The Guide to Finance
The Price of Love: How to live happily ever after (financially)
By Gini Kopecky Wallace
Whether first marriage or remarriage, new relationship or old, partners often have difficulty discussing money matters. Here's how to get your money relationship off on the right foot or back on track.
Break the ice. If you and your partner haven't talked about money and need to, you might start things off like this: "Say, 'You know, we haven't talked about money, and I think we should,'" says family-law attorney Katherine Stoner, of California. "Ask, 'How do you want to do that? Should we set aside an hour and see how far we get?'"
Come clean. What do you own, what have you saved, what's your income, and how do you spend it? The time for sharing is now. Carrying major debt? "You need full disclosure so the priority can be paying it off," says Catherine Williams, a vice-president at Money Management International. "It's like bringing a health problem into marriage. The goal becomes, 'We have to get you well so we can go forward together.'"
Merge with care. "It's vital to keep one credit card in your name so if anything happens you have your own credit identity," says Williams. Someone with a good credit rating should also protect it by not assuming a partner's debt—say, by taking equity out of their house to pay off his student loan. "Now that debt is legally shared by both of you," says Williams.
Don't sweat the small stuff. "People are different—you need to start with the premise that you're going to have disagreements," says Stoner. "Sometimes you resolve them. Sometimes you just learn to manage them." If you and your partner disagree on joint or separate accounts, go with separate, advises Suzanne Boas, president of the nonprofit Consumer Credit Counseling Service of Atlanta. But, she adds, there's no right or wrong choice.
Agree on the big things. What partners must agree on, says Boas, is "a common set of long-term goals. Whether it's to have two children and send them to college or own a comfortable house, agreeing on longer-term goals makes it easier to make sacrifices to reach them."
Form good couple habits. "It's important to start putting money toward your goals now or you'll never achieve them," says Olivia Mellan, author of The Secret Language of Money. Some good practices are: divvying up financial tasks according to interest and ability; sharing all information; holding regular money meetings; saving 10 percent of your income; building an emergency fund; using credit sparingly; paying bills promptly; agreeing on individual spending caps; and allowing each other small indulgences. "If partners don't agree on that," says Boas, "they'll become resentful."
Be equal partners. You can divide up financial tasks any way you want, as long as all information is shared. "Both partners need to know where the documents are, where the bank accounts are, what the phone numbers are—that information should be in a central location," says Ginita Wall, co-author of the pamphlet "Love & Money: 150 Financial Tips for Couples" (www.wife.org). "No secrets, no surprises," says Williams. "That's how you build a future."
Keep talking. "Sit down at least monthly to discuss inflow and outflow," says Craig Israelsen, associate professor in family life at Brigham Young University. "Do it because you love each other. Money is important. And our companion deserves more than shreds of time when we're tired. Plan a date, dedicate the time, then go out to dinner."
Get help if necessary. "There are two parts to being financially educated," says Boas. "The first is understanding how to set goals, track expenses, and make good decisions. The second is conforming our behavior to our knowledge." And NEA offers help with both. Go to www.neamb. com/investinginyou to learn about free online financial seminars by Better Investing, and go to www.neamb.com/ debtadvice to learn about free or low-cost debt-counseling and financial-education programs offered through the National Foundation for Credit Counseling.
How I Saved a Buck
"Let's get frugal because frugal is great," says Tennessee economics teacher Henry Camp, who takes his money lessons home with him. "I can't stand to waste anything," says Camp, who goes so far to save a buck as to collect tiny slivers of unused soap from his shower. (Add them to a liquid soap dispenser with water and....Voila! You've saved a buck!)
Dianne Blocher, a California math teacher, says: "My motto is: Never pay full price for something that is going to be thrown away." So Blocher only buys toilet paper, tissue, and the like on sale. "When I advocate this type of shopping, my dad will remind me that his grandfather always said, 'You can't save money by spending it.' It's another way of saying, 'Keep spending to a minimum.'"
