to understand, not to reply. This means looking at your spouse as he or she is speaking, listening carefully to fully get his or her point of view, and then taking that one step further by confirming what you have heard.

When you sit down to have a tough conversation with your spouse, you will break the trust if you are not willing to listen. Don’t ask the tough questions unless you are ready to handle any answer.

The exchange of information should be fair and equal.



Part 2 Setting Ground Rules.

1. Decide if you will merge all the money or maintain separate accounts. Even after getting married there are no laws that say you have to merge all your accounts. Having separate accounts does not mean neither of you knows what the other is doing. Both partners should have access to the records of the other since you are sharing a household.

Depending on the credit scores for both spouses, it may make more sense to keep separate accounts especially if you want to buy a home soon. One spouse alone on a mortgage is going to have a higher chance of getting the loan than two people with mixed credit scores.

2. Determine who will be the primary overseer of your money. This will include how you make decisions about both small and large purchases. The person who is most organized and financially savvy may be the best choice for managing the finances. However, both partners should take on the responsibility in some way. So, choose duties according to your individual strengths.

For example, one of you may be better at saving, so you will be in charge of building an emergency fund and overseeing retirement savings. The other may be in charge of paying monthly bills and balancing the checkbook. Decide based on what’s best for you and your spouse.

3. Agree about which of you will handle certain expenses. You will need to know who is writing the check for rent, paying the electric bill and other household bills. You do not want to get into a situation where both of you thought the other paid the electric bill and you learn that it wasn’t paid when the lights are turned off. You also don’t want to pay bills twice and be short money.

Being upfront about how much both of you make and how you will divide the bills will make things much easier. Some families divide everything I half while others just pool their money regardless of who makes what.

The use of credit cards versus cash should also be explored as one partner may be used to always using a card and then paying it off once a month while the other only uses cash. This needs to be talked about.

4. Don’t make big purchases without your spouse’s blessing. Regardless of who makes more money, a big ticket item should be bought together. This is a good time to set boundaries about how much either of you can spend without talking to your spouse. This can be as simple as saying you have a spending limit of $100 without checking in since that is a low amount in your budget and won’t overdraw the account.



Part 3 Overcoming Money Troubles.

1. Build a household budget. This budget should include all the household bills, ongoing needs and bills that were outstanding from before you got married. The budget needs to be realistic and something you both commit to. Consider these tips:

Tally up every single monthly expense and plan for them in advance.

Include separate and joint goals.

Include long-term goals like saving for a down payment on a house.

Negotiate with ongoing bills to cut down interest rates or get rid of fees.

Automate whatever you can so that you don’t miss paying bills and acquire late fees.

Go back and revise your budget as needed.

2. Start building an emergency fund. If you didn’t already have an emergency fund before getting married, now is the time to build one. An emergency fund acts as a cushion in times when unexpected expenses pop up or one of you is out of work.

How big your emergency account is will depend on you and your spouse. Many families tuck away enough money for at least 3 to 6 months of expenses. This provides greater security over the long haul.

This savings account would be for true emergencies only, not impulse buys. Take the time to set boundaries as to what qualifies as an emergency.

Some households use a credit card for emergencies like car repairs. Make sure you both agree if this is a good use of your credit cards and leave the available balance for such an emergency. If either of you has problems with managing credit cards, this may not be the best option for your household.

3. Know your debt situation and decide on a strategy to pay it off.[13] Both of you should have a very clear idea of the other person’s debt as well as your own. Don’t fall prey to the idea that it’s your spouse’s problem—it’s not. Both of your debt is usually considered during major purchases, so working together to shrink each person’s debt is ideal.

It can also be helpful to get financial advising or attend a debt reduction course for couples. If you have a significant amount of debt—or have no idea where to start to pay it down—it may be practical to involve a professional who can assist you.

4. Plan for your retirements. Talk to your spouse and come up with a plan that suits both of you for retirement and start saving. Keep in mind, that men and women often have varying opinions when it comes to retirement, so be willing to compromise and consider your spouse’s perspective.

Include payments to 401K and other investments as a part of your budget. Part of this process also includes changing the beneficiaries for each account now that you are married.

If you don’t already, you also need to draw up life insurance policies to secure your spouse and your family in case of a tragedy.



Question : If we get a divorce, will my wife get 50% of my 401K too?

Answer : Honestly, this depends on the state and the county where you are getting divorced. Different locations have different rules of division in a divorce. Some states are equitable division, meaning you split 50/50 while others are not.



Warnings.

Money troubles have ended more than a few marriages. If you are both responsible, open and honest about money, it will make for a stronger marriage.

Be mindful that some people are sensitive about discussing money. To some, money means power and control and these are very volatile subjects. Handle with care.

It can be a difficult and uncomfortable transition going from being a single person in total control of your finances to being part of a couple. If your partner is resistant, give him or her time. If you can show them that you are interested in working as a team with no judgments, your spouse will eventually come around.

February 10, 2020