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.
Heading off to college is exciting. Really exciting. You finally have freedom! You’re out on your own for the very first time, managing your studies, managing your social life and… managing your finances.
Despite being a big part of your newfound independence, personal finance is a subject you probably won’t find on your course schedule. If you didn’t take a personal finance class in high school and never had money lessons from your parents, you may not know how to manage a checking account as a college student.
“College students have very different needs for their checking account than their parents or other adults,” says Tommy Martin, CEO of Clear Path Financial Planning and a finance blogger at TommyMartin.com. If you live in a different city during the school year than you do during winter and summer breaks, for example, you may be after a bank for which location doesn’t matter.
Ok, so how do I manage my checking account in college, you ask? First, don’t get overwhelmed. Learning how to manage money while in college and getting a handle on checking account basics is simpler than you might think (oh, and the skills will serve you for years to come). Second, you can kick off your checking account education with these tips for managing a checking account in college:
1. Compare checking accounts before signing up
While your college life may center around your school campus, you should consider venturing off-campus to pick the right checking account for your lifestyle.
“Students typically sign up with a bank that’s on campus or close to campus,” says Sahil Vakil, a financial planner and president of MYRA Wealth in New Jersey. However, the nearest bank might not be the one that best fits your needs, he adds.
Instead of picking a bank based solely on proximity, consider all of your options, including banks with off-campus locations and online-only banks.
Martin agrees, saying that learning how to manage money while in college means considering all of your banking options rather than “automatically enrolling or choosing the official school bank just because it has the school logo on it.” There are other ways to show your school pride, after all.
2. Learn about checking account fees and rewards
Vakil and Martin both say a tip for managing a checking account in college is to consider an account’s fees before signing up. Costly fees can eat into your savings and spending money, which can be a blow for students who are not working full-time. When you are choosing a checking account in college, consider fees for:
Monthly maintenance (essentially keeping your account open)
Minimum balance (not maintaining one)
ATM usage
New checks
Wire transfers
Online bill pay
Replacement debit cards
Martin says a checking account with no minimum balance requirement or minimum number of transactions could be a good fit for students. “It allows them to focus on their education” instead of worrying about incurring penalties, he says. “Even a $5 fee on a checking account with $60 in it can be devastating.”
Costly fees can eat into your savings and spending money, which can be a blow for students who are not working full-time.
Martin also suggests finding an account that has a large network of no-fee ATMs located across the country to better manage your checking account as a college student. “Especially if you’re going to a school in a different state, the local bank from home might wind up costing you a lot in terms of ATM fees,” he says. If your parents plan to wire you money, find an account that doesn’t charge incoming wire fees, Martin adds.
While fees should be a focus when you are learning how to manage money while in college, don’t forget about incentives. You may be able to find a checking account that actually helps you grow your balance by paying interest or offering a cash back rewards program.
“If you have to pay for books or supplies, at least you can get some cash back and use it for a free dinner,” Martin says. Discover Cashback Debit, for example, offers 1% cash back on up to $3,000 in debit card purchases each month.1
Luckily, you don’t need to take Banking 101 to figure out your funds, and tech makes tracking your balance and account activity easier than ever. Most banks let you log in to your account online (don’t get distracted in class!), and with a bank’s mobile app you can transfer money to friends, pay bills, deposit checks and check your balanceâall while you’re on the go.
Knowing your balance at all times is a tip for managing a checking account in college because it can help you avoid overdrafts and insufficient funds fees. It can also help you forecast your income and expenses to ensure you’ll have enough money to cover future costs. Surpriseâthat’s budgeting!
There’s no one-size-fits-all budgeting program or system, though. You can go old-school and track your budget on a printed-out budget sheet, or you can go tech-savvy with a budgeting and spending app. “What’s best for you is the one you’re actually going to use,” Martin says.
If you learn how to manage money while in college and make a practice of maintaining your budget, the habit will follow you after graduation.
âCollege students have very different needs for their checking account than their parents or other adults.â
4. Secure your account
One of Vakil’s tips for managing a checking account in college is to make sure your account stays secure. Create a unique account name and password that you use only for your checking account, and never share your credentials.
Vakil says you can also enable two-factor authentication if your bank offers it and you’re looking for another way to improve the management of your checking account as a college student. “This additional layer of protection safeguards your sensitive financial data and strengthens the security of your account by requiring two methods of verifying your identity.”
For example, if you log in to your account from a new device, you may be sent a text message with a code that you’ll need to enter to access your account.
5. Keep an eye out for debit card holds
No matter where you bank, a merchant may place a hold on funds in your checking account when you use your debit card. Generally, a hold is placed for travel-related purchasesâsuch as at rental car companies, hotels and gas stationsâand used by merchants to protect against fraud and errors.
“Holds on a debit card can make it tricky for you to manage your finances,” Vakil says. For example, “when you rent a car, the car rental company might put a $500 hold on your account. If the balance in your account was $550, now you can only use another $50.”
Being aware of holds can be particularly important if you are managing a checking account as a college student and tend to have a low account balance.
If a merchant will be placing a hold, it will generally post a sign to notify customers. The hold will typically be removed after the funds are transferred to the merchant from your financial institution, typically within three to four days.
Knowing when a hold will be placed, the amount of the hold and how much money you have in your checking account can help you manage your checking account as a college student by avoiding overdrafts and missed bill payments due to insufficient funds.
6. Don’t let one mistake throw you off track
If you can learn how to manage a checking account as a college student, and more generally, how to manage money while in college, you can lay the groundwork for a solid financial future. Checking account mistakes may occasionally happen (oops, I didn’t budget enough for that spring break trip), but don’t let them discourage you to the point of apathy. Instead, try to continually expand your knowledge and practice healthy financial habits.
1 ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries. Venmo and PayPal are registered trademarks of PayPal, Inc.
The post 6 Tips for Successfully Managing a Checking Account in College appeared first on Discover Bank – Banking Topics Blog.
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, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries. Venmo and PayPal are registered trademarks of PayPal, Inc.