I am a personal finance fanatic. I grew up poor, and while for the most part my basic needs were met, I look back and never want to live the way we did. Nor do I want my children to live that way. What has that done to me? I have become passionate about personal finance, and how to be careful over what I spend my money on, how I save, and how I think about my future.
Which is what leads me to my blog title. There are a few subjects I think are taboo in our society. We rarely talk about our sex lives, and we rarely talk about money. Yes, we talk in surface ways about money, but never about how much we make, how much we save, and how much we feel most comfortable about having in our savings account. Why is that? I often wonder why it is such a taboo subject. Is it because comparisons make us feel like we are lesser than, or better than others? Possibly. What is funny, is you could live next to a run down home, that gives the facade that someone does not have the finances to keep it up, and maybe they do. Maybe it is just a choice that they live that way.
So, about checking accounts. Do you and your spouse or significant other have joint or separate checking accounts? I know that I will probably piss someone off today, as I am from the joint checking account camp. When Chris and I got married we decided to pool our finances, or rather I should say to be politically correct, we decided to pool our debt. We did not have much cash when we got married, we just had debt. Credit cards, school loans, you know normal twenty-something-year-old debt. Not too crazy, but still money we owed. So maybe it was easier for us to pool our finances, and make financial choices together. Would we have thought differently if we had plenty of cash in the bank? I hope not. Why? It works for us. We talk about everything, we discuss our purchases, and it all makes sense to us.
Yet, I know that a lot of couples fight about money. They fight about debt. Having separate checking accounts work for them, and I want to know why.
I have not really followed Sheryl Sandberg (Facebook COO) or her new book that was just released. Last week on Facebook I saw this quote and had to share it. Maybe I like it because I was a bossy little girl. Go Sheryl.
Then I found this letter to Sheryl Sandberg from Daily Worth founder, Amanda Steinberg, and I had to share as I agree with the letter. In it, she mentions a TIME magazine cover story, where Sandberg says of her husband: “He manages our money,” she says. “I have essentially no interest.” (page 5 of the TIME article). This comment is what Steinberg is reacting to in her letter.
Each and every woman should have a stake in and understanding of their personal finances. It does not mean that we always understand everything 100%, but we should try. I know too many women, that make a good living and would willingly turn over their hard-earned income to the man in their life, because they do not understand how to manage their finances. Please stop.
I know that it might be the easy way out, but you are not doing yourself any service by giving your money over to the man in your life. You are giving away your power. I would be the first to say that I do not always understand each and every part of our finances or retirement accounts. There are often little details that confuse the crap out of me, but the key is that I try to make sense of it. I want to know. I do not give up my power to my husband. We share the responsibility of our finances and make each and every decision together.
So in light of Sheryl Sandberg, and her great success as a woman, I encourage all women out there regardless of income level to care about their finances. It does not mean that you have to manage your finances day-to-day, just care about understanding them. You might pay someone to manage your finances, your husband might handle them, but set up a time each week or month to review your finances with whoever is handling them. Make a point to understand how much you are spending, and how you are saving. If you do not, to me it is like having someone take care of your children, yet you do not know their style. Which means you do not really know what is happening, right? I agree with Steinberg, all women should feel confident managing their money so that they are able to live life on their own terms.
I recently read this discussion called: “Why Kids Should Chip in for College.” It is a discussion I support. I had to pay my way through college and while it was tough, it was good life experience for me. It starts the reality that life costs money in a big way. Maybe you do not have to have your child pay for school completely, but they should contribute. If not, what happens when they graduate? Will you continue to pay for their life? How have you helped them to prepare for the next stage of their life where they have to pay rent, utilities, food, car payments, insurance, etc.?
These days with the zillions of technical devices we have at our finger tips, the ease of access to credit cards, and dwindling checking accounts, those graduating from college will have a harder time balancing the cost of their wants with the bills they will now have to pay, with the amount in their paychecks. Do we need to shift the balance of what we are doing for kids today? Have we taught them the value of the cost of life itself?
