This Week In Your Wallet: Merging Finances Before Marriage
Should couples marry their finances before tying the knot? In my book, it’s a “don’t” before “I do.” That’s why I was surprised to learn some 50% of married millennials had either fully or partially merged their finances before marriage, with over 33% relying on joint credit cards — or one joint card mixed with their individual cards, according to a new survey from Credit Karma.
Shacking up before marriage is more common now than ever — and it can result in major savings for both parties — but, as USA TODAY reports, without the legal protection of a marriage license, couples should proceed cautiously. And when doing so, consider this list of questions to ask each other. Here are a few to get you started:
- How much do you earn? Before you devise a shared budget, it’s important that both of you are transparent about what you earn and how much you can afford to split. If one partner makes significantly more than the other, then splitting expenses based on of a percentage of respective incomes might be more fair than splitting the same dollar amounts.
- Do you have debt? Student loan debt, credit card debt, any debt at all — get it on the table for discussion. You should not only disclose how much (if any) debt you have, but also your philosophies on debt and use of credit cards.
- Do we do joint or authorized? If you’re considering a joint credit card, then make sure the difference between joint and authorized users is understood. With joint accounts, you’ll both have the same access to and responsibility for the account. When one person is an authorized user, that person isn’t legally responsible for any debt. With both, however, you have the potential to impact each other’s credit scores.
- Do we have a contingency plan? In case cupid misses his mark, what would happen to the joint savings account or remaining debt on the credit card? It might be an uncomfortable conversation, but without the legal protection of marriage, it’s an important discussion to have. It could lead to the discussion of a cohabitation agreement. It’s a prenup for unmarried couples. Download templates at sites like LegalZoom.com or LawDepot.com.
All The Single Ladies
Single women are almost twice as likely to be homebuyers than single men: 16% of new homebuyers are single women, just 9% are single men, according to the National Association of Realtors. Given this, Reuters put together a list of tips for prospective homebuyers. It’s aimed at single women, but it applies to the single fellas, too. For example, the first thing to know is how much house you can afford. It’s not just the mortgage or the down payment — it’s also the taxes, the maintenance, the various insurances and a plush emergency cushion (i.e. at least six months). And when you’re buying a property alone, it becomes even more important to protect your assets, which means not skimping on insurance coverage (i.e. life, disability and healthcare).
ATM Fees Are Up…Again
I was in an airport recently and broke one of my own money rules. I used an ATM in a place without an easy exit. I paid for it – of course – it cost $2 to use the machine itself and my bank charges $2.50 – so I paid $4.50 for access to my own money. Ouch. Turns out that’s just under the average $4.52 that banks charge people who aren’t their customers to use their machines, according to a new Bankrate survey. This is a record-high and is up 21% over the past five years.
The good news? This increase can be attributed to the fact that consumers have gotten savvier about their banking behavior; consumers are using fewer ATMs that don’t belong to their banks, so banks are hiking fees to make up the difference. So what can you do if you find yourself paying more in fees than you’d like? First, make sure you’re banking at a place that’s convenient for you. Consistently using another bank’s ATM is a signal that you should think about making a change. Also, consider using your debit card to grab cash when you’re making a purchase – that can eliminate a trip to the ATM entirely. (And note: If you’re a credit union customer, you’re not out of luck. The Co-op network gives you access to 30,000 ATMs. You can download a free app to find them here.)
Small Biz Saturday Update
I’ve been a fan of Small Business Saturday since it started in 2010. It’s an American Express-sponsored event that takes place on the Saturday after Black Friday and encourages consumers to “shop small” (i.e. support the small businesses in their communities). While you don’t have to use an Amex card to participate, cardholders had been receiving a $25 statement credit if they spent (at least) that much at a participating store. In 2013, Amex dropped this to $10, and now, according to MousePrint.org, it’s zilch. Full disclosure: I’m an Amex cardholder, who didn’t know about the statement credit until, well, yesterday, but I’ve always been a fan of supporting local businesses – if we want these stores to stay in business, it’s our job to patronize them. As a resident of a small town of about 8,000 people, I also like the fact that 52% of the money you spend stays in your community, on average.
Have a great week,
Jean
