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This Week In Your Wallet: Millennials Are One-Upping Boomers

Yesterday the Dow sank nearly 2% — dropping 350 points. The S&P 500 fell more than 2%, as well. And those losses were nothing compared with the ones in the European markets. Blame Greece. Today, the government of that country will miss a $1.73 billion debt payment. Why are this little country’s financial ills reverberating in your retirement accounts? It’s not that your mutual funds have big exposure to the Greek economy.  This problem has been brewing for the last half decade. Most international investors extracted themselves long ago. So what gives? Uncertainty.  
The markets (U.S. and global) hate it. And there’s a lot of it in this scenario. It’s not known what a  “Grexit” — or Greek exit — from the Eurozone would mean to the European markets, but comparisons are being made to Lehman Brothers. Could this be the domino that sends the European economy a tumbling? If it does, U.S. companies, and those around the world that do business there, won’t be immune.  Meanwhile, this morning the BBC is reporting  that a last-ditch deal is still a possibility. And Puerto Rico’s inability to pay its own $72 billion debt tab is worrying muni bond investors for good reason.
But #LoveStillWins

All that worry aside, on Friday — after years of discourse across (and over) the aisle — the Supreme Court ruled, #LoveWins. Same-sex couples now have the Constitutional right to get married in all 50 states. If you and your partner (or someone you know) are planning to get hitched, there are a few financial considerations to make alongside your wedding registry. Because, as MONEY reports, the Supremes decision also comes with big changes in how same-sex couples manage their finances.

Remember back in 2013 when the court nixed a key part of the Defense of Marriage Act, which then allowed same-sex couples, who were legally married in states that recognized their unions, to file joint federal tax returns? Friday’s ruling extends that decision, and extends benefits on Social Security, estate taxes and retirement planning to boot. Here are a few things to consider:

  • You might be able to get money back from Uncle Sam. Depending on your incomes, filing joint federal returns could result in a lower tax bill. Usually, the more disparate the incomes, the better. If that’s the case for you, consider filing amended returns for the past three years.
  • You can access spousal benefits wherever you live now. Data from Financial Engines, a investment advisory firm, found that same-sex couples could receive an additional $20,000-$250,000 in lifetime benefits from Social Security via spousal/survivor benefits that were unavailable to them as single filers.
  • You can transfer property freely. Before the ruling, same-sex couples weren’t able to transfer property to each other without the possibility of triggering federal gift tax, or inherit large estates without paying federal estate tax. Now, there’s no limit on the amount spouses can give to each other during marriage, or through an estate plan. Continue reading here.

Stop Counting Sheep

To the long list of reasons that can keep us from getting good zzz’s at night (e.g. kids, Netflix or a snoring spouse), add money troubles. In fact, 62% of Americans are currently losing sleep over at least one financial problem, according to a new report from CreditCards.com. The most common reasons: saving for retirement, educational expenses (i.e. paying for college) and healthcare or insurance bills. I can’t help with the “Bloodline” binge — or the bear snores — but I can help with the money troubles. This week on Today.com, I offer advice on how to stop losing sleep over your finances.

For instance, if your finances are causing you to toss and turn at night, then it’s time to confront them head on — during the day. I caught up with NY-based clinical psychologist and sleep specialist Janet Kennedy, who says a lot of what we stress about at night is what we ignore during the day. Realize that nothing is going to get resolved at 4 a.m., and commit to giving attention to your money stressor after sunrise. And if you’re having a difficult time dismissing the finances — or you’re worried you’ll forget your to-dos come morning — then keep a notepad next to your bed to write them down. Put it on paper and put yourself back to bed.

Don’t Use Credit For These 3 Things

Credit cards can be invaluable tools for building your credit score — and racking up frequent flier miles. Overuse them, though, and you can build a hefty amount of debt. It can be as easy as using your credit card to make one, big-ticket purchase, and then taking several months to pay it down with minimum payments — half of which will go toward the interest it’s accumulating. (This is called the “snowball effect,” and it’s a surefire way to ding your credit, too.)

So, what’s the secret sauce for building your score and staying out of credit card debt at the same time? Making small, semi-regular purchases that you can pay in full and on time, every single month. Additionally, TIME writes, there are three things you should never buy with a credit card: hospital bills, student expenses and your dream wedding. And one thing to always put on plastic? Online purchases. Credit card issuers offer better identity theft protection — and in the event that your number gets stolen and a thief runs up the tab, you’ll get your money back much faster. 

Millennials Are One-Upping Boomers

Is your kid a better saver than you are? Could be. New research from T. Rowe Price shows millennial 401(k) savers are one-upping Boomers on some important financial practices. While millennials are saving nearly as much as Boomers are (an average of 8% of their annual salaries vs. 9%), almost twice as many millennials (40% vs. 21%) have increased their 401(k) savings in the last year. Not to mention, more millennials than boomers track their expenses — and maintain a budget.   

Some disappointing news from the survey? Millennial women are saving half as much as millennial men. For men, the median 401(k) balance is $22,000. For women, it’s $11,000. This Fortune article outlines why. The short answer: Pay gap. 

Have a great week,


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