I remember a class we had to take in high school. I cannot remember what it was called, but what I do recall is that we had a section on stocks. We were split up into teams and we had to decide what stocks we were going to buy together based on the research we did on the company, the rate of return, and many other factors. I cannot remember how well my team did, but it sparked a new thrill inside me of something I had never been exposed to – investing. What I find interesting about this class that we were required to take, was that we never learned about the basics of money: balancing a checkbook, living within your means, interest rates, deciding between how much you can make saving versus paying off debt, and saving for retirement. These aspects of personal finance would have benefitted us way before we were ever at a place to actually invest in stocks.
I wonder how many college graduates know those core personal finances ideas. Are most college graduates savvy with their social media profiles, and maybe how to create their next app, but not ready for the basics of paying their rent, and saving for their next plane ticket? Are we coddling kids today, rather than finding ways for them to be set up for success?
What do you think? Are we preparing today’s college graduates for their best financial future?
Unless you make buttloads of cash, you might have been scratching your head and wondering why your paycheck was considerably smaller this week. I am not complaining, as it is what it is. Politics aside we could be in a worse situation where we are out of even more money. Let’s face it, our country is in major debt and that is not going away anytime soon.
In case you do not know the specifics, the Social Security payroll tax rate is currently 12.4%. Employers pay 6.2%, and for the past two years employees have paid a reduced rate of 4.2%. With the recent fiscal cliff changes, that reduction will now go back to the normal 6.2% which means that employees will now pay 2% more Social Security tax (as we did in 2010). This is also true for those who are self-employed (if you make more than $433). According to Kiplinger: “Originally a one-year break, the holiday was extended at the last minute to cover 2012. Extending it again to cover 2013 would have cost about $100 billion…”
As an example: if you make $50,000 a year, you will now take home $1000 less a year, or about $38 a paycheck (about $80 less a month). If you are a dual income family, the amount is much higher of what will be lost in your take home pay.
A question: If I am paying more tax now in 2013, does that mean I will have a higher refund in 2014 due to paying more taxes now? The answer: Yes. Depending on your allowances. Since I am not the expert, here is Kiplinger’s answer: “By eliminating overwithholding of income tax, the average taxpayer who normally gets a refund can both defeat the paycheck-shrinking impact of higher payroll taxes and add a couple thousand dollars to 2013 take-home pay. (Yes, you’ll be giving up a fat refund in 2014, but wouldn’t you rather get your money when you earn it?)” Complete answer, full article, and their calculators.
What I find odd is that the Social Security website has not been updated with the 2013 rates and details. Kind of sad considering my company was able to make changes in their system to ensure that the Federal government received the extra 2% out of the first paychecks of the 2013 calendar year. Yet, the government still has not updated their website about the changes. Seriously?
Another interesting fact I found: “…many workers do not know that any annual wages above $106,800 are not taxed by Social Security. In other words, a worker who makes twice the Social Security wage cap – $213,600 per year – pays Social Security tax on only half of his or her earnings, and one who makes just over a million dollars per year pays the tax on only about a tenth.”
I was inspired by this article: “Separate Money Sane Marriage,” and it leads me to ask a question for those of you that might read this blog post. Separate finances vs. Shared finances? What are the pros and cons? I have resisted from doing a google search for everything the experts say. Partly because I think that the experts will be on both sides, and honestly I think that it is different for each couple or partnership. What works for one might not work for another.
I lean on the side of shared finances. I say that because it has worked for us. Maybe it is because of our communication style to talk about everything, including our finances. Maybe it is because when we got married we were broke, in debt, and we worked together to get out of debt, pay off credit cards, and student loans. It evolved into the idea for every facet of our lives: “What is yours is mine, what is mine is yours.” There are ebbs and flows when things we decide for Chris are more expensive or vice versa. That is part of marriage, part of life.
I can respect those that keep their finances separate, but I want to understand more about why. I know for some they might get married when they are older, and just prefer to continue to live their financial life as they have throughout the years. Why do others make that choice? What are the pros and cons?
I am curious to hear what you think! Feel free to leave a comment with your thoughts.