You spend your allowance on candy?
Web sites that help you and your kids learn about money
Go to "Kids—Learning about Money" for links to activities for kids 2 and up, including A.G. Edwards' "Big Money Adventure" (featuring counting games and a story for youngsters) and "Savings Quest" (kids build a character, pick a job, and save toward a purchase). Other sites let kids explore imaginary towns and planets, learning about money as they go. Visit: http://www.orangekids.com/; http://www.moneyopolis.org/; and www.frbsf.org/education/fedville.
The National Endowment for Financial Education's High School Financial Planning site offers a mix of serious learning units, student articles, and interactive games. Its Teen Resource Bureau grabs teens with a music-loaded home page and features including "Ask Madame Moolah," and "Financial Fun."
For Parents and Young Adults
Bankrate.com's Financial Literacy Series offers in-depth coverage of subjects ranging from budgeting to taxes, plus, real-people money makeovers and celebrity Q&As. Mymoney.gov is a wealth of information and resources. Take the "Money 20 Interactive Quiz." Click on "Building Wealth" for a delightful tutorial on handling money like an adult.
The Taxman Cometh!
Taxpayers have many ways to prepare returns and two ways to file: by mail and electronically (E-filing), which the IRS encourages with free filing for qualified earners and faster refunds. Cindy Hockenberry, of the National Association of Tax Professionals, reviews five tax-prep options.
What you need - Forms, calculator, pencil and paper.
How it works - You do the math, fill out the forms, mail them in.
Pros & cons - No cost, but it can be time-consuming and stressful. Easy to miss deductions, make mistakes. Best for simple returns. Refunds take time.
Tax tips - Download tax forms. Buy an easy-reading J.K. Lasser or Ernst & Young tax guide ($18). Take your teacher's deduction!
Cindy says, "Carefully compare last year's forms to this year's. Differences may alert you to new deductions or credits you might otherwise miss.
What you need - Home computer, software (TurboTax, TaxCut, Tax Act).
How it works - Buy and install software, follow prompts. The program will do the hard math!
Pros & cons - User-friendly but not terribly interactive. Basic programs run about $20, but costs rise for more features.
Tax tips - Buy or update software annually, as tax laws do change. Pick a program with customer support.
Cindy says, "Software programs eliminate math, but you must enter information correctly. You're responsible for mistakes!
What you need - Home computer.
How it works - Buy access to a service-provider's program, and do returns online. The provider E-files them.
Pros & cons - Sometimes free for easy returns; fees mount for complex ones. Information is held in provider's computer—a possible privacy concern.
Tax tips - H&R Block's Price Estimator quiz helps estimate costs of online filing with professional help.
Cindy says, "Work only on secure sites with "https" in the URL and/or a padlock icon in the bottom right of the screen. Some providers offer free federal forms but charge for state.
What you need - Your receipts and statements, an appointment.
How it works - Bring your papers to a tax-prep service. A preparer does your returns; you file them.
Pros & cons - Fees are involved, but NEA members qualify for special discounts at H&R Block. For more info, go to NEA Member Benefits.
Tax tips - Get price-quote upfront. Inquire about preparer's credentials, request other help if unsatisfied. Ask: what happens if the IRS finds errors?
Cindy says, "Resist pitches for other products. Start early. Some services won't take walk-ins as tax day nears.
What you need - Receipts and statements, an appointment, deeper pockets.
How it works - Bring your papers and questions to a consultation. E-file or mail.
Pros & cons - Fees vary and can run hundreds of dollars. But if you hate doing taxes and can afford to pay, it's the way to go.
Tax tips - Licensed Tax Consultants and Preparers (LTCs, LTPs) are state-licensed. Enrolled Agents (EAs) are federally licensed. CPAs may or may not have tax expertise.
Cindy says, "Ask about training, experience, cost—and availability after filing if you hear from the IRS. Don't pay until the preparer signs your returns.